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ASSET PURCHASE AGREEMENT
By and Between
ARMONK LIST COMPANIES CORP.,
a New York corporation,
and
XXXX MARKETING SERVICES, INC.,
a Delaware corporation
Dated as of May 27, 1998
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ARTICLE I
SALE AND PURCHASE OF ACQUIRED ASSETS
Section 1.01. Agreement To Purchase and Sell............................1
Section 1.02. Assumption of Liabilities.................................3
Section 1.03. Purchase Price............................................4
Section 1.04. Allocation of Consideration...............................6
Section 1.05. Closing...................................................6
ARTICLE II
SELLER'S REPRESENTATIONS AND WARRANTIES
Section 2.01. Acquired Assets and Title.................................9
Section 2.02. Corporate Status.........................................10
Section 2.03. Power and Authority......................................10
Section 2.04. Noncontravention.........................................10
Section 2.05. Enforceability...........................................11
Section 2.06. Consents and Approvals...................................11
Section 2.07. Claims and Proceedings...................................12
Section 2.08. Financial Statements.....................................12
Section 2.09. [Reserved]...............................................12
Section 2.10. No Material Adverse Changes..............................12
Section 2.11. Tax Matters..............................................13
Section 2.12. Employee Benefit Plans and Related Matters...............13
Section 2.13. Bankruptcy or Insolvency Proceedings.....................15
Section 2.14. [Reserved]...............................................15
Section 2.15. No Other Agreements......................................15
Section 2.16. No Broker................................................15
Section 2.17. Licenses, Permits, Etc. .................................15
Section 2.18. Compliance With Laws.....................................15
Section 2.19. [Reserved]...............................................15
Section 2.20. Environmental Matters....................................16
Section 2.21. [Reserved]...............................................17
Section 2.22. Full Disclosure..........................................17
ARTICLE III
REPRESENTATIONS AND WARRANTIES BY BUYER
Section 3.01. Organization.............................................17
Section 3.02. Power and Authority......................................17
Section 3.03. Noncontravention.........................................17
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Section 3.04. No Broker................................................17
Section 3.05. Bankruptcy or Insolvency Proceedings.....................17
Section 3.06. Enforceability...........................................18
Section 3.07. Use of Premises..........................................18
ARTICLE IV
MISCELLANEOUS
Section 4.01. Costs....................................................18
Section 4.02. Headings.................................................18
Section 4.03. Counterparts.............................................18
Section 4.04. Assignment or Delegation.................................18
Section 4.05. Severability.............................................18
Section 4.06. Entire Agreement.........................................18
Section 4.07. Notices..................................................18
Section 4.08. Nonwaiver................................................19
Section 4.09. Exhibits and Schedules...................................19
Section 4.10. Indemnification..........................................19
Section 4.11. Governing Law............................................22
Section 4.12. Amendments...............................................22
Section 4.13. Further Assurances.......................................22
Section 4.14. Confidentiality..........................................22
EXHIBIT A FORM OF ESCROW AGREEMENT
EXHIBIT B ALLOCATION SCHEDULE
EXHIBIT C FORM OF EMPLOYMENT AGREEMENTS
EXHIBIT D FORM OF NONCOMPETITION AGREEMENTS
EXHIBIT E FORM OF ASSUMPTION AGREEMENT
EXHIBIT F FORM OF OPINION OF BUYER'S COUNSEL
EXHIBIT G FORM OF XXXX OF SALE
EXHIBIT H FORM OF OPINION OF SELLER'S COUNSEL
SCHEDULES
Schedule 1.01 Financial Statements
Schedule 2.01(a) Liens and Encumbrances on the Purchased Assets
Schedule 2.01(c) Material Contracts
Schedule 2.01(d) Intangible Assets
Schedule 2.02 Good Standing
Schedule 2.04 Noncontravention
Schedule 2.06 Consents
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Schedule 2.07 Claims and Proceedings
Schedule 2.08 Potential Additional Liabilities
Schedule 2.10 Potential Adverse Changes
Schedule 2.12(a) Current XXXX Employees Earning in Excess of $50,000 per Year
Schedule 2.12(b) Employee Benefit Plan
Schedule 2.18 Compliance With Laws
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
May 27, 1998 (the "Effective Date") by and between XXXX MARKETING SERVICES,
INC., a Delaware corporation ("Seller"), and ARMONK LIST COMPANIES CORP., a New
York corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, the Seller desires to sell to Buyer and Buyer desires to
purchase from Seller certain of the assets of the Seller, subject to the terms,
covenants and conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements set forth herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF ACQUIRED ASSETS
SECTION 1.01. AGREEMENT TO PURCHASE AND SELL.
(a) On and subject to the terms and conditions of this
Agreement, the Seller agrees to sell, convey, transfer, assign and
deliver to the Buyer and the Buyer agrees to purchase, receive, assume
and accept from the Seller the Acquired Assets and the Acquired
Liabilities for the consideration specified in Section 1.03.
(b) It is expressly understood and agreed that the Acquired
Assets shall not include any of the assets of either XXXX Charity
Brands or XXXX Charity Brands Services, Inc.
(c) As used in this Agreement, the following capitalized
terms have the meanings set forth below unless the context otherwise
requires. Certain additional defined terms are found elsewhere in this
Agreement.
"Acquired Assets" means all of Seller's right, title and
interest in or to the Assets as and to the extent existing on the
Effective Date, including all property, plant, machinery, equipment,
computer hardware and software, goodwill and other assets, employed or
held in connection with Seller's Business (other than the Excluded
Assets), and including, without limitation, all cash, cash
equivalents, accounts receivable and all
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proceeds thereof; all work in process, supplies, furniture, fixtures
and equipment, and the name "XXXX Marketing."
"Acquired Liabilities" means (i) all of Seller's liabilities
as shown on the Unaudited Financial Statements (including the notes
thereto) as at the Balance Sheet Date (other than those liabilities
that have been paid or otherwise satisfied or discharged prior to the
Effective Date) and those liabilities of Seller arising in the
ordinary course of business of Seller since the Balance Sheet Date,
which are of the same nature as the liabilities set forth on such
Unaudited Balance Sheet, (ii) all obligations (A) under real property
and equipment leases that are included in the Acquired Assets and (b)
with respect to any current or former employees or independent
contractors, including without limitation obligations for accrued
vacation pay, sick leave and statutory and non-statutory severance
benefits, (iii) all obligations of Seller under the contracts and
other agreements identified on Schedule 2.01(c), but excluding the
Excluded Liabilities.
"Assets" means all of Seller's assets shown on its unaudited
balance sheet as at the Balance Sheet Date, other than the Excluded
Assets.
"Audited Balance Sheet" means the Balance Sheet of the Seller
as at March 31, 1998 included in the Audited Financial Statements.
"Audited Financial Statements" means the balance sheet and
statement of income and retained earnings of the Seller as at and for
the year ended March 31, 1998 audited by the Present Accountants and
delivered by the Seller pursuant to Section 1.03(c) of this Agreement.
"Balance Sheet Date" means March 31, 1998.
"Brokerage Component" means the Net Revenues of the Seller
from its brokerage operations reflected in the Audited Financial
Statements.
"Buyer's Accountants" means Coopers & Xxxxxxx.
"Computer Operations Component" means the net Revenues of the
Seller from its computer processing and consulting operations
reflected in the Audited Financial Statements.
"Excluded Assets" means the XXXX Charity Brands Assets; and
the other assets identified on Schedule 1.01-(B)
"Excluded Liabilities" means Accounts Payable relating to
certain business practices of Seller referred to in Schedule 2.19,
relating to billing procedures which result in unclaimed, unpaid
and/or uncollected obligations owing by Seller to list owners and
others, the amount of which is estimated to be $250,000; and the other
liabilities identified on Schedule 1.01-(B)
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"XXXX Charity Brands Assets" means all of the shares of JCBS
Inc. and its interest in the partnership known as "XXXX Charity Brands
Services", and all of the assets, tangible and intangible, and
liabilities relating to the business of such corporation and such
partnership, and amounts due to JCBS Inc. or XXXX from such
corporation and such partnership.
"JCBS Inc." means XXXX Charity Brands Services, Inc., a
Delaware corporation.
"Management Component" means the Net Revenues of Seller from
its list management operations reflected in the Audited Financial
Statements.
"Net Revenues" means gross xxxxxxxx less list rental payments
to third parties.
"Present Accountants" means Xxxxxx & Xxxxxx and Xxxxxxx,
Xxxxxxxxx Xxxxxxxx & Company.
"Revenue Components" means, collectively, the Brokerage
Component, Management Component and the Computer Operations Component.
"Seller's Business" means Seller's business and operations
reflected in the Unaudited Financial Statements as at and for the
period ending on the Balance Sheet Date and as conducted through the
Effective Date, other than the Excluded Assets and the Excluded
Liabilities.
"Tangible Net Worth" means the difference between the amount
of (A) the Current Assets and Operating Equipment (and in no event
including any of the Excluded Assets) and (B) the Current Liabilities.
"Unaudited Balance Sheet" means the Balance Sheet prepared by
the Seller for the fiscal year ended March 31, 1998, included as part
of Schedule 1.01.
SECTION 1.02. ASSUMPTION OF LIABILITIES. The Buyer hereby assumes the
Acquired Liabilities. The Buyer will not in any event assume or be responsible
for any liabilities, liens, claims, obligations, or encumbrances of the Seller,
contingent or otherwise, except for the Acquired Liabilities, and the Acquired
Assets shall be sold and conveyed to Buyer free and clear of all liabilities,
liens, claims, charges, restrictions on transfer, security interests, pledges
or encumbrances of any kind, except for the Acquired Liabilities and as
otherwise set forth on Schedule 2.01(a) or Schedule 2.08. Without limiting the
generality of the foregoing, in no event will Buyer assume (except as set forth
on the Unaudited Balance Sheet):
(a) any income, sales, property, franchise, use, or other tax of
the Seller arising out of or resulting from the sale of the Acquired
Assets pursuant hereto;
(b) any liability, obligation, or cost resulting from any claim
or lawsuit or other proceeding relating to the Acquired Assets or
naming the Seller, or any successor thereof,
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as a party arising out of events, transactions, or circumstances
occurring or existing prior to Closing;
(c) any claim against the Buyer, or the Seller, which claim is
based, in whole or in part, upon the failure of the Seller or the
Buyer to comply with laws applicable to bulk transfers.
Acquired Liabilities include an Accrued Rent Liability of $254,746.00
arising as a result of initial rent concessions granted to Seller by the
landlord under Seller's lease of its current premises at One Blue Hill Plaza,
Pearl River, New York. In the event that Buyer terminates such lease and
settles any liabilities under the lease for less than $254,746, Buyer will pay
Seller an additional adjustment of the Purchase Price in an amount equal to the
amount of the final settled liability under the lease which is less than
$254,746.
SECTION 1.03. PURCHASE PRICE.
(a) The purchase price (the "Purchase Price") for the Acquired
Assets of $5,439,500 subject to adjustment pursuant to this Section
1.03, will be payable by the Buyer to the Seller as follows:
(i) $4,839,500 in cash, subject to adjustment pursuant
to this Section 1.03, will be payable to the Seller by wire
transfer of immediately available funds on the Effective
Date; and
(ii) an amount equal to $600,000 (the "Escrow Amount")
will be deposited on or prior to the Closing in an escrow
account to be maintained with the escrow agent designated in
the Escrow Agreement in the form of Exhibit A to this
Agreement (the "Escrow Agent"), which Escrow Amount will be
held for one year following the Effective Date in connection
with the potential indemnification claims hereunder and for
payment of uncollected accounts receivables pursuant to the
terms and conditions of the Escrow Agreement.
(b) To the extent that the Net Revenues of the Seller from its
Brokerage Component at and for the twelve months ended March 31, 1998,
as reflected in its audited financial statements prepared in
accordance with generally accepted accounting principles consistently
applied (the "March 31 Financial Statements"), exceed $2,770,000, the
Purchase Price will be increased by an amount equal to 1.5 times the
amount of such excess and to the extent that such Net Revenues are
less than $2,770,000, the Purchase Price will be reduced by an amount
equal to 1.5 times the amount of such difference. To the extent that
the Net Revenues of the Seller from its Management Component for the
twelve months ended March 31, 1998, as reflected in its March 31
Financial Statements, exceed $2,320,000, the Purchase Price will be
increased by an amount equal to 1.5 times the amount of such excess
and to the extent that such Net Revenues are less than $2,320,000, the
Purchase Price will be reduced by an amount equal to 1.5 times the
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amount of such difference. To the extent that the Net Revenues of the
Seller from its Computer Operating Component for the twelve months
ended March 31, 1998, as reflected in its March 31 Financial
Statements, exceed $2,000,000, the Purchase Price will be increased by
an amount equal to 2.5 times the amount of such excess and to the
extent that such Net Revenues are less than $2,000,000, the Purchase
Price will be reduced by an amount equal to 2.5 times the amount of
such difference.
(c) CALCULATION OF POST CLOSING ADJUSTMENTS TO PURCHASE PRICE. As
promptly as practicable after the Closing Seller shall cause the
Present Accountants to prepare and deliver to Buyer (i) the Audited
Financial Statements, (ii) an unaudited balance sheet for Seller as at
May 29, 1998 (the "Closing Balance Sheet") prepared in accordance with
generally accepted accounting principles, consistently applied in the
manner used to prepare Seller's Audited Balance Sheet (it being agreed
that all unbilled receivables of Seller as of May 29, 1998 shall be
included in Seller's accounts receivable in preparing the Closing
Balance Sheet), and (iii) a statement (the "Statement") setting forth
(1) each of the Revenue Components itemized by Brokerage Component,
Management Component, and Computer Operations Component reflected in
the Audited Financial Statements, and (2) the Tangible Net Worth of
the Seller as at May 29, 1998, reflected in the Closing Balance Sheet
(the "Closing Tangible Net Worth"). Not later than 15 business days
after the Statement is delivered to Buyer, Buyer shall notify Seller
in writing (the "Notice of Disagreement") whether Buyer disagrees with
the computation of the Closing Tangible Net Worth or the Revenue
Components. If no Notice of Disagreement is received by Seller within
such 15-business day period, then the calculation of the Closing
Tangible Net Worth and the Revenue Components shall be deemed to be
accepted and agreed to by Buyer. Buyer shall have the right to review
the ledgers, books, records and work papers of Seller and the Present
Accountants utilized in preparing the Closing Balance Sheet and the
Net Revenue Statement. The Notice of Disagreement shall provide
specific reasons for the disagreement. If such Notice of Disagreement
is given, then Buyer and Seller shall use reasonable efforts to
resolve the disagreement regarding the calculation of the Closing
Tangible Net Worth and the Revenue Components. If no agreement is
reached between them within thirty (30) days after the date on which
Buyer gives its Notice of Disagreement, then a determining accountant
(the "Determining Accountant") shall be appointed by the Buyer's
Accountants and the Present Accountants within ten (10) days
thereafter with instructions to resolve the disagreement and provide a
report of its determination of the amounts in dispute within thirty
(30) days of its appointment. The Determining Accountant may examine
all ledgers, books, records and work papers utilized in connection
with the accounting and preparation of the Closing Balance Sheet and
the Audited Financial Statements by the scope of its engagement will
be limited to resolving those items which Buyer identified in its
Notice of Disagreement as to which Buyer disagreed and determining
whether such items were properly reflected on the Net Revenue
Statement in accordance with the requirements of this Section;
provided that the Determining Accountant shall also make such other
changes to the Closing Balance Sheet
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and the Audited Financial Statements as are necessary and appropriate
for the consistent presentation thereof in light of its determination
of the specific issues in dispute. The decision of the Determining
Accountant shall be delivered in a written report addressed to Buyer
and Seller and shall be binding and conclusive upon the parties
hereto. The costs and fees of the Determining Accountant shall be
borne one-half by Seller and one-half by Buyer. The Tangible Net Worth
set forth in the Closing Balance Sheet and the Revenue Components set
forth in the Statement, either as agreed to by Seller and Buyer if the
calculation of the Closing Tangible net Worth and the Revenue
Components are not referred to the Determining Accountant or as
finally determined by the Determining Accountant, are referred to
respectively herein as the "Final Closing Tangible Net Worth" and the
"Final Revenue Components."
(i) Upon the fifth Business Day after completion of the
calculation of the Final Closing Tangible Net Worth and Final
Revenue Components, the Purchase Price shall be adjusted in
the manner set forth below.
(ii) The Purchase Price shall be reduced by the sum of
(i) the amount, if any, by which the Final Closing Tangible
Net Worth is less than zero, and (ii) the sum of the amounts,
if any, by which each result obtained by multiplying each
Revenue Component by its corresponding multiple referred to
in Section 1.03(b) is less than the amount for such Revenue
Component required by such Section 1.03(b), and Seller shall
deliver to Buyer, cash in an amount equal to such reduction
in the Purchase Price within five (5) business days
thereafter.
(iii) The Purchase Price shall be increased by the sum
of (i) the amount, if any, by which the Final Closing
Tangible Net Worth is greater than zero, and (ii) the sum of
the amounts, if any, by which each result obtained by
multiplying each Revenue Component by its corresponding
multiple referred to in Section 1.03(b) is greater than the
amount for such Revenue Component required by such Section
1.03(b), and Seller shall deliver to Buyer, cash in an amount
equal to such increase in the Purchase Price within five (5)
business days thereafter.
SECTION 1.04. ALLOCATION OF CONSIDERATION. The Buyer and the Seller
agree to allocate the Purchase Price among the Acquired Assets for all
purposes, including financial accounting and tax purposes, in accordance with
the allocation schedule set forth in Exhibit B to this Agreement. The Buyer and
the Seller agree to cooperate in preparing and filing the applicable and
necessary Internal Revenue Service forms reflecting such allocation,
acknowledge and agree that such allocations have been determined by arm's
length negotiations and that neither of them will take a position on any income
tax return, before any governmental agency charged with the collection of any
income tax or in any judicial proceeding that is inconsistent with such
allocation.
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SECTION 1.05. CLOSING.
(a) Subject to the terms and conditions of this Agreement, the
closing under this Agreement (the "Closing") shall take place
simultaneously as of the date this Agreement is executed. The Closing
shall occur at the offices of Feder, Kaszovitz, Isaacson, Weber, Xxxxx
& Bass LLP, New York City, New York, or at such other place as the
Buyer and the Seller may agree.
(b) At Closing, the Buyer shall execute, acknowledge and/or
deliver or cause to be delivered the following:
(i) The Purchase Price, other than the Escrow Amount, in
cash by wire transfer of immediately available funds pursuant
to wiring instructions provided by the Seller prior to the
Closing;
(ii) The Employment Agreements, in the form of Exhibit
C, for each of Xxxxx Xxxxxx, Xxxxxx Xxxxxxxxx, Xxxx Xxxxxx,
Xxxxx Xxxxxxx and Xxxx Xxxxxxx (collectively, the
"Employees"), duly executed by the Buyer;
(iii) The Noncompetition Agreements, in the form of
Exhibit D, for each of the Employees, Xxxxxxx Xxxxxxxx and
Xxxxxxx Xxxxxx, duly executed by the Buyer;
(iv) A certificate of good standing for the Buyer issued
by the Secretary of State of the State of New York;
(v) An assumption agreement (the "Assumption Agreement")
relating to the assumption of certain liabilities of the
Seller, in the form of Exhibit E duly executed by the Buyer;
(vi) The opinion of counsel to the Buyer in
substantially the form set forth in Exhibit F;
(vii) The Escrow Agreement in the form of Exhibit A,
duly executed by the Buyer;
(viii) Buyer Secretary's Certificate certifying as to
the following:
(A) resolutions duly adopted by the Board of
Directors of the Buyer, certified by its corporate
secretary, authorizing the execution, delivery and
performance of this Agreement, the Employment
Agreements, the Noncompetition Agreements, the
Assumption Agreement and the Escrow Agreement and
the consummation of the transactions contemplated
thereby; and
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(B) the incumbency and signature of the officers of
the Buyer executing this Agreement, the Employment
Agreements, the Noncompetition Agreements, the
Assumption Agreement and the Escrow Agreement.
(ix) The Escrow Amount, which will be delivered to the
Escrow Agent; and
(x) Any and all other instruments reasonably required or
requested by the Seller or its counsel in connection with the
Closing.
(c) At Closing, the Seller shall execute, acknowledge and/or
deliver or cause to be delivered the following:
(i) A xxxx of sale, relating to the Acquired Assets to
be transferred to the Buyer, in the form attached hereto as
Exhibit G, duly executed by the Seller (the "Xxxx of Sale");
(ii) Such other instruments of conveyance, assignment and
transfer, in form and substance satisfactory to the Buyer's
counsel, as shall be effective to vest in the Buyer good and
marketable title to the Acquired Assets;
(iii) The Employment Agreements, in the form of Exhibit C,
duly executed by the respective Employees;
(iv) The Noncompetition Agreements, in the form of
Exhibit D, duly executed by the respective Employees, Xxxxxxx
Xxxxxxxx and Xxxxxxx Xxxxxx;
(v) A certificate of good standing for the Seller issued
by the Secretary of State of the State of Delaware;
(vi) Seller Secretary's Certificate certifying to the
following:
(A) resolutions duly adopted by the Board of
Directors of the Seller certified by its corporate
secretary, authorizing the execution, delivery and
performance of this Agreement, the Assumption
Agreement and the Escrow Agreement and the
consummation of the transactions contemplated
thereby;
(B) the incumbency and signature of the officers of
the Seller executing this Agreement, the Assumption
Agreement and the Escrow Agreement; and
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(C) resolution duly adopted by all of the Seller's
shareholders authorizing the consummation of the
transaction contemplated hereby.
(vii) The opinion of counsel to the Seller in
substantially the form set forth in Exhibit H;
(viii) The Escrow Agreement, in the form of Exhibit A,
duly executed by the Seller;
(ix) Draft, unaudited financial statements of the Seller
at and for the twelve months ended March 31, 1998, prepared
in accordance with generally accepted accounting principles
consistently applied, except as otherwise noted in the
financial statements (the "Unaudited March 31 Financial
Statements");
(x) All consents, approvals, authorizations or orders of
and all registrations, declarations or filings with third
parties, including creditors, contract parties or public or
governmental authorities, necessary for the authorization,
execution and delivery of this Agreement by the Seller or the
consummation by the Seller of the transactions contemplated
by this Agreement, except for those which the Seller has not
obtained or made as set forth in Schedule 2.06; and
(xi) Any and all other instruments reasonably required
or requested by the Buyer or its counsel in connection with
the Closing.
ARTICLE II
SELLER'S REPRESENTATIONS AND WARRANTIES
The Seller represents and warrants to the Buyer that the statements
contained in this Article II, including the disclosure schedules thereto, are
correct and complete in all material respects as of the date of this Agreement,
except that any representation or warranty that is given as of a particular
date and relates solely to a particular date or period is given as of such date
or period. If and to the extent any information required to be furnished in any
Section of any Schedule or Exhibit hereto is contained in another Section of
such Schedule or Exhibit or in any other Schedule or Exhibit hereto, such
information will be deemed to be included in all Sections or Exhibits of each
Schedule or Exhibit in which such information is required to be included.
Seller represents, warrants and covenants to Buyer, its successors and assigns
as follows:
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SECTION 2.01. ACQUIRED ASSETS AND TITLE.
(a) Except for the Acquired Liabilities and as otherwise set
forth in Schedule 2.01(a) or Schedule 2.08 hereto, the Seller will
convey the Acquired Assets to Buyer free and clear of all liabilities,
liens, claims, charges, restrictions on transfer, security interests,
pledges or encumbrances of any kind. The Seller has the full right,
power, authority and capacity to sell and transfer the Acquired Assets
to the Seller. There are no agreements, covenants, conditions,
limitations or other exceptions affecting the Acquired Assets which
would prevent, prohibit, delay or interfere with Buyer's intended use
of the Acquired Assets.
(b) Schedule 1.01 hereto contains a description of all material
fixed and other tangible assets owned, leased or used by the Seller,
including without limitation, improvements to leased property and real
property, equipment, vehicles and all personal property relating to
the Seller and its business and properties. All such improvements,
equipment, vehicles and personal property are in good working
condition and repair, normal wear and tear excepted. All such
improvements, equipment, vehicles and personal property comply in all
material respects to applicable health, sanitation, fire,
environmental (including air and water pollution laws and
regulations), safety, labor, zoning and building laws and ordinances;
and the Seller has not received any written notification within the
last five years of any violation of any applicable ordinance or
regulation of building, zoning or other law, in respect of its
properties or operations. To the Seller's knowledge, none of such real
property is currently the subject of any eminent domain, condemnation
or similar proceeding and, to the Seller's knowledge, no such
proceeding is threatened. To the Seller's knowledge, there are no
pending or threatened proceedings which might interfere with the
Buyer's quiet enjoyment of such real property.
(c) Schedule 2.01(c) contains a list of all contracts and
agreements for the performance of services or the purchase or leasing
of property by the Seller of an amount or value in excess of $10,000
("Material Contracts"). Each of the Material Contracts is in full
force and effect and (assuming each such contract is a valid and
binding obligation of the other parties thereto) is valid and
enforceable in accordance with its terms. The Seller is not, and to
the knowledge of the Seller each other person that has or had any
obligation under a Material Contract is not, in material violation,
breach or default of any such Material Contract or with or without
notice or lapse of time or both would be in material violation, breach
or default of any such Material Contract, except as set forth in
Schedule 2.01(c). The Seller has not renegotiated, and there are no
outstanding rights to renegotiate, any amounts paid or payable under
any Material Contract with any person.
(d) Schedule 2.01(d) hereto also contains a description of all
material intangible assets owned or used by the Seller, including,
without limitation, tradenames, trademarks, servicemarks, copyrights,
uncopyrighted marks, software, licenses, sublicenses, permits and
patents (collectively, the "Intangible Assets"). Except as set forth
in Schedule 2.01(d),
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the Seller has full and clear title to the Intangible Assets for the
goods and services for which such Intangible Assets are used and
believes that any registrations thereof are valid and subsisting and
are in full force and effect. Except as set forth in Schedule 2.01(d),
the Seller has the sole, full and clear title to each copyright in the
Intangible Assets and believes that the registrations thereof are
valid and subsisting and are in full force and effect.
SECTION 2.02. CORPORATE STATUS. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with full corporate power and authority to carry on its business and
to own or lease and to operate its properties as and in the places where such
business is conducted and such properties are owned, leased or operated. The
Seller is qualified to do business as a foreign corporation in the
jurisdictions identified in Schedule 2.02 and is in good standing under the
laws of any state of the United States in which the character of the properties
owned or leased by it therein or in which the transaction of business makes
such qualification necessary, except where the failure to be so qualified would
not have a Material Adverse Effect. For purposes of this Agreement, the term
"Material Adverse Effect" shall mean any change or changes in the assets,
business, operations, property or results of operations that is materially
adverse to the financial condition of the Seller. The Seller has delivered to
the Buyer complete and correct copies of its certificate of incorporation and
bylaws or other organizational documents, in each case, as amended and in
effect on the date of this Agreement. The Seller is not in violation of any of
the provisions of such organizational documents.
SECTION 2.03. POWER AND AUTHORITY. The Seller has full corporate power
and authority to enter into, execute and deliver this Agreement and all other
agreements and documents contemplated by this Agreement, to perform its
obligations thereunder and to consummate the transactions contemplated thereby
except as set forth in Schedule 2.02 hereto. The Seller has taken all corporate
action required, including requisite actions by the Board of Directors and the
shareholders of the Seller, to authorize the execution and delivery of this
Agreement and the consummation of the transactions contemplated on its part
herein.
SECTION 2.04. NONCONTRAVENTION. Except as set forth in Schedule 2.04
hereto, neither the execution and delivery of this Agreement by the Seller nor
the consummation by the Seller of the transaction as contemplated on its part
hereby will (i) violate in any material respects or result in a material change
in any rights or obligations under any governmental permit or license, any
existing law or regulation applicable to the Seller or any judgment, writ,
injunction, order, award or decree of any court, arbitrator or governmental
authority by which it is bound, (ii) conflict with in any material respect,
result in a breach of any material provision of or the modification or
termination of, constitute a material default (with the giving of notice or the
lapse of time or both) under or result in the creation or imposition of any
lien, security interest, charge or encumbrance upon any of the assets of the
Seller which in the aggregate are material under any mortgage, indenture,
security agreement, contract, agreement or other undertaking to which it is a
party or by which it is bound (other than contracts, leases or other agreements
which require a consent to the transfer thereof) and which, in the aggregate,
would have a Material Adverse Effect upon
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the operation of the business conveyed as part of the transfer of the Acquired
Assets or (iii) conflict with or result in a breach of any provisions of its
certificate of incorporation or bylaws.
SECTION 2.05. ENFORCEABILITY. This Agreement, the Xxxx of Sale, the
Escrow Agreement and the Assumption Agreement constitutes the valid and legally
binding obligations of the Seller, enforceable upon and against Seller in
accordance with their respective terms.
SECTION 2.06. CONSENTS AND APPROVALS. (a) Except as set forth on
Schedule 2.06 hereto, the Seller has obtained all approvals, authorizations or
orders of and has made all registrations, declarations or filings with third
parties, including governmental authorities, necessary for the authorization,
execution and delivery of this Agreement by the Seller or the consummation by
the Seller of the transactions contemplated by this Agreement, which consents,
approvals, authorizations, orders, registrations, declarations and filings are
set forth in Schedule 2.06.
(b) Seller and Buyer will cooperate and use their respective
commercially reasonable efforts to obtain as promptly as practicable all
consents, approvals and waivers which have not been obtained as of the Closing
required by third persons to transfer the contracts in a manner that will avoid
any default, conflict or termination of rights under the contracts.
Notwithstanding anything to the contrary in this Agreement, nothing in this
Section 2.06 shall require Seller or Buyer to expend any material sum, make a
material financial commitment or grant or agree to any material concession to
any third person to obtain any such consent, approval or waiver.
(c) In the event that any and all consents, approvals or waivers
necessary for the assignment, transfer or novation of any contract, or any
claim, right or benefit arising thereunder or resulting therefrom, or consents
relating to sale of the Acquired Assets, shall not have been obtained prior to
the Closing, then as of the Closing, this Agreement, to the extent permitted by
law, shall constitute full and equitable assignment by Seller to Buyer of all
of Seller's right, title and interest in and to, and all of Seller's
obligations and liabilities under, such contract, and Buyer shall be deemed
Seller's agent for purposes of completing, fulfilling and discharging all of
Seller's liabilities under any such contract. The parties shall take all
necessary steps and actions to provide Buyer with the benefits of such
contracts, and to relieve Seller of the performance and other obligations
thereunder arising after the Closing. Buyer agrees to pay, perform and
discharge, and Buyer agrees to indemnify Seller against and hold Seller
harmless from, all obligations and liabilities of Seller relating to such
performance or failure to perform under such Contracts arising after the
Closing. To the extent required in order to obtain a consent, approval or
waiver to the transfer of any contract described in this Section, Buyer and
Buyer's parent corporation, American Business Information, Inc., by their
signatures at the end of this Agreement hereby guarantee such obligations of
Buyer and agree to pay, perform and discharge all obligations and liabilities
of Seller relating to such performance or failure to perform under any such
contract arising after the Closing.
(d) In the event Seller shall be unable to make the equitable
assignment described in the preceding paragraph, or if such attempted
assignment would give rise to any right of
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termination, or would otherwise adversely affect the rights of Seller or Buyer
under such contract, or would not assign all Seller's rights thereunder at the
Closing, Seller and Buyer shall continue to cooperate and use all reasonable
efforts to provide Buyer with all such rights. To the extent that any such
consents and waivers are not obtained, or until the impediments to such
assignments are resolved, Seller shall use all reasonable efforts to (i)
provide to Buyer, at the request of Buyer, the benefits of any such contract,
(ii) cooperate in any lawful arrangement designed to provide such benefits to
Buyer, and (iii) enforce, at the request of and for the account of Buyer, any
rights of Seller arising from any such contract against any third person,
including the right to elect to terminate in accordance with the terms thereof
upon the advice of Buyer. To the extent that Buyer is provided the benefits of
any contract referred to herein (whether from Seller or otherwise), Buyer shall
perform the obligations of Seller thereunder, and Buyer agrees to pay, perform
and discharge, and Buyer agrees to indemnify Seller against and hold Seller
harmless from, all obligations and liabilities of relating to such performance
or failure to perform (but only to the extent such obligations or liabilities
arise solely from acts of Buyer after the Closing).
SECTION 2.07. CLAIMS AND PROCEEDINGS. Except as set forth in Schedule
2.07, there is no suit, action, claim, complaint, proceeding, demand,
arbitration, grievance, citation, summons, subpoena, inquiry or investigation
of any nature, civil, criminal, regulatory or otherwise, pending or, to the
knowledge of the Seller, threatened against the Seller or the Acquired Assets
before any court or by any governmental, administrative or regulatory agency or
authority, or otherwise which, if decided adversely, would have Material
Adverse Effect upon the operation of the business conveyed as part of the
transfer of the Acquired Assets. The Seller is not subject to any currently
existing order, writ, injunction or decree relating to its operations. There is
no litigation pending or written notice of threatened litigation in which any
injunction or material damages are sought against or from Seller in connection
with the transactions contemplated hereby
SECTION 2.08. FINANCIAL STATEMENTS. The Seller has delivered the
Unaudited March 31 Financial Statements to the Buyer. The Seller shall
cooperate and use commercially reasonable efforts to prepare and deliver to the
Buyer the Closing Balance Sheet and to cause its independent accounting firm to
prepare and complete the Audited Financial Statements, at the Seller's expense,
for completion and delivery to the Buyer on or prior to July 15, 1998. The
Unaudited Balance Sheet, including the notes thereto, has been prepared, and
the Audited March 31 Financial Statements and the Closing Balance Sheet shall
be prepared, in accordance with generally accepted accounting principles
consistently applied throughout the periods covered thereby, except as
otherwise noted in the financial statements, present fairly the financial
condition of the Seller as of such dates and the results of operations for such
periods, are correct and complete in all material respects and are consistent
with the books and records of the Seller, which books are correct and complete
in all material respects. Schedule 2.08 sets forth certain potential additional
liabilities.
SECTION 2.09. [RESERVED.]
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SECTION 2.10. NO MATERIAL ADVERSE CHANGES. Except as set forth in
Schedule 2.10, since March 31, 1998, there has not been (i) any change in the
financial condition, results of operations, business, assets or liabilities
(contingent or otherwise, whether due or to become due, known or unknown) of
the Seller which would have a Material Adverse Effect on the foregoing, (ii)
any incurrence by the Seller of any long term debt, (iii) any increases in
salary, bonus or other compensation to any officers, employees or agents of the
Seller, (iv) any pending or threatened labor disputes or other labor problems
against or potentially affecting the Seller or (v) any other transaction
entered into by the Seller, except in the ordinary course of business and
consistent with past practice.
SECTION 2.11. TAX MATTERS.
(a) For purposes of this Agreement, "Tax" means any federal,
state, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Section 59A of the
Internal Revenue Code of 1986, as amended (the "Code")), customs,
duties, capital stock, franchise, profits, withholding, social
security (or similar), 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 penalty, interest or addition thereto,
whether disputed or not.
(b) Since March 31, 1998, the Seller has not incurred any Tax
liabilities other than in the ordinary course of business. There are
no Tax liens upon any of the Acquired Assets.
SECTION 2.12. EMPLOYEE BENEFIT PLANS AND RELATED MATTERS.
(a) Schedule 2.12(a) sets forth the names, ages and titles of all
members of the Board of Directors and officers of the Seller and all
employees of the Seller earning in excess of $50,000 per year and the
annual rate of compensation (including bonuses) being paid to each
such officer and employee as of the most recent practicable date.
(b) Schedule 2.12(b) lists each employment, bonus, deferred
compensation, pension, stock option, stock appreciation right,
profit-sharing or retirement plan, arrangement or practice, each
medical, vacation, retiree medical severance pay plan, and each other
agreement or fringe benefit plan, arrangement or practice, of the
Seller, whether legally binding or not, that affects one or more of
the Seller's employees, including all "employee benefit plans" as
defined by Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") (collectively, the "Plans"). The Seller
neither has nor sponsors, nor participates in, any Plan that is
subject to Title IV of ERISA or the minimum funding standards of
Section 412 of the Code.
(c) For each Plan that is an "employee benefit plan" under
Section 3(3) of ERISA, the Seller has delivered to the Buyer correct
and complete copies of the plan
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documents and summary plan descriptions, the most recent determination
letter received from the Internal Revenue Service, the most recent
Form 5500 Annual Report, and all related trust agreements, insurance
contracts and funding agreements that implement each such Plan.
(d) The Seller has no commitment, whether formal or informal and
whether legally binding or not, (i) to create any additional Plan,
(ii) to modify or change any Plan or (iii) to maintain for any period
of time any Plan. Schedule 2.12(b) contains an accurate and complete
description of the funding policies (and commitments, if any) with
respect to each existing Plan.
(e) The Seller has no unfunded past service liability in respect
of any of its Plans; neither the Seller nor any Plan, nor any trustee,
administrator, fiduciary or sponsor of any Plan, has engaged in any
prohibited transaction as defined in Section 406 of ERISA or Section
4975 of the Code for which there is no statutory exemption in Section
408 of ERISA or Section 4975 of the Code; all filings, reports and
descriptions as to such Plans (including Form 5500 Annual Reports,
summary plan descriptions and summary annual reports) required to have
been made or distributed to participants, the Internal Revenue
Service, the United States Department of Labor and other governmental
agencies have been made in a timely manner; there is no material
litigation, disputed claim, governmental proceeding or investigation
pending or threatened with respect to any of the Plans, the related
trusts or any fiduciary, trustee, administrator or sponsor of the
Plans; the Plans have been established, maintained and administered in
all material respects in accordance with their governing documents and
applicable provisions of ERISA and the Code and Treasury Regulations
promulgated thereunder; and each Plan that is intended to be a
qualified plan under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service with
respect to the current terms of the Plan.
(f) Except where failure to do so would not have a Material
Adverse Effect, the Seller has complied in all respects with all
applicable federal, state and local laws, rules and regulations
relating to employee's employment and employment relationships,
including, without limitation, wage-related laws, antidiscrimination
laws, employee safety laws and COBRA (defined herein to mean the
requirements of Code Section 4980B, Proposed Treasury Regulation
Section 1.162-26 and Part 6 of Subtitle B of Title I of ERISA).
(g) The consummation of the transactions contemplated by this
Agreement will not (i) result in the payment or series of payments by
the Seller to any employee or other person of an "excess parachute
payment" within the meaning of Section 280G of the Code; (ii) entitle
any employee or former employee of the Seller to severance pay,
unemployment compensation or any other payment; or (iii) accelerate
the time of payment or vesting of any stock option, stock appreciation
right, deferred compensation or other employee benefits under any Plan
(including vacation and sick pay).
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(h) None of the Plans that are "welfare benefit plans," within
the meaning of Section 3(1) of ERISA, provide for continuing benefits
or coverage after termination or retirement from employment, except
for COBRA rights under a "group health plan" as defined in Code
Section 4980B(g) and ERISA Section 607.
(i) Neither the Seller nor any member in a "controlled group"
with the Seller (as defined in ERISA) has ever contributed to,
participated in or withdrawn from a multiemployer plan as defined in
Section 4001(a)(3) of Title IV of ERISA, and the Seller has not
incurred and does not owe any liability as a result of any partial or
complete withdrawal by an employer from such a multiemployer plan as
described under Section 4201, 4203 or 4205 of ERISA.
(j) Seller and Buyer agree that Buyer is not assuming any Plans
of the Seller or any of its subsidiaries or affiliates or any
liability under any such Plan.
SECTION 2.13. BANKRUPTCY OR INSOLVENCY PROCEEDINGS. There are no
attachments, executions, assignments for the benefit of creditors or voluntary
or involuntary proceedings in bankruptcy pending or to Seller's knowledge
threatened against Seller or the Acquired Assets.
SECTION 2.14. [RESERVED.]
SECTION 2.15. NO OTHER AGREEMENTS. Seller has no existing contract or
agreement, written or oral, and is not engaged in any negotiations, with any
party other than Buyer for the sale, transfer or other conveyance of the
Acquired Assets (including the grant of any license to any intellectual
property of the Seller other than licenses in the ordinary course of business
related to the sale of the Seller's products or services) or portion thereof or
of any interest in or right to acquire the Acquired Assets or a portion
thereof, or for the acquisition of any material portion of the capital stock of
the Seller.
SECTION 2.16. NO BROKER. The Seller has not entered into any contract,
arrangement or understanding with any person or firm that may result in the
obligation of the Seller or the Buyer to pay any finder's fee, brokerage or
agent's commission or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby, except for Xxxxxx Xxxxxx Corporate Services, Inc., to whom the Buyer
shall have no liability or obligation to pay any fees, commissions, expenses or
other like payments.
SECTION 2.17. LICENSES, PERMITS, ETC. Seller has delivered to Buyer
all documents, instruments, approvals, certificates, plans and specifications,
records and reports with respect to the Acquired Assets in the possession of
Seller. There are no governmental licenses or permits required to own and
operate the Acquired Assets.
SECTION 2.18. COMPLIANCE WITH LAWS. Except as set forth in Schedule
2.18, the Seller has been and currently is conducting its business and each of
the premises leased or owned by it have been and now are being used and
operated in compliance, in all material respects, with all
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applicable statutes (including 15 U.S.C. Section 1681 et seq.), regulations,
rules, ordinances, judgments, orders, covenants, restrictions and plans of
federal, state, regional, county or municipal court, authorities, agencies or
boards, except where the failure to do so would not have a Material Adverse
Effect. All governmental licenses, permits and approvals necessary to own and
operate the Acquired Assets are in full force and effect and there are no
violations thereof, except where the failure to do so would not have a Material
Adverse Effect.
SECTION 2.19. [RESERVED.]
SECTION 2.20. ENVIRONMENTAL MATTERS.
(a) To the Seller's knowledge, the Seller is in compliance in all
material respects with all applicable environmental laws, and no
facility owned or leased by the Seller (including, to the knowledge of
the Seller, all owners or operators thereof insofar as such property
is concerned) is in violation of any applicable environmental laws in
any material respect. The Seller has not received any written
communication that alleges that any facility owned or leased by the
Seller (including, with respect to any such facility, to the knowledge
of the Seller, any owner or operator thereof insofar as such property
is concerned) is not in such material compliance, and to the knowledge
of the Seller there are no circumstances that may prevent or interfere
with such compliance by the Seller in the future. There are no
licenses held by the Seller pursuant to environmental laws.
(b) There is no Environmental Claim (as defined below) pending
against the Seller or any facility owned or leased by the Seller or,
to the knowledge of the Seller, threatened against the Seller or any
such facility, or threatened or pending against any person whose
liability for any environmental claims the Seller has or may have
retained or assumed either contractually or by operation of law. The
term "Environmental Claim" means any written notice by a person
alleging actual or potential liability (including, potential liability
for any investigatory cost, cleanup cost, governmental response cost,
natural resource damage, property damage, personal injury or penalty)
arising out of, based on or resulting from (i) the presence,
transport, disposal, discharge or release of any chemicals,
pollutants, contaminants, wastes, toxic or hazardous substances,
petroleum or petroleum products or (ii) circumstances forming the
basis of any violation, or alleged violation of any environmental law.
(c) To the Seller's knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge,
disposal or presence of any materials of environmental concern, that
will form the basis of any valid Environmental Claim against the
Seller, any facility owned or leased by the Seller or any person whose
liability for any Environmental Claim the Seller has or may have
retained or assumed either contractually or by operation of law.
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(d) Without in any way limiting the generality of the foregoing,
to the knowledge of the Seller there:
(i) are no underground storage tanks currently or
formerly being located on property currently owned or leased
by the Seller;
(ii) is no asbestos contained in or forming part of
any building or structure owned or leased by the Seller; and
(iii) are no polychlorinated biphenyls which are
used or stored at any property currently owned or leased by
the Seller.
SECTION 2.21. [RESERVED.]
SECTION 2.22. FULL DISCLOSURE. All of the information provided by the
Seller and its representatives herein or in the disclosure schedules and
exhibits hereto is true, correct and complete in all material respects, and no
representation, warranty or statement made by the Seller in or pursuant to this
Agreement, the disclosure schedules or the exhibits contains any untrue
statement of a material fact or omits or will omit to state any material fact
necessary to make such representation, warranty or statement not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES BY BUYER
The Buyer represents and warrants to the Seller that the statements
contained in this Article III, including the disclosure schedules thereto, are
correct and complete as of the date of this Agreement, except that any
representation or warranty that is given as of a particular date and relates
solely to a particular date or period is given as of such date or period. Buyer
represents, warrants and covenants to Seller, its successors and assigns as
follows:
SECTION 3.01. ORGANIZATION. Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of New York.
SECTION 3.02. POWER AND AUTHORITY. The Buyer has full corporate power
and authority to enter into, execute and deliver this Agreement and all other
agreements and documents contemplated by this Agreement, to perform its
obligations thereunder and to consummate the transactions contemplated thereby.
The Buyer has taken all corporate action required to authorize the execution
and delivery of this Agreement and the consummation of the transactions
contemplated on its part herein.
SECTION 3.03. NONCONTRAVENTION. The execution and delivery of this
Agreement by Buyer and the consummation by Buyer of the transactions as
contemplated on its part hereby do not or will not violate or result, with the
giving of notice or the lapse of time or both, in a material violation of any
provision of (i) any existing law or regulation or any order, award or decree
of
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any court, arbitrator or governmental authority by which Buyer is bound, (ii)
any mortgage, indenture, security agreement, contract, agreement or other
undertaking to which Buyer is a party or by which it is bound or (iii) Buyer's
Certificate of Incorporation or Bylaws.
SECTION 3.04. NO BROKER. The Buyer has not entered into any contract,
arrangement or understanding with any person or firm that may result in the
obligation of the Seller or the Buyer to pay any finder's fee, brokerage or
agent's commission or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby.
SECTION 3.05. BANKRUPTCY OR INSOLVENCY PROCEEDINGS. There are no
attachments, executions, assignments for the benefit of creditors or voluntary
or involuntary proceedings pending or threatened against Buyer.
SECTION 3.06. ENFORCEABILITY. This Agreement constitutes, and all
other agreements and documents contemplated by this Agreement to which the
Buyer is a party will constitute on the Effective Date, the valid and legally
binding obligations of the Buyer, enforceable upon and against Buyer in
accordance with their respective terms.
SECTION 3.07. USE OF PREMISES. Buyer agrees that JCBS Inc. and XXXX
Charity Brands Services, for one year after the date of this Agreement, shall
have the right to use the portion of the premises it uses as of the date of
this Agreement leased by Seller.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. COSTS. Each of the parties to this Agreement shall pay
all costs incurred by it incident to the preparation, execution and delivery of
this Agreement and the performance of its obligations under this Agreement,
whether or not the transactions contemplated by this Agreement shall be
consummated, including fees and disbursements of legal counsel, accountants,
financial advisors and consultants employed by the respective parties to this
Agreement in connection with the transactions contemplated by this Agreement.
SECTION 4.02. HEADINGS. All headings of sections of this Agreement are
inserted for convenience only and do not form part of this Agreement or limit,
expand or otherwise alter the meaning of any provisions hereof.
SECTION 4.03. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, and
all of which shall constitute one in the same agreement.
SECTION 4.04. ASSIGNMENT OR DELEGATION. No rights, obligations or
duties of the Seller or the Buyer hereunder may be assigned or delegated.
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SECTION 4.05. SEVERABILITY. Should any provision of this Agreement be
deemed unenforceable by a court of competent jurisdiction, the unenforceable
provision shall be considered severed from this Agreement and the remainder
shall remain in force.
SECTION 4.06. ENTIRE AGREEMENT. This instrument contains and
constitutes the entire agreement of the parties regarding the subject matter
hereof, and there are no other agreements, written or oral, between the parties
affecting the subject matter hereof.
SECTION 4.07. NOTICES. All notices or other communications to be given
hereunder shall be given in writing and delivered by (i) certified mail, return
receipt requested, (ii) personal delivery, (iii) facsimile or (iv) overnight
express carrier addressed as follows:
If to Seller: Mr. Xxxxxxx Xxxxxx
c/x Xxxxxxx Enterprises, Inc.
One Xxxx Xxxx Xxxxx
Xxxxx Xxxxx, XX 00000
with a copy to: Feder, Kaszovitz, Isaacson, Weber, Xxxxx & Bass
LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx Xxxx, Esq.
If to Buyer: Armonk List Companies Corp.
0000 Xxxxx 00 Xxxxxx
Xxxxx, XX 00000
Attention: Mr. Xxxxxx Xxxxxxx, Chief Financial
Officer
with a copy to: Xxxxxxx X. Xxxxxxxx, Esq.
Corporate Counsel
Armonk List Companies Corp.
0000 Xxxxx 00 Xxxxxx
Xxxxx, XX 00000
or to such other address furnished by any party to the other in writing at any
time and from time to time for such notice purposes. Any notice served by
either party on the other shall be deemed effective the fifth business day
following deposit in the mail if sent by certified mail, return receipt
requested, when received, if delivered personally, upon machine confirmation if
sent by facsimile, or the next business day following deposit with an overnight
express carrier.
SECTION 4.08. NONWAIVER. No delay, forbearance or neglect by Buyer or
Seller in the enforcement of any of the conditions of this Agreement or any of
Seller's or Buyer's rights or remedies hereunder shall constitute or be
construed as a waiver thereof. No waiver of any of the
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conditions of this Agreement by Seller or Buyer shall be effective unless
expressly and affirmatively made and given by Seller or Buyer, as the case may
be, in writing.
SECTION 4.09. EXHIBITS AND SCHEDULES. All exhibits and schedules
attached hereto shall be deemed a part hereof to the same extent as if fully
set forth herein.
SECTION 4.10. INDEMNIFICATION.
(a) Seller agrees to indemnify and hold Buyer and its directors,
officers, shareholders, employees, agents and affiliates harmless from
and against any and all claims, demands, losses, costs, expenses
(including, without limitation, reasonable attorneys' fees and
expenses, accountants' fees and expenses and expenses and fees of
other associated professionals), damages, causes of action or
liabilities (collectively, all of the foregoing are referred to as
"Claims") that may be paid, incurred or suffered by, or asserted
against, Buyer or the Acquired Assets, resulting from any liability or
obligation of Seller with respect to events or conditions affecting
the Acquired Assets arising or accruing prior to the date of the
Closing which is not part of the Acquired Liabilities or resulting
from a breach by Seller of any of its representations, warranties and
covenants set forth in this Agreement. The foregoing indemnity shall
survive the Closing for a period of one year after the Closing, except
that the indemnity shall survive the Closing for a period of three
years with respect to Tax liabilities of Seller.
No claim may be made against Seller for indemnification
pursuant to this Section 4.10(a) with respect to any individual Claim,
unless the aggregate of all Claims of the Buyer for which the Buyer is
entitled to be indemnified shall exceed $100,000 and Seller shall not
be required to pay or be liable for the first $100,000 in aggregate
amount of any such Claims, and in no event shall Seller's aggregate
liability for all Claims exceed the Purchase Price, nor shall Seller
be liable for consequential, indirect, punitive, exemplary or special
damages, including loss of profits.
For the purposes of this Section 4.10(a), in computing such
individual or aggregate amounts of Claims, the amount of each Claim
shall be deemed to be an amount (i) net of any Tax benefit to the
Buyer or any affiliate thereof, (ii) net of any insurance proceeds and
any indemnity, contribution or other similar payment received by any
third party with respect thereto, and (iii) net of any reserves
provided for the situation in question which are included in the
Acquired Assets and reflected in the Closing Balance Sheet. Tax
benefits will be considered to be realized by Buyer for the purposes
of this Section 4.10(a) in the year in which a payment occurs, and the
amount of the tax benefits shall be determined by assuming (i) Buyer
or its affiliate, as the case may be, is in the maximum Federal income
tax bracket after any deduction reportable with respect to a payment
hereunder and (ii) Buyer or its affiliate's effective state and local
income tax rate is its effective rate for the most recent prior
taxable year for which such information is available.
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(b) Buyer agrees to indemnify and hold Seller and its directors,
officers, shareholders, employees, agents and affiliates harmless from
and against any and all Claims that may be paid, incurred or suffered
by, or asserted against, Seller resulting from a breach by Buyer of
any of its representations, warranties and covenants set forth in this
Agreement.
(c) If the Buyer or the Seller suffers or is threatened with any
Claim for which it would be entitled to be indemnified from the other
party, it shall notify the indemnifying party to such effect with
reasonable promptness after it first becomes aware of such Claim, and
shall furnish the indemnifying party with details regarding the Claim.
If the Claim is asserted by a third party by the filing by such third
party of any action at law or in equity, the indemnified party shall
give such notice of the Claim not later than 10 days prior to the date
by which a responsive pleading must be filed, and shall also furnish
the original or a copy of such Claim (if made in writing) and of all
documents received from the third party in support of its Claim, and
shall otherwise make available all relevant information material to
the defense of such Claim in the possession or control of the
Indemnified Party. If the indemnifying party requests in writing that
such third-party Claim not be paid, the indemnified party shall not
pay such Claim and the indemnifying party shall, at its expense,
settle, compromise or litigate such Claim in good faith, and shall
keep the indemnified party adequately informed of any action taken and
the progress thereof; provided that the indemnified party shall not be
required to refrain from paying any such Claim which has matured by a
court judgment or decree unless a timely appeal is taken therefrom and
a proper appeal bond posted by or on behalf of the indemnifying party,
nor shall the indemnified party be required to refrain from paying any
Claim where such action would result in the foreclosure of a lien upon
any of its property or an order enjoining or restraining it
temporarily or permanently, from the operation of business in the
normal course. If the Indemnifying party elects to compromise or
defend such Claim, it shall within thirty (30) days (or sooner, if the
nature of the Claim so requires) notify the indemnified party of its
intent to do so, and the indemnified party shall cooperate with the
indemnifying party and shall provide the indemnifying party access to
its records and personnel relating to any such Claim, in each case, at
the expense of the indemnifying party, in the compromise of, or
defense against, such Claim. Subject to the limitations contained
below on the obligations of the indemnifying party in respect of
proposed settlements, the indemnified party shall have the right to
employ its own counsel with respect to any Claim, but the fees and
expenses of such counsel shall be at the expense of such indemnified
party unless (a) the employment of such counsel at the expense of the
indemnifying party shall have been authorized in writing by the
Indemnifying party in connection with the defense of such action, or
(b) such indemnifying party shall not have, as provided above,
promptly employed counsel reasonably satisfactory to the Indemnified
party to take charge of the defense of such action. The indemnified
party, at its own cost, may employ separate counsel to assert, based
on an opinion of counsel, one or more legal defenses available to it
which are different from or additional to those available to such
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indemnifying party; the indemnifying party shall not have the right to
direct the defense of such action on behalf of the indemnified party
in respect of such different or additional defenses.
Notwithstanding the foregoing provisions of this Section
4.10(c) neither the indemnifying party nor the indemnified party may
settle or compromise any Claim for which indemnification has been
sought and is available hereunder, over the reasonable objection of
the other; provided, however, that consent to settlement or compromise
shall not be unreasonably withheld or delayed. If, however, the
indemnified party refuses to consent to a bona fide offer of
settlement which the indemnifying party wishes to accept, the
indemnified party may continue to pursue such matter, free of any
participation by the indemnifying party, at the sole expense of the
indemnified party. In such event, the obligation of the indemnifying
party to the indemnified party shall be equal to the lesser of (i) the
amount of the offer of settlement which the indemnified party refused
to accept plus the costs and expenses of the indemnified party prior
to the date the indemnifying party notified the Indemnified party of
the offer of settlement, and (ii) the actual out-of-pocket amount the
indemnified party is obligated to pay as a result of the indemnified
party's continuing to pursue such matter.
If, by the expiration of 15 days after notice of such a claim
is given, the indemnifying party has not notified the indemnified
party that the indemnifying party will undertake to settle, compromise
or litigate such claim, such action shall be deemed an authorization
to the indemnified party to pay such claim, and upon receipt of proof
of payment, indemnity shall immediately be due and payable.
SECTION 4.11. GOVERNING LAW. This Agreement shall be construed and
interpreted in accordance with the laws of the State of Delaware without giving
effect to its conflict of laws principles.
SECTION 4.12. AMENDMENTS. This Agreement may not be modified or
amended, except by an agreement in writing signed by the parties hereto. The
parties may waive any of the conditions contained herein or any of the
obligations of the other parties hereunder, but any such waiver shall be
effective only if it is in writing and signed by the party waiving such
condition or obligation.
SECTION 4.13. FURTHER ASSURANCES. Each of the parties hereto agrees to
take such further action and to execute such further instruments as may be
reasonably required by any of the other parties in order to consummate the
transaction contemplated by this Agreement and to carry out the intentions
expressed in this Agreement.
SECTION 4.14. CONFIDENTIALITY. As a material inducement to Seller and
Buyer entering into this Agreement, Seller and Buyer shall keep the
Confidential Information (as defined below) in strict confidence and shall not
disclose such Confidential Information other than to such of their
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respective officers, directors, employees, attorneys, advisors, accountants and
agents with a need to know such Confidential Information.
"Confidential Information" shall mean the financial terms of this
Agreement and the Transaction Documents. Notwithstanding anything in this
Agreement to the contrary, Confidential Information shall not include any
information which (i) at the time of disclosure is generally available to and
known by the public (other than as a result of a disclosure made directly or
indirectly in violation of this Agreement), or (ii) becomes publicly available
in the future (other than as a result of a disclosure made directly or
indirectly in violation of this Agreement).
In the event that a party to this Agreement, or any of such party's
officers, directors, shareholders, employees or agents become legally compelled
(by deposition, interrogatory, request of documents, subpoena, civil
investigative demand or similar process) to disclose any of the Confidential
Information of the other party, the person referred to above from whom such
information is being sought shall provide the party to whom such Confidential
Information belongs with promptly prior written notice of such requirement, and
such other party may seek a protective order or other appropriate remedy and/or
waive compliance with the terms of this Agreement. In the event that such
protective order or other remedy is not obtained, or the other party waives
compliance with the provisions hereof, the party required to provide such
information agrees to furnish only such portion of the Confidential Information
which is legally required to be furnished.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date and year first above written.
ARMONK LIST COMPANIES CORP.,
a New York corporation
By:
---------------------------------
Title:
---------------------------------
XXXX MARKETING SERVICES, INC.,
a Delaware corporation
By:
---------------------------------
Title:
---------------------------------
AMERICAN BUSINESS INFORMATION, INC.
hereby guarantees Buyers's obligations under
Section 2.06(c)
By:
---------------------------------
Title:
---------------------------------
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EXHIBIT A
FORM OF ESCROW AGREEMENT
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EXHIBIT B
ALLOCATION SCHEDULE
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EXHIBIT C
FORM OF EMPLOYMENT AGREEMENTS
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33
EXHIBIT D
FORM OF NONCOMPETITION AGREEMENTS
29
34
EXHIBIT E
FORM OF ASSUMPTION AGREEMENT
30
35
EXHIBIT F
FORM OF OPINION OF BUYER'S COUNSEL
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36
EXHIBIT G
FORM OF XXXX OF SALE
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EXHIBIT H
FORM OF OPINION OF SELLER'S COUNSEL
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