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EXHIBIT 10.41
ASSET PURCHASE AGREEMENT
dated as of
May 1, 1996
among
BizEd, Inc.,
and
Allegro New Media, Inc.
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ASSET PURCHASE AGREEMENT
Asset Purchase Agreement, dated as of May 1, 1996, among BizEd, Inc., a
Connecticut corporation (the "Company"), and Allegro New Media, Inc., a Delaware
corporation (the "Purchaser").
WHEREAS, the Company has developed a business evaluation and analysis
computer software application in the visual basic computer language as a
template for use with Microsoft(R) Excel, with accompanying printed
documentation, such application being entitled "Grow" ("Grow"); and
WHEREAS, the Purchaser is a publisher of computer software products
(the "Products") and the parties have agreed upon the sale to the Purchaser of
all of the assets of the Company relating to Grow, on the terms set forth below,
NOW, THEREFORE, in consideration of the foregoing and of the mutual
premises, covenants, representations and warranties herein contained, it is
hereby agreed as follows:
1. Sale and Transfer of Assets
1. 1. Assets to be Sold
In reliance on the representations and warranties contained herein and
subject to the terms and conditions hereof, the Company will sell, assign and
deliver, free and clear of all Claims and Encumbrances, to Purchaser, and
Purchaser will purchase from the Company at the Closing (as such term and
certain other capitalized terms are defined in Section 10 hereof), subject to
Section 1.2 hereof, all of the tangible and intangible assets of the Company as
the same may exist on the Closing Date relating to Grow (collectively the
"Assets"), including without limitation the following:
(a) all of the Company's rights to sell and distribute Grow and the
good will associated therewith;
(b) all of the Company's rights in any and all patents, trademarks,
trade names and logos (including registrations and applications for registration
of any of them) now or previously used by the Company in connection with Grow,
including without limitation the registered patents and/or trademarks listed on
Schedule 4.14 to this Agreement, together with the good will of the business
associated with such trademarks, trade names and logos;
(c) all copyrights (including any registrations and applications for
registration of those copyrights) relating to Grow, including but not limited to
the copyrights listed on Schedule 4.14 hereto;
(d) all past and current mailing lists and customer lists relating to
Grow and all materials used for the development thereof;
(e) all books, records, files and data and proprietary information
relating to Grow;
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(f) all intermediate and final software content and programs and source
disks, master diskettes, program documentation tapes, manuals, forms, guides and
other documentation and materials with respect thereto owned by the Company and
copies of the foregoing which the Company has a right to copy but does not own,
including without limitation the items described on Schedule 4.8 hereto,
(g) all inventories of Grow, raw materials, work in process, finished
products and supplies (collectively. the "Inventory") including any Inventory
held at any location controlled by the Company and Inventory previously
purchased and in transit to the Company at such locations;
(h) all Grow-related goods or other products under research or
development prior to or on the Closing Date (all of which shall be deemed to be
included in Grow);
(i) subject to the terms of Section 6.4 hereof, all of the rights of
the Company under all licenses, orders, commitments, contracts, arrangements and
other agreements relating to Grow, including without limitation (A) all purchase
orders and (B) those items listed on Schedule 4.7 hereto (other than those
agreements listed in Schedule 4.7 under the Section titled "Agreements Not
Assumed") and the Company's right to receive payment for Grow or services
rendered pursuant to or in connection therewith, to receive goods and services
pursuant to, and to assert claims and take other rightful actions in respect of
breaches, defaults and other violations of, such contracts;
(j) to the extent the same are transferable, all federal, state or
local governmental or regulatory permits, licenses, approvals and franchises
which are owned or have been received by the Company in connection with Grow
(collectively, "Permits"), including without limitation Permits which are listed
on Schedule 4.7 hereto;
(k) all Grow-related goodwill of the Company and all other rights,
properties and assets not otherwise described in this Agreement of any character
whatsoever, wherever located, and not expressly excluded from the Assets by
terms of this Agreement.
1.2. Assets Retained by the Company.
The following assets of the Company (the "Excluded Assets") are being
retained by the Company (and excluded from Section 1. 1.):
(a) all rights of insurance coverage relating to the liabilities being
retained by the Company after the Closing Date;
(b) income tax records of the Company; provided, that Purchaser shall
have reasonable access to such records for periods prior to the Closing Date to
the extent Purchaser shall reasonably require such access;
(c) minute and stock books of the Company; provided, that Purchaser
shall have reasonable access to such records for periods prior to the Closing
Date to the extent Purchaser shall reasonably
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require such access;
(d) the agreements listed on Schedule 4.13 hereto and identified as
"Agreements Not Assumed";
(e) subject to Purchaser's rights hereunder, the rights of the Company
under this Agreement and the proceeds payable to the Company hereunder;
(f) all other assets of the Company not related to Grow; and
(g) all other assets of the Company not described in Section 1.1 above.
2. Payment of Purchase Price.
2.1. Purchase Price
In full consideration for the Assets to be transferred to Purchaser,
subject to the terms and conditions of this Agreement, Purchaser shall pay to
the Company or the Stockholder, as set forth below, the amounts as set forth
below (the "Purchase Price"):
(a) $81,250 in cash, payable to the Company at the Closing (as defined
below);
(b) $81,250 of shares of Common Stock, par value $.001 per share (the
"Common Stock") of the Purchaser, valued based on the closing price per share of
Common Stock on NASDAQ on the trading day prior to the date hereof, issuable at
the Closing;
(c) 2,500 shares of Common Stock, issuable at the Closing;
(d) 2,500 shares of Common Stock, issuable upon the shipment of any
version of Grow that is not a template for Microsoft(R) Excel;
(e) $31,250 in cash, payable on December 31, 1997;
(f) $31,250 of shares of Common Stock, valued based on the average
closing price per share of Common Stock on NASDAQ for the ten (10) consecutive
trading day period ending three (3) trading days prior to December 31, 1997,
issuable on December 31,1997; and
(g) ten percent (10%) of the net cash receipts of the Purchaser, after
discounts, returns and allowances, of Grow in visual basic computer language as
a template for use with Microsoft(R) Excel and Microsoft(R) Access, with
accompanying printed documentation, payable by the Purchaser to the Company
quarterly with respect to each calendar quarter ending after the date of the
Agreement within forty-five days (45) after the end of each calendar quarter.
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2.2 Allocation of Purchase Price.
The Purchase Price shall be allocated as set forth on Schedule 2.2
hereto and all tax returns filed by the parties shall be consistent with such
allocation. The Company and the Purchaser shall each file IRS Form 8594 in
accordance with such allocation and consistent with one another and in
accordance with applicable law and regulations.
2.3. No Assumption of Liabilities.
The Purchaser shall not assume or have any liability for any
liabilities or obligations of the Company, and the Company shall pay, perform
and discharge all its liabilities and obligations which are not so assumed by
Purchaser.
2.4. Reports and Audit.
(c) Purchaser shall render to the Company within forth-five (45) days
after the end of each March, June, September and December (each such period
being hereinafter referred to as a "calendar quarter") during the term for which
payments under Section 2. 1 (g) hereof are payable, a written account of all
products subject thereto sold by Purchaser during the previous calendar quarter,
and a calculation of the amounts due pursuant thereto, including sufficient data
for the Company to verify the calculation. If no products subject to such
payments have been sold by Purchaser during such calendar quarter, Purchaser
shall been so report in writing to the Company within forty-five (45) days after
the end of such calendar quarter.
(d) Purchaser shall keep full, true and accurate books of accounts
containing all particulars relating to sales, licenses, sublicenses and other
activities of Purchaser which may be necessary for the purpose of ascertaining
and verifying the amounts payable to the Company by Purchaser under Section
2.1(g) hereof. Said books and accounts shall be kept at Purchaser's principal
place of business. At the Company's request, Purchaser shall permit an
independent certified public accountant selected by the Company (except for one
for whom Purchaser has a reasonable objection) to have access once each year
during the regular business hours of Purchaser to such records to determine, for
any calendar quarter prior to the date of such request, the correct report
and/or payment made. Said certified public accountant shall be required to
execute a reasonable confidentiality and non-disclosure agreement if requested
by Purchaser.
3. The Closing.
3.1. Place and Date.
The closing of the transactions provided for in Section I shall take
place at the offices of Blau, Kramer, Wactlar & Xxxxxxxxx, P.C., 000 Xxxxxxx
Xxxxxxxxxx, Xxxxxxx, Xxx Xxxx 00000 (or at such other place as the parties may
agree upon in writing), on May 1, 1996, or, if the conditions to close have not
been fully met on such date, on the date which is two business days after the
last of the conditions has
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been fulfilled (or waived by the party entitled to waive that condition). The
closing is referred to in this agreement as the "Closing" and Date of the
Closing as the "Closing Date".
3.2. Documents to be Delivered by the Company.
At the Closing, the Company shall deliver to Purchaser the following:
(a) such bills of sale, assignments or other instruments of transfer
and assignment as shall be necessary to convey and vest in Purchaser title to
all right, title and interest in and to all of the Assets free and clear of all
Claims and Encumbrances. Simultaneously with such delivery the Company shall
take such action as may be necessary or reasonably requested by Purchaser to
place Purchaser in possession and control of the Assets;
(b) a copy of resolutions of the board of directors and shareholders of
the Company authorizing the execution, delivery and performance of this
agreement by the Company, and a certificate of its secretary or assistant
secretary, dated the Closing Date, that such resolutions were duly adopted and
are in full force and effect;
(c) if the Closing date is not the date hereof, the certificate
referred to in Section 7.1(a);
(d) the documents referred to in Section 7.1(f); and
(e) the License Agreement between the Purchaser and the Company,
substantially in the form attached hereto as Exhibit A (the "License
Agreement").
3.3. Documents to be Delivered by Purchaser.
At the Closing, Purchaser shall deliver to the Company (or, in the case
of subsection 3.4(d), to Xxxxxxxx X. Xxxxxxx, Xx. (the "Stockholder")), the
following:
(a) a copy of resolutions of the board of directors of Purchaser
authorizing the execution, delivery and performance of this Agreement by
Purchaser, and a certificate of its secretary or assistant secretary, dated the
Closing Date, that such resolutions were duly adopted and are in full force and
effect;
(b) the certificate referred to in Section 7.2(a);
(c) the documents referred to in Section 7.2(b);
(d) the Consulting Agreement between the Purchaser and Stockholder,
substantially in the form attached hereto as Exhibit B (the "Consulting
Agreement"); and
(e) the License Agreement.
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3.4. Documents to be Delivered by Stockholder.
At the Closing, Stockholder shall deliver to the Purchaser the
Consulting Agreement.
3.6. Form of Documents.
Unless specifically otherwise provided herein, all documents to be
delivered pursuant to Section 3 by one party to the other party to this
Agreement or any Affiliate thereof shall be in form and substance reasonably
satisfactory to the other parties and their counsel.
4. Representations and Warranties of the Company.
The Company hereby represents and warrants (and the Stockholder hereby
represents and warrants with respect to the second sentence of Section 4.2
below) to the Purchaser as follows:
4.1. Organization and Authority.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Connecticut and has all requisite
power and authority to own, operate and lease its properties and to carry on its
business as now being conducted.
4.2. Authorization of Agreement.
The Company has the power and authority to execute, deliver and perform
its obligations under this Agreement. The Stockholder has the legal capacity to
execute, deliver and perform his obligations under this Agreement. The
execution, delivery and performance of this Agreement by the Company has been
duly authorized by all necessary corporate action on the part of the Company.
This Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally now or hereafter in effect and
subject to the application of equitable principles and the availability of
equitable remedies.
4.3. No Conflicts.
The execution, delivery and performance of this Agreement and the
consummation of all of the transactions contemplated hereby: (i) do not and will
not require the consent, waiver, approval, license, designation or authorization
of, or declaration with, any person or public authority; (ii) do not and will
not with or without the giving of notice or the passage of time or both, violate
or conflict with or result in a breach or termination of any provision of, or
constitute a default under, or accelerate or permit the acceleration of the
performance required by the terms of, or result in the creation of any mortgage,
security interest, claim, lien, charge or other encumbrance upon any of the
Assets pursuant to, or otherwise give rise to any liability or obligation under,
any agreement, mortgage, deed of trust, indenture,
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license, permit or any other agreement or instrument or any order, judgment,
decree, statute, regulation or any other restriction of any kind or description
to which the Company is a party or by which the Company or any of the Assets may
be bound; and (iii) will not terminate or result in the termination of any such
agreement or instrument, or in any way affect or violate the terms and
conditions of, or result in he cancellation, modification, revocation or
suspension of, any rights included in the Assets.
4.4. Conduct of Business.
Except as disclosed on Schedule 4.4 hereto, since February 1, 1996, the
Company has not (i) mortgaged, pledged or subjected to any lien or otherwise
encumbered any of the Assets; (ii) waived, released or compromised any claims or
rights of substantial value which otherwise would have been part of the Assets,
(iii) entered into any settlement, compromise or consent with respect to any
claim, proceeding or investigation which otherwise would have been part of the
Assets; (iv) sold, assigned, transferred, leased or otherwise disposed of any
assets, tangible or intangible, or canceled any debts or claims which otherwise
would have been part of the Assets; (v) made or announced any change in the
terms, including but not limited to price, of the sale of any Grow-related goods
or made or announced any change in the form or manner of distribution of Grow;
or (vi) entered into any contract or commitment to do any of the foregoing.
4.5. Title to Purchased Assets.
The Company has and on the Closing Date will convey to Purchaser good
and marketable title to all of its real and valid title to all of the Assets
free and clear of all Claims and Encumbrances. No instrument, easement, license
or grant of record, applicable zoning or building law, ordinance or
administrative regulation or other impediment of any kind prohibits or
interferes with, limits or impairs, or would, if not permitted by any prior
nonconforming use, prohibit or interfere with or limit or impair, the use,
operation, maintenance of, or access to, or the value of, any of the Assets. The
Assets taken as a whole constitute all of the properties and assets used or held
in conjunction with Grow and are sufficient and adequate to market and sell Grow
in accordance with the most current standards established by customers,
suppliers and any governmental entities. All of the Assets are located in the
State of Connecticut.
4.6. Personal Property.
Schedule 4.6 hereto sets forth true and complete list of all items of
personal property owned by the Company included in the Assets. Such items are in
a state of good working condition and repair, normal wear and tear excepted, and
are adequate and appropriate for the selling and marketing of Grow.
4.7. Contracts.
(a) Except as disclosed in Schedule 4.7 hereto, the Company is not a
party to or bound by any oral or written contracts, obligations, commitments or
understandings relating to Grow, including without limitation any:
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(i) contract, commitment or arrangement involving, in any one case,
$1,000 or more,
(ii) contract, commitment or arrangement relating to production,
manufacturing, sale, licensing or distribution.
(iii) contract, commitment or arrangement relating to research or
development;
(iv) contract with a term of, or requiring performance, more than six
months from its date;
(v) commitment, contract or arrangement which is not terminable upon
notice of 30 days or less without penalty, cost or liability to the Company or,
after the Closing Date, to the Purchaser;
(vi) lease or lease purchase agreement, mortgage, conditional sale or
title retention agreement, indenture, security agreement, credit agreement,
pledge or option with respect to any property, real or personal (tangible or
intangible), in any capacity;
(vii) commitment, contract or arrangement for the purchase or use of
services, materials, supplies, inventory, machinery or equipment;
(viii) commitment, contract or arrangements for the sale or use of
Grow;
(ix) employment, consulting or independent contractor agreement,
contract, commitment or arrangement;
(x) contract, agreement, commitment or arrangement with any labor union
or other collective bargaining group;
(xi) bonus, pension, savings, welfare, profit sharing, stock option,
retirement, severance, commission, executive compensation, hospitalization
insurance or similar plan providing for employee benefits or any other
arrangement providing for benefits for any former or current employees or for
the remuneration, direct or indirect, of the Company's directors, officers or
employees;
(xii) note, loan, credit or financing agreement or other contract for
money borrowed, and all related security agreements and collateral documents,
including any agreement for any commitment for future loans, credit or
financing;
(xiii) guarantee;
(xiv) contract, commitment or arrangement regarding any capital
expenditures;
(xv) agency (sales or otherwise), distribution or brokerage (including,
without limitation, any brokerage or finder's agreement or arrangement with
respect to any of the transactions contemplated by this Agreement) contract,
commitment or arrangement;
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(xvi) contract with investment bankers, accountants, attorneys,
consultants or other independent contractors;
(xvii) contract with any director or officer of the Company or any
Affiliate of such person;
(xviii) contract, commitment or arrangement which would restrain the
Purchaser or any Affiliate of the Purchaser from engaging or competing in any
business or to maintain the confidentiality of any matter,
(xix) contract, commitment or arrangement not made in the ordinary
course of business of the Business: or
(xx) license, permit, franchise or royalty agreement.
(b) The Company has delivered to the Purchaser correct and complete
copies of all of the contracts, agreements and other documents required to be
listed in Schedule 4.7 hereto and all amendments thereto and waivers granted
thereunder (all such contracts, agreements and other documents, except any of
such listed under "Agreements not Assumed" on Schedule 4.7 hereto are sometimes
hereinafter referred to as the "Assigned Contracts"). The rights and interests
of the Company in all Assigned Contracts may be assigned to the Purchaser
without the consent of any other person, except as specifically disclosed on
Schedule 4.7 hereto, and at the Closing the Purchaser will acquire all such
rights and interests. The Company enjoys good working relationships under all
Assigned Contracts, and no unresolved disputes are pending or, to the best of
the Company's knowledge, threatened, under or in respect of any such Assigned
Contracts. The prices to be received or paid by the Company under all Assigned
Contracts with its customers and others have been determined in accordance with
the Company's established pricing policies. The Company has no contracts
relating to Grow with the United States Government.
(c) Except as set forth on Schedule 4.7 hereto, all Assigned Contracts
described in Schedule 4.7 hereto are valid and effective in accordance with
their respective terms, and there is not, under any of such contracts,
agreements or other documents, any existing default by the Company or, to the
Company's knowledge, by any other party, or any event which with notice, lapse
of time, or both, would constitute a default thereunder.
4.8. Intellectual Property.
Schedule 4.8 hereto sets forth a true and complete list of all of the
Company's trademarks, trade names, copyrights, patents and similar rights, and
any applications with respect thereto used by the Company in whole or in part
for the conduct of its Grow-related business as now conducted (the "Intellectual
Property"). All the Intellectual Property is owned by the Company free and clear
of any and all licenses, liens, claims security interests, charges or other
encumbrances or restrictions of any kind, no licenses for the use of any of such
Intellectual Property have been granted by the Company to any third parties and,
except as set forth on Schedule 4.8 thereto, the Company does not license any
such
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Intellectual Property from others. All of such rights are valid, are adequate
and appropriate for Grow-related business as now conducted. All of such rights
will be acquired by Purchaser at the Closing, and the transfer of such rights
to, and use by Purchaser will not require the consent of any other person. Grow
does not infringe in any way on or conflict with any registered or unregistered
patent, trademark, trade name, copyright, license or other right, of any Person.
No claim is pending or threatened or has been made within the past five (5)
years, to the effect that any such infringement or conflict has occurred.
4.9. Customer and Supplier Relations.
Attached as Exhibit 4.9 hereto is a complete and correct list of all
current customers for Grow showing the sales to each for the fiscal year ended
December 31, 1995 and the period ended March 1, 1996 and of all suppliers whose
Grow-related sales to the Company amounted to more than $10,000 during either
such period, showing the sales of each to the Company. Neither the Company nor
the Stockholder has any knowledge that any customer or supplier or group of
related customers or suppliers have terminated or expects to terminate a
material portion of its normal business with the Company. Except as disclosed in
Schedule 4.9 hereto, no director, officer or Affiliate of the Company has any
direct or indirect interest, either by way of stock ownership or otherwise, in
any firm, corporation, association or business enterprise, which competes with,
is a supplier or customer of, or is a distributor or sales agent for, or is a
party to any contract with the Company.
4.10. Litigation; Compliance.
(a) Except as disclosed in Schedule 4.10 hereto, there are no actions,
suits, proceedings, arbitrations or governmental investigations pending or
threatened against, by or affecting the Company (or, to the best of the
Company's knowledge, any basis therefore) in which, individually or in the
aggregate, an unfavorable determination could materially affect the Grow-related
business or its prospects, earnings or condition (financial or otherwise) or any
of the Assets or result in any material liability on the part of the Purchaser
or prevent or impair the execution, delivery or performance of this Agreement or
any of the transactions or events contemplated hereby or could declare this
Agreement unlawful or cause the rescission of any of the transactions hereunder
or require Purchaser to divest itself of any part of the Assets to be acquired
pursuant hereto, nor has any such action, suit, proceeding, arbitration or
governmental investigation been pending within the two years prior to the date
hereof. The Company has not been charged with or received notice of any
violation of any applicable federal, state, local or foreign law, rule,
regulation, ordinance, order or decree relating to the Assets, or the operation
of the Grow-related business, and the Company is not aware of any threatened
claim of such violation (including any investigation) or any basis therefor. The
Company has made available to Purchaser its files containing all customers
complaints received during the five year period prior to the date of this
Agreement and all insurance claims made by the Company within the last two
years.
(b) To the best knowledge of the Company and the Stockholder, the
Company has complied and is in compliance in all material respects with all
laws, rules, regulations, ordinances, orders, decrees, writs, injunctions, or
other governmental restrictions applicable to the Assets. The Company has
furnished to Purchaser copies of all correspondence between it and any
governmental agencies during
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the previous three years.
(c) To the best knowledge of the Company and the Stockholder, the
Company has all governmental licenses, permits, approvals or other
authorizations required for the conduct of the Grow-related business as now
conducted, all of which are in full force and effect and all of which are listed
on Schedule 4.10 hereto; there is no action or proceeding pending or, to the
knowledge of the Company, threatened, to terminate rights under any such
governmental licenses, permits or authorizations, and except as disclosed on
Schedule 4.10 hereto, at the Closing the Purchaser will acquire all of the
rights of Seller under such licenses, permits, approvals and authorizations.
4.11. Brokers, Finders, etc.
The Company has employed no finder, broker, agent or other intermediary
in connection with the negotiation or consummation of this Agreement or any of
the transactions contemplated hereby.
4.12. Disclosure.
(a) No representation or warranty by the Company and no statement or
certificate furnished or to be furnished by or on behalf of the Company to
Purchaser or its agents pursuant to this Agreement or in connection with the
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary in
order to make the statements contained herein or therein not misleading or
necessary to provide a prospective purchaser of the Assets with proper
information as to the Company and its affairs. There is to the best of the
Company's knowledge no fact which materially adversely affects or in the future
may (so far as the Company can now reasonably foresee) materially adversely
affect the business, prospects, condition (financial or otherwise), affairs or
operations of the Grow-related business which has not been set forth herein.
(b) As used in this Section 4 and elsewhere in this Agreement the term
"to the best of the Company's knowledge" means the actual knowledge of any
officer of the Company.
4.13. Assets of Stockholder.
The total assets or sales of the Stockholder and all other persons or
entities aggregated with him for purposes of determining total assets under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 0000 (xxx "XXX Xxx") do not
equal or exceed $100 million.
5. Representations and Warranties of Purchaser.
The Purchaser represents and warrants to the Company as follows:
5.1. Corporate Status.
The Purchaser is a corporation duly organized, validly existing and in
good standing under the
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laws of the State of Delaware with full corporate power and authority to carry
on its business as now conducted.
5.2 Authority for Agreements.
The Purchaser has the power and authority to execute and deliver this
Agreement and to carry out its obligations hereunder. The execution, delivery
and performance by the Purchaser of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Purchaser and this Agreement constitutes the
valid and legally binding obligation of the Purchaser enforceable against the
Purchaser in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization and similar laws of
general application relating to or affecting the rights and remedies of
creditors.
5.3. No Conflicts.
The execution, delivery and performance of this Agreement and the
consummation of all of the transactions contemplated hereby by the Purchaser:
(i) do not and will not require the consent, waiver, approval, license,
designation or authorization of, or declaration with, any person or public
authority; and (ii) do not and will not with or without the giving, of notice or
the passage of time or both, violate or conflict with or result in a breach or
termination of any provision of, or constitute a default under, or accelerate or
permit the acceleration of the performance required by the terms of, or result
in the creation of any mortgage, security interest, claim, lien, charge or other
encumbrance upon any of the Assets pursuant to, or otherwise give rise to any
liability or obligation under, any agreement, mortgage, deed of trust,
indenture, license, permit or any other agreement or instrument or any order,
judgment, decree, statute, regulation or any other restriction of any kind or
description to which the Purchaser is a party or by which the Purchaser may be
bound.
5.4. Assets of the Purchaser.
The total assets or sales of the Purchaser and all other persons or
entities aggregated with it for purposes of determining total asset under the
HSR Act do not equal or exceed $100 million.
6. Covenants.
6.1. Operation of Business; Conduct Pending Closing.
(a) From the date hereof until the Closing Date the Company shall
operate the Grow-related business in the ordinary course and in a manner
consistent with past practice. The Company shall use all reasonable efforts to
maintain and preserve the Grow-related business' present business organization,
keep available to the Company the services of its employees and preserve its
relationship with customers, suppliers and others having, business dealings with
it and the Company will:
(i) maintain the Assets in good operating condition and repair, except
for ordinary wear and
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tear and damage by unavoidable casualty;
(ii) keep in full force and effect insurance comparable in amount and
scope of coverage to insurance now carried by it,
(iii) perform in all material respects all of its obligations under
agreements, contracts, licenses and instruments relating to or affecting its
properties, assets and business;
(iv) maintain its books of account and records in the usual, regular
and ordinary manner;
(v) promptly notify Purchaser in writing of, and furnish any
information that Purchaser reasonably may request with respect to the occurrence
of any event or the existence of any state of facts (whether or not permitted by
the provisions of this Agreement) that would result in any of the Company's
representations and warranties not being true as of the Closing Date;
(vi) not (i) incur any extraordinary expense or become a party to or
become obligated by any contract, commitment or agreement for the sale, lease or
other disposition of a material part of its assets or which would be required to
be listed on Schedule 4.7. hereto; or
(vii) not enter into any compromise or settlement of any litigation,
proceeding or governmental investigation relating to the Assets, except
settlements made by insurers.
(b) Company and Purchaser shall each use its best efforts to cause the
fulfillment at the earliest practicable date of all of the conditions to their
respective obligations to consummate the transaction contemplated by this
Agreement.
6.2. Access to Information; Confidentiality.
Prior to the Closing, Purchaser may make such investigation of the
Grow-related business as Purchaser may desire and the Company shall give to
Purchaser and its counsel, accountants and other representatives reasonable
access during normal business hours throughout the period prior to the Closing
access to the assets, books, commitments, agreements, records and files of the
Company and the Company shall furnish to Purchaser during that period all
documents and copies of documents (certified as true and complete if requested)
and information concerning the business and affairs of the Company relating to
the Grow-related business as the Purchaser may reasonably request. The Purchaser
shall hold, and cause its representatives to hold, all such information and
documents confidential pending the Closing and, if the purchase and sale
contemplated by this Agreement is not consummated for any reason, shall return
to the Company all such information and documents and any copies as soon as
practicable. The Company and Stockholder shall keep confidential and will not
use or disclose to others any secret processes, inventions, formulae, methods,
plans, drawings, proprietary information or knowhow used or usable in connection
with the Grow-related business.
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6.3. Notice of Impairment.
Each party hereto shall promptly advise the other parties hereto of any
event (other than one generally known to the public) that is likely to
materially impair the such party's ability to perform its obligations under this
Agreement.
6.4. Consents.
This Agreement shall not constitute an agreement to assign any interest
in any instrument, contract, lease, permit or other agreement or arrangement of
the Company or any claim, right or benefit arising thereunder or resulting,
therefrom, if an assignment without the consent of a third party would
constitute a breach or violation thereof or adversely affect the rights of the
Purchaser or the Company thereunder. If a consent of a third party which is
required in order to assign any instrument, contract, lease, permit or other
agreement or arrangement or any claim, right or benefit arising thereunder or
resulting therefrom, which consent the Company shall use its best efforts to
obtain prior to the Closing, is not obtained prior to the Closing, or if an
attempted assignment would be ineffective or would adversely affect the ability
of the Company to convey its interest to the Purchaser, the Company will
cooperate with the Purchaser to provide that the Purchaser shall receive the
Company's interest in the benefits under any such instrument, contract, lease,
permit or other agreement or arrangement; and any transfer or assignment to the
Purchaser by the Company of any interest under any such instrument, contract,
lease, permit or other agreement or arrangement that requires the consent of a
third party shall be made subject to such consent or approval being obtained.
6.5. Expenses.
Purchaser, the Company and the Stockholder shall bear their own
respective expenses incurred in connection with this Agreement and in connection
with all obligations required to be performed by each of them under this
Agreement.
6.6. Sales Taxes.
The Company shall pay all state or local sales or use taxes payable in
connection with the sale of the Assets pursuant to this Agreement.
6.7. Employees.
The Purchaser shall not be responsible for the payment of any
obligations whatsoever of the Company to any of the Company's employees or
former employees.
6.8. Further Assurances.
At any time and from time to time after the Closing, each party shall,
without further consideration, execute and deliver to the other such other
instruments of transfer and assumption and
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shall take such other action as the other may reasonably request to carry out
the transfer of assets and assumption of liabilities contemplated by this
Agreement.
6.9. Disclosure of Information
(a) The Company and the Stockholder shall keep confidential and not
divulge to any Person any of the Purchaser's confidential information and
business secrets including, but not limited to, confidential information and
business secrets relating to such matters as the Purchaser's finances and
operations, the materials, processes, plans, designs, models, apparatus,
equipment and formulae used in the Purchaser's operations, the names of the
Purchaser's customers and their requirements and the names of the Purchaser's
suppliers, illustrators, photographers and authors. All of the Purchaser's
confidential information and business secrets as well as any inventions,
improvements or techniques which the Shareholder discovers, invents or perfects
and which may be used in the production or distribution of any Grow-related
product of a type sold or distributed by the Purchaser shall be sole and
exclusive property of the Purchaser.
(b) The Company and the Stockholder shall not either for any of their
own account or for any Person solicit, interfere with, or endeavor to cause any
employee of the Purchaser to leave his employment or induce or attempt to induce
any such employee to breach his employment agreement with the Purchaser.
(c) The Company and the Stockholder agree that in the event one or more
of them violate the provisions of subsections (a) and (b) of this Section 6.9,
the running of the time period for the provisions so violated shall be
automatically, extended for a period of one year from the date he or it, as the
case may be, permanently ceases such violation or for a period of one year from
the date of the entry by a court of competent jurisdiction of a final order or
judgment enforcing such provisions, or for the full time period specified in
such provisions, whichever time period is later.
In the event of a breach or threatened breach by the Company or the
Stockholder of the provisions of this subsection 6.9., the Purchaser shall be
entitled to an injunction restraining the Company and the Stockholder from
disclosing, in whole or in part, confidential information described herein, or
from rendering any services to any Person to whom such confidential information
has been disclosed, or is threatened to be disclosed. Nothing herein contained
shall be construed as prohibiting the Purchaser from pursuing any other remedies
available to it for such breach or threatened breach including the recovery of
damages from the Company or the Stockholder. The covenants in this subsection
6.9. shall run in favor of the Purchaser and its successors and assigns and
shall survive the termination of this Agreement.
6.10. Piggyback Registration Rights.
(a) At any time, if the Company proposes to file a registration
statement under the Securities Act with respect to an offering by the Company of
any class of equity security similar to any Registerable Securities (other than
a registration statement on Form S-4 or S-8 or any successor form or a
registration statement filed solely in connection with an exchange offer, a
business combination transaction or an
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offering of securities solely to the existing stockholders or employees of the
Company), then the Company shall give written notice of such proposed filing to
the holders of Registerable Securities at least 30 days before the anticipated
filing date, and such notice shall offer such holders the opportunity to
register such aggregate number of Registerable Securities as each such holder
may request. The Company shall use reasonable efforts to cause the managing
underwriter or underwriters of a proposed underwritten offering to permit,
within 25 days of the giving of the written notice provided for in the
immediately preceding sentence, the holders of Registerable Securities requested
to be included in the registration to include such securities in such
underwritten offering on the same terms and conditions as any similar securities
of the Company included therein. Notwithstanding anything to the contrary in the
foregoing, if the managing underwriter or underwriters of such offering (or, in
the case of an offering not being underwritten, the Company) delivers a written
opinion (or, in the case of the Company, a resolution of its Board of Directors
certified by the President of the Company) to the holders of Registerable
Securities that the total amount and kind of securities which they, the Company
and any other person intend to include in such offering is such as to materially
and adversely affect the success of such offering, then the amount of securities
to be offered for the accounts of holders of Registerable Securities and persons
other than the Company shall be eliminated or reduced pro rata (based on the
amount of securities owned which carry registration rights) to the extent
necessary to reduce the total amount of securities to be included in such
offering to the amount recommended by such managing underwriter or underwriters
in its written opinion (or the Board of Directors in its resolution). For
purposes of this Section 6.10. the term "Registerable Securities" shall mean the
Company's common stock, par value $.001 per share (the "Common Stock"), which is
(i) acquired by Seller pursuant to this Agreement, including in each case any
shares received in connection with any stock split, stock divided,
recapitalization, reclassification or other distribution payable or issuable in
shares of Common Stock.
(b) The Company may require each seller of Registerable Securities as
to which any registration is being effected to furnish to the Company such
information regarding the distribution of such securities as the Company may
from time to time reasonably request in writing. Seller agrees, and each other
holder of Registerable Securities will be required, in its request to register
securities pursuant to this Agreement, to agree, that, upon receipt of any
notice from the Company of the happening of any event material to the Company,
such holder will forthwith discontinue disposition of Registerable Securities
pursuant to the registration statement covering such Registerable Securities
until such holder's receipt of the copies of the supplemented or amended
prospectus, or until it is advised in writing (the "Advice") by the Company that
the use of the applicable prospectus may be resumed, and until it has received
copies of any additional or supplemental filings which are incorporated by
reference in such prospectus, and, if so directed by the Company, such holder
will deliver to the Company (at the expense of the Company) all copies, other
than permanent file copies then in such holder's possession, of the prospectus
covering such Registerable Securities current at the time of receipt of such
notice.
(c) All expenses incident to the performance of or compliance with this
Agreement by the Company, including, without limitation, all registration and
filing fees of the Commission, the National Association of Securities Dealers
Inc. and other agencies, fees and expenses of compliance with securities or blue
sky laws (including reasonable fees and disbursements of counsel in connection
with blue sky qualifications of the Registerable Securities), rating agency
fees, printing expenses, messenger and
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delivery expenses, internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the fees and expenses incurred in connection with the
listing, if any, of the securities to be registered on any securities exchange
and fees and disbursements of counsel for the Company and the Company's
independent certified public accountants (including the expenses of any special
audit or "cold comfort" letters required by or incident to such performance),
securities acts liability insurance (if the Company elects to obtain such
insurance), the fees and expenses of any special experts retained by the company
in connection with such registration. and the fees and expenses of any other
person retained by the company (but not including any underwriting discounts or
commissions attributable to the sale of Registerable Securities or other
out-of-pocket expenses of the holders of Registerable Securities (or the agents
who act on their behalf) unless reimbursement is specifically approved by the
Company) will be borne by the Company. All such expenses are herein called
"Registration Expenses".
(d) The Company agrees to indemnify and hold harmless, to the full
extent permitted by law, each holder of Registerable Securities, its officers
and directors and each person who controls such holder (within the meaning of
the Securities Act), and any agent thereof against all losses, claims, damages,
liabilities and expenses incurred by such party pursuant to any actual or
threatened suit, action, proceeding or investigation (including reasonable
expenses of investigation) arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in any registration statement,
prospectus or preliminary prospectus or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein (in the case of a prospectus, in the light of the
circumstances under which they were made) not misleading, except insofar as the
same arise out of or are based upon, any such untrue statement or omission based
upon information with respect to such holder furnished in writing to the Company
by such holder expressly for use therein.
(e) In connection with any registration statement in which a holder of
Registerable Securities is participating, each such holder will be required to
furnish to the Company in writing such information with respect to such holder
as the Company reasonably requests for use in connection with any such
registration statement or prospectus, and each Purchaser agrees to the extent it
is such a holder, and each other such holder will be required to agree, to
indemnify, to the full extent permitted by law, the Company, the directors and
officers of the Company and each person who controls the Company (within the
meaning of the Securities Act) and any agent thereof, against any losses,
claims, damages, liabilities and expenses (including reasonable attorney's fees
and expenses of investigation) incurred by such party pursuant to any actual or
threatened suit, action, proceeding or investigation arising out of or based
upon any untrue or alleged untrue statement of a material fact or any omission
or alleged omission of a material fact necessary to make the statements therein
(in the case of a prospectus, in the light of the circumstances under which they
are made) not misleading, to the extent, but only to the extent, that such
untrue statement or omission is based upon information relating to such holder
furnished in writing to the Company expressly for use therein.
(f) Promptly after receipt by an indemnified party under this Section
6.10 of written notice of the commencement of any action, proceeding, suit or
investigation or threat thereof made in writing for which such indemnified party
may claim indemnification or contribution pursuant to this Agreement,
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such indemnified party shall notify in writing the indemnifying party of such
commencement or threat; but the omission so to notify the indemnifying party
shall not relieve it from any liability which it may have to any indemnified
party (x) hereunder, unless the indemnifying party is actually prejudiced
thereby or (y) otherwise than under this Section 6.10. In case any such action,
suit or proceeding shall be brought against any indemnified party, and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and the indemnifying party shall
assume the defense thereof, with counsel reasonably satisfactory to the
indemnified party and the payment of all expenses. The indemnified party shall
have the right to employ separate counsel in any such action, suit or proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party has agreed to pay such fees and expenses, (ii) the
indemnifying party shall have failed to assume the defense of such action, suit
or proceeding or to employ counsel reasonably satisfactory to the indemnified
party therein or to pay all expenses or (iii) the named parties to any such
action or proceeding (including any impleaded parties) include both the
indemnified party and the indemnifying party and the indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to the indemnified party which are different from or additional to
those available to the indemnifying party and which may result in a conflict
between the indemnifying party and such indemnified party (in which case, if the
indemnified party notifies the indemnifying party in writing that the
indemnified party elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such action or proceeding on behalf of the indemnified party, it
being understood, however, that the indemnifying party shall not, in connection
with any one such action, suit or proceeding or separate but substantially
similar or related actions, suits or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys at any time for
the indemnified party, which firm shall be designated in writing by the
indemnified party).
6.11. Right of First Refusal.
From and after the date of this Agreement, the Company shall not
market, sell, or in any other way commercially exploit any computer software
products relating to small office or home office businesses unless and until the
Company shall first offer to the Purchaser the right to so market, sell or
otherwise commercially exploit such computer software. In this connection, the
Company shall furnish to the Purchaser in writing the terms and conditions of
any bona fide proposed transaction involving any such marketing, sale or other
commercial exploitation (the "Terms Notice"). The Purchaser shall have the
right, exercisable within thirty (30) days of the date of its receipt of the
Terms Notice, to exercise this right of first refusal by delivering written
notice of such exercise to the Company. The consummation of any such transaction
shall take place within one hundred twenty (120) days thereafter. In the event
that the Purchaser does not exercise this right of first refusal by delivering
such written notice to the Company within such thirty (30) day period, then the
Company shall be free to engage in such proposed transaction on the terms and
conditions set forth in the Terms Notice. Any subsequent transaction, or any
transaction which is not entirely consistent with the terms and conditions set
forth in the Terms Notice, shall again be subject to the right of first refusal
hereinabove set forth.
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7. Conditions Precedent.
7.1. Conditions to Obligations of the Purchaser.
The obligation of the Purchaser to pay the Purchase Price to the
Company and to satisfy its other obligations hereunder shall be subject to the
fulfillment (or waiver by the Purchaser) at or prior to the Closing, of the
following additional conditions, which the Company agrees to use its best
efforts to cause to be fulfilled:
(a) Representations, Performance. If the Closing Date is not the date
hereof, the representations and warranties contained in Section 4 hereof shall
be true at and as of the date hereof and shall be repeated and shall be true at
and as of the Closing Date with the same effect as though made at and as of the
Closing Date, except as affected by the transactions contemplated hereby; the
Company shall have duly performed and complied with all agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date; and the Company shall have delivered to
Purchaser a certificate dated the Closing Date, and signed by its Chairman or
President and by its chief financial officer, to the effect set forth above in
this section 7.1.(a).
(b) Consents. Any required consent to the sale or transfer of the
Assets under any agreement or contract shall have been obtained.
(c) Litigation. No suit, action, arbitration or other proceeding or
investigation shall be threatened or pending before any court or governmental
agency in which it is sought to restrain or prohibit or to obtain material
damages or other material relief in connection with this Agreement or the
consummation of the transactions contemplated hereby or which is likely to
affect materially the value of the Assets.
(d) Payments of Transfer and Recording Taxes. The Company shall have
paid all transfer and recording taxes (including without limitation any
applicable real estate recording taxes) in connection with the sale of the
Assets from the Company to the Purchaser.
(e) U.C.C. and Lien Search. The Purchaser shall have received (at its
expense) copies of a report of a Uniform Commercial Code search and tax and
judgment lien search in the State of Connecticut, searching the relevant names
of or used by the Company reasonably satisfactory in form and substance to the
Purchaser.
(f) Proceedings and Documentation. All corporate and other proceedings
of the Company in connection with the transactions contemplated by this
Agreement, and all documents and instruments incident to such corporate
proceedings, shall be satisfactory in form and substance to the Purchaser and
the Purchaser's counsel, and the Purchaser and the Purchaser's counsel shall
have receive all such receipts, documents and instruments, or copies thereof,
certified if requested, to which the Company is entitled and as may be
reasonably requested.
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(g) Property Loss. No portion of the Assets shall, after the date
hereof and before the Closing Date, have been destroyed or damaged or taken by
condemnation under circumstances where the loss thereof will not be
substantially reimbursed to the Purchaser through the proceeds of applicable
insurance or condemnation award.
(h) Consents and Approvals. All material licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental or
regulatory bodies which are (i) necessary to enable the Purchaser to fully
utilize the Assets as contemplated from and after the Closing shall have been
obtained and be in full force and effect, including licenses, permits consents,
approvals, authorizations, qualifications and orders of governmental or
regulatory bodies held in the name or on behalf of the Company but under which
the Purchaser may legally continue to conduct such business or (ii) necessary
for the consummation of the transactions contemplated hereby, shall have been
obtained. Consents by the other parties to each contract constituting part of
the Assets to the assignment to and assumption thereof by the Purchaser shall
have been obtained.
7.2. Conditions to Obligations of the Company.
The obligation of the Company to deliver the bills of sale,
assignments, endorsements and other instruments of transfer relating to the
Assets and to satisfy the Company's other obligations hereunder shall be subject
to the fulfillment, on or prior to the Closing Date (or waiver by the Company),
of the following conditions, which Purchaser agrees to use its best efforts to
cause to be fulfilled.
(a) Representations, Performance, etc. If the Closing Date is not the
date hereof, the representations and warranties of the Purchaser contained in
Section 5 hereof shall be true at and as of the date hereof and shall be
repeated and shall be true at and as of the Closing Date with the same effect as
though made at and as of such time; the Purchaser shall have duly performed and
complied with all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or on the Closing Date; and the
Purchaser shall have delivered to the Company a certificate dated the Closing
Date, and signed by its President or any Vice President and by its chief
financial officer to the effect set forth above in this Section 7.2.(a)
(b) Proceedings and Documentation. All corporate and other proceedings
in connection with the transactions contemplated by this Agreement, and all
documents and instruments incident thereto, shall be satisfactory in form and
substance to the Company and Company's counsel, and the Company and Company's
counsel shall have received all such receipts, documents and instruments, or
copies thereof, certified if requested, to which the Company is entitled and as
may be reasonably requested.
8. Termination.
(a) This Agreement may be terminated at any time prior to the Closing
Date:
(i) by mutual consent of the parties hereto.
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(ii) by the Purchaser by notice to the Company (A) if any of the
conditions set forth in Section 7.1 hereof shall not, or it becomes apparent
that any of such conditions will not, have been fulfilled by May 15, 1996, or
(B) if any material default under or material breach of any agreement or
condition of this Agreement, or any material misrepresentation or material
breach of any warranty contained herein, on the part of the Company shall have
occurred and shall not have been cured; or
(iii) by the Company by notice to the Purchaser, (A) if any of the
conditions set forth in Section 7.2 hereof shall not, or it becomes apparent
that any of such conditions will not, have been fulfilled by May 15, 1996, or
(B) if any material default under or material breach of any agreement or
condition of this Agreement, or any material misrepresentation or material
breach of any warranty contained herein, on the part of the Purchaser shall have
occurred and shall not have been cured.
(b) In the event of the termination of this Agreement pursuant to the
provisions of Section 9(a) hereof, this Agreement shall become void and have no
effect, without any liability on the part of any party hereto or its directors,
officers or stockholders in respect of this Agreement, except as specified in
Section 11.1 hereof and except that nothing herein shall limit the right of
either party to seek damages from the other for willful breach of this
Agreement.
10. Definition of Certain Terms.
(a) Except as otherwise herein specifically provided, each accounting
term used herein shall have the meaning given to it under generally accepted
accounting principles, consistently applied.
(b) In addition to terms defined elsewhere in this Agreement, as used
herein, the following terms shall have the following meanings (such meanings to
be equally applicable to both the singular and plural forms of the terms
defined):
Affiliate: with respect to any Person, any Person which, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. The term "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
Agreement: this Asset Purchase Agreement
Assets: as defined in Section 1.1.
Assigned Contracts: as defined in Section 4.13.
Claims and Encumbrances: liens, mortgages, security interests, pledges,
charges, agreements, restrictions, easements, claims, defects in title and
encumbrances of any kind or description.
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Closing: as defined in Section 3.1.
Closing Date: as defined in Section 3.1.
Company: as defined in the Preamble to this Agreement.
Code: the Internal Revenue Code of 1986, as amended.
Consulting Agreement: as defined in Section 3.3.
Excluded Assets: as defined in Section 1.2.
Indemnified Party: as defined in Section 11.1.
Indemnifying Party: as defined in Section 11.1.
Intellectual Property: as defined in Section 4.8.
Inventory: as defined in Section 1.1.
Permits: as defined in Section 1.1.
Person: any natural person, firm, partnership, association,
corporation, trust, public body or governmental entity.
Purchaser: as defined in the Preamble to this Agreement.
Stockholder: as defined in Section 3.3.
11. Indemnification, Survival.
11.1 Indemnification.
(a) From and after the Closing, the Company will indemnify the
Purchaser, its officers, directors and stockholders, against, and hold the
Purchaser, its officers, directors and stockholders, harmless from, any and all
liability, damage, deficiency, loss, cost or expense (including reasonable
attorneys' fees and expenses) that are based upon or that arise out of, subject
to Sections 11.2 and 11.3 hereof, (i) any misrepresentation or breach of any
warranty or agreement made by the Company herein, (ii) any obligation, debt or
liability of the Company to the extent that the same is not expressly assumed
herein by Purchaser, (iii) the ownership of the Assets and operation of the
Company's business on or prior to the Closing Date, or (iv) failure to comply
with any applicable bulk transfer laws.
(b) The Purchaser will indemnify the Company, its officers, directors
and stockholders,
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against, and hold the Company, its officers, directors and stockholders,
harmless from, any and all liability, damage, deficiency, loss, cost or expense
(including reasonable attorneys' fees and expenses) that are based upon or that
arise out of, subject to Sections 11.2 and 11.3 hereof, (i) the material breach
or default of any representation, warranty or agreement made by the Purchaser
herein, or (ii) without limiting the provisions of Section 2.3 (including the
limitations and exclusions contained therein), the ownership of the Assets and
operation of the Business from and after the Closing Date.
(c) Each party entitled to indemnification under this Agreement (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
becomes aware of any claim by a third party for which indemnification is
available hereunder, the delivery of which notice shall require the Indemnifying
Party (at its expense) to assume the defense of any claim or any litigation
resulting therefrom, provided that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or litigation, shall be reasonably
satisfactory to the Indemnified Party, and the Indemnified Party may participate
in such defense, but only at such Indemnified Party's expense, and provided
further, that the omission by any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its indemnification
obligations under this Agreement except to the extent that the omission results
in a failure of actual notice to the Indemnifying Party and such Indemnifying
Party is irreparably damaged as a result of the failure to give notice. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to the entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability with respect to such claim or litigation.
Notwithstanding the foregoing, the Indemnified Party shall have the right at all
times to take over and assume control of the defense, settlement, negotiations
or lawsuit relating to any claim or demand, provided, however, that if the
Indemnified Party does so take over and assume control, the amount of the
indemnity by the Indemnifying Party shall be limited to the amount which the
Indemnifying Party has immediately prior to such time indicated it would be
willing to pay to adjust and settle such claim or demand. In the event that the
Indemnifying Party does not accept the defense of any matter as above provided,
the Indemnified Party shall have the full right to defend against any such claim
or demand, and shall be entitled to settle or agree to pay in full such claim or
demand, in its sole discretion, and all costs and expenses relating thereto
(including without limitation legal fees and expenses) shall be borne by the
Indemnifying Party. In any event, the Company, the Stockholder and the Purchaser
shall cooperate in the defense of such action and the records of each shall be
available to the other with respect to such defense.
11.2. Time and Manner of Claims.
The Purchaser, on one hand, the Company and the Stockholder, on the
other hand, shall be liable for damages arising from its or his material
misrepresentations or material breaches of its or his representations and
warranties only to the extent that notice of a claim therefor is asserted by the
other in writing and delivered. Any notice of a claim by reason of any of the
representations and warranties contained in this Agreement shall state the
representation or warranty with respect to which the claim is asserted. The
representations, warranties, agreements and indemnities contained in this
Agreement shall survive the execution and delivery of this Agreement, any
examination by or on behalf of such parties,
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and the completion of the transactions contemplated herein.
11.3 Offset Procedures.
In the event that the Purchaser has a claim against the Company
arising under Section 11.1 of this Agreement, regardless of whether such claim
or any portion thereof is a Matured Claim or a Contingent Claim (as hereinafter
defined), the Purchaser shall be entitled to offset the entire amount of such
claim against any amounts due to the Company hereunder or under the License
Agreement to the Stockholder pursuant to the Consulting Agreement. Such right of
offset shall be exercised in the following manner:
(a) The Purchaser shall first send to the Company or the Stockholder a
notice (the "Offset Notice") specifying the amount of the Purchaser's claim,
specifying whether or the extent to which such claim is mature, non-contingent
and fixed in amount (a "Matured Claim") or not yet matured, contingent or not
fixed in amount (a "Contingent Claim"; Matured or Contingent Claims being herein
generally called "Claims"), indemnifying, to the extent applicable, the
provisions hereof asserted to give rise to the Claim and briefly identifying the
facts which constitute the basis of such obligation or Claim.
(b) Within thirty (30) days after the Purchaser delivers the Offset
Notice to the Company or the Stockholder, the Company or the Stockholder shall
deliver to the Purchaser a written notice (the "Dispute Notice") identifying in
reasonable detail which Claims, or parts thereof, the Company or the Stockholder
questions in good faith or does not question in good faith, as the case may be,
and the reasons therefor. If within thirty (30) days after giving the Offset
Notice, the Purchaser does not receive a dispute Notice from the Company or the
Stockholder, the Purchaser shall be entitled to offset the amount of any such
Claim against payments due from the Purchaser to the Company hereunder or under
the License Agreement or to the Stockholder pursuant to the Consulting
Agreement, in any order that the Purchaser may determine in its sole discretion,
provided, that if such Claim is later defeated, defensed, settled or otherwise
resolved for a cost to the Purchaser (the "Claim Resolution Amount") which is
less than the amount offset with respect to such Claim. then the Purchaser shall
promptly remit to the Company or the Stockholder, as the case may be, the amount
of the difference between the aggregate amount of such offset and the Claim
Resolution Amount.
(c) If within thirty (30) days after giving the Offset Notice, the
Purchaser receives a Dispute Notice from the Stockholder, then (i) with respect
to any portion of a Claim not questioned, the provisions of subsection (b) above
shall apply, and (ii) with respect to any portion of a Claim questioned, the
Purchaser shall be entitled to provisionally offset the amount thereof against
payments due from the Purchaser to the Company hereunder or under the License
Agreement or to the Stockholder pursuant to the Consulting Agreement, in any
order that the Purchaser may determine in its sole discretion, by holding any
such amount separate from its other assets in any interest-bearing escrow
account.
(d) Any amounts questioned and held separate from its other assets by
the Purchaser pursuant to subsection (c)(ii) shall be so separated from such
other assets at the time such amount is otherwise due to the Company under this
Agreement or under the License Agreement or to the Stockholder pursuant to the
Consulting Agreement, and so held until the Claim in respect thereof is
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resolved by agreement of the parties or an order of a court of competent
jurisdiction directs payment of the disputed amount.
(e) Upon resolution of a Claim in accordance with the provisions of
subsection (d), any cash amount which has been retained and held separate
pursuant to subsection (c)(ii) shall thereupon be promptly delivered by the
Purchaser to the Company or the Stockholder, as the case may be, to the extent
required in accordance with the terms of the resolution of such Claim, and to
the extent not so required to be so paid over to the Company or the Stockholder
shall be retained by the Purchaser in settlement of its Claim, and all interest
or other income, if any, which has been earned with respect to any such cash
amount shall be allocated between the Company or the Stockholder, on one hand,
the Purchaser, on the other hand, in proportion to their respective entitlements
to such sum. The Purchaser, on one hand, and the Company and the Stockholder, on
the other hand, shall have no other responsibility or liability to account for
any interest with respect to any amount so withheld or otherwise with respect to
any claim.
12. General.
12.1 Consent to Jurisdiction and Waivers.
The Company and the Stockholder irrevocably consent that any legal
action or proceeding against it or him under, arising out of or in any manner
relating to, this Agreement, the License Agreement or the Consulting Agreement,
of or any other document delivered in connection herewith, may be brought in any
court of the State of New York located within the Southern of or Eastern
District of New York of or in the United States District Court for the Southern
of or Eastern District of New York. The Company and the Stockholder by the
execution and delivery of this Agreement, expressly and irrevocably consent and
submit to the personal jurisdiction of any of such courts in any such action of
or proceeding. The Company and the Stockholder further irrevocably consent to
the service of any complaint, summons, notice of or other process relating to
any such action of or proceeding by delivery thereof to it by hand of or by any
other manner provided for in Section 12.4. The Company and the Stockholder
hereby expressly and irrevocable waive any claim of or defense in any such
action of or proceeding based on any alleged lack of personal jurisdiction,
improper venue of or forum non conveniens of or any similar basis. Nothing in
this Section 12.1 shall affect of or impair in any manner of or to any extent
the right of the Purchaser to commence legal proceedings of or otherwise proceed
against the Company and/of or the Stockholder in any jurisdiction of or to serve
process in any manner permitted by law. The Company and the Stockholder hereby
waive their rights, if any, to trial by jury.
12.2 Expenses.
Subject to the terms of Section 11 hereof, each of the parties hereto
shall bear its own expenses, costs and fees (including attorneys' and auditors'
fees and expenses) in connection with the transactions contemplated hereby,
including the preparation and execution of this Agreement and compliance
herewith, whether of or not the transactions contemplated hereby shall be
consummated. All such expenses, costs and fees to be borne by the Company shall
be the obligation of the Company and shall not be assumed by Purchaser nor
reduce the Assets being transferred hereunder.
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12.3 Severability.
If any provision of this Agreement, and, in particular, if any
provision of the covenant not to compete, shall be held of or deemed to be of or
shall, in fact, be inoperative of or unenforceable as applied in any particular
case because it conflicts with any other provision of or provisions hereof of or
any constitution of or statute of or rule of public policy, of or for any other
reason, such circumstances shall not have the effect of rendering the provision
in question inoperative of or unenforceable in any other case of or
circumstance, of or of rendering any other provision of or provisions herein
contained invalid, inoperative, of or unenforceable to any extent whatever. The
invalidity of any one of or more phrases, sentences, clauses, sections, of or
subsections of this Agreement shall not affect the remaining portions of this
Agreement.
12.4. Notices.
All notices, consents, requests, instructions, approvals and other
communications provided for herein and all legal process in regard hereto shall
be validly given, made or served, if in writing and delivered personally of or
sent by registered of or certified mail (return receipt requested), postage
prepaid, or by nationally recognized overnight courier service or by facsimile
transmission electronically confirmed during normal business hours, (i) if to
Purchaser at 00 Xxxxxxx Xxxxxx, #0, Xxxxxxxxx, Xxx Xxxxxx 00000, Fax No.: (201)
000-0000. Attn..: Xxxxx X. Cinnamon. with a copy to Blau, Kramer, Wactlar &
Xxxxxxxxx, P.C., at 000 Xxxxxxx Xxxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxx Xxxx 00000
Attn.: Xxxx X. Xxxxxxx, Esq., Fax No.: (000) 000-0000; and (ii) if to the
Company or the Stockholder at 0 Xxxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000,
Fax No.: (000) 000-0000, of or, in each case, at such other address as may be
specified in writing to the other parties.
12.5. Waiver.
All the parties hereto may waive compliance by any party with any of
the provisions of this Agreement. No waiver of any provisions shall be construed
as a waiver of any other provision. Any waiver must be in writing.
12.6. Amendment.
This Agreement may not be amended except by an instrument in writing
duly executed and delivered on behalf of each of the parties hereto.
12.7. Publicity.
Neither the Purchaser, the Company nor the Stockholder shall issue any
press release of or public announcement of any kind concerning the transactions
contemplated by this Agreement without consulting with the other parties hereto;
provided, however, that the Purchaser shall be permitted without prior
consultation with the Company of or the Stockholder to issue such announcements
in each case as may be required by applicable law of or stock exchange of or
securities self-regulatory organization rules
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of or regulations applicable to the Purchaser, and the Company and the
Stockholder will cooperate with the Purchaser in furnishing any documents of or
information necessary in connection therewith.
12.8. Joint and Several Obligations.
All representations, warranties, covenants and agreements of the
Company and/of or the Stockholder contained herein shall be the joint and
several representations, warranties, covenants and agreements of the Company and
the Stockholder.
12.9. Miscellaneous.
The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning of or interpretation of this
Agreement. This Agreement, the License Agreement and the Consulting Agreement
constitute the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, and all of which shall constitute one
and the same instrument. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of New
York, applicable to contracts made and to be performed in New York. This
Agreement shall be binding upon and inure to the benefit of the successors and
assigns of the parties hereto. The rights and obligations contained in this
Agreement are solely for the benefit of the parties hereto and are not intended
to benefit of or be enforceable by any other party, under the third party
beneficiary doctrine of or otherwise.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
ALLEGRO NEW MEDIA, INC.
By: /s/Xxxx X. Xxxxxxxxx
-------------------------------------------
Xxxx X. Xxxxxxxxx
Vice President & Chief Executive Officer
BIZED, INC.
By: /s/Xxxxxxxx X. Xxxxxxx, Xx.
-------------------------------------------
Xxxxxxxx X. Xxxxxxx, Xx.
President
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Exhibits and Schedules
Exhibits
A - License Agreement
B - Consulting Agreement
Schedules
2.2 - Allocation of Purchase Price
4.4 - Conduct of Business
4.6 - Personal Property
4.7 - Contracts
4.8 - Intellectual Property
4.9 - Customer and Supplier Relations
4.10 - Litigation, Compliance
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