EXHIBIT 10.23
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
AMERICAN GUIDANCE SERVICE, INC.
("PARENT")
XXXXX ACQUISITION CO., LLC
("BUYER")
and
XXXXX ENTERPRISES, INCORPORATED
("SELLER")
and
XXXXXXX XXXX a/k/a XXXXX XXXX
("SHAREHOLDER")
and
XXXXXXX XXXX
("XXXX")
Dated as of May ___, 2001
TABLE OF CONTENTS
Page
ARTICLE 1 PURCHASE AND SALE OF ASSETS.........................................................................1
1.1 Asset Purchase......................................................................................1
1.2 Excluded Assets.....................................................................................2
1.3 Consideration for Assets............................................................................2
1.4 Payment of Purchase Price...........................................................................3
1.5 Non-Assumption of Liabilities.......................................................................3
1.6 Limited Assumed Liabilities.........................................................................4
1.7 Sales, Use and Excise Taxes.........................................................................4
ARTICLE 2 CONDITIONS..........................................................................................4
2.1 Conditions to Buyer's Obligation....................................................................4
2.2 Conditions to Seller's Obligations..................................................................5
2.3 Termination of Agreement............................................................................6
ARTICLE 3 CONDUCT AND TRANSACTIONS OF BUSINESS PRIOR TO CLOSING...............................................7
3.1 Access to Information...............................................................................7
3.2 Restrictions in Operation of the Business...........................................................7
3.3 General.............................................................................................8
3.4 Notice of Developments..............................................................................8
3.5 No-Shop.............................................................................................8
ARTICLE 4 REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SELLER, SHAREHOLDER AND XXXX..........................8
4.1 Organization and Corporate Power....................................................................8
4.2 Authorization.......................................................................................8
4.3 Title to Assets.....................................................................................8
4.4 Licenses and Permits................................................................................9
4.5 Inventory; Tangible Personal Property...............................................................9
4.6 Intellectual Property...............................................................................9
4.7 Insurance..........................................................................................10
4.8 Litigation, Adverse Claims and Related Matters.....................................................10
4.9 Laws and Regulations...............................................................................10
4.10 Breaches of Contracts; Required Consents...........................................................10
4.11 Brokerage..........................................................................................11
4.12 Creditors..........................................................................................11
4.13 No Default or Legal Restrictions...................................................................11
4.14 No Insolvency......................................................................................11
4.15 Environmental Protection...........................................................................11
4.16 Financial Statements...............................................................................11
4.17 Effect of the Transaction..........................................................................11
4.18 Complete Assets....................................................................................11
4.19 Brokerage..........................................................................................12
4.20 Completeness of Disclosure.........................................................................12
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ARTICLE 5 REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF PARENT AND BUYER.....................................12
5.1 Corporate Organization and Power...................................................................12
5.2 Authorization......................................................................................12
5.3 No Violation.......................................................................................12
5.4 Brokerage..........................................................................................12
5.5 Creditors..........................................................................................13
5.6 No Insolvency......................................................................................13
ARTICLE 6 INDEMNIFICATION....................................................................................13
6.1 Indemnification by Seller, Shareholder and Xxxx....................................................13
6.2 Indemnification by Buyer...........................................................................13
6.3 Cooperation, Notice and Opportunity to Defend......................................................14
ARTICLE 7 OTHER AGREEMENTS...................................................................................14
7.1 Escrow Agreement...................................................................................14
7.2 Expenses...........................................................................................14
7.3 Confidentiality....................................................................................15
7.4 Public Disclosures.................................................................................15
ARTICLE 8 CLOSING............................................................................................15
8.1 Closing............................................................................................15
8.2 Documents to be Delivered by Seller................................................................15
8.3 Documents Delivered by Buyer.......................................................................16
ARTICLE 9 POST CLOSING OBLIGATIONS...........................................................................16
9.1 Environmental Obligations..........................................................................16
9.2 Further Documents and Assurances...................................................................17
9.3 Collection of Seller's Receivables.................................................................17
9.4 Dissolution of Seller..............................................................................18
9.5 Review of Closing Balance Sheet....................................................................18
ARTICLE 10 NONCOMPETITION, NON-DISCLOSURE, NON-SOLICITATION...................................................19
10.1 Noncompetition.....................................................................................19
10.2 Geographical Extent of Covenant....................................................................19
10.3 Tolling of Restricted Period.......................................................................19
10.4 Limitation on Covenant.............................................................................19
10.5 Nonsolicitation; Non-hire and Noninterference......................................................19
10.6 Indirect Competition or Solicitation...............................................................20
10.7 Reasonableness of Restrictions.....................................................................20
10.8 Nondisclosure......................................................................................20
10.9 "Business Secrets".................................................................................20
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ARTICLE 11 MISCELLANEOUS......................................................................................21
11.1 Amendment and Waiver...............................................................................21
11.2 Notices............................................................................................21
11.3 Assignment.........................................................................................22
11.4 No Strict Construction.............................................................................23
11.5 Captions...........................................................................................23
11.6 Complete Agreement.................................................................................23
11.7 Counterparts.......................................................................................23
11.8 Governing Law......................................................................................23
11.9 Survival...........................................................................................23
11.10 Interpretation.....................................................................................23
11.11 Schedules and Exhibits.............................................................................23
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LIST OF DEFINED TERMS
Section Where Found
-------------------
Accounts Payable..................................................Section 8.2(e)
Artwork...........................................................Section 1.1(d)
Business..............................................................Background
Business Secrets....................................................Section 10.9
Buyer....................................................................Preface
Claims............................................................Section 1.5(c)
Closing..............................................................Section 8.1
Closing Balance Sheet................................................Section 9.5
Closing Date.........................................................Section 8.1
Collection Period.................................................Section 9.3(a)
Competing Business Activity......................................Section 10.1(b)
Computer Software.................................................Section 4.6(b)
Contracted Employees..............................................Section 2.1(g)
Contracts.........................................................Section 1.1(b)
Damages...........................................................Section 6.1(a)
Employment Letters................................................Section 2.1(g)
Escrow...............................................................Section 7.1
Escrow Agreement.....................................................Section 7.1
Excluded Assets......................................................Section 1.2
Financial Statements................................................Section 4.16
Indemnifying Party...................................................Section 6.3
Inventory.........................................................Section 1.1(c)
Lease.............................................................Section 2.1(f)
Liabilities..........................................................Section 1.5
Parent...................................................................Preface
Phase I Report....................................................Section 2.1(m)
Premises.............................................................Section 9.1
Property.............................................................Section 9.1
Purchased Assets.....................................................Section 1.1
Purchase Price.......................................................Section 1.3
Restricted Period................................................Section 10.1(a)
Seller...................................................................Preface
Seller's Receivables..............................................Section 9.3(a)
Shareholder..............................................................Preface
Shareholder Consulting Agreement..................................Section 2.1(d)
Source Code.......................................................Section 1.1(e)
Titles............................................................Section 1.1(a)
Trademarks and Licenses...........................................Section 4.6(a)
Xxxx.....................................................................Preface
Xxxx Consulting Agreement.........................................Section 2.1(e)
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT made as of this ___th day of May, 2001, by and between
American Guidance Service, Inc., a Minnesota corporation with offices located at
0000 Xxxxxxxx Xxxx, Xxxxxx Xxxxx, XX 00000 ("Parent"), Xxxxx Acquisition Co.,
LLC, a Delaware limited liability company ("Buyer") and Xxxxx Enterprises,
Incorporated, a Texas corporation with offices located at 0000 Xxxxxx Xxxxx
Xxxxx, Xxxxxx, XX 00000-0000 ("Seller"), Xxxxxxx Xxxx, a/k/a Xxxxx Xxxx, an
individual residing at 0000 Xxxxx Xxxxxxx, Xxxxxxxx, Xxxxx 00000 ("Shareholder")
and Xxxxxxx Xxxx, an individual residing at 0000 Xxxxx Xxxxxxx, Xxxxxxxx, Xxxxx
00000 ("Xxxx").
BACKGROUND
A. Seller is engaged in the business (the "Business") of creating,
publishing and selling skill assessment test preparation and other educational
materials including the titles, software and other materials identified in
Schedule 1.1(a).
B. Seller desires to sell and transfer to Buyer and Buyer desires to
purchase and acquire from Seller, the titles and certain other assets of Seller
as described in this Agreement, upon the terms, conditions and provisions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties, agreements and conditions herein, and other good
and valuable consideration, the receipt and the sufficiency of which are
acknowledged, the parties agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1. Asset Purchase. Subject to the terms and conditions set forth in
this Agreement, Buyer will purchase from Seller, and Seller will sell, transfer,
assign, convey and deliver to Buyer on the Closing Date (as defined in Section
8.1), all of Seller's right, title and interest in and to the assets used in or
relating to the Business (other than the Excluded Assets), including without
limitation the following assets of Seller (the "Purchased Assets"):
(a) The titles, software and other materials, published and
unpublished, identified on Schedule 1.1(a) hereto (the "Titles")
including all documents, data and information used in their
publication;
(b) The author and/or reseller contracts, license agreements,
assignment agreements, distribution agreements, sales agreements, put
rights agreements and all other agreements related to, necessary for or
arising in connection with the Business, which are all identified on
Schedule 1.1(b) (the "Contracts"), and all other intangible assets,
including without limitation the goodwill of the Business, informal
relations with customers, contractors, authors, resellers and suppliers
and rights relating to the exclusive use of the name "Xxxxx
Enterprises";
(c) The inventory identified on Schedule 1.1(c) (the
"Inventory");
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(d) All available artwork, film, plates and all other
reproductive materials (the "Artwork");
(e) The computer program source code, object code,
documentation, technical manuals relating to the computerized versions
of the Titles, any and all proprietary rights and information to all of
the foregoing (the "Source Code");
(f) All copyrights to the Titles, Artwork and any other
Purchased Asset;
(g) All trademark, service xxxx, trade name and all other
intellectual or proprietary rights, including without limitation all
common law rights, to the Titles, Artwork and all other Purchased
Assets;
(h) All sales support and promotional materials, advertising
materials and production, sales and marketing records relating to the
Titles;
(i) All customer lists or similar records of all sales and
potential sales of the Titles (together with the right to solicit and
service said customers) and files, a detailed sales history of products
and quantities sold as identified on Schedule 1.1(i), all supplier
lists, manuals, forms, computer programs and like data respecting the
Business;
(j) Author advances, if any, relative to the Titles as
identified in Schedule 1.1(j);
(k) All Trademarks and Licenses as defined in Section 4.6(a);
(l) All Computer Software as defined in Section 4.6(b);
(m) All unfilled sales orders, including back orders, for the
Titles, which are identified in Schedule 1.1(m); and
(n) All furniture, fixtures, equipment, machines and other
tangible assets which are owned by Seller and used in connection with
the Business as of the date of this Agreement, including but not
limited to those set forth on Schedule 1.1(n).
Coincident with the above sale and transfer, and upon payment of the
purchase price at Closing as contemplated by Section 1.4 of this Agreement,
Seller shall deliver to Buyer possession of the Purchased Assets.
1.2 Excluded Assets. The following assets (the "Excluded Assets") and
the assets listed on Schedule 2.1 shall not be sold, transferred, conveyed or
delivered to Buyer pursuant to this Agreement: (i) cash, including bank accounts
of Seller, (ii) life insurance policies and (iii) except as provided in Article
9 below, accounts receivable of the Business arising prior to the Closing Date;
provided, however, that the Excluded Assets shall not include more than Seven
Hundred Fifty Thousand Dollars ($750,000) in accounts receivables.
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1.3 Consideration for Assets. In consideration of and in exchange for
the sale of the Purchased Assets, Buyer shall pay to Seller the following (the
"Purchase Price"):
(a) Eighty Thousand Dollars ($80,000) for tangible assets as
set forth on Schedule 1.3(a).
(b) Five Million Nine Hundred Twenty Thousand Dollars
($5,920,000) for goodwill as set forth on Schedule 1.3(b).
1.4 Payment of Purchase Price. At Closing, Buyer shall pay Seller, in
immediately available U.S. funds, the Purchase Price less Four Hundred Thousand
Dollars ($400,000) which shall be deposited pursuant to the terms of the Escrow
Agreement described in Section 7.1 below.
1.5 Non-Assumption of Liabilities. Despite anything to the contrary
contained in this Agreement, Buyer shall not assume, purchase, accept nor
undertake any claims, promises, liabilities, duties, obligations, warranties,
guarantees or undertakings of Seller or any officer, director, employee, agent
or parent corporation of Seller, of any kind or nature whatsoever, whether
fixed, contingent or accrued, matured or not matured, known or unknown,
determined or undetermined, due or not yet due pertaining in any manner to the
Business or the Purchased Assets including, without limitation (collectively,
the "Liabilities"):
(a) any federal, state or local taxes, fees or charges based
upon or measured by (i) Seller's income or profits, (ii) sales, excise
or use taxes associated with Seller' business, or (iii) the sale,
assignment or transfer of the Purchased Assets, all through the Closing
Date;
(b) any obligation for accounting, legal or other professional
fees which Seller incurs relative to the consummation of the
transactions contemplated herein;
(c) any costs, expenses, charges, assessments, claims and
liabilities (collectively any "Claims") resulting from any
investigation, action or litigation or threats of investigation or
litigation or other action arising out of or in connection with the
Purchased Assets or the Business prior to and as of the Closing Date,
notwithstanding that any such Claims are not revealed, disclosed,
discovered, asserted or resolved until after the Closing Date;
(d) except as set forth in Schedule 1.5(d), any obligations,
duties, liabilities, representations or agreements with respect to any
outstanding warranties of Seller, whether express or implied, or
product liability, whether express or implied, in connection with the
Business through the Closing Date;
(e) any obligation respecting intercompany payables,
receivables or any other intercompany transactions arising prior to the
Closing Date;
(f) any obligation or liability relating to or in connection
with the employees of the Seller, including, but not limited to, any
liability for accrued vacation or severance pay;
(g) any obligation or account payable of the Seller arising in
connection with or relating to the Business on or prior to the Closing
Date; or
(h) any costs, expenses and liabilities with respect to any
environmental matters including penalties for non-compliance with state
and federal environmental protection statutes or regulations or costs
of remediation of any environmental damage.
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1.6 Limited Assumed Liabilities. The only liabilities assumed by the
Buyer are the items or matters in listed in Schedule 1.6.
1.7 Sales, Use and Excise Taxes. Seller shall be responsible for
payment for any sales, use or excise taxes assessable with respect to the sale,
assignment or transfer of the Purchased Assets contemplated in this Agreement.
ARTICLE 2
CONDITIONS
2.1 Conditions to Buyer's Obligation. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) The representations and warranties set forth in Article 4
or in any exhibit, schedule or document delivered to Buyer pursuant to
this Agreement will be true and correct in all respects at and as of
the Closing as though then made and as though the Closing Date was
substituted for the date of this Agreement;
(b) Seller, Shareholder and Xxxx will have performed and
complied with, in all respects, all of the conditions, covenants and
agreements required to be performed and complied with under this
Agreement;
(c) All governmental filings, authorizations and approvals or
consents of third parties that are required, if any, for the
consummation of the transactions contemplated by this Agreement will
have been duly made and obtained;
(d) Seller and Shareholder shall have executed and delivered
the Consulting Agreement in the form of Exhibit A (the "Shareholder
Consulting Agreement");
(e) Seller and Xxxx shall have executed and delivered the
Consulting and Agreement in the form of Exhibit B (the "Xxxx Consulting
Agreement");
(f) Seller, Shareholder and Xxxx shall have executed and
delivered the Lease Agreement in the form of Exhibit C (the "Lease");
(g) Each of the employees identified on Schedule 2.1(g) (the
"Contracted Employees") shall have executed and delivered to the Buyer
an Employment Letter substantially in the form attached as Exhibit D;
(h) No action or proceeding before any court or government
body will be pending or threatened, including without limitation
actions or proceedings pending or threatened relating to any of the
Titles, wherein an unfavorable judgment, decree or order would prevent
the carrying out of this Agreement or any of the transactions or
transfers of Purchased Assets contemplated by this Agreement, declare
unlawful the transactions contemplated by this Agreement, cause such
transactions to be rescinded or in any way materially interfere with
the transfer of any of the Titles or any of the Purchased Assets, nor
shall there be any judgement rendered which has the effect of doing any
of the foregoing;
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(i) All proceedings, corporate or otherwise, to be taken by
Seller in connection with the consummation of the Closing and the other
transactions contemplated by this Agreement and all documents required
to be delivered by Seller to effect the transactions contemplated by
this Agreement reasonably requested by Buyer will be satisfactory in
form and substance to Buyer;
(j) The Buyer's board of directors shall have authorized the
officer(s) of Buyer to close the transactions contemplated by the
Agreement;
(k) All parties shall have executed and delivered the Escrow
Agreement in the form attached as Exhibit E;
(l) There has been no material adverse change in amount,
nature or value of the Purchased Assets or material damage sustained to
the general reputation of the Business or its brands and marks in the
marketplace; and
(m) Buyer, in its sole discretion, shall be reasonably
satisfied that there are no material adverse findings of environmental
hazards or environmental liabilities identified in the Phase I
environmental report (the "Phase I Report") on the premises identified
in the Lease. Such determination shall be made at least ten (10) days
prior to Closing Date by written notice to Seller or this condition is
waived.
Except as provided in Section 2.1(m), any condition specified in this
Section 2.1 may be waived by Buyer provided that no such waiver will be
effective unless it is set forth in writing executed by Buyer.
2.2 Conditions to Seller's Obligations. The obligation of Seller to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) The representations and warranties set forth in Article 5
hereof or in any document delivered to Seller pursuant to this
Agreement will be true and correct, in all respects, at and as of the
Closing as though then made and as though the Closing Date was
substituted for the date of this Agreement;
(b) Buyer will have performed and complied with, in all
respects, all the conditions, covenants and agreements required to be
performed and complied with by it under this Agreement;
(c) All governmental filings, authorizations and approvals or
consents of third parties that are required, if any, by Buyer for the
consummation of the transactions contemplated by this Agreement will
have been duly made and obtained as of the Closing Date;
5
(d) No action or proceeding before any court or government
body will be pending or threatened against Buyer wherein an unfavorable
judgment, decree or order would prevent the carrying out of this
Agreement or any of the transactions contemplated hereby, declare
unlawful the transactions contemplated by this Agreement or cause such
transactions to be rescinded;
(e) All proceedings, corporate or otherwise, to be taken by
Buyer in connection with the consummation of the Closing and the other
transactions contemplated by this Agreement and all documents required
to be delivered by Buyer to effect the transactions contemplated by
this Agreement reasonably requested by Seller will be reasonably
satisfactory in form and substance to Seller;
(f) Buyer and Shareholder shall have executed and delivered
the Shareholder Consulting Agreement;
(g) Buyer and Xxxx shall have executed and delivered the Xxxx
Consulting Agreement;
(h) The Seller's board of directors shall have authorized the
officer(s) of Seller to close the transactions contemplated by the
Agreement;
(i) Buyer, Shareholder and Xxxx shall have executed and
delivered the Lease;
(j) All of the parties shall have executed and delivered the
Escrow Agreement; and
(k) Confirmation shall have been received by Seller from its
bank that good funds have been received on the Closing Date in Seller's
account representing the portion of the Purchase Price referred to in
Section 1.4.
Any condition specified in this Section 2. 2 may be waived by Seller
provided that no such waiver will be effective unless it is set forth in a
writing executed by Seller.
2.3 Termination of Agreement. This Agreement and the transactions
contemplated in this Agreement may be terminated at or prior to the Closing Date
(provided that no party may terminate this Agreement due to a delay in Closing
if such party's failure to fulfill its obligations under this Agreement shall
have been a reason for delay) as follows:
(a) By mutual written consent of each party hereto;
(b) By Buyer pursuant to written notice if Seller has failed
in any material respect to satisfy on or before the Closing Date all of
the conditions to Closing set forth in Section 2.1 including
cooperation with due diligence as described in this Agreement;
(c) By Buyer pursuant to written notice if Buyer is not
satisfied with the results of its continuing business, legal and
financial due diligence including the results of the Phase I Report;
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(d) By Seller pursuant to written notice if Buyer has failed
in any material respect to satisfy on or before the Closing Date any of
the conditions to Closing set forth in Section 2.2; or
(e) If the transaction has not closed by May 31, 2001, which
may be extended by written agreement of the parties.
ARTICLE 3
CONDUCT AND TRANSACTIONS OF BUSINESS PRIOR TO CLOSING
3.1 Access to Information. During the period prior to the Closing,
Seller shall permit officers and representatives of Buyer including without
limitation its counsel, accountants or other authorized representatives, full
access during normal business hours to all of the property, books, contract
commitments, corporate and other records relating to the Business and/or the
Purchased Assets and shall furnish to Buyer during such period all such
information concerning the Business and/or the Purchased Assets as Buyer
reasonably may request and shall allow Buyer a full opportunity to make a
complete investigation of the Business.
3.2 Restrictions in Operation of the Business. Seller represents and
covenants that during the period from the date of this Agreement to the Closing
(except as Buyer otherwise has consented in writing):
(a) Seller will timely pay and discharge all bills and
monetary obligations arising in the ordinary course of business and
timely and properly perform all of its obligations and commitments
under all existing contracts and agreements pertaining to the Business
and the Purchased Assets, except as to amounts or obligations which
Seller contests in good faith or as to which it advises Buyer in
writing prior to Closing;
(b) Seller shall carry on the Business in the ordinary course
of business consistent with past practices, including customary capital
spending and product development, will preserve intact the present
organization of the Business, and will use all reasonable efforts to
keep available the employees of the Business and to preserve
relationships with customers and the goodwill of the Business, and
Seller shall not enter into any agreement or purchase any asset in
respect of the Business outside the ordinary course of business without
the prior consent of Purchaser;
(c) Seller shall not reduce any insurance coverage affecting
any of the Purchased Assets;
(d) Unless otherwise consented to by Buyer, Seller shall use
its reasonably best business efforts to preserve the Business and the
Purchased Assets and not to impair relationships with suppliers,
customers and others in connection with the Business or the Purchased
Assets; and
(e) Seller shall not agree to take any action referred to in
this Section 3.2 in the future.
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3.3 General. Buyer, Seller, Shareholder and Xxxx will each use its, his
and her reasonable best efforts to take all action and to do all things
necessary, proper, or advisable in order to consummate and make effective the
transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the Closing conditions set forth in Article 2). Neither Buyer,
Seller, Shareholder nor Xxxx shall take any action that would, or that could be
expected to, result in any of the conditions to Closing to not be satisfied.
3.4 Notice of Developments. Buyer, Seller, Shareholder and Xxxx will
each give prompt written notice within 48 hours to the other parties of any
material adverse development causing a breach of any of its, his or her own
representations and warranties in Articles 4 and 5. No disclosure by any party
pursuant to this Section 3.4, however, shall be deemed to amend or supplement
any schedule or to prevent or cure any misrepresentation, breach of warranty, or
breach of covenant.
3.5 No-Shop. Seller agrees that prior to the termination of this
Agreement by Buyer pursuant to Section 2.3, neither Seller nor any of Seller's
representatives or agents will solicit any offer, inquiry or proposal from any
other person with respect to the sale of the Business or the Purchased Assets.
If Seller receives an unsolicited offer for the Business or the Purchased
Assets, Seller shall promptly inform Buyer of the offer, including without
limitation all material terms, and if such offer is in writing, shall provide
Buyer with a copy of the offer.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
OF SELLER, SHAREHOLDER AND XXXX
Seller, Shareholder and Xxxx each jointly and severally hereby
represent and warrant the following to Buyer with the intention that Buyer may
rely upon the same and acknowledge that the same shall be true on the date
hereof and as of the Closing Date and shall survive the Closing of this
transaction and shall not merge into any instruments delivered at Closing:
4.1 Organization and Corporate Power. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas and all jurisdictions in which it is doing business or has facilities, and
has all requisite power and authority and all material authorizations, licenses
and permits necessary to own and operate the Purchased Assets and to conduct the
Business as now conducted.
4.2 Authorization. Seller has full legal right, power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated by this Agreement. The execution, delivery and performance of this
Agreement have been duly approved by all necessary action of Seller, Shareholder
and Xxxx. This Agreement has been duly authorized, executed and delivered by
Seller and constitutes a valid and binding obligation of Seller, Shareholder and
Xxxx, enforceable in accordance with its terms.
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4.3 Title to Assets. Seller is the owner of the Purchased Assets and,
as of the Closing, Seller will own good and marketable title to the Purchased
Assets free and clear of all liens, charges, purchase rights, claims, pledges,
mortgages, security interests, encumbrances, or other limitations or
restrictions of any kind or nature whatsoever, with the exception of liens for
sales taxes not yet due.
4.4 Licenses and Permits. Seller possesses all permits, licenses,
approvals and notifications, governmental or otherwise necessary to operate the
Business.
4.5 Inventory; Tangible Personal Property. The Inventory listed on
Schedule 1.1(c) will be, as of the Closing Date, good, merchantable and saleable
at customary prices in the ordinary course of business. The other tangible
personal property listed on Schedule 1.1(n) to be transferred under this
Agreement is in good operating condition and repair, with only reasonable
ordinary wear and tear excepted, and is suitable for the use to which such
personal property has been put in the Business. Seller hereby assigns to Buyer
as of the Closing Date, to the extent possible, any and all warranties covering
such personal property existing as of the Closing Date.
4.6 Intellectual Property.
(a) Trademarks and Copyrights. Schedule 4.6(a) sets forth a
complete and accurate list of each trademark, copyright, trade name,
and trademark and tradename registration or application, and copyright
registration and application for copyright registration, by date and
germane case or docket number and country of origin, and each license
or licensing agreement, by date and the parties thereto, for each
trademark and copyright license or license of application, held or
employed by Seller, in connection with the Business or the Purchased
Assets (each such trademark, copyright, application, and license or
licensing agreement hereafter termed the "Trademarks and Licenses").
With respect to the Trademarks and Licenses:
(i) Seller owns, free and clear of all liens, pledges
or other encumbrances, all right, title and interest in the
Trademarks and Licenses and otherwise has all rights to use
the Trademarks and Licenses. The Trademarks and Licenses do
not conflict with, infringe upon or violate any patent, patent
license, patent application, trademark, servicemark, trade
name, trademark or trade name or servicemark registration or
application, copyright, copyright registration or application
relating thereto, or any license or other right of any third
person, firm or corporation;
(ii) There are no outstanding or threatened,
governmental, judicial or adversary proceedings, hearings,
arbitrations, disputes or other disagreements with respect to
any of the Trademarks and Licenses; and
(iii) Upon the consummation of the Closing, Buyer
will be vested with and the sole owner of all rights, title
and interest in and to all of the Trademarks and Licenses.
(b) Computer Software. As used in this Agreement, the term
"Computer Software" means all computer software programs, Source Code
and other computer program source codes, computer data bases and
related documentation, materials and technical manuals which are used
in connection with the Titles, Copyrights and other Purchased Assets
and/or licensed to any customer, except for general office use
software. With respect to such Computer Software:
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(i) Seller owns, free and clear of all liens, pledges
or other encumbrances, all right, title and interest in the
Computer Software, and otherwise has all rights to use the
Computer Software. The Computer Software does not conflict
with, infringe upon or violate any patent, patent license,
patent application, trademark, servicemark, trade name, or
trademark, servicemark or trade name registration or
application copyright, copyright registration or application,
or any license or intellectual property right of any third
person, firm or corporation;
(ii) There are no outstanding or threatened,
governmental, judicial or adversary proceedings, hearings,
arbitrations, disputes or other disagreements with respect to
any of the Computer Software; and
(iii) Upon the consummation of the Closing, Buyer
will be vested with and the sole owner of all rights, title
and interest, and all rights and authority to use all of the
Computer Software.
4.7 Insurance. Seller has maintained and will continue to maintain
until the Closing Date insurance on the Purchased Assets against loss or damage
by fire or other casualty as set out in letter dated October 10, 2000 from
Xxxxxxx Insurance Company. All such insurance is in full force on the date of
this Agreement and is carried with reputable insurers.
4.8 Litigation, Adverse Claims and Related Matters. Except as disclosed
on Schedule 4.8 hereto, there is no suit, action, claim or other legal,
administrative or arbitration proceeding pending or to Seller's knowledge
threatened before any court or governmental commission, bureau or other
regulatory authority, and there is no investigation or inquiry by any
administrative agency or governmental body asserted or, to Seller's knowledge,
threatened against Seller which relates directly to the Purchased Assets. There
is no outstanding order, writ, injunction or decree of any court, administrative
agency or governmental body or arbitration tribunal against or affecting the
Purchased Assets.
4.9 Laws and Regulations. Seller has complied, and will be in
compliance on the Closing Date, with all applicable laws, statutes, orders,
rules, regulations and requirements promulgated by governmental or other
authorities relating to the Purchased Assets. Seller has not received any notice
of any sort of alleged violation of any such statute, order, rule, regulation or
requirement relating to the Purchased Assets.
4.10 Breaches of Contracts; Required Consents. Neither the execution
and delivery of this Agreement by Seller, Shareholder or Xxxx, nor compliance by
Seller, Shareholder or Xxxx with the terms and provisions of this Agreement
will:
(a) conflict with or result in a breach of (i) any judgment,
order, decree or ruling to which Seller is a party, (ii) any injunction
of any court or governmental authority to which Seller is subject, or
(iii) any agreement, contract or commitment which is material to the
Purchased Assets; or
(b) except as disclosed in the schedules hereto, require the
affirmative consent or approval of any third party.
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4.11 Brokerage. There are no claims for brokerage commissions, finders
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of
Seller, for which Buyer has any legal obligation.
4.12 Creditors. No transfer of property is being made and no obligation
is being incurred in connection with the transactions contemplated by this
Agreement with the intent to hinder, delay or defraud creditors of Seller.
4.13 No Default or Legal Restrictions. The execution and delivery of
this Agreement by Seller, Shareholder and Xxxx and the consummation of the
transactions contemplated by this Agreement will not (a) conflict with, or, with
or without the giving of notice or passage of time, result in any breach of the
terms, conditions or provisions of, or constitute a default under, or result in
the imposition of any lien or encumbrance upon the Purchased Assets pursuant to,
any applicable law, administrative regulation or judgment, order or decree of
any court or governmental body, (b) violate any provision of any law, rule or
regulation of any administrative agency or governmental body, or any order,
writ, injunction or decree of any court, administrative agency, governmental
body or arbitrator, or (c) require any filing with, or license, permit, consent
or other governmental approval of, any federal, state or local governmental
body.
4.14 No Insolvency. Seller hereby covenants and represents that the
fair market value of its total assets exceed their total liabilities and that
Seller has sufficient working capital to pay its obligations when due and the
transaction herein contemplated will not materially adversely impact upon
Seller's financial condition.
4.15 Environmental Protection. Seller, Shareholder and Xxxx have no
knowledge, after reasonable inquiry, of any past or present conditions,
circumstances, activities, practices, incidents, actions or plans relating to
the Business or the Purchased Assets which may interfere with, or prevent
compliance or continued compliance with, any laws relating to pollution or
protection of the environment.
4.16 Financial Statements. Attached at Schedule 4.16 is the (a)
unaudited statements of income for the Seller for each of the years ended
December 31, 1998, 1999 and 2000 and (b) unaudited balance sheet of the Seller
as at December 31, 1998, 1999 and 2000 (collectively, the "Financial
Statements"). The Financial Statements have been prepared from books and records
maintained by the Seller consistent with past practice and fairly present, in
all material respects, the financial conditions and results of operations of the
Sellers, for the periods and as of the dates indicated.
4.17 Effect of the Transaction. As of the date hereof, the Seller knows
of no creditor, employee, client, customer or other person having a material
business relationship with the Seller that has changed, or intends to change,
such relationship because of the purchase and sale of the Purchased Assets.
4.18 Complete Assets. The Purchased Assets include all assets used in
or necessary for the operation of the business including without limitation all
of the Titles, Contracts and Source Code, and Seller has provided to Buyer prior
to Closing copies of all written contracts, agreements, arrangements, licenses,
leases and/or permits to which Seller is a party.
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4.19 Brokerage. There are no claims for brokerage commissions, finders
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of
Seller, for which Buyer has any legal obligation.
4.20 Completeness of Disclosure. The information set forth in the
Schedules to this Agreement constitute part of the representations and
warranties of the Seller, Shareholder and Xxxx and are accurate descriptions of
the matters disclosed therein. None of the representations, warranties or
statements of Seller, Shareholder and/or Xxxx contained in this Agreement, or
any schedule or exhibit to this Agreement contains or will contain any untrue
statement of a fact or omits to state any fact the omission of which would be
misleading.
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF
PARENT AND BUYER
Parent and Buyer each jointly and severally hereby represent and
warrant the following to Seller with the intention that Seller may rely upon the
same and acknowledge that the same shall be true on the date hereof and as of
the Closing Date and shall survive and shall not merge into any instruments
delivered at the Closing of this transaction:
5.1 Corporate Organization and Power. Parent is a corporation duly
organized and validly existing under the laws of the State of Minnesota, with
full corporate power and authority to enter into this Agreement and perform its
obligations hereunder. Buyer is a limited liability company duly organized and
validly existing under the laws of the State of Delaware, with full corporate
power and authority to enter into this Agreement and perform its obligations
hereunder.
5.2 Authorization. Parent and Buyer each have full legal right, power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement have been duly approved by all necessary action of each of the
Parent and the Buyer. This Agreement has been duly authorized, executed and
delivered by Parent and Buyer and constitutes a valid and binding obligation of
Parent and Buyer, enforceable in accordance with its terms.
5.3 No Violation. Neither Parent nor Buyer is subject to or obligated
under its certificate of incorporation, its bylaws, any applicable law, or rule
or regulation of any governmental authority, or any agreement or instrument, or
any license, franchise or permit, or subject to any order, writ, injunction or
decree, which would be breached or violated by its execution, delivery or
performance of this Agreement. Parent and Buyer shall each comply with all
applicable laws, and with all applicable rules and regulations of all
governmental authorities in connection with the execution, delivery and
performance of this Agreement and the transactions contemplated hereby.
5.4 Brokerage. There are no claims for brokerage commissions, finders
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of
Parent or Buyer, for which Seller has any legal obligation.
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5.5 Creditors. No transfer of property is being made and no obligation
is being incurred in connection with the transactions contemplated by this
Agreement with the intent to hinder, delay or defraud creditors of Buyer.
5.6 No Insolvency. Buyer hereby covenants and represents that on the
Closing Date the fair market value of its total assets will exceed total
liabilities and that on the Closing Date Buyer will have sufficient working
capital to pay its obligations when due and the transaction herein contemplated
will not materially adversely impact upon Buyer's financial condition.
ARTICLE 6
INDEMNIFICATION
6.1 Indemnification by Seller, Shareholder and Xxxx.
(a) In addition to the indemnification provided in Section 9.1
below, Seller, Shareholder and Xxxx jointly and severally, shall
indemnify, defend and hold harmless Buyer, and its successors and
assigns and their respective affiliates, against, and in respect of,
any and all damages, claims, losses, liabilities and expenses,
including, without limitation, legal, accounting and other expenses
(collectively "Damages"), which may arise out of: (i) any breach of any
of the representations, warranties, agreements, covenants or
post-closing obligations made in this Agreement by Seller, Shareholder
or Xxxx; or (ii) the ownership or condition of the Purchased Assets on
or prior to the Closing Date. Further, Seller, Shareholder and Xxxx
acknowledge and agree that this indemnification includes Buyer's right
to reimbursement for any amounts by which Liabilities paid by Buyer on
Seller's behalf exceed the Seller's Receivables collected by Buyer all
as set forth in Section 9.2 below.
(b) Except for Damages arising out of the Buyer's payment of
the Liabilities as described in Section 9.2 below, neither Seller,
Shareholder nor Xxxx shall be liable for any Damages covered by the
indemnity set forth above until the aggregate amount of such Damages
exceeds Fifty Thousand Dollars ($50,000). Furthermore, except for
Damages arising out of the Buyer's payment of the Liabilities as
described in Section 9.2 below, neither Seller, Shareholder nor Xxxx
shall be liable for any Damages covered by the indemnity set forth
above if the aggregate amount of all such Damages exceeds fifty percent
(50%) of the total Purchase Price.
6.2 Indemnification by Buyer.
(a) Buyer shall indemnify, defend and hold harmless Seller and
Shareholder from and against any and all Damages which may arise out of
any breach of any of the representations, warranties, agreements,
covenants or post-closing obligations made in this Agreement by Buyer.
(b) Except for Damages arising out of the Buyer's payment of
the Liabilities as described in Section 9.2 below, Buyer shall not be
liable for any Damages covered by the indemnity set forth in Section
6.2(a) above until the aggregate amount of such Damages exceeds Fifty
Thousand Dollars ($50,000). Furthermore, except for Damages arising out
of the Buyer's payment of the Liabilities as described in Section 9.2
below, Buyer shall not be liable for any Damages covered by the
indemnity set forth in Section 6.2(a) above if the aggregate amount of
all such Damages exceeds fifty percent (50%) of the total Purchase
Price.
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6.3 Cooperation, Notice and Opportunity to Defend. Within ten (10)
business days after the receipt by any party hereto of notice of any claims or
the commencement of any action or proceeding, such party will, if a claim with
respect thereto is to be made against any party obligated to provide
indemnification ("Indemnifying Party") pursuant to Section 6 hereof, give such
Indemnifying Party written notice of such claim or the commencement of such
action or proceeding. In the case of any such notice arising from a claim
asserted by a third party, such Indemnifying Party shall have the right, at its
option, to compromise or defend, at its own expense and by its own counsel, any
such matter involving the asserted liability of the party seeking such
indemnification. Such notice, and the opportunity to compromise or defend, if
applicable, shall be a condition precedent to any liability of the Indemnifying
Party under the indemnification agreements contained in this Agreement. If any
Indemnifying Party shall undertake to compromise or defend any such asserted
liability, such party shall promptly notify the party seeking indemnification of
its intention to do so, and the party seeking indemnification agrees to
cooperate with the Indemnifying Party and its counsel in the compromise of, or
defense against, any such asserted liability. In any event, the indemnified and
indemnifying parties shall have the right to participate in the defense of such
asserted liability and to approve any compromise or settlement, which approval
shall not be unreasonably withheld. The indemnified and indemnifying parties
will reasonably cooperate with each other in connection with any indemnification
claim and each shall make available to the other all pertinent information. The
Indemnifying Party will not consent to the entry of a judgment with respect to
the matter or enter into any settlement which does not include a provision
whereby the plaintiff or claimant in the matter releases the other party from
all liability with respect thereto, without the written consent of the other
party.
ARTICLE 7
OTHER AGREEMENTS
7.1 Escrow Agreement. At Closing, Buyer shall withhold from the
Purchase Price Four Hundred Thousand Dollars ($400,000) (the "Escrow," which
shall also refer to and include any interest earned on the $400,000) and deposit
such amount with Resource Trust Bank, as escrow agent all as more fully set
forth in the form of Escrow Agreement (the "Escrow Agreement") attached as
Exhibit E hereto and made a part hereof by reference. The parties hereto
acknowledge and agree that the amount of the Escrow ($400,000), plus any
interest earned on the Escrow, in no way shall be deemed a limitation on the
amount of any claim or recovery to which Buyer may be entitled to recover
against any other party pursuant to Section 6.1 hereof for damages sustained as
a result of a breach of any representation, warranty, agreement, covenant or
post-closing obligation set forth in this Agreement. Further, Seller,
Shareholder and Xxxx acknowledge and agree that Buyer may look to the Escrow as
a source of reimbursement to the extent that Buyer pays any Liabilities in
excess of Seller's Receivables collected as set forth in Section 9.2 below.
7.2 Expenses. Except as otherwise specified herein, each party will pay
all of its expenses, including attorneys' fees, incurred in connection with the
negotiation of this Agreement, the performance of its obligations hereunder and
the consummation of the transactions contemplated by this Agreement.
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7.3 Confidentiality. If the transactions contemplated by this Agreement
are not consummated, Buyer and Seller will use their best efforts to maintain
the confidentiality of all information and will return all materials (and all
copies of such materials) received in connection with this Agreement and the
transactions contemplated hereby to each other.
7.4 Public Disclosures. Neither party shall disclose the transaction
contemplated herein in any press release or any public announcement without the
prior written consent of the other party, which consent shall not be
unreasonably withheld, unless such disclosure is required by applicable law or
governmental regulations or the order of a court of competent jurisdiction, in
which case prior to making such disclosure, the party shall give written notice
to the other party describing in reasonable detail the proposed content of such
disclosure and shall permit the other party to review and comment upon the form
and substance of such disclosure.
ARTICLE 8
CLOSING
8.1 Closing. The closing of the transaction contemplated by this
Agreement (the "Closing") shall be held by the exchange of documents by way of
couriers or in person at the offices of Robins, Kaplan, Xxxxxx & Xxxxxx L.L.P.,
0000 XxXxxxx Xxxxx, 000 XxXxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx or at such date,
time and place as the parties may mutually agree upon in writing. Such date of
Closing is referred to herein as the "Closing Date." The parties currently
anticipate that the Closing will be scheduled to occur on April 30, 2001.
8.2 Documents to be Delivered by Seller. Seller agrees to deliver the
following documents, duly executed as appropriate, to Buyer in form and
substance reasonably satisfactory to Buyer and its counsel at the Closing:
(a) the Xxxx of Sale for the assignment and transfer of
Purchased Assets;
(b) a Certificate of Seller, Shareholder and Xxxx to the
effect that each of the conditions specified in 2.1(a-c), (h), (i) and
(l) is satisfied in all respects, acknowledging their participation in
preparing the schedules to this Agreement and verifying the
completeness and accuracy of all such schedules;
(c) opinion of Seller's counsel dated as of the Closing Date
substantially in the form set forth in Exhibit E;
(d) documentation of receipt of consents from all state and
federal governmental agencies and third parties;
(e) a final statement of outstanding accounts payable of the
Seller arising out of or in connection with the Business and the
Purchased Assets as of and on the Closing Date (the "Accounts
Payable");
15
(f) such instruments of sale, transfer, assignment, conveyance
and delivery, in form and substance reasonably satisfactory to counsel
for Buyer and Seller, as are required in order to transfer to Buyer
clear title to the Purchased Assets;
(g) such other documents as Buyer may reasonably request for
the purpose of assigning, transferring, granting, conveying, and
confirming to Buyer or reducing to its possession the Purchased Assets;
(h) the Shareholder Consulting Agreement;
(i) the Xxxx Consulting Agreement;
(j) the Lease; and
(k) the Employment Letters.
8.3 Documents Delivered by Buyer. Buyer agrees to deliver the following
documents, duly executed as appropriate, to Seller at the Closing:
(a) wire transfer to Seller's bank of the portion of the
Purchase Price referred to in Section 1.4;
(b) such other documents as Seller reasonably may request to
carry out the transactions contemplated under this Agreement;
(c) the Shareholder Consulting Agreement;
(d) the Xxxx Consulting Agreement; and
(e) the Lease.
ARTICLE 9
POST CLOSING OBLIGATIONS
9.1 Environmental Obligations.
(a) It is the joint and several obligation of Seller,
Shareholder and Xxxx, at their sole cost and expense, to comply or
ensure compliance with, any and all matters, circumstances and
requirements arising out of any and all laws, regulations, rules,
ordinances, agreements with governments, or court or administrative
orders that: (i) concern or relate to on-site or off-site environmental
conditions or environmental compliance liability, particularly
potential CERCLA or analogous state liability relating to the Business,
the Purchased Assets, the Property (as described in the Lease) or the
Premises (as described in the Lease); and (ii) arise from matters,
circumstances or requirements in existence prior to or as of the
Closing relating to the Business or the Purchased Assets or arise from
matters, circumstances or requirements in existence prior to, as of or
after the Closing relating to the Property (as described in the Lease)
or the Premises (as described in the Lease). It is the further joint
and several obligation of Seller, Shareholder and Xxxx, at their sole
cost and expense, to indemnify, defend, and hold the Buyer harmless
from, against, and with respect to all losses related to said matters,
circumstances or requirements. Such obligations, an any liability,
damage, or cost that Seller, Shareholder and Xxxx may have for any
breach thereof, shall survive the Closing and continue indefinitely,
notwithstanding any other provision herein to the contrary. In the
event that Buyer is notified by a third party or governmental entity or
discovers the existence of any environmental condition, the result of
which may require response action or form the basis for the assertion
of a claim by any third party, including claims of governmental
entities, Buyer shall promptly notify Seller, Shareholder and Xxxx
thereof, and Seller, Shareholder and Xxxx shall, jointly and severally,
at their sole cost and expense, proceed with due diligence to take
appropriate action and respond thereto. In the event that Seller,
Shareholder and Xxxx fail to proceed with due diligence or fail to
prosecute to completion such action and response, Purchaser may, at its
option, take the appropriate action and/or respond thereto and shall
continue to have all rights to indemnity and reimbursement as set forth
in this Agreement.
17
(b) Seller, Shareholder and Xxxx acknowledge that certain
permitting and environmental law requirements that existed prior to or
as of the date hereof may result in claims and/or demands by and/or
liabilities to governmental agencies or other third parties after the
date hereof and the Closing Date. Seller, Shareholder and Xxxx, jointly
and severally, shall assume all liabilities, damages, costs, duties and
responsibilities imposed by or arising from such permitting and legal
requirements.
9.2 Further Documents and Assurances. At any time and from time to time
after the Closing Date, each party shall, upon request of the other party,
execute, acknowledge and deliver all such further and other assurances and
documents, and will take such action consistent with the terms of this
Agreement, as may be reasonably requested to carry out the transactions
contemplated herein and to permit each party to enjoy its rights and benefits
hereunder. If requested by Buyer, Seller further agrees to assign to Buyer the
right to prosecute or otherwise take such action to enforce in its own name for
the benefit of Buyer, any claims, right or benefit transferred by this Agreement
that may require prosecution or enforcement in Seller's name. Any prosecution or
enforcement of claims, rights, or benefits under this provision shall be solely
at Buyer's expense but shall not prejudice any other rights of Buyer under this
Agreement.
9.3 Collection of Seller's Receivables.
(a) Upon execution of this Agreement, Seller shall deliver to
Buyer a true, complete and accurate list of the accounts receivable of
all customers of Seller as of the Closing Date. During the 120-day
period following the Closing Date (the "Collection Period"), Buyer,
shall, in the ordinary course of business, include in its billing to
customers, and, subject to the following provisions hereof, collect for
the benefit of Seller, the account receivables of the Seller as of the
Closing Date up to $750,000 (the "Seller's Receivables"); provided,
however, that in no event shall Buyer be obligated to take any action,
including without limitation the institution of legal action, to
collect any of Seller's Receivables.
(b) Commencing on the third Friday after the Closing Date, and
continuing thereafter on the Friday following every consecutive
two-week period during the Collection Period, Buyer shall pay to the
Seller the total amount collected by Buyer on account of Seller's
Receivables during the two-week period ending on the previous Friday,
and shall deliver to Seller at the time of such payment a list of
Seller's Receivables so collected. During the Collection Period, Seller
shall not take any action to collect any of Seller's Receivables and
shall promptly notify Buyer if Seller receives payment in respect of
any of Seller's Receivables.
(c) Although Seller is wholly obligated and responsible for
all of the Liabilities, during the Collection Period, if for any reason
Buyer pays Liabilities in excess of collected Seller's Receivables,
Buyer shall be entitled to reimbursement of such amounts from the
Escrow.
(d) Upon expiration of the Collection Period, Buyer may cease
all billing and collection efforts with respect to Seller's
Receivables, or any portion thereof, which remain outstanding, and
except as specifically provided herein shall be relieved of any
responsibility with respect to the then outstanding Seller's
Receivables.
(e) Upon expiration of the Collection Period, Buyer shall
purchase from the Seller, and Seller shall sell, assign, transfer,
convey and deliver to the Buyer the remaining Seller's Receivables
(less any amounts used to satisfy the Accounts Payable) and all rights
related to the Seller's Receivables, including all rights to enforce
any judgments related to the Seller's Receivables, at their cash value
less a discount rate of twelve percent (12%).
9.4 Dissolution of Seller. On or before one hundred eighty (180) days
following the Closing Date, Shareholder shall cause the Seller to be dissolved
as a corporation in accordance with the requirements of Texas law.
9.5 Review of Closing Balance Sheet. Within ten (10) business days of
the Closing, Seller shall deliver to Buyer a balance sheet as of the Closing
Date, which shall also include a detailed statement of the preliminary accounts
payable and accounts receivables, each containing trial balances as of the
Closing Date (the "Closing Balance Sheet"). Buyer shall have five (5) business
days to review the Closing Balance Sheet to determine the accuracy of the
information reflected in it. In the event the Buyer determines that the Closing
Balance Sheet overstates the assets of the Business or understates the
liabilities or shareholders equity by any amount, Buyer shall be entitled to be
reimbursed for such amount from the Escrow.
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ARTICLE 10
NONCOMPETITION, NON-DISCLOSURE, NON-SOLICITATION
10.1 Noncompetition. As an inducement for Buyer to enter into this
Agreement, Seller, Shareholder and Xxxx each jointly and severally agree that
during the "Restricted Period" (as defined below) none of them shall, directly
or indirectly, engage in any "Competing Business Activity" (as defined below),
in any manner or capacity (including, without limitation, as an advisor,
consultant, director, officer, employee, principal, agent, shareholder, partner,
sole proprietor, member of a limited liability company or of any association, or
otherwise). Shareholder and Xxxx each jointly and severally acknowledge and
agree that through the performance of his and her duties for the Seller, and
through the performance of duties pursuant to the Shareholder Consulting
Agreement and the Xxxx Consulting Agreement, each has substantial knowledge
relating to the Business, and each has been and will be brought into frequent
contact, either in person, by telephone or through the mails, with existing and
potential customers of the Business and Buyer. Seller, Shareholder and Xxxx each
jointly and severally acknowledges and agrees that the foregoing makes it
necessary for the protection of the Buyer's business, and the Buyer's use of the
Purchased Assets that none of them compete with the Buyer for a reasonable
period of time as further described in this Article 10.
(a) As used herein, "Restricted Period" shall mean a period of
five (5) years from the Closing Date.
(b) As used herein, "Competing Business Activity" shall mean
any business activities that are (a) competitive with the Business or
(b) related to the Purchased Assets.
10.2 Geographical Extent of Covenant. The obligations of Seller,
Shareholder and Xxxx under this Article 10 shall apply to all markets, domestic
or foreign, in which the Business operates as of the Closing Date or during the
term of the Restricted Period.
10.3 Tolling of Restricted Period. If it is judicially determined that
Seller, Shareholder or Xxxx has violated any obligation described in this
Article 10, the Restricted Period shall be extended by a period of time equal to
the period during which such violation occurred.
10.4 Limitation on Covenant. Ownership by Seller, Shareholder or Xxxx,
as a passive investment, of less than one percent of the outstanding shares of
capital stock of any corporation listed on a national securities exchange or
publicly traded in the over-the-counter market shall not constitute a breach of
this Article 10.
10.5 Nonsolicitation; Non-hire and Noninterference. During the
Restricted Period, neither Seller, Shareholder nor Xxxx shall:
(a) induce or attempt to induce any employee of the Buyer to
leave the employ of the Buyer, or in any way interfere adversely with
the relationship between any such employee and the Buyer or affiliate;
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(b) induce or attempt to induce any employee of the Buyer or
any affiliate to work for, render services to, provide advice to, or
supply confidential business information or trade secrets of the Buyer
to any third person, firm or corporation;
(c) employ, or otherwise pay for services rendered by, any
employee of the Buyer in any business enterprise with which Seller,
Shareholder or Xxxx may be associated, connected or affiliated; or
(d) induce or attempt to induce any customer, supplier,
licensee, licensor or other business relation of the Buyer to cease
doing business with the Buyer, or in any way interfere with the
relationship between any such customer, supplier, licensee, licensor or
other business relation.
10.6 Indirect Competition or Solicitation. During the Restricted
Period, neither Seller, Shareholder nor Xxxx may, directly or indirectly,
assist, solicit or encourage any other person in carrying out, directly or
indirectly, any activity that would be prohibited by the provisions of this
Article 10 if such activity were carried out by any of them, either directly or
indirectly; and, in particular, neither Seller, Shareholder nor Xxxx may,
directly or indirectly, induce any employee of the Buyer or any Affiliate to
carry out, directly or indirectly, any such activity.
10.7 Reasonableness of Restrictions. Seller, Shareholder and Xxxx each
jointly and severally agrees that the terms and conditions contained in this
Article 10 are reasonable and necessary for the protection of the Buyer's
business, trade secrets and confidential information, including (without
limitation) the Business, the Buyer's business, trade secrets and confidential
information related to the Purchased Assets. Seller, Shareholder and Xxxx each
jointly and severally acknowledges that he, she and it each has the ability to
continue to earn sufficient compensation in business without breaching any of
the provisions of this Article 10.
10.8 Nondisclosure. Seller, Shareholder and Xxxx each jointly and
severally acknowledges, covenants and agrees that, from and after the date
hereof, he, she and it will hold any and all items constituting Business Secrets
communicated or transmitted to, or otherwise obtained by him, her or it, in
confidence; and neither Seller, Shareholder nor Xxxx shall, regardless of the
reason therefor, directly or indirectly make use of, exploit, disclose or
divulge any Business Secrets to any other person or entity (except to the extent
such information is required to be submitted to any federal, state or local
governmental agent or to any third party pursuant to subpoena or other court
process), or directly or indirectly utilize the Business Secrets to make any
false statement or otherwise commit any act (including contacting any customers)
that could in any way be injurious or detrimental to Buyer's use of the
Purchased Assets, including without limitation its image, business or customer
relations.
10.9 "Business Secrets". For the purposes hereof, "Business Secrets"
shall mean all information and materials pertaining to Seller's Business or the
Purchased Assets, including, without limitation, customer information, Seller's
business methods, policies, procedures, techniques, sales and marketing
strategies, financial statements, sales and gross profit data, employee and
independent contractor rosters and profiles, pricing and cost data, contract
information, know-how and all other information relating to or dealing with the
Business or the Acquired Assets. Furthermore, the term Business Secrets shall
apply to any of the foregoing, whether or not in written form and whether or not
Seller has possession of such writings.
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ARTICLE 11
MISCELLANEOUS
11.1 Amendment and Waiver. This Agreement may be amended, and any
provision of this Agreement may be waived, provided that any such amendment or
waiver will be binding on Seller only if such amendment or waiver is set forth
in a writing executed by Seller and that any such amendment or waiver will be
binding upon Buyer only if such amendment or waiver is set forth in a writing
executed by Buyer. No course of dealing between or among any persons having any
interest in this Agreement will be deemed effective to modify, amend or
discharge any part of this Agreement or any rights or obligations of any person
under or by reason of this Agreement. Waiver by Seller or Buyer of any breach of
or failure to comply with any provision of this Agreement by the other party
shall not be construed as, or constitute a continuing waiver of, or a waiver of
any other breach of, or failure to comply with, any other provision of this
Agreement.
11.2 Notices. All notices, demands and other communications to be given
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or
mailed by first class mail, return receipt requested. Notices, demands and
communications to Seller and Buyer will, unless another address is specified in
writing, be sent to the addresses indicated below:
Notices to Seller and Shareholder:
Xxxxx Enterprises, Incorporated
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxx Xxxx, President
with a copy to:
Xxxxxxx X. Xxxxx
Xxxxx & XxXxxxxx, L.L.P.
0000X Xxxxxxxxxxx Xx.
Xxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx
Notice to Buyer:
Xxxxx Acquisition Co., LLC
0000 Xxxxxxxx Xxxx
Xxxxxx Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx, Manager
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with a copy to:
Robins, Kaplan, Xxxxxx & Xxxxxx L.L.P.
0000 XxXxxxx Xxxxx
000 XxXxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx
and
Ripplewood Holdings L.L.C
Xxx Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxx and Saguna Umerjee
Notice to Parent:
American Guidance Service, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxx Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx
with a copy to:
Robins, Kaplan, Xxxxxx & Xxxxxx L.L.P.
0000 XxXxxxx Xxxxx
000 XxXxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx
and
Ripplewood Holdings L.L.C
Xxx Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxx and Saguna Umerjee
11.3 Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, and no other person shall acquire
or have any right under or by virtue of this Agreement except that Seller may
assign certain rights and obligations under this Agreement to a new entity for
tax purposes with the prior written consent of the Buyer, which shall not be
unreasonably withheld. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any party hereto without the prior
written consent of the other parties except the indemnification rights
hereunder, which may be assigned to a financial or other institution in
connection with any financing relating to the transactions contemplated in this
Agreement.
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11.4 No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
person.
11.5 Captions. The captions used in this Agreement are for convenience
of reference only and do not constitute a part of this Agreement and will not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement will be enforced and construed
as if no caption had been used in this Agreement.
11.6 Complete Agreement. This document and the documents referred to
herein contain the complete agreement between the parties and supersede any
prior understandings, agreements or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any way.
There are no restrictions, promises, warranties, covenants, or undertakings,
other than those expressly provided for herein.
11.7 Counterparts. This Agreement may be executed in one or more
counterparts all of which taken together will constitute one and the same
instrument.
11.8 Governing Law. This Agreement shall be construed and enforced in
accordance with the internal laws (and not the law of conflicts) of the State of
Delaware.
11.9 Survival. All covenants, agreements, representations and
warranties made by the parties in this Agreement or any schedule or exhibit to
this Agreement, or in connection with the transactions contemplated by this
Agreement shall survive the Closing and continue for a period of fifteen (15)
months thereafter; provided however, that the representation set forth at
Section 4.15 will survive until the expiration of any and all federal, state or
local statutory limitations applying to environmental laws or regulations have
expired. No review or inspection made by the parties shall be deemed to waive or
modify any such representation.
11.10 Interpretation. This Agreement has been fully negotiated by the
parties through their legal counsel. Accordingly, in interpreting this
Agreement, the rule of interpretation requiring that documents be construed
against the draftsman shall be inapplicable. Further, all additions or deletions
of provisions from any and all drafts of this Agreement shall be of no force or
effect in interpreting the terms of this Agreement or the intentions of the
parties hereto.
11.11 Schedules and Exhibits. Each schedule and exhibit delivered
pursuant to the terms of this Agreement shall be in writing and shall constitute
a part of this Agreement.
* * * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Asset
Purchase Agreement as of the date first written above.
PARENT:
AMERICAN GUIDANCE SERVICE, INC.
By:
-------------------------------------
Xxxxx Xxxxxxxxx, President
For those sections that relate
to Parent
BUYER:
XXXXX ACQUISITION CO., LLC
By:
-------------------------------------
Xxxxx Xxxxxxxxx, Manager
SELLER:
XXXXX ENTERPRISES, INCORPORATED
By:
-------------------------------------
Xxxxxxx Xxxx, President
SHAREHOLDER:
----------------------------------------
Xxxxxxx Xxxx for those sections that
relate to Shareholder
XXXX:
----------------------------------------
Xxxxxxx Xxxx, for those sections that
relate to Xxxx
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