EXHIBIT 10.5
ASSET PURCHASE AGREEMENT
DATED: May 12, 1999
AMONG: Plenum Communications, Inc. ("Buyer")
a Minnesota corporation
AND: LION, Inc. ("LION")
a Washington corporation
AND: IMark, Inc.
Colorado corporation
IMark Design Group
a Colorado limited liability company
(jointly and severally referred to as "Sellers")
AND: Xxxxxxx X. Xxxxxx
Dhitipun Penvari (jointly and severally referred to
as "Shareholders")
(all collectively referred to as "the Parties")
1.0 RECITALS
1.1 Sellers are engaged in the business of commercial website
development for the mortgage industry. The business operations of Sellers
have been carried on as distinct businesses under the name of IMark, Inc.
and/or IMark Design Group. Shareholders are the owners, of record and
beneficially, of all the issued and outstanding capital stock and ownership
interests of Sellers.
1.2 Subject only to the limitations and exclusions contained in
this Asset Purchase Agreement ("Agreement") and on the terms and conditions
set forth below, Sellers desire to sell and Buyer desires to purchase
substantially all of the assets, business operations (and assume certain of
the liabilities) of Sellers. The assets and business operations of Sellers
not desired to be purchased by Buyer are referred to in this Agreement as the
Excluded Assets.
1.3 This Agreement contemplates a transaction in which on the
Closing Date the Acquired Assets shall be sold, assigned, transferred, and
conveyed to LION, and become the assets of LION.
NOW THEREFORE, in consideration of the recitals and of the respective
covenants, representations, warranties and agreements contained in this
Agreement, and intending to be legally bound, the Parties agree as follows:
2.0 DEFINITIONS
2.1 "AGREEMENT" means this Asset Purchase Agreement and all of its
attached exhibits and schedules,; "hereof," "hereto," and
"hereunder" and similar expressions mean and refer
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to this Agreement and not to any particular Section or
paragraph; "Section," "paragraph" or "clause" means and
refers to the specified article, section, paragraph or clause
of this Agreement.
2.2 "ACQUIRED ASSETS" means all right title and interest of the
Sellers in and to (i) the Specified Assets, consisting of the
Intellectual Property and other assets specified in SCHEDULE
2.2.1, and (ii) the properties, assets and rights of every
nature, kind and description, tangible and intangible
(including goodwill), whether real, personal or mixed,
whether accrued, contingent or otherwise and whether now
existing or hereinafter acquired (other than the Excluded
Assets) primarily relating to or used or held for use in
connection with the Business of Sellers as may exist on the
Closing Date, including without limitation all those items in
the following categories:
(a) all machinery, equipment, furniture, furnishings,
automobiles, trucks, vehicles, tools, dies, molds,
parts and similar property;
(b) all inventories of raw materials, work in progress,
finished products, goods, spare parts, replacement
and component parts, and office and other supplies
(collectively, the "Inventories"), including
Inventories held at any location controlled by
Sellers and Inventories previously purchased and in
transit to any Seller at Seller's location;
(c) all rights in and to products sold or leased
(including, but not limited to, products hereafter
returned or repossessed and unpaid sellers' rights of
rescission, replevin, reclamation and rights to
stoppage in transit);
(d) all rights (including but not limited to any and all
Intellectual Property rights) in and to the products
sold or leased and in and to any products or other
Intellectual Property rights under research or
development prior to or on the Closing Date;
(e) all of the rights of Sellers under all contracts,
arrangements, licenses, leases and other agreements,
including, without limitation, any right to receive
payment for products sold or services rendered, and
to receive goods and services, pursuant to these
agreements and to assert claims and take other
rightful actions in respect of breaches, defaults and
other violations of these contracts, arrangements,
licenses, leases and other arrangements;
(f) all credits, prepaid expenses, deferred charges,
advance payments, security deposits and prepaid items;
(g) all notes and accounts receivable held by the Sellers
and all notes, bonds and other evidences of
indebtedness of and rights to receive payments from
any Person held by the Sellers;
(h) all Intellectual Property and all rights thereunder
or in respect thereof primarily relating to or used
or held for use in connection with the Business,
including but not limited to, rights to xxx for and
remedies against past, present and future
infringements, and rights of priority and protection
of interests therein under the laws of any
jurisdiction worldwide and all tangible embodiments
(together with all Intellectual Property rights
included in the Specified Assets);
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(i) all books, records, manuals and other materials (in
any form or medium), including, without limitation,
all records and materials maintained at the offices
of Sellers, advertising matter, catalogues, price
lists, correspondence, mailing lists, lists of
customers, distribution lists, photographs,
production data, sales and promotional materials and
records, purchasing materials and records, personnel
records, quality control records and procedures,
blueprints, research and development files, records,
data books, Intellectual Property disclosures, media
materials and plates, accounting records, sales order
files and litigation files;
(j) to the extent their transfer is permitted by law, all
Governmental Approvals, including all applications
therefor;
(k) all rights to causes of action, lawsuits, judgments,
claims and demands of any nature available to or being
pursued by the Sellers with respect to the Business or
the ownership, use, function or value of any Acquired
Asset, whether arising by way of counterclaim or
otherwise; and
(l) all guarantees, warranties, indemnities and similar
rights in favor of the Sellers with respect to any
Acquired Asset;
PROVIDED HOWEVER, that the Acquired Assets shall not include
(i) the Excluded Assets set forth in Schedule 2.2.2 of this
Agreement and all rights thereunder (which Schedule 2.2.2
shall include as an Excluded Asset cash totaling Forty
Thousand Dollars ($40,000), if this amount is in the
principal bank account of Sellers at the Closing Time), or
(ii) the corporate charter, qualifications to conduct
business as a corporation or business entity, arrangements
with registered agents relating to these qualifications,
taxpayer and other identification numbers, seals, minute
books, stock transfer books, blank stock certificates, and
other documents relating to the organization, maintenance and
existence of Sellers as business entities.
2.3 "ASSUMED LIABILITIES" means any and all liabilities,
obligations and commitments relating exclusively to the
Business or the Acquired Assets:
(a) specified in SCHEDULE 2.3 ("Assumed Liability
Schedule")
(b) that are incurred after the date of the Assumed
Liability Schedule in the ordinary course of business
consistent with prior practice and in accordance with
the terms of this Agreement, and that are not,
individually or in the aggregate, material to the
Business
(c) arising out of the agreements, contracts and
commitments set forth on the SCHEDULE 5.7, but not
including any obligation or liability for any breach
thereof occurring prior to the Closing Date
(d) liabilities in respect of Transferred Employees to
the extent specifically assumed by Buyer pursuant to
Section 8.2(e)
2.4 "BEST OF SELLER'S KNOWLEDGE" shall mean the knowledge of the
Shareholders and/or members and officers of Sellers, including
what they know without the duty to inquire;
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2.5 "BUSINESS" means the business presently and heretofore
carried on by the Sellers at the offices located at 0000 X.
Xxxxx Xxxx., Xxx. 000, Xxxxxx, XX 00000 relating generally
to commercial website development, to be acquired by Buyer
pursuant to this Agreement, consisting of the Assets, and the
Assumed Liabilities, but not including the Excluded Assets.
2.6 "BUYER" has the meaning set forth in the preface above.
2.7 "CLOSING" means the completion of the sale and purchase of the
Acquired Assets by the transfer and delivery of documents of
title and the payment of the purchase price as contemplated in
this Agreement;
2.8 "CLOSING DATE" means the 17th of May, 1999, or such other date
as the Parties may agree as to the date upon which the Closing
shall take place;
2.9 "CLOSING TIME" means 1:00 o'clock Pacific Daylight Time in
the afternoon on the Closing Date or such other time on the
Closing Date as the Parties may agree as to the time on the
Closing Date upon which the Closing shall take place;
2.10 "CONFIDENTIAL INFORMATION" means any information exchanged by
the parties, including but not limited to trade secrets,
know-how, formulas, processes, data, network configuration
and rights-of-way, drawings, proprietary information,
customer lists, prices, and any non-public information which
concerns the business and operations of a party to this
Agreement, and shall also include any information exchanged
pursuant to this Agreement. Confidential Information, when
disclosed in written, machine-readable, or other tangible
form by one party to the other party, may be clearly marked
as "Confidential" or as otherwise specified as confidential
by the policies of the Parties. Information which is of an
apparent confidential nature, either in writing or orally,
shall be treated as Confidential Information.
2.11 "EXCLUDED ASSETS" has the meaning set forth in Section 2.2
above.
2.12 "GAAP" means United States generally accepted accounting
principles as in effect from time to time
2.13 "INTELLECTUAL PROPERTY" means any and all United States and
foreign: (a) patents (including design, utility and software
patents) and patent applications (including patent
disclosures awaiting filing, reissues, divisions,
continuations and extensions), patent disclosures awaiting
filing determination, inventions and improvements thereto;
(b) trademarks, service marks, trade names, trade dress,
logos, Internet domain names, business and product names (but
excluding the name IMark), slogans, registrations and
applications for registration; (c) copyrights (including
software) and registrations thereof; (d) inventions,
processes, designs, formulae, trade secrets, know-how,
confidential and technical information, manufacturing,
engineering and technical drawings, product specifications
and confidential business information; (e) intellectual
property rights similar to any of the foregoing; (f) copies
and tangible embodiments thereof (in whatever form or medium,
including electronic media) and (g) all computer software
(including data and related documentation).
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2.14 "LIENS" means any mortgage, pledge, hypothecation, right of
others, claim, security interest, encumbrance, lease, sublease,
license, occupancy agreement, adverse claim or interest,
easement, covenant, encroachment, burden, title defect, title
retention agreement, voting trust agreement, interest, equity,
option, lien, right of first refusal, charge or other
restrictions or limitations of any nature whatsoever, including
but not limited to those which may arise under any contracts.
2.15 "LION" has the meaning set forth in the preface above.
2.16 "ORGANIZATIONAL DOCUMENTS" refers to the (a) articles of
incorporation and bylaws of a corporation; (b) the certificate
of formation or articles of organization and the operating
agreement of a limited liability company; (c) any charter or
similar document adopted or filed by the corporation or limited
liability company prepared in connection with the creation,
formation or organization of a corporation entity.
2.17 "PERSON" means any natural person, corporation, firm,
partnership, association, company, trust, business trust,
government, governmental agency or any other entity.
2.18 "PLENUM SHARES" means three hundred fifty-two thousand nine
hundred forty-two (352,942) common shares in the capital
stock of Buyer to be issued to Sellers in payment and
satisfaction of the Purchase Price. The Plenum Shares are
equal to that number of shares of Buyer common stock which
equal $600,000, divided by the "Average Market Price," which
is equivalent to the average closing price of Buyer's common
stock in the over-the-counter market as quoted on OTC
Bulletin Board system for the 20 trading days last preceding
the date of this Agreement.
2.19 "PURCHASE PRICE" shall have the meaning set forth in Section
4.4 below.
2.20 "SEC" means the United States Securities and Exchange
Commission.
2.21 "SECURITIES ACT" means collectively the Securities Act of 1933,
as amended, and the rules and regulations promulgated
thereunder.
2.22 "SELLERS" has the meaning set forth in the preface above.
2.23 "SELLERS ENTITY" or "SELLERS ENTITIES" refers to each of the
two companies: IMark, Inc., a Colorado corporation and IMark
Design Group, a Colorado limited liability company.
2.24 "SHAREHOLDERS" has the meaning set forth in the preface above.
2.25 "SPECIFIED ASSETS" is defined in Section 2.2 above.
2.26 "TAX" means any tax levied by federal, state, local or foreign
governments on income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security, unemployment,
disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on
minimum, estimated or other tax of any kind whatsoever,
including any interest, penalty or addition thereto, whether
disputed or not.
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2.27 "TRANSFERRED EMPLOYEES" has the meaning set forth in Section
8.2(e) below.
3.0 SCHEDULES AND EXHIBITS
3.1 The following are the Schedules and Exhibits annexed hereto and
incorporated by reference and deemed to be part of this Agreement:
Schedule 2.2.1 - Intellectual Property and other Specified Assets
Schedule 2.2.2 - Excluded Assets
Schedule 2.3 - Assumed Liabilities
Schedule 4.1 - Liens on Acquired Assets; Conflicts and Consents
Schedule 4.5 - Allocation of Purchase Price
Schedule 5.7 - Contracts, Leases, Rental Agreements
Schedule 5.8 - Undisclosed Liabilities
Schedule 5.12 - Receivables
Schedule 5.13 - Customers
Schedule 5.18 - Employees
Schedule 5.21 - Bank Accounts
Schedule 5.22 - Insurance
Exhibit A - Form of Employment Agreement for Key Employees
Exhibit B - Forms of Assignment
Exhibit C - Shareholders' Consent
4.0 BASIC TRANSACTION
4.1 SALE AND PURCHASE OF ASSETS. Subject to and upon the terms
and conditions set forth in this Agreement, on the Closing Date the Sellers
will sell, transfer, convey, assign and deliver to LION, and LION will
purchase or acquire from the Sellers, all right, title and interest of the
Sellers in and to the Acquired Assets. The Acquired Assets shall become the
assets of LION. The Acquired Assets shall include, but not be limited to,
the Specified Assets consisting of the Intellectual Property and other assets
listed on SCHEDULE 2.2.1.
The Acquired Assets shall be transferred or otherwise
conveyed to the Buyer free and clear of all liabilities, obligations, liens
and encumbrances, excepting only the Assumed Liabilities listed in SCHEDULE
2.3 and Liens listed in SCHEDULE 4.1.
4.2 EXCLUDED ASSETS. The Sellers will retain and not transfer,
and the Buyer will not purchase or acquire, the Excluded Assets listed on
SCHEDULE 2.2.2, PROVIDED HOWEVER, that the Excluded Assets shall include cash
of Forty Thousand Dollars ($40,000), if this amount is in the principal bank
account of Sellers at the Closing Time.
4.3 CLOSING. The Closing shall take place at on or before the
close of business ("Closing Time") on the 17th of May, 1999 ("Closing Date"),
at such time and place as the Parties may agree.
4.4 PURCHASE PRICE. On the terms and subject to the conditions
set forth in this Agreement, Buyer agrees to purchase the Acquired Assets and
to assume or to cause LION to assume the Assumed Liabilities for an aggregate
Purchase Price of Six Hundred Thousand Dollars ($600,000). On Closing, the
Acquired Assets shall be sold, assigned, transferred and conveyed to LION,
and Buyer shall pay the Purchase Price as follows:
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4.4.1 PLENUM SHARES. By the issuance by Buyer of the
Plenum Shares to the Sellers (or to the Shareholders,
at the election of the Sellers), which shall be equal
to that number of shares of Buyer common stock which
shall equal Six Hundred Thousand Dollars ($600,000),
divided by the Average Market Price (as defined in
Section 2.18 above). If on the date one year from the
date of Closing (May 17, 2000), the Average Market
Price (as defined in Section 2.18 above) of the
Plenum Shares is less than Six Hundred Thousand
Dollars ($600,000), Buyer covenants and agrees to
make up the difference by, in the sole discretion of
Buyer, either (i) a payment of cash; or (ii) through
the issuance to the Sellers (or to the Shareholders,
at the election of the Sellers) of additional shares
of common stock of Buyer (the "Additional Plenum
Shares"). The Sellers and Shareholders acknowledge
and agree that none of the Plenum Shares (and, if
applicable, the Additional Plenum Shares), nor any
portion thereof, may be sold, conveyed, transferred,
traded or disposed of on or before twelve (12) months
after Closing, provided that no more than Twenty Five
Thousand (25,000) Plenum Shares (including, if
applicable, Additional Plenum Shares) may be sold per
month after May 17, 2000, unless the Sellers give
prior written notice to the Buyer.
4.5 ALLOCATION OF PURCHASE PRICE. The Parties agree to allocate
the aggregate of the Purchase Price and the Assumed Liabilities
(collectively, the "Aggregate Purchase Price") for all purposes including
financial accounting and tax purposes, in accordance with the allocation
schedule to be prepared by the Buyer attached as SCHEDULE 4.5.
4.6 ASSUMPTION OF LIABILITIES. Subject to the terms and
conditions set forth in this Agreement, at the Closing the Buyer shall assume
or to cause LION to assume and agree to pay, honor and discharge when due all
of the Assumed Liabilities, in accordance with the schedule attached as
SCHEDULE 2.3. At the Closing the Buyer shall assume or to cause LION to
assume and agree to pay, honor and discharge all liabilities, obligations and
commitments relating to the real property and office equipment leases listed
in SCHEDULE 4.1. In addition, the Company will take all reasonable steps
necessary to remove Shareholders from personal liability on the real property
and office equipment leases listed in SCHEDULE 4.1.
4.7 EXCLUDED LIABILITIES. Notwithstanding the provisions of
Section 4.6 or other provision of this Agreement or any of its schedules or
exhibits, and regardless of any disclosure to Buyer, the Buyer shall not
assume any liabilities, obligations or commitments of any Seller or the
Shareholders relating to or arising out of the operation of the Business or
the ownership of the Acquired Assets prior to the Closing other than the
Assumed Liabilities and the Liens listed in SCHEDULE 4.1. .
4.8 TRANSFER OF BANK ACCOUNTS AND ASSETS. On the Closing Date,
Sellers and Shareholders shall deliver to Buyer all such executed documents
as may be required to assign, transfer and convey to Buyer or to LION the
Acquired Assets, including but not limited to, any cash contained in the Bank
Accounts set forth in SCHEDULE 5.21. Each of Sellers and Shareholders hereby
appoints Buyer and Buyer's executive officers as their attorney-in-fact to
file all such documents on or after the Closing Date.
4.9 FURTHER ASSURANCES. Each of Sellers and Shareholders from time
to time after the Closing, at Buyer's request, will execute, acknowledge and
deliver to Buyer such other instruments of conveyance and transfer and will take
such other actions and execute and deliver such other documents,
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certifications and further assurances as Buyer or LION may reasonably require
in order to vest more effectively in Buyer or in LION, or to put Buyer or
LION more fully in possession of, any of the Acquired Assets, or to better
enable Buyer or LION to complete, perform or discharge any of the Assumed
Liabilities. Each of the Parties will cooperate with the other and execute
and deliver to the other parties such other instruments and documents and
take such other actions as may be reasonably requested from time to time by
any other party to this Agreement as necessary to carry out, evidence and
confirm the intended purposes of this Agreement.
4.10 CONSENT OF THIRD PARTIES. Notwithstanding anything to the
contrary in this Agreement, this Agreement shall not constitute an agreement
to assign or transfer any governmental approval, instrument, contract, lease,
permit or other agreement or arrangement or any claim, right or benefit
arising under this Agreement or resulting therefrom if any assignment or
transfer or an attempt to make such an assignment or transfer without the
consent of a third party would constitute a breach or violation or affect
adversely the rights of Buyer under this Agreement. Any transfer or
assignment to the Buyer or LION by Sellers of any interest under any such
instrument, contract, lease, permit or other agreement or arrangement that
requires the consent of a third party shall be made subject to such consent
or approval being obtained. If any such consent or approval is not obtained
on or prior to the Closing Date, Sellers shall continue to use all reasonable
efforts to obtain any such approval or consent after the Closing Date until
such time as it has been obtained. Sellers will cooperate with Buyer or LION
in any lawful and economically feasible arrangement to provide that Buyer or
LION shall receive the interest of Sellers, as the case may be, in the
benefits under any such instrument, contract, lease, permit or other
agreement or arrangement, including performance by Sellers as agent; PROVIDED
HOWEVER, that Buyer or LION shall undertake to pay or satisfy the
corresponding liabilities for the real property and office equipment leases
listed in SCHEDULE 4.1, and for the enjoyment of the benefit to the extent
the Buyer or LION would have been responsible if the consent or approval had
been obtained. Sellers shall pay and discharge, and shall indemnify and hold
Buyer or LION harmless from and against, any and all out-of-pocket costs of
seeking to obtain or obtaining any such consent or approval whether before or
after the Closing Date. Nothing in this Section shall be deemed a waiver by
Buyer of its right to have received on or before the Closing Date an
effective assignment of all of the Acquired Assets.
5.0 REPRESENTATIONS AND WARRANTIES OF SELLERS
5.1 DUE AUTHORIZATION. Sellers have all necessary corporate
power, authority and capacity to enter into this Agreement and the agreements
and other instruments contemplated herein and to perform the respective
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereunder have been, and on the
Closing Date will have been, duly authorized by all necessary company action
on the part of the Sellers. Sellers have all necessary power, authority and
capacity to enter into this Agreement and the agreements and other
instruments contemplated herein and the consummation of the transactions
contemplated hereunder. This Agreement when executed constitutes, and on the
Closing Date will constitute legal, valid and binding obligations of Sellers
enforceable against each of them in accordance with the its terms.
5.2 ORGANIZATION AND GOOD STANDING. Organization and Good
Standing. Sellers consist of a corporation and a limited liability company,
duly incorporated, duly organized, validly existing, and in good standing
under the laws of their respective jurisdictions, and have all necessary
power, authority and capacity to own or lease their property and assets
(including, without limitation, the Specified Assets) and to carry on the
Business as presently conducted by them. Neither the nature of the Business
nor the location or character of the property owned or leased by Sellers
requires Sellers to be registered, recorded, licensed or otherwise qualified
as a foreign corporation or to be in good standing in any
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jurisdiction other than in Colorado. Sellers will deliver to Buyer, prior to
Closing, copies of the Organizational Documents of each Sellers Entity, as
currently in effect.
5.3 CONFLICTS. Except as set forth in SCHEDULE 4.1, the
disposition of the Acquired Assets and the entering into and performance of
this Agreement and the agreements and other instruments contemplated herein
will not (with or without the giving of notice or the lapse of time or both):
(a) contravene, conflict with, or result in a violation of (i) any
provision of the Organizational Documents of Sellers, or (ii)
any resolution adopted by the directors, manager(s) or the
members of any Sellers Entity;
(b) contravene, conflict with, or result in a violation of any
legal requirement, applicable law or any order to which any
Sellers Entity or either Sellers, or any of the Acquired
Assets owned or used by any Sellers Entity, may be subject;
(c) contravene, conflict with, or result in a violation of any of
the terms or requirements of any governmental authorization
that is held by any Sellers Entity or that otherwise relates
to the business of, or any of the assets owned or used by,
any Sellers Entity;
(d) contravene, conflict with, or result in a violation or breach
of any provision of any contract, instrument or third party
agreement to which Sellers or Shareholders may be a party, or
by which any of their assets may be subject, or give any
Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to
cancel, terminate, or modify, any applicable contract; or
result in the imposition or creation of any encumbrance upon
or with respect to any of the assets owned or used by any
Sellers Entity.
Except as set forth in SCHEDULE 4.1, Sellers Entities are not and will
not be required to give any notice to or obtain any consent from any
Person in connection with the execution and delivery of this Agreement
or the consummation or performance of any of the contemplated
transactions.
5.4 FINANCIAL STATEMENTS. Sellers represents and warrants to
Buyer that the following financial statements have been or will be delivered
to Buyer prior to Closing, and that each document is or will be, to the Best
of Seller's Knowledge, true, correct, and complete:
5.4.1 Unaudited balance sheets of Sellers as of December
31, 1998, and as of April 30, 1999 ("Balance Sheets"), and the
related unaudited consolidated statements of income, changes in
equity, and cash flow for the fiscal year or interim period then
ended. The financial statements referred to in this Section have been
prepared in accordance with Sellers' internal accounting practices
and have not been prepared in accordance with GAAP, but present
fairly the financial condition and the results of operations, changes
in equity, and cash flow of Sellers as at the respective dates of and
for the periods referred to in such financial statements, subject to
adjustments that to the Best of Seller's Knowledge are not material.
5.5 BOOKS AND RECORDS. The books of account, minute books,
capitalization record books, and other records of Sellers, all of which will
be made available to Buyer prior to Closing, are, to the Best of Seller's
Knowledge, complete and correct and have been maintained in accordance with
sound business practices, are not false, misleading, or fail to state a
material facts nor are they based on any misrepresentations of any officers
or directors of Sellers. The minute books of Sellers contain accurate and
complete records of all meetings held of, and corporate action taken by, the
members, the
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manager(s), and committees of Sellers, and no meeting of any such members,
manager(s), or committees has been held for which minutes have not been
prepared and are not contained in such minute books.
5.6 ASSETS. Except as set forth in SCHEDULE 4.1, Sellers have
good title to all Acquired Assets free and clear of all Liens, except liens
for current taxes not yet due. Prior to Closing, Sellers will provide any
and all true and correct copies of instruments by which Sellers holds
property and interests, all contracts, all insurance policies, opinions,
abstracts, and surveys in the possession of Sellers and relating to such the
ownership or contractual rights to the Acquired Assets. The Acquired Assets,
together with the services of the Transferred Employees, comprise all assets
and services required for the continued conduct of the Business by Buyer as
now being conducted. Except for Excluded Assets, there are no assets or
properties used in the operation of the Business and owned by any Person
other than the Sellers that will not be leased or licensed to Buyer under
valid, current leases or license arrangements. The Acquired Assets are
structurally sound, are in good operating condition and repair, and are
adequate for the uses to which they are currently used or are held for use,
and none of the Acquired Assets or equipment is in need of maintenance or
repairs except for ordinary, routine maintenance and repairs that are not
material in nature or cost.
5.7 CONTRACTS. SCHEDULE 5.7 contains a complete and correct list
of all agreements, contracts, commitments, leases, instruments, arrangements
and other documents which have been made available for review by Sellers,
together with all amendments thereto, and accurate descriptions of all oral
contracts. There are no other agreements, contracts, commitments, leases,
arrangements and other documents by which any of the Acquired Assets are
bound or affected or to which Sellers or Shareholders are a party or bound in
connection with the Business or its Assets. Except as set forth in SCHEDULE
4.1, to the Best of Seller's Knowledge there does not exist under any
contract any event of default or event or condition that, after notice or
lapse of time or both, would constitute a violation, breach or default on the
part of Sellers. None of the Sellers or Shareholders has outstanding any
power of attorney relating to the Business.
5.8 NO UNDISCLOSED LIABILITIES. Except to the extent reflected
or reserved against in the Balance Sheets (including the notes thereto), or
incurred subsequent to the date thereof and disclosed in SCHEDULE 5.8 or
elsewhere in this Agreement (including the Schedules hereto) and except for
unsecured current obligations and liabilities incurred in the ordinary and
usual course of the Business and which are not materially adverse to the
nature and manner of conducting the Business, or the operations, assets,
properties, future prospects or financial condition of the Sellers, the
Sellers do not have any material outstanding indebtedness or any material
liabilities or obligations (whether accrued, determinable, absolute,
contingent or otherwise) in respect of which the Sellers or the Buyer may be
liable on or after the completion of the transactions contemplated by this
Agreement. None of Sellers employees is now or will by the passage of time
become entitled to receive any vacation time, vacation pay or severance pay
attributable to services rendered prior to the Closing Date except as
disclosed on the Balance Sheets or in SCHEDULE 5.8.
5.9 TAXES.
5.9.1 Sellers have filed or caused to be filed, on a timely
basis since inception, all federal, state, municipal or local tax
returns that are or were required to be filed by or with respect to
any of them, either separately or as a member of a group, pursuant to
applicable legal requirements. Sellers have delivered or made
available to Buyer copies of, and SCHEDULE 5.9 contains a complete
and accurate list of, all such tax returns relating to income or
franchise taxes filed from the date of formation through March 31,
1999 and a complete list of audits of
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all tax returns. Except as set forth in SCHEDULE 2.3, Sellers have
paid, or made provision for the payment of, all taxes that have or
may have become due pursuant to those tax returns or otherwise, or
pursuant to any assessment received by Sellers or any Sellers Entity,
except such taxes, if any, as are listed in SCHEDULE 5.9 and are
being contested in good faith and as to which adequate reserves have
been provided in the Balance Sheets.
5.9.2 Except as described in SCHEDULE 5.9, no Sellers or
Sellers Entity has given or been requested to give waivers or
extensions (or is or would be subject to a waiver or extension given
by any other Person) of any statute of limitations relating to the
payment of taxes of any Sellers Entity or for which any Sellers
Entity may be liable.
5.9.3 The charges, accruals, and reserves with respect to
taxes on the respective books of each Sellers Entity are adequate and
are at least equal to that Sellers Entity's liability for taxes and
there exists no proposed tax assessment against any Sellers Entity
except as disclosed in the Balance Sheets or as described in SCHEDULE
5.9. All taxes that any Sellers Entity is or was required by legal
requirements to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the proper
governmental body or other Person.
5.9.4 All tax returns filed by (or that include on a
consolidated basis) any Sellers Entity are true, correct, and complete.
5.9.5 Notwithstanding anything to the contrary herein, except
as set forth in SCHEDULE 2.3, Sellers shall remain responsible
subsequent to the Closing Date, for the filing of any tax returns and
the payment of any taxes, including but not limited to income taxes,
personal property taxes, franchise employment taxes, sales and/or use
taxes of Sellers required to be paid with respect to taxable periods
prior to the Closing Date (even if such tax claim, audit, notice or
final determination is not received until subsequent to the Closing
Date).
5.10 BUSINESS CARRIED ON IN ORDINARY COURSE. The Business has
been carried on in the ordinary and usual course since the date of the
Balance Sheet and to the Best of Seller's Knowledge there has been no change
in the affairs, business, prospects, operations or condition of the Business,
financial or otherwise, or arising as a result of any legislative or
regulatory change, revocation of any license or right to do business, fire,
explosion, accident, casualty, labor problem, flood, drought, riot, storm,
act of God or otherwise, except changes occurring in the ordinary and usual
course of the Business and which, in the aggregate, have not materially
adversely affected and will not materially adversely affect the nature and
manner of conducting the Business, or the operations, assets, properties,
future prospects or financial condition of the Corporation.
5.11 LITIGATION AND CLAIMS. There is no suit, action, litigation,
labor grievance or complaint, investigation, (including, without limitation,
investigations under human rights or health and safety legislation) or
administrative, governmental, arbitration or other proceeding (whether or not
purportedly on behalf of the Sellers), including without limitation appeals
and applications for review, in progress, or to the best knowledge and belief
of the Sellers (after due inquiry from the Shareholders), pending or
threatened against or relating to the Sellers, or affecting its respective
properties or the Business, or affecting the Acquired Assets, or affecting
the right of the Buyer to enter into this Agreement or perform the Buyer's
obligations hereunder.
5.12 ACCOUNTS RECEIVABLE. All accounts receivable of Sellers that
are reflected on SCHEDULE 5.12 or on the Balance Sheets or accounting records
of Sellers, (collectively, the "Accounts
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Receivable") represent valid obligations arising from sales actually made or
services actually performed in the ordinary course of business, as of the
date of execution of this Agreement. Except as reflected on SCHEDULE 5.12,
to the Best of Seller's Knowledge, each of the Accounts Receivable either has
been or should be collected in full, within ninety days after the day on
which it first becomes due and payable. There is no contest, claim, or right
of set-off, other than arising in the ordinary course of business, under any
contract with any obligor of an Accounts Receivable relating to the amount or
validity of such Accounts Receivable.
5.13 CUSTOMERS. SCHEDULE 5.13 sets forth: (a) all the names and
addresses of all current customers of each Seller that ordered goods or
services from the Seller during the 12-month period ended April 30, 1999; and
(b) the amount for which such customer was invoiced during the period.
Except as disclosed on SCHEDULE 5.13, no Seller has received any notice or
has any reason to believe that any of these customers have ceased, or will
cease, to use the goods or services of the Business, or has sought or is
seeking to reduce the price it will pay for the goods or services of the
Business. Buyer acknowledges that these customers are obligated to Sellers
only on a month-to-month basis.
In addition, there are certain customers of the prior business of
Sellers ("IMark customers") for which Sellers may continue to provide
services on weekends to complete prior Seller obligations. The identity of
these IMark customers is clearly indicated on SCHEDULE 5.13.
5.14 COMPLIANCE WITH LAW. To the Best of Seller's Knowledge,
except as otherwise set forth in SCHEDULE 4.1, Sellers are, as of the date of
execution of this Agreement, and will be as of the Closing Date, in full
compliance with any applicable law, ordinance, or regulation that is or was
applicable to Sellers or to the conduct or operation of their business or the
ownership or use of any of their assets. Sellers have not received any
notice or other communications whether oral or written from any governmental
body or any other person regarding (a) any actual, alleged, possible, or
potential violation of, or failure to comply with, any applicable law, or (b)
any actual, alleged, possible, or potential obligation on the part of any
Sellers Entity to undertake, or to bear all or any portion of the cost of,
any remedial action of any nature.
5.15 INTELLECTUAL PROPERTY.
5.15.1 SCHEDULE 2.2.1 contains a complete and
accurate list and summary description (including, where
applicable, applications for registration and registration
particulars), of all Intellectual Property and documents and
agreements relating to the Intellectual Property (as defined
in Section 2.13 above) which is owned or used by Sellers and
the Sellers have the sole and exclusive right to use the
same. Except as listed in SCHEDULE 2.2.1, there are neither
any royalty payments or license fees payable to Sellers or by
Sellers, or other agreements to which Sellers are a party or
by which Sellers are bound, except for any license implied by
the sale of a product and perpetual, paid-up licenses for
commonly available software programs with a value of less
than $1,000 under which Sellers is the licensee. There are
no outstanding and, to the Best of Sellers' Knowledge, no
threatened disputes or disagreements with respect to any such
agreement. The Sellers have not received notice that, and to
the Best of Sellers' Knowledge, the conduct of the Business
is not infringing any patent, trade xxxx, trade name,
copyright, proprietary or similar right, domestic or foreign,
of any other person, firm or corporation.
5.15.2 To the Best of Seller's Knowledge, the
intellectual property assets are all those necessary for the
operation of Sellers's businesses as they are currently
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conducted in the business plan disclosed to Buyer. Sellers
are the owners of all right, title, and interest in and to
each of the intellectual property assets, free and clear of
all liens, security interests, charges, encumbrances,
equities, and other adverse claims, and has the right to use
without payment to a third party of the intellectual property
assets.
5.16 LEASES. Sellers are not a party to or bound by any leases or
licenses of real property or agreements in the nature of leases or licenses
of real property, either as lessor or lessee, or agreements to enter into
such leases or licenses, other than those referred to in SCHEDULE 5.7 (in
which is specified the parties, their dates of execution and expiry dates,
any options to renew, the location of any leased or licensed lands or
premises and the rental payments thereunder) and except as set forth in the
agreements or under Colorado law all interests held by the Sellers as lessor,
lessee, licensor or licensee under such leases, licenses or agreements and to
the knowledge and belief of the Sellers, are free and clear of any and all
mortgages, security interest, charges, adverse claims, rights, pledges,
demands, liens, title retention agreements and other encumbrances of any
nature or kind whatsoever. All rental and other payments required to be paid
by the Sellers pursuant to such leases, licenses or agreements have been duly
paid and the Sellers are not otherwise in default in meeting their
obligations under any such leases, licenses or agreements. To the Best of
Seller's Knowledge, there are no events or circumstances which could give
rise to such parties claiming default by the Sellers under such leases,
licenses or agreements. No consent of any parties to such leases, licenses
or agreements (other than the Sellers) is required by reason of the
transactions contemplated hereby except as specified in SCHEDULE 4.1 nor will
such transactions impose any more onerous obligations on the Sellers under
such leases, licenses or agreements.
5.17 FULL DISCLOSURE. To the Best of Sellers' Knowledge, no
representation or warranty of Sellers in this Agreement contains any untrue
statement or omits to state a material fact. To the Best of Sellers'
Knowledge, Sellers have disclosed and made available to the Buyer all
information relating to or otherwise in connection with the use and operation
of the properties or assets used in or held for use in connection with the
Business.
5.18 EMPLOYEES AND EMPLOYMENT CONTRACTS. There are set forth in
SCHEDULE 5.18 the names and titles of all the directors and officers of the
Sellers, and of all personnel employed or engaged in the Business, together
with particulars of the material terms and conditions of employment or
engagement of such persons, including rates of remuneration, benefits and
positions held. Except as disclosed on SCHEDULE 5.18, Sellers do not have any
written contracts of employment entered into with any employees employed by
Sellers, any oral contracts of employment which are not terminable on the
giving of reasonable notice in accordance with applicable law, any
management, any employee benefit, bonus, deferred compensation, profit
sharing, severance, termination, change of control, stock option, stock
appreciation, stock purchase or other similar agreement, plan or arrangement,
whether written or unwritten that provides or may provide benefits or
compensation in respect of any employee or former employee employed or
formerly employed in the Business. All vacation pay, bonuses, commissions
and other forms of compensation for employees of the Sellers have been
disclosed on SCHEDULE 5.18.
5.19 NO GUARANTEES. The Sellers have not given or agreed to give,
or are a party or bound by, any indemnity, or any guarantee of indebtedness
or other obligations of third parties or any other commitment by which the
Sellers or the Business is or is contingently responsible for such
indebtedness or other obligations.
5.20 BROKERS OR FINDERS. Sellers have incurred no obligation or
liability contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement and
the transactions contemplated thereby.
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5.21 BANK ACCOUNTS. There is set forth in SCHEDULE 5.21 the name
of each bank or other depository in which the Sellers maintain any bank
account, trust account or safety deposit box and the names of all persons
authorized to draw thereon or who have access thereto.
5.22 INSURANCE. Sellers maintain such policies of insurance,
issued by responsible insurers, as are appropriate to its Business, property
and assets, in such amounts and against such risks as are customarily carried
and insured against by owners of comparable businesses, properties and
assets. SCHEDULE 5.22 lists all such policies together with worker's
compensation coverages presently maintained by Sellers together with a brief
description of each such policy including the types of policy, name of
insurer, coverage limits, expiration dates and annual premiums. All such
policies of insurance are in full force and effect and the Sellers are not in
default, whether as to the payment of premium or otherwise, under the terms
of any such policy and have not failed to give any notice or present any
claim under any such insurance policy in due and timely fashion. No notice
of cancellation or non-renewal with respect to, nor disallowance of any claim
under or with respect to any such policy has been received by Sellers.
Sellers have no knowledge (after due enquiry from the Shareholders) of any
circumstances or occurrences which might form the basis of a material
increase in premiums.
5.23 CHANGES TO TECHNOLOGY. As of the Closing Date, there are no
new technological developments of which the Sellers have any knowledge which
might have an adverse effect on the Business or its operations or which might
require substantial new capital investment by the Buyer in the Business,
provided that the Sellers make no representation or warranty with respect to
disruptions to the Business caused by what is commonly referred to as the
"Y2K Problem."
6.0 REPRESENTATIONS OF BUYER
6.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Minnesota.
6.2 DUE AUTHORIZATION. Buyer has all necessary corporate power,
authority and capacity to enter into this Agreement and to perform its
obligations. The execution and delivery of this Agreement and the
performance of the transactions contemplated hereunder have been duly
authorized by all necessary corporate action on the part of Buyer.
6.3 VALID AND BINDING OBLIGATION. This Agreement when executed
will constitute the legal, valid, and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, and therefore subject
to limitation with respect to enforcement imposed in connection with laws
affecting the rights of creditors generally including, without limitation,
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
and to the extent that equitable remedies such as specific performance and
injunction are in the discretion of the court from which they are sought.
6.4 NO VIOLATION. Buyer is not a party to, bound by or subject
to any indenture, mortgage, lease, agreement, instrument, charter or by-law
provision, statute, regulation, order, judgment, decree or law which would be
violated, contravened or breached by, or under which any default would occur
as a result of the execution and delivery by Buyer of this Agreement or the
performance by Buyer of any of the terms hereof.
6.5 PLENUM SHARES. The Plenum Shares, when issued in accordance
with the terms of this Agreement, will be validly issued and outstanding
shares in the capital of Buyer.
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6.6 RELIANCE. Buyer hereby expressly acknowledges that Sellers
are relying upon the covenants, representations and warranties of Buyer
contained in this Agreement or in any agreement, certificate or other
document delivered pursuant to this Agreement in connection with the sale of
the Acquired Assets.
6.7 BROKERS OR FINDERS. Buyer has incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement and
will indemnify and hold Sellers harmless from any such payment alleged to be
due by or through Buyer as a result of the action of Buyer or its officers or
agents.
6.8 NO MATERIAL ADVERSE CHANGES. To the best of Buyer's
knowledge, there has been no change in the affairs, business, prospects,
operations or condition of the business of Buyer, financial or otherwise,
which has materially adversely affected and will materially adversely affect
the nature and manner of conducting its business, or the operations, assets,
properties, future prospects or financial condition of the Buyer. No
bankruptcy proceeding has been instituted or is contemplated by Buyer.
6.9 LITIGATION AND CLAIMS. There is no suit, action, litigation,
labor grievance or complaint, investigation, (including, without limitation,
investigations under human rights or health and safety legislation) or
administrative, governmental, arbitration or other proceeding (whether or not
purportedly on behalf of the Buyer), including without limitation appeals and
applications for review, in progress, or to the best knowledge and belief of
Buyer, pending or threatened against or relating to Buyer, or affecting its
respective properties or business, or affecting the right of Sellers to enter
into this Agreement or perform Sellers' obligations hereunder.
7.0 CONDITIONS PRECEDENT TO THE PERFORMANCE BY BUYERS AND SELLERS OF THEIR
OBLIGATIONS UNDER THIS AGREEMENT
7.1 BUYER'S CONDITIONS. The obligation of the Buyer to complete
the purchase of the Acquired Assets hereunder shall be subject to the
satisfaction of, or compliance with, at or before the Closing Time, each of
the following conditions precedent (each of which is hereby acknowledged to
be inserted for the exclusive benefit of the Buyer and may be waived by the
Buyer in whole or in part):
(a) TRUTH AND ACCURACY OF REPRESENTATIONS OF SELLERS AT CLOSING
TIME. All of the representations and warranties of the Sellers made
in or pursuant to this Agreement (including the Schedules hereto) or
in agreement, certificate or other document delivered or given
pursuant to this Agreement, including, without limitation, the
representations and warranties set forth in Section 5.0, shall be
true and correct in all material respects as at the Closing Time and
with the same effect as if made at and as of the Closing Time (except
as such representations and warranties may be affected by the
occurrence of events or transactions expressly contemplated and
permitted hereby).
(b) PERFORMANCE OF OBLIGATIONS. The Sellers shall have complied
with and performed in all respects its obligations, covenants and
agreements herein.
(c) NO MATERIAL ADVERSE EFFECT. No event, occurrence, fact,
condition, change, development or effect shall have occurred, exist
or come to exist since the date of this Agreement that, individually
or in the aggregate, has constituted or resulted in, or could
reasonably be expected to constitute or result in a material adverse
effect to the Business, operations, prospects, results of operations,
condition (financial or otherwise), properties (including intangible
properties), assets (including intangible assets) or liabilities of
the Business.
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7.2 NON-PERFORMANCE OF CONDITIONS FOR THE BENEFIT OF BUYER. In
the event that any of the conditions set forth in Section 7.1 shall not be
fulfilled and/or performed at or before the Closing Time, the Buyer may
terminate this Agreement by notice in writing to the Sellers, and the Buyer
shall thereupon be released from all obligations under this Agreement and the
Sellers shall also be released from all obligations under this Agreement,
provided any of the conditions may be waived in whole or in part by the Buyer
at any time without prejudice to its right of termination in the event of a
non-fulfilment and/or non-performance of any other condition or conditions,
any such waiver to be binding upon the Buyer only if the same is in writing.
7.3 ACCEPTANCE OF NOTICE OF NON-FULFILMENT. The Buyer covenants
and agrees that in the event that at the Closing Time, any condition or
conditions for the benefit of the Buyer set out in this Section 7.0 have not
been fulfilled and/or performed to the reasonable satisfaction of the Buyer
and such condition or conditions is or are not reasonably capable of being
fulfilled and/or performed or caused to be fulfilled and/or performed by the
Sellers, and the Sellers have, at or prior to the Closing Time, made complete
and accurate disclosure in writing, referring specifically to the provisions
of this Section 7.3 to the Buyer of the facts relating to its failure to
fulfill and/or perform such condition or conditions, and the Buyer elects to
complete the purchase and sale of the Acquired Assets, except as otherwise
agreed by the Buyer and the Sellers, the Sellers shall not be liable to the
Buyer hereunder for breach of any covenant, representation or warranty in
respect of the matter so disclosed.
7.4 SELLERS' CONDITIONS. The obligation of the Sellers to
complete the sale of the Acquired Assets hereunder shall be subject to the
satisfaction of, or compliance with, at or before the Closing Time, each of
the following conditions precedent (each of which is hereby acknowledged to
be inserted for the exclusive benefit of the Seller and may be waived by the
Seller in whole or in part):
(a) TRUTH AND ACCURACY OF REPRESENTATIONS OF BUYER AT CLOSING
TIME. All of the representations and warranties of Buyer made in or
pursuant to this Agreement (including the Schedules hereto) or in
agreement, certificate or other document delivered or given pursuant
to this Agreement, including, without limitation, the representations
and warranties set forth in Section 6.0, shall be true and correct in
all material respects as at the Closing Time and with the same effect
as if made at and as of the Closing Time (except as such
representations and warranties may be affected by the occurrence of
events or transactions expressly contemplated and permitted hereby).
8.0 COVENANTS OF THE BUYERS AND SELLERS
8.1 COVENANTS OF THE SELLERS. The Sellers covenant and agree that
the Sellers shall do the following:
(a) CONDUCT BUSINESS IN ORDINARY COURSE. Except as otherwise
contemplated or permitted by this Agreement, the Shareholders shall
cause the Sellers during the period from the date of this Agreement
to the Closing Time, to conduct the Business in the ordinary and
usual course thereto and not, without the prior written consent of
the Buyer, to enter into any transaction or do any thing which, if
effected before the date of this Agreement, would constitute or would
cause a material breach of the covenants, representations and
warranties contained herein. On Closing, the Sellers shall provide
the Buyer with updated management prepared financial statements as of
April 30, 1999, which shall comprehensively reflect all material
changes and the financial position of the Sellers from the date of
the Balance Sheets up to the date of this Agreement. The Sellers
acknowledge their obligation to provide the Buyer with financial
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statements to the Closing Date, to be provided as soon as possible
but in no event later than 30 days thereafter.
(b) INVESTIGATIONS. The Shareholders shall cause the Sellers to
permit Buyer and its employees, agents, counsel and accountants or
other representatives, between the date hereof and the Closing Time,
without interference to the ordinary conduct of the Business, to have
free and unrestricted access during normal business hours to the
premises and personnel of Sellers, to all the books, accounts,
records and other data of Sellers (including, without limitation, all
Organizational Documents, Intellectual Property, corporate,
accounting and tax records, guarantees, agreements, title
documentation, surveys, minute books, share certificate books, tax
returns and related correspondence, and financial statements of
Sellers) and to the properties and assets of Sellers, and to furnish
to the Buyer such financial and operating data and other information
with respect to the Business, legal condition, properties and assets
of the Sellers as the Buyer shall from time to time consider
necessary or desirable to enable confirmation of the matters
represented, warranted and covenanted herein. Without limiting the
generality of the foregoing, it is agreed that the accounting
representatives of the Buyer shall be afforded ample opportunity to
make a full investigation of all aspects of the financial affairs of
the Sellers.
No investigations made by or on behalf of the Buyer at any time shall
have the effect of waiving, diminishing the scope of or otherwise
affecting any representation, warranty or covenant made by the
Sellers herein or in any agreement, certificate or any other document
delivered or given pursuant to this Agreement.
(c) CORRECTNESS OF REPRESENTATIONS AND WARRANTIES. The
Shareholders and Sellers shall cause each of the covenants,
representations and warranties of the Sellers contained herein,
including, without limitation, Section 5.0, to remain true and
correct until and at each of the Closing Date and the Closing Time.
(d) CONTINUE INSURANCE. The Shareholders and Sellers shall cause
the Sellers during the period from the date of this Agreement to the
Closing Time, to continue in force and effect, and to renew, when
necessary, all existing policies of insurance presently maintained by
the Sellers and to give all notices and present all claims under all
such policies of insurance in due and timely fashion and to promptly
advise the Buyer of any such claims.
(e) PERFORM OBLIGATIONS. The Shareholders and Sellers shall cause
the Sellers during the period from the date of this Agreement to the
Closing Time, to comply with all laws and other obligations affecting
the operation of the Business and to pay all required taxes and tax
installments, including without limitation, income, corporate, retail,
excise and realty taxes.
(f) TRANSFER OF BANK ACCOUNTS AND ACQUIRED ASSETS. The
Shareholders and Sellers shall take and cause the Sellers to take all
necessary steps and proceedings as are necessary to permit all of the
Acquired Assets to be duly and regularly transferred to LION or its
nominee(s) at the Closing. On the Closing Date, Shareholders and
Sellers shall deliver to Buyer all such executed documents as may be
required to assign, transfer and convey to Buyer or to LION the
Acquired Assets, including but not limited to, any cash contained in
the Bank Accounts set forth in Schedule 5.20.
(g) FURTHER ASSURANCES. Each of Sellers and Shareholders from
time to time after the Closing, at Buyer's request, will execute,
acknowledge and deliver to Buyer such other instruments of conveyance
and transfer and will take such other actions and execute and deliver
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such other documents, certifications and further assurances as Buyer
may reasonably require in order to vest more effectively in Buyer or
LION, or to put Buyer or LION more fully in possession of, any of the
Acquired Assets, or to better enable Buyer or LION to complete,
perform or discharge any of the Assumed Liabilities.
(h) NO ENCUMBRANCES. The Sellers shall transfer the Acquired
Assets to the Buyer at the Closing Time free and clear of all
mortgages, liens, charges, security interests, adverse claims,
pledges, demands, rights and other encumbrances of any nature or kind.
(i) NO SOLICITATION. Until the Closing Date, none of the
Shareholders or Sellers, any of their affiliates or any person acting
on their behalf shall solicit or encourage any inquiries or proposals
for, or enter into any discussions with respect to, the acquisition
of any of the Acquired Assets or of any properties or assets held for
use in connection with the conduct of the Business.
(j) NON-PUBLIC INFORMATION; PUBLIC ANNOUNCEMENTS. Until the
Closing Date, none of the Shareholders or Sellers, any of their
affiliates or any person acting on their behalf shall furnish or
cause to be furnished any non-public information concerning the
Business or this Agreement to any Person (other than the Buyer and
its agents and representatives), other than in the ordinary course of
business or pursuant to applicable law and after prior written notice
to the Buyer. Except as required by applicable law, Sellers shall
not, and they shall not permit any of their affiliates or any person
acting on their behalf to, make any public announcement in respect of
this Agreement or the transactions contemplated hereby without the
prior written consent of the Buyer.
(k) SHAREHOLDER EMPLOYMENT AGREEMENTS. The Shareholders and
Sellers shall deliver and cause to be delivered to the Buyer at the
Closing Time executed Employment Agreements with Xxxxxxx X. Xxxxxx
and Dhitipun Penvari (the "Shareholders") in the form of Employment
Agreement annexed hereto as EXHIBIT A. As consideration for these
Employment Agreements, Shareholders and Sellers agree that each party
will not compete or participate, whether as an owner, shareholder,
partner, consultant, entrepreneur, employee, or otherwise, or
knowingly cause or enable any other person or entity to compete, in
any business related to the Business currently operated by Sellers or
the post-acquisition business of Buyer within any area where Buyer is
operating its business or plan to operate, for a period of two (2)
years from the last date of employment.
Notwithstanding the above, Buyer acknowledges and agrees that there
are certain customers of the prior business of Sellers ("IMark
customers") for which Sellers and prior employees of Sellers may
continue to provide services on weekends to complete prior Seller
obligations. The identity of these IMark customers is clearly
indicated on SCHEDULE 5.13.
(l) TRANSFERRED EMPLOYEE AGREEMENTS. Shareholders and Sellers
will cause each other to use all reasonable efforts to cause the
employees employed in the operations of the Business to make
available their employment services to the Buyer. For a period of
two (2) years from the Closing Date, Shareholders and Sellers will
not, directly or indirectly, solicit, offer to employ or retain the
services of or otherwise interfere with the relationship of the Buyer
with any Person employed by or otherwise engaged to perform services
for the Buyer in connection with the operation of the Business.
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Notwithstanding the above, Buyer acknowledges and agrees that there
are certain customers of the prior business of Sellers ("IMark
customers") for which Sellers and prior employees of Sellers may
continue to provide services on weekends to complete prior Seller
obligations. The identity of these IMark customers is clearly
indicated on SCHEDULE 5.13.
(m) BOARD AND SHAREHOLDER APPROVAL. Sellers shall obtain the
adoption and approval of this Agreement and the transactions
contemplated thereby from its managing members and/or board of
directors, as well as the Shareholders, at a meeting duly called,
noticed and held for such purpose or as otherwise required by
Colorado Law.
8.2 COVENANTS OF THE BUYER. The Buyer covenants and agrees that
Buyer shall do the following:
(a) CONFIDENTIALITY. In the event of the termination of this
Agreement without consummation of the transactions contemplated
hereby, the Buyer will use its best efforts to keep confidential any
Confidential Information (unless in the public domain) obtained from
the Sellers. If this Agreement is so terminated, promptly after such
termination, all documents, working papers and other written material
obtained from one party in connection with this Agreement and not
theretofore made public (including all copies thereof), shall be
returned to the party which provided such material or, in lieu
thereof, a certificate in writing confirming that the Confidential
Information in question has been destroyed.
(b) CORRECTNESS OF REPRESENTATIONS AND WARRANTIES. The Buyer
shall cause each of the covenants, representations and warranties of
the Buyer contained herein, including, without limitation, Section
6.0, to remain true and correct until and at each of the Closing Date
and the Closing Time.
(c) BOARD APPROVAL. Buyer shall obtain the ratification,
adoption and approval of this Agreement and the stock issuances and
transactions contemplated thereby from its board of directors, at a
meeting duly called, noticed and held for such purpose or as
otherwise required by Minnesota Law.
(d) SHAREHOLDER EMPLOYMENT AGREEMENTS. Buyer shall offer
employment agreements to Xxxxxxx X. Xxxxxx and Dhitipun Penvari (the
"Shareholders") in the form of the Employment Agreement annexed
hereto as EXHIBIT A. Under the terms of the Employment Agreements,
the Shareholders will become employees of Buyer, effective the
Closing Date, and will receive compensation of at least $5,000 per
month during the term of their employment. Under the terms of the
Employment Agreements, the Shareholders will receive an aggregate
total of 450,000 options. Of these options, 300,000 will vest at an
equal calendar quarterly rates over a four-year period beginning one
year and ending five years from the date of this Agreement. The
remaining 150,000 options will vest at an equal quarterly rates over
the period beginning ninety (90) days and ending two years from the
date of this Agreement. All options will expire on the date which is
five years and thirty days after the date of grant. Buyer agrees to
register the common stock underlying the Shareholder options on its
next Form S-8 to be filed with the SEC.
In consideration for these Employment Agreements, Shareholders agree
that each party will not compete or participate, whether as an owner,
shareholder, partner, consultant, entrepreneur, employee, or
otherwise, or knowingly cause or enable any other person or entity to
compete, in any business related to the Business currently operated
by Sellers or the post-acquisition
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business of Buyer within any area in the United States where Buyer is
operating its business or plans to operate, for a period of two (2)
years from the last date of employment.
Notwithstanding the above, Buyer acknowledges and agrees that there
are certain customers of the prior business of Sellers ("IMark
customers") for which Sellers and prior employees of Sellers may
continue to provide services on weekends to complete prior Seller
obligations. The identity of these IMark customers is clearly
indicated on SCHEDULE 5.13.
(e) TRANSFERRED EMPLOYEES EMPLOYMENT AGREEMENTS. Effective as of
the Closing Date, Buyer shall offer employment to those employees who
are employed by Sellers principally in the operation of the Business
at wage or salary levels. Buyer shall honor all salaries and
incentive plans of current IMark employees as set forth on SCHEDULE
5.18. Those employees who accept such offers of employment effective
as of the Closing Date shall be referred to in this Agreement as the
"TRANSFERRED EMPLOYEES." Effective as of the Closing Date, the Buyer
shall assume the liability of the Sellers in respect of the
Transferred Employees for accrued but unpaid salaries, wages,
vacation and sick pay, but only to the extent the liability is
reflected on SCHEDULE 5.18. Buyer agrees to hear any argument to
increase the compensation of the Transferred Employees based on
market value following the date of this agreement. All Transferred
Employees' salaries will be reviewed within 90 days of the date of
this agreement. Annual employee compensation reviews must at minimum
reflect an adjustment for cost of living increases. If a change of
venue from Colorado is required, employee compensation must be
increased in relation to the cost of living increase with the change
of venue. In general, employees will be granted options to purchase
10,000 shares of Buyer common stock at exercise prices not less than
fair market value. However, IMark's Sales Manager shall be granted
options to purchase 15,000 shares of Buyer common stock. These
employee options will vest at an equal calendar quarterly rates over
a four-year period beginning one year and ending five years from the
date of this Agreement, and will expire five years and thirty days
after the date of grant.
(f) WORKERS COMPENSATION. From and after the Closing Date, the
Sellers shall, jointly and severally, remain sole responsible for any
and all liabilities to or in respect of any employee relating to or
arising in connection with any and all written or recognized claims
for workers' compensation benefits arising in connection with any
occupational injury or disease occurring or existing on or prior to
the Closing Date.
9.0 ADDITIONAL COVENANTS
9.1 Each of the Parties will cooperate with the other and execute
and deliver to the other parties such other instruments and documents and
take such other actions as may be reasonably requested from time to time by
any other party to this Agreement as necessary to carry out, evidence and
confirm the intended purposes of this Agreement.
9.2 Each party will conduct its own due diligence review after
the execution of this Agreement, and shall pay its own expenses, fees, and
costs incurred in the preparation and performance of this Agreement.
9.3 Any term of this Agreement may be waived in writing at any
time by the party which is entitled to the benefit thereof, upon the
authority of the board of directors or manager(s) of such party, but no such
waiver shall affect or impair the right of the waiving party to require
observance, performance or satisfaction of any other term or condition
hereof. Any of the terms or provisions of this
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Agreement may be amended or modified at anytime by mutual agreement in
writing executed upon the sole authority of the board of directors or
manager(s) of each party.
9.4 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SELLERS. The representations, warranties and covenants of the Sellers
contained in this Agreement or in any agreement, certificate or any other
document delivered or given pursuant to this Agreement shall survive the
completion of the transactions contemplated by this Agreement and,
notwithstanding such completion or any investigation made by or on behalf of
the Buyer, shall continue in full force and effect for the benefit of the
Buyer for a period of 1 year from the Closing Date, subject to Section 10.0.
Notwithstanding the provisions of this Section or other provision of
this Agreement or any of its schedules or exhibits, and regardless of any
disclosure to Buyer, any liability of Sellers' under this Agreement shall be
limited to and shall not exceed the Purchase Price.
9.5 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
BUYER. The covenants, representations, and warranties of the Buyer contained
in this Agreement or in any agreement, certificate or any other document
delivered or given pursuant to this Agreement shall survive the completion of
the transactions contemplated by this Agreement and, notwithstanding such
completion or any investigation made by or on behalf of the Sellers, shall
continue in full force and effect for the benefit of the Sellers for a period
of 1 year from the Closing Date, subject to Section 10.0.
9.6 This Agreement shall be binding upon and inure to the benefit
of the Parties named herein and their respective successors and permitted
assigns. No Party may assign either this Agreement or any of its rights,
interests, or obligations contained in this Agreement without the prior
approval of the other Parties.
9.7 Sellers and Buyer expressly agree and acknowledge that each
Party has sought the advice of its own counsel at its own expense for the
legality and tax effects of this transaction and is not relying on any
representations or of the other party or their agents. Each Party agrees to
hold the other harmless for any representations or comments with regards to
the legality and tax effects of this transaction.
9.8 This Agreement constitutes and contains the entire agreement of
the Parties, and supersedes any and all prior negotiations, correspondence,
understandings, letters of intent and agreements between the Parties.
9.9 Any notice, request, demand, claim, instruction, or other
document to be given to any party pursuant to this Agreement shall be in
writing delivered personally or sent by mail, registered or certified,
postage fully prepaid, as follows:
If to Sellers, to the following address:
IMark, Inc.
0000 X. Xxxxx Xxxx., Xxx 000
Xxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx, President
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If to Buyer, to the following address, with a copy to:
Plenum Communications, Inc. Xxxxxxxxx Business Law P.C.
0000 00xx Xxx. X.X. 0000 Xxxxx Xxx., Xxx. 000
Xxxxxx Xxxxxx, XX 00000 Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxx Attn: Xxxxxxx X. Xxxxxxxxx
Any party may give any notice, request, demand, claim, instruction,
or other document under this section using any other means (including
expedited courier, messenger service, telecopy, facsimile, telex, ordinary
mail, or electronic mail), but no such notice, request, demand, claim,
instruction, or other document shall be deemed to have been duly given unless
and until it actually is received by the individual for whom it is intended.
Any party may change its address for purposes of this section by giving
notice of the change of address to the other party in the manner provided in
this section.
9.10 Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any
other situation or in any other jurisdiction.
9.11 With regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.
9.12 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument, and in making proof hereof it shall
not be necessary to produce or account for more than one such counterpart.
9.13 This Agreement shall be construed in accordance with its
terms and the laws of the State of Colorado.
9.14 In the event an arbitration, suit or action is brought by any
party under this Agreement to enforce any of its terms, or in any appeal
therefrom, it is agreed that the prevailing party shall be awarded and
receive from the non-prevailing party all costs and expenses, including all
reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court, in the action and on appeal.
9.15 In the event of breach or anticipatory breach of any
provision of this Agreement, the Parties shall have only the right to
damages, specific performance, and injunctive relief. Any Party shall be
entitled to obtain injunctive relief against a threatened breach of this
Agreement or the continuation of any breach, or both, without the necessity
of proving actual damages.
9.16 The exhibits and schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
10.0 INDEMNIFICATION
10.1 SELLERS TO INDEMNIFY. Subject to the limitations set forth
in Section 10.3 below, the Sellers covenant and agree to indemnify and save
harmless the Buyer, its respective officers, directors, shareholders, lenders
and affiliates, of and from:
(a) all debts, liabilities, contracts or engagements whatsoever,
including any liabilities for federal, provincial, sales, excise,
income, corporate or any other taxes of the Sellers, existing at the
Closing Time and not disclosed on or included in the Balance Sheets
save and except those liabilities disclosed in this Agreement
(including the Schedules hereto) or accruing or incurred
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subsequent to the date of the Balance Sheet in the ordinary course of
the Business and none of which is materially adverse to the Business,
or the operations, assets, properties or financial condition of the
Sellers;
(b) all contingent liabilities which the Sellers become obligated
to pay, existing at the Closing Time, not disclosed or reflected in
the Balance Sheets or notes forming part of the Financial Statements
or elsewhere in this Agreement (including the Schedules hereto);
(c) any assessment or reassessment for income, franchise or
corporate tax, interest and/or penalties for any period up to and
including the Closing Date for which no adequate reserve has been
provided and disclosed or reflected in the Balance Sheets or notes
forming part of the Financial Statements or elsewhere in this
Agreement (including the Schedules hereto);
(d) any loss suffered by the Buyer or the Business as a result of
any breach of any representation, warranty or covenant of the Sellers
contained in this Agreement or in any agreement, certificate or other
document delivered or given pursuant to this Agreement;
(e) any claims by or liabilities to any Person with whom the
Sellers or their agents and affiliates have had discussions regarding
the disposition of the Acquired Assets made or incurred in relation
to or as a result of or in connection with the consummation of the
transactions contemplated by this Agreement; and
(f) all claims, actions, causes of action, damages, losses,
liabilities, demands, costs and expenses (including legal fees and
costs) in respect of the foregoing.
10.2 Subject to the limitations provided in Section 10.3 below,
the liability of the Sellers under this Section shall cease upon the
expiration of the respective limitation periods set out in Section 9.4 unless
the Sellers shall have been given notice by the Buyer of any claim hereunder
pursuant to this Section prior to such date, in which event the limitation
period shall not apply with respect to such claim.
10.3 Limitations. The Sellers shall not be obligated to make any
payment to the Buyer in respect of any amount payable by the Sellers to
either or both of them under this Section 10.0 unless, and then only to the
extent that, in the case of one payment, the amount exceeds $1,000, or in the
event that the aggregate of such amounts exceeds $1,000. Notwithstanding the
provisions of this Section or other provision of this Agreement or any of its
schedules or exhibits, and regardless of any disclosure to Buyer, any
liability of Sellers' under this Agreement shall be limited to and shall not
exceed the Purchase Price.
10.4 Nothing contained in this Agreement, including without
limitation, Section 9.4, shall limit the liability of the Sellers to the
Buyer by reason of any fraudulent breach of representation or warranty
contained in this Agreement or in any agreement, certificate or other
document delivered or given pursuant to this Agreement, or limit the time
within which a claim hereunder on account of such fraudulent breach may be
made.
10.5 Nothing contained in this Agreement, including without
limitation, Section 9.5, shall limit the liability of the Buyer to the
Sellers by reason of any fraudulent breach of representation or warranty
contained in this Agreement or in any agreement, certificate or other
document delivered or given pursuant to this Agreement, or limit the time
within which a claim hereunder on account of such fraudulent breach may be
made.
10.6 BUYER TO INDEMNIFY. Subject to the limitations set forth in
Section 10.7 below, the Sellers covenant and agree to indemnify and save
harmless the Sellers, its respective officers, directors,
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shareholders, members, of and from any loss suffered by the Sellers or the
Business as a result of any breach of any representation, warranty or
covenant of Buyer contained in this Agreement.
10.7 Notwithstanding the provisions of this Section or other
provision of this Agreement or any of its schedules or exhibits, and
regardless of any disclosure to Sellers, any liability of Buyer under this
Agreement shall be limited to and shall not exceed the Purchase Price.
11.0 SIGNATURES
IN WITNESS WHEREOF, this Agreement has been signed by each of the
Parties.
Plenum Communications, Inc. ("Buyer") LION, Inc. ("LION")
a Minnesota corporation a Washington corporation
---------------------------------- ---------------------------------
By: Xxxxx Xxxxxx, CEO By: Authorized Representative
IMark, Inc. ("Seller") IMark Design Group ("Seller")
a Colorado corporation a Colorado limited liability company
---------------------------------- ---------------------------------
By: Xxxxxxx X. Xxxxxx, President By: Xxxxxxx X. Xxxxxx
Managing Member
---------------------------------- ---------------------------------
Xxxxxxx X. Xxxxxx ("Shareholder") Dhitipun Penvari ("Shareholder")
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SCHEDULES AND EXHIBITS
Schedule 2.2.1 - Intellectual Property and other Specified Assets
Schedule 2.2.2 - Excluded Assets
Schedule 2.3 - Assumed Liabilities
Schedule 4.1 - Liens on Acquired Assets; Conflicts and Consents
Schedule 4.5 - Allocation of Purchase Price
Schedule 5.7 - Contracts, Leases, Rental Agreements
Schedule 5.8 - Undisclosed Liabilities
Schedule 5.12 - Receivables
Schedule 5.13 - Customers
Schedule 5.18 - Employees
Schedule 5.21 - Bank Accounts
Schedule 5.22 - Insurance
Exhibit A - Form of Employment Agreement for Key Employees
Exhibit B - Forms of Assignment
Exhibit C - Shareholders' Consent
- 29 -
