STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into as
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of the 4th day of December 2000, by and between Zany Brainy, Inc., a
Pennsylvania corporation ("Zany"), and Online Retail Partners Inc., a Delaware
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corporation ("ONRP").
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WHEREAS, Zany, ONRP, directly or through its wholly-owned subsidiary,
Online Retail Partners LLC (as the successor in interest to ONRP Services LLC)
("ONRP Services"), ZB Holdings LLC, a Delaware limited liability company ("ZB
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Holdings"), and XxxxXxxxxx.xxx LLC, a Delaware limited liability company
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("XX.xxx"), previously entered into a series of agreements in furtherance of the
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formation and operation of a joint venture for the purpose of operating under
XX.xxx an e-commerce site on the World Wide Web (the "Site");
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WHEREAS, Zany, ONRP, ZB Holdings, XX.xxx, Children's Equity LLC, a Delaware
limited liability company that holds certain non-voting interests in ZB Holdings
("Children's Equity"), and Zany Brainy Direct LLC, a Delaware limited liability
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company and a wholly owned subsidiary of Zany ("ZB Direct"), determined to
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effect the dissolution, liquidation and winding-up of XX.xxx, ZB Holdings and
Children's Equity in accordance with the terms of a Plan of Dissolution dated as
of the date hereof (the "Plan of Dissolution");
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WHEREAS, ONRP Services and XX.xxx entered into a Web Site Services
Agreement dated October 20, 1999 (the "WSSA") whereby ONRP Services agreed to
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provide certain site development, hosting, and marketing services to XX.xxx as
set forth in the WSSA for a term of five years;
WHEREAS, ONRP Services, XX.xxx and Zany also entered into a Data
Sharing/License Agreement dated October 20, 1999 (the "DSLA") whereby Zany,
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XX.xxx and ONRP Services would share certain data and information gathered from
the Site and other similar sites (collectively "Data"), and ONRP Services would
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provide certain services related to the Data;
WHEREAS, the rights and obligations of Zany under the WSSA and the DSLA
have been transferred to ZB Direct;
WHEREAS, under the terms of the Plan of Dissolution, (i) ZB Holdings has
agreed to assume all of the liabilities of XX.xxx, and ZB Direct has agreed to
assume all of the liabilities of ZB Holdings, with such liabilities to include
certain amounts owed to ONRP Services under the WSSA and (ii) Zany has agreed to
guaranty the obligations of ZB Direct to ONRP Services; and
WHEREAS, the parties have agreed that under the terms and conditions set
forth in this Agreement, Zany will issue to ONRP shares of its common stock, par
value $0.01 per share (the "Common Stock"), and a warrant to purchase shares of
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Common Stock and pay ONRP an aggregate of one million dollars ($1,000,000) as
set forth in Sections 2.5(a) and (b) of this Agreement (the "Cash Payments"), in
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consideration for (i) the execution and delivery of the amendment, and agreement
to terminate, the WSSA and DSLA and the full and complete satisfaction of all
liabilities of XX.xxx (or ZB Direct) to ONRP Services under the WSSA and
the DSLA, which events shall be evidenced by the execution and delivery of an
amendment and termination agreement in substantially the form attached as
Exhibit A (the "Amendment and Termination Agreement"), (ii) the execution and
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delivery of a new license agreement by and among ZB Direct, ONRP and ONRP
Services in substantially the form attached hereto as Exhibit B (the "New
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License Agreement"), and (iii) the execution and delivery of a Software Escrow
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Agreement between ONRP Services and ZB Direct, substantially in the form
attached hereto as Exhibit C (the "Software Escrow Agreement").
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NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. ACTIONS PRECEDING EXECUTION.
Each of the parties understands and agrees that the following actions have
been taken by the following parties prior to the date and time of the execution
and delivery of this Agreement in contemplation of, and preparation for, the
transactions contemplated by this Agreement:
1.1 Authorization of Common Stock. Zany has authorized the issuance and
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sale to ONRP of 1,250,000 shares of its Common Stock (the "Shares").
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1.2 Authorization of Issuance of Warrant. Zany has authorized the issuance
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to ONRP of a warrant to purchase 1,000,000 shares of its Common Stock, in
substantially the form attached hereto as Exhibit D (the "Warrant").
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1.3 Listing of Additional Shares. Zany will file with the Nasdaq National
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Market a Notification Form for Listing of Additional Shares with respect to the
Shares and the Warrant Shares (as defined below).
1.4 Blue Sky. Zany has obtained all necessary Blue Sky law permits and
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qualifications, or has the availability of exemptions therefrom, required by any
state for the offer and sale of the Shares and the Warrant Shares.
2. CONSIDERATION; SALE OF SHARES; deliverables
2.1 Consideration. The consideration for the issuance and sale of the
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Shares, the issuance of the Warrant to ONRP and the Cash Payments, shall be:
(a) The execution and delivery of the Amendment and Termination
Agreement;
(b) The execution and delivery of the New License Agreement,
providing for the transfer of certain technology as more specifically detailed
on Annex I hereto; and
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(c) The execution and delivery of the Software Escrow Agreement.
2.2 Issuance of Shares and Warrant. Upon the execution and delivery of
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this Agreement, Zany will issue and sell to ONRP the Shares and the Warrant. The
Shares issued
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hereunder and the Common Stock issuable upon the exercise of the Warrant (the
"Warrant Shares") are issued in a transaction that is exempt from registration
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under the Securities Act of 1933, as amended (the "Securities Act"), by reason
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of Section 4(2) thereof and under applicable state securities laws.
2.3 Location. The consummation of the purchase and sale of the Shares and
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the other transactions contemplated by this Agreement shall take place on and as
of the date hereof at the offices of Xxxxxx, Xxxxx & Xxxxxxx LLP, 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxxxx, XX 00000.
2.4 Items Delivered Simultaneously With the Execution of this Agreement.
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(a) ONRP has, and has caused ONRP Services to, execute and deliver to
Zany the Amendment and Termination Agreement;
(b) Zany has delivered to ONRP (i) a stock certificate representing
ONRP's ownership of the Shares and (ii) the executed Warrant;
(c) Zany has, and has caused ZB Direct to, execute and deliver to
ONRP the Amendment and Termination Agreement;
(d) ZB Direct, ONRP and ONRP Services have executed and delivered the
New License Agreement; and
(e) ZB Direct, ONRP Services and Fort Xxxx Escrow Services, Inc. have
executed and delivered the Software Escrow Agreement.
2.5 Cash Payments. Zany agrees to pay ONRP:
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(a) three hundred fifty thousand dollars ($350,000) on January 3,
2001, provided that ONRP is then in compliance with the terms of the WSSA as
amended by the Amendment and Termination Agreement; and
(b) six hundred fifth thousand dollars ($650,000) on February 5,
2001, provided that ONRP is then in compliance with the terms of the WSSA as
amended by the Amendment and Termination Agreement.
2.6 Retail Technology Delivery. ONRP will cause ONRP Services to deliver
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to Zany, within thirty (30) days of the execution of this Agreement, the Retail
Technology in the object code and source code form and the documentation related
thereto which is reasonably required for a person of normal skill in the
industry to use the object code and source code. Such delivery will be made in
electronic and written format.
3. REPRESENTATIONS AND WARRANTIES OF ONRP.
To induce Zany to enter into this Agreement and consummate the transactions
contemplated hereby, ONRP represents and warrants to Zany that, except as set
forth in the disclosure schedule, if any, delivered by ONRP to Zany prior to the
execution and delivery of this Agreement (the "ONRP Disclosure Schedule"):
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3.1 Organization, Standing and Power. ONRP is a corporation duly
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organized, validly existing and in good standing under the laws of its
jurisdiction of organization. ONRP has the corporate power to own its properties
and to carry on its business as now being conducted. ONRP is not in violation of
any of the provisions of its certificate of incorporation or bylaws.
3.2 Authority. ONRP has all requisite corporate power and authority to
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enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action (corporate or otherwise) on the part of ONRP. This Agreement has been
duly executed and delivered by ONRP and constitutes the legal, valid and binding
obligation of ONRP enforceable against ONRP in accordance with its terms, except
as limited by applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the enforceability of creditors' rights generally and to
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law) (the "Bankruptcy and Equity Exception").
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The execution and delivery of this Agreement does not, and the consummation of
the transactions contemplated hereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of a benefit under (a) any provision of the certificate
of incorporation or bylaws of ONRP or (b) any material mortgage, indenture,
lease, contract or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to ONRP or any of its subsidiaries or their properties or assets,
except where such conflict, violation, default, termination, cancellation or
acceleration with respect to the foregoing provisions of clause (b) would not,
individually or in the aggregate, have a Material Adverse Effect (as defined
below) on ONRP. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority, is
required by or with respect to ONRP in connection with the execution and
delivery of this Agreement by ONRP or the consummation by Zany of the
transactions contemplated hereby, except for such consents, authorizations,
filings, approvals and registrations which, if not obtained or made, would not
have a Material Adverse Effect on ONRP and would not prevent, materially alter
or delay any of the transactions contemplated by this Agreement. A "Material
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Adverse Effect" with respect to any entity means any event, change or effect
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that is materially adverse to the financial condition, properties, assets
(including intangible assets), business, operations or products (including
planned business, operations or products) of such entity and its subsidiaries,
taken as a whole, except for (A) matters generally effecting the industry in
which the such entity operates and (B) changes in general economic conditions.
3.3 No Violation. Neither the execution or delivery of this Agreement by
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ONRP nor the consummation by it of the transactions contemplated hereby, will
violate any statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge or restriction of any court, administrative agency or commission
or governmental authority or instrumentality (a "Governmental Authority") to
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which ONRP is a party or to which it is bound or subject, or the provisions of
the certificate of incorporation or bylaws of ONRP.
3.4 Litigation; Claims. There is no litigation, claim, proceeding or
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government investigation (i) pending or, to ONRP's knowledge, threatened,
against ONRP relating to the
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transactions contemplated by this Agreement, or (ii) to ONRP's knowledge, except
as set forth in Schedule 3.4 hereto, pending or threatened against XX.xxx or ZB
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Holdings.
3.5 No Brokers. Neither ONRP nor any individual, partnership,
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corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture or other entity of whatever
nature (a "Person") acting on behalf of ONRP has obligated ONRP to pay any
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brokerage or finders' fee or agents' commissions or investment bankers' or
financial advisory fee or similar charges in connection with this Agreement or
any transaction contemplated hereby to any Person, nor has ONRP or any such
Person taken any action on which a claim for any such payment could be based.
3.6 Investment Representations. ONRP has knowledge and experience in
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financial and business matters sufficient to enable it to evaluate the merits
and risks of an investment in Zany and was not formed for the purpose of
investing in Zany's Common Stock. ONRP has assets sufficient to enable it to
bear the economic risk of its investment in the Shares and has assets in excess
of Five Million Dollars ($5,000,000). ONRP is acquiring the Shares and the
Warrant (including the underlying Warrant Shares) for its own account, and not
with a present view to, or for sale in connection with, any distribution
thereof. ONRP understands that the Shares have not been registered under the
Securities Act by reason of their issuance in a transaction exempt from the
registration requirements of the Securities Act pursuant to the exemption
provided in Section 4(2) thereof, that the Shares have not been registered under
applicable state securities laws by reason of their issuance in a transaction
exempt from such registration requirements, and that the Shares may not be sold
or otherwise disposed of unless registered under the Securities Act and
applicable state securities laws, or exempted from registration, and that the
certificates representing the Shares will bear the legends required by
applicable securities and blue sky laws. ONRP further understands that the
exemption from registration afforded by Rule 144 promulgated under the
Securities Act is not presently available with respect to the Shares.
3.7 ONRP's Acknowledgement as to Information. ONRP or its representatives
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have received from Zany, or Zany has made available, (i) the Schedules to this
Agreement, (ii) the Exhibits to this Agreement, (iii) such documents referred to
in this Agreement or in the Schedules or Exhibits hereto and (iv) any other
information as they have requested with respect to Zany as ONRP has deemed
necessary and relevant in connection with the transactions contemplated by this
Agreement, and ONRP has had the opportunity, directly or through its
representatives, to ask questions of and receive answers from persons acting on
behalf of Zany necessary to verify the information so obtained.
3.8 Intellectual Property Representations. Any capitalized terms used but
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not defined in this Section 3.8 shall have the meanings ascribed to such terms
in the WSSA.
(a) All Retail Technology which is being transferred is identified in
Annex II and there is no other Retail Technology used in the Site or developed
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by or on behalf of ONRP Services and/or ONRP except for that set forth on Annex
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II;
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(b) All Common Technology is identified in Annex I and there is no
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other Common Technology used in the Site or developed by or on behalf of ONRP
Services and/or ONRP except for that set forth on Annex I. The Common Technology
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and the Retail Technology shall be collectively referred to herein as the
"Technology";
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(c) No other software in addition to the Technology listed on Annex I
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and Annex II is required to operate the Site to the same extent, with the same
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functionality and in the same manner as the Site currently exists as of the date
of this Agreement and as it has consistently operated during the past ninety
days;
(d) ONRP and/or ONRP Services owns, or has a license to use, all of
the Technology. The Technology (exclusive of the software provided pursuant to
the Third Party Agreements (as defined below)) was developed independently by
ONRP Services without reference to the intellectual property of any third party.
The Technology is provided by ONRP free of any liens or encumbrances. There are
no claims or demands of any other entity pertaining to any such intellectual
property and no proceedings have been instituted, or are pending or, to the
knowledge of ONRP and/or ONRP Services, threatened, which challenge the rights
of ONRP and/or ONRP Services in respect thereof. ONRP and/or ONRP Services has
no knowledge of any infringement by others of any intellectual property rights
in the Technology. To the knowledge of ONRP and/or ONRP Services, the operation
of the Site and/or the Technology does not infringe any intellectual property
rights of any other entity. No proceeding charging ONRP and/or ONRP Services
with infringement of any adversely held intellectual property rights has been
filed or, to the knowledge of ONRP and/or ONRP Services, is threatened to be
filed. To the knowledge of ONRP and/or ONRP Services, there exists no unexpired
patent or patent application which includes claims that would be infringed by or
otherwise adversely affect the operation of the Site or the use of the
Technology;
(e) All patents, patent applications, trademark registrations,
trademark applications and registered copyrights related to the Technology and
the Site (exclusive of any of the foregoing related to software provided
pursuant to Third Party Agreements) are identified on Annex I and Annex II. All
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patents, patent applications, trademark registrations, trademark applications
and registered copyrights identified on Annex I and Annex II have been duly
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registered in, filed in or issued by the United States Patent and Trademark
Office, the United States Register of Copyrights, or the corresponding offices
of other jurisdictions as identified on Annex I and Annex II, and have been
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properly maintained and renewed in accordance with all applicable laws and
administrative regulations of the United States and each such jurisdiction;
(f) All licenses or other agreements under which ONRP and/or ONRP
Services is granted intellectual property rights relating to the Technology
("Third Party Agreements") are listed in Annex I(a) and Annex II(a),
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respectively. All of said licenses or other agreements are in full force and
effect, there is no material default by ONRP and/or ONRP Services or, to the
knowledge of ONRP and/or ONRP Services, any other party thereto. To the
knowledge of ONRP and/or ONRP Services, the licensors under said licenses and
other agreements have and had all requisite power and authority to grant the
rights purported to be conferred thereby. The transfers of the Technology
contemplated in this Agreement and the other agreements contemplated herein will
not violate any provision of any Third Party Agreements, conflict with, or
result in any violation of, or default under (with or without notice or lapse of
time, or both), render the transfers invalid, or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a benefit
under any Third Party Agreement. True and complete copies of all such licenses
or other agreements, and any amendments thereto, have been provided to Zany;
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(g) ONRP and/or ONRP Services has taken all steps required in
accordance with sound business practice to establish and preserve its ownership
of all intellectual property rights in the Technology, except where failure to
take such steps would not have a material adverse effect on the operation of the
Site. Such practices include, without limitation, requiring all professional and
technical employees to execute agreements under which such employees are
required to convey to ONRP and/or ONRP Services ownership of all inventions and
developments conceived or created by them in the course of their employment;
(h) The Technology as delivered to Zany and/or ZB Direct shall not
contain "threats" known as viruses, time bombs, logic bombs, Trojan horses, trap
doors, or other malicious computer instructions, intentional devices or
techniques that can or were designed to threaten, infect, attack, assault,
vandalize, defraud, disrupt, damage, disable, or shut down a computer system or
any component thereof, including its security or user data; and
(i) There are no (i) actions, suits, claims or proceedings pending
or, to the knowledge of ONRP or ONRP Services, threatened against or affecting
the Technology, at law or in equity, or before or by and any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) arbitration proceeding relating to
the Technology or (iii) governmental inquiry pending or, to the knowledge of
ONRP or ONRP Services, threatened against, involving or affecting the
Technology; provided, that, with respect to software provided pursuant to Third
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Party Agreements, the foregoing representations are limited to actions, suits,
claims, proceedings, arbitrations and governmental inquiries, or threats
thereof, known to ONRP or ONRP Services. There are no outstanding orders, writs,
judgments, injunctions or decrees of any court, governmental agency or
arbitration tribunal against, involving or affecting, the Technology; provided,
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that, with respect to software provided pursuant to Third Party Agreements, the
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foregoing representation is limited to orders, writs, judgments, injunctions and
decrees known to ONRP or ONRP Services.
3.9 Representations Complete. None of the representations or warranties
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made by ONRP herein contains any untrue statement of a material fact, or omits
to state any material fact necessary in order to make the statements contained
herein, in light of the circumstances with which they were made, not misleading.
3.10 Financial Statements. ONRP knows of no reason why the financial
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statements of XX.xxx and ZB Holdings prepared as of the date hereof are not (i)
in compliance as to form in all material respects with applicable accounting
requirements, (ii) prepared in accordance with generally accepted accounting
principles applied on a basis consistent throughout the periods indicated and
consistent with each other, and (iii) a fair presentation in all material
respects of the consolidated financial condition and operating results of XX.xxx
and ZB Holdings, respectively, and their subsidiaries at the dates and during
the periods indicated therein.
4. REPRESENTATIONS OF ZANY.
To induce ONRP to enter into this Agreement and consummate the transactions
contemplated hereby, Zany represents and warrants to ONRP that, except as set
forth in the disclosure schedule, if any, delivered by Zany to ONRP prior to the
execution and delivery of this Agreement (the "Zany Disclosure Schedule"):
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4.1 Organization, Standing and Power. Zany is a corporation duly organized,
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validly existing and in good standing under the laws of its jurisdiction of
organization. Zany has the corporate power to own its properties and to carry
on its business as now being conducted and is duly qualified to do business and
is in good standing in each jurisdiction in which the failure to be so qualified
and in good standing would have a Material Adverse Effect on Zany. Zany has
made available to ONRP a true and correct copy of the articles of incorporation
and bylaws or other charter documents, as applicable, of Zany, as amended to
date. Zany is not in violation of any of the provisions of its articles of
incorporation or bylaws.
4.2 Authority. Zany has all requisite corporate power and authority to
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enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action (corporate or otherwise) on the part of Zany. This Agreement has been
duly executed and delivered by Zany and constitutes the legal, valid and binding
obligation of Zany enforceable against Zany in accordance with its terms, except
as limited by the Bankruptcy and Equity Exception. The execution and delivery of
this Agreement does not, and the consummation of the transactions contemplated
hereby will not, conflict with, or result in any violation of, or default under
(with or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a benefit
under (a) any provision of the articles of incorporation or bylaws of Zany or
(b) any material mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Zany or any of its
subsidiaries or their properties or assets), except where such conflict,
violation, default, termination, cancellation or acceleration with respect to
the foregoing provisions of clause (b) would not, individually or in the
aggregate, have a Material Adverse Effect on Zany. No consent, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Authority, is required by or with respect to Zany or any of its
subsidiaries in connection with the execution and delivery of this Agreement by
Zany or the consummation by Zany of the transactions contemplated hereby, except
for (w) any filings as may be required under applicable federal and state
securities laws, (x) the filing with the Nasdaq National Market of a
Notification Form for Listing of Additional Shares with respect to the Shares
and the Warrant Shares, and (y) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not have a
Material Adverse Effect on Zany and would not prevent, materially alter or delay
any of the transactions contemplated by this Agreement.
4.3 No Violation. Neither the execution or delivery of this Agreement by
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Zany nor the consummation by it of the transactions contemplated hereby, will
violate any statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge or restriction of any Governmental Authority to which Zany is a
party or to which it is bound or subject, or the provisions of the articles of
incorporation or bylaws of Zany.
4.4 Capital Structure. The authorized capital stock of Zany consists of
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100,000,000 shares of Zany Common Stock, and 5,000,000 shares of preferred
stock, par value $0.01 per share, of which there were issued and outstanding as
of the close of business on December 1, 2000, approximately 32,172,000 shares of
Zany Common Stock and no shares of preferred stock. All outstanding shares of
Zany Common Stock have been duly authorized, validly issued, fully paid and are
nonassessable and free of any liens or
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encumbrances other than any liens or encumbrances created by or imposed upon the
holders thereof. The shares of Zany Common Stock to be issued pursuant to this
Agreement and the Warrant Shares to be issued pursuant to the terms of the
Warrant will be duly authorized, validly issued, fully paid and nonassessable,
and no stockholder of Zany will have any preemptive right of subscription or
purchase in respect thereof.
4.5 SEC Documents; Financial Statements. As of their respective filing
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dates, each statement, report, registration statement (with the prospectus in
the form filed pursuant to Rule 424(b) of the Securities Act), definitive proxy
statement and other filing filed with the Securities and Exchange Commission
("SEC") by Zany (collectively, the "Zany SEC Documents") complied in all
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material respects with the applicable requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the Securities Act, and none
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of the Zany SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances in which they
were made, not misleading, except to the extent corrected by a subsequently
filed Zany SEC Document. All documents required to be filed as exhibits to the
Zany SEC Documents have been so filed. The financial statements of Zany,
including the notes thereto, included in the Zany SEC Documents (the "Zany
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Financial Statements") were complete and correct in all material respects as of
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their respective dates, complied as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto as of their respective dates, and were prepared
in accordance with generally accepted accounting principles applied on a basis
consistent throughout the periods indicated and consistent with each other
(except as may be indicated in the notes thereto or, in the case of unaudited
statements included in Quarterly Reports on Form 10-Q, as permitted by Form 10-Q
under the Exchange Act). The Zany Financial Statements fairly present in all
material respects the consolidated financial condition and operating results of
Zany and its subsidiaries at the dates and during the periods indicated therein
(subject, in the case of unaudited statements, to normal, recurring year-end
audit adjustments). There has been no material change in Zany's accounting
policies except as described in the notes to the Zany Financial Statements.
4.6 No Brokers. Zany has not incurred, nor will it incur, directly or
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indirectly, any liability for brokerage or finders' fees or agents' commissions
or investment bankers' or financial advisory fees or any similar charges in
connection with this Agreement to any Person, nor has Zany or any Person taken
any action on which a claim for such payment could be based.
4.7 Representations Complete. None of the representations or warranties
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made by Zany herein contains any untrue statement of a material fact, or omits
to state any material fact necessary in order to make the statements contained
herein, in light of the circumstances with which they were made, not misleading.
5. INDEMNIFICATION.
5.1 Survival of Representations, Warranties and Covenants. All the
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representations, warranties and covenants set forth in this Agreement or in any
instrument delivered in connection herewith, and all rights of Zany and ONRP
with respect thereto, shall survive until the date that is three (3) years
following the date of this Agreement and shall terminate on such date. The
termination of any representation or warranty, however, shall not
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affect the right to indemnification for breach of such representation or
warranty if written notice of such breach is given prior to such termination.
5.2 Indemnification.
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(a) From and after the date of this Agreement, and subject to the
limitations set forth in this Section 5, ONRP will indemnify and hold harmless
Zany and its officers, directors, agents and employees, and each person, if any,
who controls or may control Zany within the meaning of the Securities Act
(hereinafter referred to individually as an "Indemnified Person" and
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collectively as "Indemnified Persons") from and against any and all losses,
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costs, damages, liabilities and expenses arising from claims, demands, actions,
causes of action, including, without limitation, reasonable legal fees and
including any of the foregoing incurred in settlement of any litigation
commenced or threatened (collectively, "Damages") resulting from, arising out of
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or based on (i) any misrepresentation or breach of any of the representations,
warranties, covenants and agreements given or made by ONRP in this Agreement or
the ONRP Disclosure Schedule or (ii) any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus or offering circular, or any amendment or supplement thereof,
incident to any such registration, qualification or compliance, based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
light of the circumstances in which they were made, to the extent that such
untrue statement or omission or allegation thereof is made in reliance upon and
in conformity with written information furnished to Zany by or on behalf of the
Holder (as defined herein) and stated to be specifically for use in preparation
of such registration statement, prospectus or offering circular; provided that
the indemnity shall not apply to the extent that such claim, loss, damage or
liability results from the fact that a current copy of the prospectus was not
made available to the Holder and such current copy of the prospectus would have
cured the defect giving rise to such loss, claim, damage or liability.
(b) From and after the date of this Agreement, and subject to the
limitations set forth in this Section 5, Zany will indemnify and hold harmless
ONRP and each of its Indemnified Persons from and against any and all Damages
resulting from, arising out of or based on (i) any misrepresentation or breach
of any of the representations, warranties, covenants and agreements given or
made by Zany in this Agreement or the Zany Disclosure Schedule or (ii) any
untrue statement (or alleged untrue statement) of a material fact contained in
any registration statement, prospectus or offering circular, or any amendment or
supplement thereof, incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in light of the circumstances in which they were made,
and will reimburse each Holder of the Registrable Securities (as defined herein)
and each person controlling such Holder, for reasonable legal and other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action as incurred; provided that Zany will
not be liable in any such case to the extent that any untrue statement or
omission or allegation thereof is made in reliance upon and in conformity with
written information furnished to Zany by or on behalf of such Holder and stated
to be specifically for use in preparation of such registration statement,
prospectus or offering circular; provided, further, that Zany will not be liable
in any such case where the claim, loss, damage or liability arises out of or is
related to the failure of the Holder to comply with the covenants and agreements
contained in this Agreement respecting sales of Registrable Securities, and
except
10
that the foregoing indemnity agreement is subject to the condition that, insofar
as it relates to any such untrue statement or alleged untrue statement or
omission or alleged omission made in the preliminary prospectus but eliminated
or remedied in (i) the amended prospectus on file with the SEC at the time the
registration statement becomes effective, (ii) in the amended prospectus filed
with the SEC pursuant to Rule 424(b) of the Securities Act, or (iii) in the
prospectus subject to completion under Rule 434 of the Securities Act, which
together meet the requirements of Section 10(a) of the Securities Act (the
"Final Prospectus"), such indemnity agreement shall not inure to the benefit of
----------------
any such Holder or any such controlling person, if a copy of the Final
Prospectus furnished by Zany to the Holder for delivery was not furnished to the
person or entity asserting the loss, liability, claim or damage at or prior to
the time such furnishing is required by the Securities Act and the Final
Prospectus would have cured the defect giving rise to such loss, liability,
claim or damage.
"Damages" as used herein is not limited to matters asserted by third
parties, but includes Damages incurred, suffered or sustained in the absence of
claims by a third party.
5.3 Certain Limitations.
-------------------
(a) Zany's right to indemnification for Damages under Section 5.2(a)
shall accrue only if the aggregate of all such Damages exceeds $5,000 (the
"Threshold Amount") and then only to the extent of any excess Damages over
----------------
the Threshold Amount. ONRP's right to indemnification for Damages under Section
5.2(b) shall accrue only if the aggregate of all such Damages exceeds the
Threshold Amount and then only to the extent of any excess Damages over the
Threshold Amount.
(b) No indemnification shall be made (or Damages counted against the
Threshold Amount) to Zany or ONRP, as the case may be, for matters to the extent
that they are covered by insurance (after reduction for the reasonable costs and
expenses of obtaining such insurance payment).
5.4 Certain Procedural Matters.
--------------------------
(a) A party seeking indemnification (the "Indemnified Party") shall
-----------------
give prompt written notice to the party from whom indemnification will be sought
(the "Indemnifying Party") of any claim for indemnification hereunder and shall
------------------
provide to the Indemnifying Party as soon as practicable thereafter all
information and documentation necessary to support and verify the claim asserted
(or which would be asserted if not below the Threshold Amount), and the
Indemnifying Party and his or its representatives shall be given access to all
personnel, properties, books and records that the Indemnifying Party reasonably
determines to be related thereto.
(b) If any legal proceeding is instituted or any claim or demand is
asserted by any person in respect of which and Indemnified Party may seek to
assert a claim for indemnification hereunder, the Indemnified Party shall
promptly cause written notice of the assertion of any such legal proceeding,
claim or demand to be made to the Indemnifying Party; provided that the failure
to so notify the Indemnifying Party shall not reduce or adversely affect the
right of the Indemnified Party to assert a claim for indemnification hereunder
with respect to such legal proceeding, claim or demand except to the extent that
the Indemnifying Party is materially prejudiced thereby. The Indemnifying Party
shall have the right at any time, at his or
11
its option and expense, to participate in (but not to control) the defense of
any such legal proceeding, claim or demand (including without limitation the
right to participate in negotiations and settlement discussions). The
Indemnified Party and the Indemnifying Party shall cooperate fully with each
other in connection with the defense, negotiation and settlement of any such
legal proceeding, claim or demand, and the Indemnifying Party shall be given
access to all personnel, properties, books and records that the Indemnifying
Party reasonably determines to be related thereto. No such legal proceeding,
claim or demand may be settled or compromised (nor shall any agreement be
entered into or commitment made with respect to any settlement or compromise)
without the written consent of the Indemnifying Party, which shall not be
unreasonably withheld.
5.5 Exclusive Remedy. This Section 5 sets forth the exclusive right of the
----------------
parties, from and after the date hereof, to obtain indemnification or other
compensation for, or to assert any claim in respect of, any Damages resulting
from the transactions contemplated by this Agreement, and all other rights are
expressly waived for the benefit of the parties hereto and their investors,
shareholders, officers, directors and employees. The limitations contained in
this Section 5 however, shall not limit the liability of any party hereto with
respect to any actual fraud of such party.
5.6 Resolution of Conflicts; Arbitration.
------------------------------------
(a) In case an Indemnifying Party shall object to any indemnification
claim or claims by an Indemnified Party, the Indemnifying Party and the
Indemnified Party shall attempt in good faith for thirty (30) days to agree upon
the rights of the respective parties with respect to each of such claims.
(b) If no such agreement can be reached after good faith negotiation,
either the Indemnifying Party or the Indemnified Party may, by written notice to
the other, demand arbitration of the matter unless the amount of the Damages is
at issue in pending litigation with a third party, in which event arbitration
shall not be commenced until such amount is ascertained or both the Indemnifying
Party and the Indemnified Party agree to arbitration; and in such event the
matter shall be settled by arbitration conducted by a single arbitrator. The
Indemnifying Party and the Indemnified Party shall jointly select an arbitrator.
If the Indemnifying Party and the Indemnified Party fail to agree upon an
arbitrator within ten (10) days, an arbitrator shall be selected for them by the
American Arbitration Association. The decision of the arbitrator so selected as
to the validity and amount of any indemnification claim shall be binding and
conclusive upon the parties to this Agreement.
(c) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. Any such arbitration shall be held in
Xxxxxxxxxx County, Pennsylvania under the commercial rules then in effect of the
American Arbitration Association. The non-prevailing party to an arbitration
shall pay its own expenses, the fees of each arbitrator, the administrative fee
of the American Arbitration Association, and the expenses, including without
limitation, attorneys' fees and costs reasonably incurred by the other party to
the arbitration.
6. REGISTRATION RIGHTS
12
6.1 Definitions. As used in this Agreement, the following terms shall have
-----------
the following meanings:
(a) "Affiliate" shall mean, with respect to any Person (as defined
---------
below), any other Person controlling, controlled by or under direct or indirect
common control with such Person (for the purposes of this definition "control,"
when used with respect to any specified Person, shall mean the power to direct
the management and policies of such person, directly or indirectly, whether
through ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" shall have meanings correlative to the
foregoing).
(b) "Business Day" shall mean a day Monday through Friday on which
------------
banks are generally open for business in New York.
(c) "Holders" shall mean ONRP and any person holding Registrable
-------
Securities or any person to whom the rights under Section 6 have been
transferred in accordance with Section 6.7 hereof.
(d) "Person" shall mean any person, individual, corporation, limited
------
liability company, partnership, trust or other nongovernmental entity or any
governmental agency, court, authority or other body (whether foreign, federal,
state, local or otherwise).
(e) The terms "register," "registered" and "registration" refer to
-------- ---------- ------------
the registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
(f) "Registrable Securities" shall mean not more than 312,500 shares
----------------------
of 1,250,000 Shares sold hereunder; provided, however, that securities shall
-------- -------
only be treated as Registrable Securities if and only for so long as they (A)
have not been disposed of pursuant to a registration statement declared
effective by the SEC, (B) have not been sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act so that
all transfer restrictions and restrictive legends with respect thereto are
removed upon the consummation of such sale, (C) are held by a Holder or a
permitted transferee pursuant to Section 6.7, or (D) have not become eligible
for sale pursuant to Rule 144 (or any successor thereto) under the Securities
Act.
(g) "Registration Expenses" shall mean all expenses incurred by Zany
---------------------
in complying with Section 6.2 hereof, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and expenses of counsel for Zany, blue sky fees and expenses and the
expense of any special audits incident to or required by any such registration
and all expenses incurred by any Holder, including, without limitation, all
underwriting discounts and selling commissions applicable to the sale of
Registrable Securities and all fees and expenses of legal counsel for any
Holder.
(h) "Registration Statement" shall have the meaning ascribed to such
----------------------
term in Section 6.2.
(i) "Registration Period" shall have the meaning ascribed to such
-------------------
term in Section 6.2.
13
6.2 Registration Statement. Subject to the last sentence of this Section
----------------------
6.2, Zany will, upon the request of ONRP, but in no event prior to the later of
(a) the receipt by Zany of either (i) a waiver from each holder, other than ONRP
(a "Private Placement Holder"), of outstanding registration rights on the date
------------------------
hereof of all existing rights with respect to the registration of shares of Zany
Common Stock in connection with the registration of shares of Zany Common Stock
pursuant to this section 6.2 or (ii) a request that the shares of non-waiving
Private Placement Holders be included in the Registration Statement (in no event
shall the process of obtaining waivers or accepting such registration requests
take longer than forty-five (45) days after ONRP's request) and (b) three months
following the date of this Agreement, (x) file a registration statement on Form
S-3, or if Zany is ineligible to use Form S-3, then on Form S-1 (the
"Registration Statement") with respect to (i) the resale of not more than
----------------------
312,500 shares of Common Stock sold pursuant to this Agreement and use its best
efforts to have such Registration Statement declared effective by the SEC prior
to the date which is ninety (90) days after the date on which the Registration
Statement is filed; provided, however, that Zany will have no obligation to
-------- --------
request that the Registration Statement be declared effective prior to the date
that is six (6) months after the date of this Agreement, and (y) cause such
Registration Statement to remain effective until the earlier of (i) such date as
the holders of the securities have completed the distribution described in the
Registration Statement or (ii) at such time that such shares are no longer, by
reason of Rule 144 under the Securities Act, required to be registered for the
sale thereof by such holders. The period of time during which Zany is required
hereunder to keep the Registration Statement effective is referred to herein as
the "Registration Period." Notwithstanding the foregoing, in the event a
-------------------
Private Placement Holder in lieu of delivering a waiver of registration rights,
requests that his shares be included in the Registration Statement, then the
number of shares to be registered by the Holders shall be reduced, on a pro rata
basis with such Private Placement Holder(s), so that the total number of shares
required to be registered pursuant to this Section 6.2 does not exceed 312,500
shares; provided, that in the event the number of shares held by the Holders is
reduced by 50% or more, then the Holders shall have the right, one time only, to
request that Zany file another Registration Statement pursuant to this Section
6.2. Within sixty (60) days of the date hereof, Zany agrees, regardless of
whether ONRP has exercised its rights under this Section 6.2, to use reasonable
efforts to seek a waiver of registration rights from the Private Placement
Holders in connection with the registration of shares of Zany Common Stock
pursuant to this Section 6.2.
6.3 Expenses. All Registration Expenses, regardless of whether the
--------
registration statement is declared effective, incurred in connection with any
registration, qualification, exemption or compliance pursuant to Section 6.2,
including, without limitation, all Registration Expenses relating to the sale of
securities registered by or on behalf of any Holder shall be borne by the
Holders, on a pro rata basis.
6.4 Further Agreements. In the case of the registration, qualification,
------------------
exemption or compliance effected by Zany pursuant to this Agreement, Zany shall,
upon reasonable request, inform each Holder as to the status of such
registration, qualification, exemption and compliance. Zany shall at ONRP's
expense:
(a) use its reasonable best efforts to keep such registration, and
any qualification, exemption or compliance under state securities laws which
Zany determines to obtain, continuously effective until the Holders have
completed the distribution described in the registration statement relating
thereto. Notwithstanding the foregoing, at Zany's election, Zany
14
may cease to keep such registration, qualification, exemption or compliance
effective with respect to any Registrable Securities, and the registration
rights of a Holder shall expire, at such time as they are no longer, by reason
of Rule 144 of the Securities Act (or other exemption from registration
acceptable to Zany) required to register for the sale thereof;
(b) advise the Holders:
(i) when the Registration Statement or any amendment thereto
has been filed with the SEC and when the Registration Statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the SEC for amendments or supplements to
the Registration Statement or the prospectus included therein or for
additional information;
(iii) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for such purpose;
(iv) of the receipt by Zany of any notification with respect to
the suspension of the qualification of the Registrable Securities included
therein for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose; and
(v) of the happening of any event that requires the making of
any changes in the Registration Statement or the prospectus so that, as of
such date, the statements therein are not misleading and do not omit to
state a material fact required to be stated therein or necessary to make
the statements therein (in the case of the prospectus, in the light of the
circumstances under which they were made) not misleading;
(c) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of any Registration Statement at the earliest
possible time;
(d) furnish to each Holder at least one copy of such Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, and, if the Holder so requests in writing, all
exhibits (including those incorporated by reference) in the form filed with the
SEC;
(e) during the Registration Period, deliver to each Holder as many
copies of the prospectus included in such Registration Statement and any
amendment or supplement thereto as such Holder may reasonably request; and Zany
consents to the use, consistent with the provisions hereof, of the prospectus or
any amendment or supplement thereto by each of the selling Holders of
Registrable Securities in connection with the offering and sale of the
Registrable Securities covered by the prospectus or any amendment or supplement
thereto;
(f) during the Registration Period, deliver to each Holder (i) as
soon as practicable, one copy of the following documents, other than those
documents available via XXXXX: (A) its annual report to its shareholders, if any
(which annual report shall contain financial statements audited in accordance
with generally accepted accounting principles in the United States of America by
a firm of certified public accountants of recognized standing); (B) if
15
not included in substance in its annual report to shareholders, its annual
report on Form 10-K (or similar form); (C) each of its quarterly reports to its
shareholders, and, if not included in substance in its quarterly reports to
shareholders, its quarterly report on Form 10-Q (or similar form), and (D) a
copy of the full Registration Statement (the foregoing, in each case, excluding
exhibits); and (ii) upon reasonable request, all exhibits excluded by the
parenthetical to the immediately preceding clause (D), and all other information
that is generally available to the public;
(g) prior to any sale of Registrable Securities by a Holder pursuant
to the Registration Statement, register or qualify or obtain an exemption for
offer and sale under the securities or blue sky laws of such jurisdictions as
any such Holders reasonably request in writing, provided that Zany shall not for
any such purpose be required to qualify generally to transact business as a
foreign corporation in any jurisdiction where it is not so qualified or to
consent to general service of process in any such jurisdiction, and do any and
all other acts or things reasonably necessary or advisable to enable the offer
and sale in such jurisdictions of the Registrable Securities covered by such
Registration Statement;
(h) cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be sold
pursuant to any Registration Statement free of any restrictive legends to the
extent not required at such time and in such denominations and registered in
such names as Holders may request at least three (3) business days prior to
sales of Registrable Securities pursuant to such Registration Statement;
(i) upon the occurrence of any event contemplated by Section
6.4(b)(v) above, Zany shall promptly prepare a post-effective amendment to the
Registration Statement or a supplement to the related prospectus, or file any
other required document so that, as thereafter delivered to purchasers of the
Registrable Securities included therein, the prospectus will not include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; and
(j) use its reasonable best efforts to comply with all applicable
rules and regulations of the SEC, and will make generally available to the
Holders not later than 45 days (or 90 days if the fiscal quarter is the fourth
fiscal quarter) after the end of its fiscal quarter in which the first
anniversary date of the effective date of the Registration Statement occurs, an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act.
6.5 Covenants of Holder.
-------------------
(a) Each Holder agrees that, upon receipt of any notice from Zany of
the happening of any event requiring the preparation of a supplement or
amendment to a prospectus relating to Registrable Securities so that, as
thereafter delivered to the Holders, such prospectus shall not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, each
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to the registration statement contemplated by Section 6.2 until its receipt of
copies of the supplemented or amended prospectus from Zany and, if so directed
by Zany, each Holder shall deliver to Zany all copies, other than permanent file
copies then in such Holder's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
16
(b) Each Holder shall suspend, upon request of Zany, any disposition
of Registrable Securities pursuant to the Registration Statement and prospectus
contemplated by Section 6.2 during (i) any period not to exceed two 46-day
periods within any one 12-month period Zany requires in connection with a
primary underwritten offering of equity securities and (ii) any period, not to
exceed one 60-day period per circumstance or development, when Zany determines
in good faith that offers and sales pursuant thereto should not be made by
reason of the presence of material undisclosed circumstances or developments
with respect to which the disclosure that would be required in such a prospectus
is premature, would have an adverse effect on Zany or is otherwise inadvisable.
(c) As a condition to the inclusion of its Registrable Securities,
each Holder shall furnish to Zany with such information regarding such Holder
and the distribution proposed by such Holder as Zany may request in writing or
as shall be required in connection with any registration, qualification or
compliance referred to in this Section 6.
(d) Each Holder hereby covenants with Zany (i) not to make any sale
of the Registrable Securities without effectively causing the prospectus
delivery requirements under the Securities Act to be satisfied, and (ii) if such
Registrable Securities are to be sold by any method or in any transaction other
than on a national securities exchange, the Nasdaq National Market, the Nasdaq
Small Cap Market or in the over-the-counter market, in privately negotiated
transactions, or in a combination of such methods, to notify Zany by letter at
least five (6) business days prior to the date on which the Holder first offers
to sell any such Registrable Securities.
(e) Each Holder acknowledges and agrees that the Registrable
Securities sold pursuant to the Registration Statement described in this Section
are not transferable on the books of Zany unless the stock certificate submitted
to the transfer agent evidencing such Registrable Securities is accompanied by a
certificate reasonably satisfactory to Zany to the effect that (i) the
Registrable Securities have been sold in accordance with such Registration
Statement and (ii) the requirement of delivering a current prospectus has been
satisfied.
(f) Each Holder agrees not to take any action with respect to any
distribution deemed to be made pursuant to such registration statement which
would constitute a violation of Regulation M under the Exchange Act or any other
applicable rule, regulation or law.
(g) At the end of the period during which Zany is obligated to keep
the Registration Statement current and effective as described above, the Holders
of Registrable Securities included in the Registration Statement shall
discontinue sales of shares pursuant to such Registration Statement upon receipt
of notice from Zany of its intention to remove from registration the shares
covered by such Registration Statement which remain unsold, and such Holders
shall notify Zany of the number of shares registered which remain unsold
immediately upon receipt of such notice from Zany.
6.6 Covenants of Zany. With a view to making available to the Holders the
-----------------
benefits of certain rules and regulations of the SEC which at any time permit
the sale of the Registrable Securities to the public without registration, Zany
shall use its reasonable best efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times;
17
(b) file with the SEC in a timely manner all reports and other
documents required of Zany under the Exchange Act; and
(c) so long as a Holder owns any unregistered Registrable Securities,
furnish to such Holder, upon any reasonable request, a written statement by Zany
as to its compliance with Rule 144 under the Securities Act, and of the Exchange
Act, a copy of the most recent annual or quarterly report of Zany, and such
other reports and documents of Zany as such Holder may reasonably request in
availing itself of any rule or regulation of the SEC allowing a Holder to sell
any such securities without registration.
6.7 Assignment. The rights to cause Zany to register Registrable
----------
Securities granted to the Holders by Zany under Section 6.1 may be assigned in
full by a Holder in connection with a transfer by such Holder of all, but not
less than all, of its Registrable Securities to a Person, provided, however,
that (i) such transfer may otherwise be effected in accordance with applicable
securities laws; (ii) such Holder gives prior written notice to Zany; and (iii)
such transferee agrees to comply with the terms and provisions of this
Agreement, and such transfer is otherwise in compliance with this Agreement.
Except as specifically permitted by this Section 6.7, the rights of a Holder
with respect to Registrable Securities as set out herein shall not be
transferable to any other Person, and any attempted transfer shall cause all
rights of such Holder therein to be forfeited.
7. RELEASE.
ONRP and Zany hereby release and forever discharge each other, and each
other's applicable successors, assigns and affiliates, and its and their
respective directors, officers, employees and representatives of and from any
and all past or present causes of action, actions, damages, losses, liabilities,
obligations, claims, and demands, known or unknown, including, without
limitation those arising out of any past performance, breach or alleged breach
of the WSSA or DSLA; provided, however, that such release shall not prevent ONRP
-------- -------
or Zany from seeking recovery of any damages, losses, liabilities or obligations
relating to the other's (or the other's affiliates') future performance, breach
or alleged breach of this Agreement or any other ongoing agreement between ONRP
and Zany (or their respective affiliates), or seeking recovery under the
indemnification provisions of this Agreement or any such other ongoing
agreement.
8. GENERAL.
8.1 Additional Agreements; Best Efforts. Each of the parties agrees to use
-----------------------------------
their reasonable best efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including cooperating fully with
the other party, including by provision of information. In case at any time
after the date of this Agreement any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and directors of
each party to this Agreement shall take all such necessary action.
8.2 Assignment and Binding Effect. All of the terms and provisions of this
-----------------------------
Agreement shall be binding upon and inure to the benefit of parties and their
successors and permitted assigns of the parties hereto; provided, however, that
-------- -------
no assignment, delegation or
18
other use of any right or duty may be made by either party without the prior
written consent of the other party, which consent shall not be unreasonably
withheld.
8.3 Entire Agreement; Amendment; Waiver. This Agreement sets forth the
-----------------------------------
entire understanding of the parties hereto with respect to the transactions
contemplated hereby. Each of the Schedules and Exhibits to this Agreement is
incorporated herein by this reference and expressly made a part hereof. Any and
all previous agreements and understandings between or among the parties
regarding the subject matter hereof, whether written or oral, are superseded by
this Agreement. This Agreement shall not be amended or modified except by a
written instrument duly executed by each of the parties hereto. Any extension or
waiver by any party of any provision hereto shall be valid only if set forth in
an instrument in writing signed on behalf of such party.
8.4 Counterparts. This Agreement may be executed in any number of
------------
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered (which deliveries may be made by telefax)
shall be deemed to be an original, and all of which counterparts taken together
shall constitute but one and the same instrument. It shall not be necessary in
making proof of this Agreement or any counterpart hereof to produce or account
for any of the other counterparts.
8.5 Expenses. Zany has paid and will pay the fees, expenses and
--------
disbursements of Zany and its agents, representatives, accountants and counsel
incurred in connection with the subject matter of this Agreement. ONRP has paid
and will pay the fees, expenses and disbursements of ONRP and its agents,
representatives, financial advisers, accountants and counsel incurred in
connection with the subject matter of this Agreement.
8.6 Notices. Any notice, request, claim, demand, waiver, consent, approval
-------
or other communication which is required or permitted hereunder shall be in
writing and shall be deemed given if delivered personally or sent by telefax
(with confirmation of receipt), on the third business day after posted by
registered or certified mail, postage prepaid, or on the next business day after
sent by recognized overnight courier service, as follows:
If to Zany to:
Zany Brainy, Inc.
0000 Xxxxxxxxxxx Xxxxxxxxx
Xxxx xx Xxxxxxx, XX 00000
Attention.: Legal Department
(Telecopy: 610-278-7800)
with a required copy to:
Xxxxxx, Xxxxx & Xxxxxxx LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
(Telecopy: 215-963-5299)
If to ONRP to:
19
Online Retail Partners Inc.
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Legal Department
(Telecopy: 212-653-8401)
or to such other address as the person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein.
8.7 Governing Law. This Agreement and the rights and obligations of the
-------------
parties under this Agreement shall be governed by, and construed and interpreted
in accordance with the laws of the Commonwealth of Pennsylvania.
8.8 Severability. If any provision of this Agreement or the application
------------
thereof to any person or circumstance is held invalid or unenforceable in any
jurisdiction, the remainder hereof, and the application of such provision to
such person or circumstance in any other jurisdiction or to other persons or
circumstances in any jurisdiction, shall not be affected thereby, and to this
end the provisions of this Agreement shall be severable.
8.9 No Benefit to Others. The representations, warranties, covenants and
--------------------
agreements contained in this Agreement are for the sole benefit of the parties
hereto and, in the case of Article 5, the Zany Indemnified Persons and the ONRP
Indemnified Persons, and their heirs, administrators, personal representatives,
successors and assigns, and they shall not be construed as conferring any rights
on any other persons.
8.10 Further Representations. Each party to this Agreement acknowledges and
-----------------------
represents that it, he or she has been represented by its, his or her own legal
counsel in connection with the transactions contemplated by this Agreement, with
the opportunity to seek advice as to its, his or her legal rights from such
counsel. Each party further represents that it is being independently advised
as to the tax consequences of the transactions contemplated by this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
20
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
ZANY BRAINY, INC.
By:_____________________________
Name:
Title:
ONLINE RETAIL PARTNERS INC.
By:_____________________________
Name:
Title:
[Signature page to Stock Purchase Agreement]
21
