ASSET PURCHASE AGREEMENT
Between
THE DENALI PROJECT, L.L.C.
as Seller
and
SIBONEY LEARNING GROUP, INC.
as Purchaser
May 4, 2001
Table of Contents
Page
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1. DEFINITIONS..............................................1
2. TRANSFER OF ASSETS; CLOSING..............................1
2.01. Transfer of Assets..............................1
2.02. Other Transactions at Closing...................1
2.03. Liabilities Not Assumed.........................2
2.04. Excluded Assets.................................2
3. WARRANTIES AND REPRESENTATIONS OF DP.....................2
3.01. Organization and Standing of DP.................2
3.02. Authority.......................................2
3.03. Clear Title and Condition of Assets.............3
3.04. Financial Statements............................3
3.05. Absence of Changes..............................3
3.06. Payment of Debts and Liabilities................3
3.07. No Conflicting Agreements or Orders.............3
3.08. Compliance......................................4
3.09. Litigation......................................4
3.10. [Intentionally Deleted.]........................4
3.11. Employment Agreements...........................4
3.12. Taxes...........................................4
3.13. Intellectual Property...........................4
3.14. Leases..........................................5
3.15. [Intentionally Deleted.]........................5
3.16. Other Contracts.................................5
3.17. Suppliers.......................................5
3.18. Customers.......................................5
3.19. ERISA...........................................5
3.20. Environmental...................................5
3.21. Consents........................................6
3.22. No Misrepresentation............................6
4. REPRESENTATIONS AND WARRANTIES OF SLG....................6
4.01. Organization and Standing of SLG................6
4.02. Binding Agreement...............................6
4.03. Agreement Within Authority......................6
4.04. No Conflicting Agreements or Orders.............6
4.05. Corporate Action................................6
4.06. No Conflict.....................................6
4.07. No Misrepresentation............................7
4.08. Financial Statements............................7
4.09. Warranty Limitation.............................7
4.10. Nonreliance.....................................7
4.11. Financing.......................................7
5. COVENANTS OF SLG.........................................7
5.01. Information.....................................7
5.02. Performance of Assigned Contracts...............7
5.03. Allocation of Purchase Price....................8
6. COVENANTS OF DP..........................................8
6.01. Access to Information...........................8
6.02. Maintain Assets.................................8
6.03. Maintain Organization...........................8
6.04. Regular Course of Business......................8
6.05. Insurance.......................................8
6.06. Business Changes................................8
6.07. Allocation of Purchase Price....................9
7. ADDITIONAL ACTIONS AT CLOSING............................9
7.01. Opinion of Counsel..............................9
7.02. Organizational Approval.........................9
7.03. Casualty Loss...................................9
7.04. Non-Competition Agreements with
Xx. Xxxxxxx Xxxxx and Xxx Xxxxxxxxx.............9
7.05. Agreement with Xxxx Xxxxxxx.....................9
7.06. Opinion of Counsel..............................9
8. [Intentionally Deleted.].................................10
9. INDEMNIFICATION..........................................10
9.01. Indemnification of SLG by DP....................10
9.02. Indemnification of DP by SLG....................10
9.03. Notice to Indemnifying Party....................11
9.04. Schedules.......................................11
9.05. Damages.........................................11
9.06. Maximum Liability...............................11
10. CLOSING AND RISK OF LOSS.................................12
10.01. Place and Time..................................12
10.02. Risk of Loss....................................12
10.03. Simultaneous Performance........................12
10.04. Transfer of Possession..........................12
11. MISCELLANEOUS............................................12
11.01. Commission......................................12
11.02. Survival of Representations and Warranties......12
11.03. Incorporation of Schedules......................12
11.04. Further Assurances..............................12
11.05. Limited Assumption of DP's Liabilities..........13
11.06. Transfer Taxes..................................13
11.07. Notices.........................................13
11.08. Entire Agreement................................14
11.09. Binding Effect..................................14
11.10. Third Parties...................................14
11.11. Expenses of the Parties.........................15
11.12. Further Assurances..............................15
11.13. Counterparts....................................15
11.14. Headings........................................15
11.15. Mail and Communications.........................15
11.16. [Intentionally Deleted.]........................15
11.17. Missouri Law to Govern..........................15
ASSET PURCHASE AGREEMENT BETWEEN
THE DENALI PROJECT, L.L.C. AND
SIBONEY LEARNING GROUP, INC.
This Asset Purchase Agreement (the "Agreement") is entered into as of
the 4th day of May, 2001, by SIBONEY LEARNING GROUP, INC., a Texas corporation
with its principal place of business in the State of Missouri ("SLG"), and THE
DENALI PROJECT, L.L.C., a Delaware limited liability company ("DP").
A. DP owns certain assets, rights and property necessary for, and
operates a business which is engaged in, the design, manufacture, sale and
distribution of computer software sold and used for educational purposes under
the name "Summit Software" (the "Business"); and
B. The members of DP have authorized and approved this Agreement and
have determined that it is in the best interests of DP and its members for DP to
sell the assets described herein to SLG in exchange for the consideration
provided for below;
THEREFORE, in consideration of the agreements set forth herein, and
subject to the conditions herein contained, it is mutually agreed as follows:
1. DEFINITIONS.
Schedule 1.01 contains certain definitions of capitalized terms used in
this Agreement for ease of reference.
2. TRANSFER OF ASSETS; CLOSING.
2.01. Transfer of Assets. At the Closing, subject to the terms and
conditions of this Agreement and in reliance on the representations, warranties
and covenants contained herein, DP shall sell, transfer, convey and assign to
SLG, and SLG shall acquire, the Assets in exchange for a purchase price equal to
$550,000, plus the aggregate amount of all Advances (as defined in Schedule
1.01) as follows:
(a) by payment and delivery at Closing of: (i) Five Hundred
Thousand Dollars ($500,000.00) by wire transfer or cashier's check; and
(b) by execution and delivery at Closing to DP of the promissory
note of SLG in the principal amount of Fifty Thousand and No/100
Dollars ($50,000.00), calling for one principal payment, without
interest, of Fifty Thousand and No/100 Dollars ($50,000.00) one year
after the Closing Date, and otherwise as provided in the form of
promissory note attached hereto as Schedule 2.01(b) ("the Note"); and
(c) by acknowledgement by DP of receipt of all Advances
theretofore made by SLG.
2.02. Other Transactions at Closing. At the Closing:
(a) DP will deliver to SLG full possession of the Assets and such
bills of sale, endorsements, assignments and other good and sufficient
instruments of sale, conveyance, transfer and assignment, in form and
substance satisfactory to SLG (including a Xxxx of Sale and Assignment
in the form of Schedule 2.02(a)), as are required or desirable in the
opinion of SLG's counsel to effectively vest in SLG full, indefeasible,
merchantable, legal, equitable and beneficial title to the Assets, with
full substitution and subrogation to all rights and actions of
warranty, free and clear of all debts, claims, security interests,
liens, encumbrances and other title retention agreements, pledges,
assessments, covenants, restrictions and charges of every nature;
(b) SLG will assume and agree to perform the post-Closing
obligations of DP under the Assigned Contracts pursuant to an
Assumption Agreement in the form of Schedule 2.02(b); and
(c) Siboney Corporation, parent of SLG, will execute a guaranty
of payment and performance of the obligations of SLG under the Note and
under this Agreement in the form of Schedule 2.02(c); and
(d) Xx. Xxxxxxx Xxxxx and Xxx Xxxxxxxxx shall have executed and
delivered to SLG Covenants Not To Compete (referred to in Section
7.12); and
(e) SLG will provide The Xxxxx Group Arizona, L.L.C., at no cost,
with 15 unlimited user site licenses of new versions of Summit Math and
Summit Reading up to and including, but not beyond, the planned version
that incorporates voice. The upgrades will be provided within 30 days
after they become available; and
(f) the parties will perform all of the other obligations
required to be performed by them at or before the Closing, including
without limitation, delivering the documents and fulfilling the
conditions set forth in Article VII hereof.
2.03. Liabilities Not Assumed. OTHER THAN THE POST-CLOSING OBLIGATIONS
OF DP UNDER THE ASSIGNED CONTRACTS, SLG IS NOT ASSUMING AND IS NOT RESPONSIBLE
FOR ANY LIABILITIES OR OBLIGATIONS OF DP OR THE BUSINESS, INCLUDING WITHOUT
LIMITATION, ALL ACCOUNTS PAYABLE OF DP THROUGH THE CLOSING DATE.
2.04. Excluded Assets. Notwithstanding anything herein to the contrary,
the Assets will not include the Excluded Assets.
3. WARRANTIES AND REPRESENTATIONS OF DP.
DP represents, warrants to and covenants and agrees with SLG as
follows:
3.01. Organization and Standing of DP. DP is a limited liability
company duly organized, validly existing and is in good standing under the
limited liability company laws of the state of Delaware and has all necessary
power and authority to own its assets as now owned and to carry on the Business
as now conducted.
3.02. Authority. DP has full power and authority to enter into this
Agreement and to complete the Closing, which have been duly authorized by all
required limited liability company and other action on the part of DP.
3.03. Clear Title and Condition of Assets. DP has good and marketable
title to and interest in all of the Assets, free and clear of any restrictions
on or conditions to transfer or assignment, mortgages, conditional sales
agreements, liens, pledges, charges, encumbrances, claims, security interests,
easements, covenants, conditions or restrictions (collectively, "Encumbrances").
3.04. Financial Statements. To DP's knowledge, the balance sheets of DP
for the years ended December 31, 1999 and 2000 (the "Financial Statements")
fairly state the financial condition of DP, on a cash basis accounting method,
as of such dates in all material respects.
3.05. Absence of Changes. Except as set forth in Schedule 3.05 or any
other schedule, since December 31, 2000, there has not been any: (a) transaction
by DP affecting the Assets or the Business other than in the ordinary course of
business as previously conducted; (b) adverse change in the financial condition,
Assets or the Business; (c) amendment or termination of any contract, agreement
or license to which DP is a party that relates to the Assets or the Business;
(d) mortgage, pledge or other encumbrance of, or the granting of any security
interest or lien with respect to, any of the Assets; or (e) any other event or
condition, other than The Xxxxxxx Lawsuit, of any character that has had or in
the future may have a materially adverse effect on the financial condition,
business, Assets or the Business as previously conducted.
3.06. Payment of Debts and Liabilities. DP will pay all accounts,
debts, bills and liabilities of DP which are payable through the Closing Date or
which subsequent to the Closing could become an encumbrance on or result in a
secured interest in the Assets or otherwise affect the use of the Assets or
conduct of the Business by SLG subsequent to the Closing.
3.07. No Conflicting Agreements or Orders.
(a) There is no provision of the Articles of Organization or the
Operating Agreement of DP or of any contract, security agreement,
lease, mortgage, indenture, or other document, instrument, license,
franchise or agreement which is binding on DP or which affects DP or
its properties, which conflicts with or in any way prevents or will be
violated by the execution, delivery or carrying out of the terms of
this Agreement.
(b) The execution, delivery and performance of the Agreement by
DP will not constitute a default, or an event which with the giving of
notice or the passage of time, or both, would constitute a default,
under any of the foregoing nor be the grounds for the suspension,
revocation, impairment, forfeiture, nonrenewal or termination of any
license, permit, franchise, certificate, consent or authorization.
(c) The execution, delivery and consummation of this Agreement by
DP will not constitute or result in: (i) the creation or imposition of
an Encumbrance on, or give to others any interest or right in or with
respect to, any of the Assets, or (ii) a complete or partial withdrawal
from any employer or multi-employer/employee benefit plan under ERISA,
or any funding deficiency or lien under ERISA or any other law, rule or
regulation applicable to the Assets or the Business. DP is not subject
to any order, writ, injunction, decree, judgment, award, determination,
direction or demand of any court, arbitrator, or federal, state,
municipal or other governmental department, bureau, agency or
instrumentality which would be violated by the execution, delivery or
carrying out of the terms of this Agreement.
3.08. Compliance. To DP's knowledge, DP has conducted the Business and
maintained its properties, including all real property covered by leases, in
material compliance with, and is not in violation of, applicable laws, rules,
regulations and orders of any federal, state and local government or regulatory
body (including, without limitation, any and all applicable building, zoning and
licensing laws, ordinances, regulations or orders affecting the location, size
and function of the Assets and the operation of the Business and all
Environmental Laws).
3.09. Litigation. Except for The Xxxxxxx Lawsuit, no suit, action,
decree, arbitration or legal, administrative or other proceeding, controversy or
investigation is pending or, except for a potential dispute with Xxxxxx
Xxxxxxxxx (to the knowledge of DP or Shareholder) threatened against DP, or
which otherwise might adversely affect the Business or financial condition of DP
or any of the Assets, DP's right to transfer the same, the possession and use
thereof, or the operation by SLG of the Business.
3.10. [Intentionally Deleted.]
3.11. Employment Agreements. Except as disclosed on Schedule 3.11, DP
has not entered into, and has no obligation or liability with respect to, any
employment or consulting agreement, executive compensation plan, collective
bargaining agreement, deferred compensation agreement, bonus plan, employee
pension plan or retirement plan, employee profit sharing plan, employee stock
purchase or stock option plan, severance agreement or any other agreement or
arrangement providing for remuneration or benefits to employees or their
dependents.
3.12. Taxes. DP has filed all federal, state and local tax and
information returns and estimates required to be filed by DP within the times
and in the manner prescribed by law. DP has delivered to SLG true and complete
copies of the federal income tax or information returns of DP for the years
ended December 31, 1999 and 2000.
3.13. Intellectual Property.
(a) DP is the sole owner or the exclusive licensee (in each case,
separately identified as such) of the software programs and other works
of authorship, trade names, trademarks and tradenames listed on
Schedule 3.13 (collectively, the "Intellectual Property"), which
constitute all of the intellectual property sold, licensed or otherwise
used by DP in connection with the Business.
(b) The sale, license or use of the Intellectual Property by DP
does not infringe upon or conflict with the rights of others. None of
the software programs, works of authorship, trade names or trademarks
listed on Schedule 3.13, or any registration thereof, is infringed or
has been challenged or threatened in any way. There is no potentially
interfering trademark, service xxxx or trade name application of any
third party.
(c) At Closing, DP will assign the Intellectual Property to SLG.
DP agrees not to use the name "Summit Software" or any similar name
after Closing.
3.14. Leases. Except as set forth on Schedule 3.14, no personal or real
property used by DP and included in the Assets is held under any lease.
3.15. [Intentionally Deleted.]
3.16. Other Contracts. Schedule 3.16 contains a complete and accurate
list of all Assigned Contracts. DP has furnished SLG true and complete copies of
all Assigned Contracts. There is no default of DP or event that with notice or
lapse of time, or both, would constitute a default, nor, to the knowledge of DP,
any default or threatened default by any other party thereto, existing with
respect to any of such agreements. DP has received no notice that any party to
any of such agreements intends to cancel or terminate any of the Assigned
Contracts or to exercise or not exercise any options under any of the Assigned
Contracts.
3.17. Suppliers. Attached as Schedule 3.17 is a list of the suppliers
of goods and services to DP relating to the Business during the current year to
date and for the year ended December 31, 2000.
3.18. Customers. DP has provided SLG with a list of DP's customers for
Summit Software products (the "Customer List") and the amount of purchases of
each of them for the year ended December 31, 2000 and, separately, for the two
(2) month period ended February 28, 2001. At the Closing, DP will provide SLG
with an update of the Customer List as of the close of the business day prior to
the Closing Date (the "Closing Customer List").
3.19. ERISA. To DP's knowledge, no employee benefit plans ("Employee
Benefit Plans") within the meaning of Section 3(3) of ERISA, whether or not any
such Employee Benefit Plans are otherwise exempt from the provisions of ERISA,
are or have been established, maintained or contributed to or by DP, including,
for this purpose and for the purpose of all of the representations in this
Section 3.19, all employers (whether or not incorporated) which by reason of
common control are treated together with DP as a single employer within the
meaning of Section 414 of the Code.
3.20. Environmental. To DP's knowledge, the operations and activities
of DP comply, and have in the past complied, in all respects, with all
Environmental Laws.
3.21. Consents..The only consent DP needs for the consummation of this
transaction is the consent of its members, which consent DP has obtained.
3.22. No Misrepresentation. No representation or warranty made by DP in
this Agreement or any Schedule hereto or in any document or instrument delivered
by or on behalf of DP to SLG in connection with this Agreement contains or will
contain an untrue statement of a material fact.
4. REPRESENTATIONS AND WARRANTIES OF SLG.
SLG hereby represents and warrants to, and covenants and agrees with,
DP as follows:
4.01. Organization and Standing of SLG. SLG is a Texas corporation,
validly existing and in good standing under the laws of the State of Texas.
4.02. Binding Agreement. This Agreement constitutes, and each other
instrument to be executed and delivered by SLG in accordance herewith will
constitute, when executed and delivered pursuant hereto, the valid and legally
binding obligations of SLG.
4.03. Agreement Within Authority. The execution and delivery of this
Agreement by SLG, the consummation of the transactions contemplated hereunder
and the performance by SLG of this Agreement and the agreements and instruments
which are executed and delivered in connection herewith in accordance with each
of their terms will not violate: (a) the Articles of Incorporation or Bylaws of
SLG, or (b) any judgment, order, writ, injunction, decree or demand against SLG
of any court or federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality.
4.04. No Conflicting Agreements or Orders. No approval or consent of
any foreign, federal, state, county, local or other governmental or regulatory
body is required as a condition to the validity of this Agreement as it relates
to SLG or to give effect to the transactions contemplated hereby by SLG.
4.05. Corporate Action. The execution and delivery of this Agreement by
SLG and the performance of all acts contemplated to be performed by SLG
hereunder have been duly authorized by all necessary corporate action. SLG has
duly executed and delivered this Agreement and the agreements or instruments
which are executed by SLG in connection herewith.
4.06. No Conflict. The execution and delivery of this Agreement and
each other instrument to be executed by SLG in accordance herewith and the
consummation of the transactions contemplated herein by SLG will not conflict or
be inconsistent with or result in the termination of or constitute a breach of
or default under the terms of any indenture, mortgage, deed of trust, covenant,
agreement or other instrument to which SLG is a party or to which its property
is subject.
4.07. No Misrepresentation. No representation or warranty made by SLG
in this Agreement or any Schedule hereto or in any document or instrument
delivered by SLG in connection with this Agreement contains or will contain any
untrue statement of a material fact.
4.08. Financial Statements. The financial statements of Siboney
Corporation, parent company of SLG, included in its year 2000 Annual Report of
Shareholders, a copy of which has been delivered to DP, fairly state the
financial condition of Siboney Corporation, in accordance with generally
accepted accounting principles, as of the dates referred to therein in all
material respects.
4.09. Warranty Limitation. SLG UNDERSTANDS AND AGREES THAT THE ASSETS
BEING PURCHASED HEREUNDER ARE SOLD, TRANSFERRED AND CONVEYED TO SLG IN AN
"AS-IS" CONDITION ON A "WHERE IS" BASIS, WITHOUT ANY WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED,
EXCEPT AS OTHERWISE EXPRESSLY STATED IN SECTIONS 3.03 AND 3.13.
4.10. Nonreliance. In connection with its decision to acquire the
Assets, SLG acknowledges that it is not relying upon any financial projections,
budgets or other forward-looking financial data with respect to the Assets or
the Business prepared by or furnished to it by or on behalf of DP and that DP is
making no representation or warranty with respect thereto.
4.11. Financing. SLG has access to all funds necessary to consummate
the transactions contemplated by this Agreement.
5. COVENANTS OF SLG.
SLG further covenants and agrees with DP as follows:
5.01. Information. In the event the Closing is not consummated for any
reason, all copies of proprietary documents and information provided to SLG by
DP hereunder will be returned to DP by SLG, and SLG shall maintain the same in
confidence and will not disclose or utilize the same except with the prior
written consent of DP.
5.02. Performance of Assigned Contracts. After the Closing, SLG shall
perform and discharge the obligations of DP that arise after the Closing Date
under the Assigned Contracts.
5.03. Allocation of Purchase Price. DP and SLG shall agree on
allocation, for income tax purposes, of the Purchase Price among the Assets.
6. COVENANTS OF DP.
DP further covenants and agrees with SLG that, at all times prior to
the Closing:
6.01. Access to Information. Promptly after the execution of this
Agreement: DP shall give SLG and its counsel, accountants and other
representatives shall have full access during normal business hours to all
properties, books, accounts, records, agreements and documents of or relating to
DP, the Assets or the Business.
6.02. Maintain Assets. DP will maintain the Assets on a current basis
and in customary repair, order and condition.
6.03. Maintain Organization. DP will use its reasonable efforts to keep
its organization intact, keep available the services of its employees and
maintain the relationship and goodwill of its customers. The compliance by DP
with the provisions of this Section 6.03 shall not, however, create an
obligation on the part of SLG to employ any employee of DP subsequent to the
Closing.
6.04. Regular Course of Business. DP will not, without the prior
written consent of SLG, purchase, sell or otherwise dispose of any property or
assets, or incur any liability, obligation or commitment, or engage in any
activity or transaction, except in the regular and customary course of business.
6.05. Insurance. Until the Closing, DP will cause its policies of
insurance relating to the Business and the Assets to continue to be kept in full
force and effect and will refrain from taking any action which impairs the
continued insurability of the Assets or the Business.
6.06. Business Changes. DP will not do or agree to do any of the
following without the prior written consent of SLG:
(a) Enter into any contract, commitment or transaction not in the
usual and ordinary course of the Business as heretofore conducted;
(b) Make any material capital expenditure; or
(c) Materially modify, amend, cancel or terminate any of the
Assigned Contracts.
6.07. Allocation of Purchase Price. DP and SLG shall agree on
allocation, for income tax purposes, of the Purchase Price among the Assets.
7. ADDITIONAL ACTIONS AT CLOSING.
The following actions shall be taken simultaneously with the
effectiveness of this Agreement:
7.01. Opinion of Counsel. SLG shall have received the favorable opinion
of counsel for DP, dated as of the Closing Date, in the form of Schedule 7.03.
In rendering such opinion, counsel for DP may rely on written certificates of
the chief executive officer or the chief financial officer of DP and appropriate
public officials as to factual matters, provided a copy thereof is attached to
and forms a part of the opinion of counsel with the knowledge and consent of the
chief executive officer or the chief financial officer of DP.
7.02. Organizational Approval. The execution and delivery of this
Agreement by DP and the performance of its covenants and obligations hereunder,
shall have been duly authorized by all necessary limited liability company and
other action of DP, and SLG shall have received copies of all resolutions
pertaining to such authorization and approval, certified as correct and in full
force and effect as of the Closing by an authorized person of DP.
7.03. Casualty Loss. The Business shall not have been affected by, any
loss, destruction or damage due to fire or other casualty, unless, if any such
destruction or damage has occurred, SLG has determined that the loss,
destruction or damage is not of such a nature as to curtail or interrupt the
Business or determined that available insurance proceeds are sufficient to
repair or replace any damaged or lost Assets and DP shall have assigned the
proceeds of any such insurance to SLG, which DP agrees to do upon the request of
SLG.
7.04. Non-Competition Agreements with Xx. Xxxxxxx Xxxxx and Xxx
Xxxxxxxxx. Xx. Xxxxxxx Xxxxx and Xxx Xxxxxxxxx will have entered into the
Non-Competition Agreement set forth in Schedule 7.04 (the "Non-Competition
Agreements").
7.05. Agreement with Xxxx Xxxxxxx. Xxxx Xxxxxxx shall have entered into
an employment arrangement with SLG on terms reasonably acceptable to SLG.
7.06. Opinion of Counsel. DP will have received the favorable opinion
of counsel for SLG, dated as of the Closing Date, in the form of Schedule 7.07.
In rendering their opinion, counsel for SLG may rely on written certificates of
the officers of SLG and appropriate public officials as to factual matters,
provided a copy thereof is attached to and forms a part of the opinion of SLG's
counsel with the knowledge and consent of such officers.
8. [Intentionally Deleted.]
9. INDEMNIFICATION.
This Article sets forth the respects in which SLG shall be indemnified
by DP in the event SLG becomes obligated or liable for, and discharges,
obligations or liabilities of DP and/or in the event of any misrepresentation or
breach of warranty or agreement on the part of DP hereunder, and the respects in
which DP shall be indemnified by SLG in the event DP shall become obligated for,
and shall discharge, any liabilities of SLG (including the Assumed Liabilities
subsequent to the Closing) and/or in the event of any misrepresentation or
breach of warranty or agreement on the part of SLG hereunder.
9.01. Indemnification of SLG by DP.
(a) Representations, Warranties, Covenants and Agreements. DP
agrees to indemnify SLG and hold SLG harmless against any and all loss,
liability, damage, claim, cost and expense of any nature including,
without limitation, attorneys' fees, arising from or in connection with
any representation or warranty made by DP not being complete, accurate
and true at the date of this Agreement, or the failure by DP to fulfill
and fully perform each covenant or agreement to be performed on the
part of DP under this Agreement or under any other instrument or
document executed and delivered by DP in connection with the
transactions contemplated hereby, as any of the same may be amended
from time to time.
(b) Failure to Discharge Liabilities. DP agrees to indemnify SLG
and hold SLG harmless against any and all loss, liability, damage,
claim, cost and expense of any nature whatsoever, including, without
limitation, attorneys' fees, arising from or in connection with: (i)
any transferee liability law; and (ii) any judgment pursuant to which
SLG is held liable or accountable for, or the Assets acquired hereunder
or the Business subsequent to the Closing may be charged in respect of,
any liability or obligation of DP other than the Assumed Liabilities.
(c) Remedies Not Exclusive; Rights of Set-Off. Subject to the
limitation in Section 9.06, the rights and remedies of SLG under this
Article or otherwise in this Agreement shall be cumulative and in
addition to and not in limitation or exclusion of all other rights and
remedies, whether by the terms of this Agreement or at law or in equity
or otherwise, which may exist on the part of SLG by reason of any
misrepresentation or breach of warranty, covenant or agreement on the
part of DP. Such rights and remedies shall be cumulative and may be
exercised at any time or from time to time, and any failure or delay of
SLG in exercising any right or remedy at any time shall not constitute
a waiver thereof or restrict its subsequent enforcement or the
enforcement of any other right or remedy of SLG. In addition to any
other rights and remedies of SLG hereunder or otherwise, if DP is
liable to indemnify SLG under the foregoing provisions, any amounts due
and payable to SLG by reason of the obligations of DP to indemnify SLG
and hold SLG harmless hereunder shall be subject to a right of setoff
and reduction on the part of SLG against any amounts due and payable by
SLG to DP hereunder or under any other agreement, including without
limitation, any amounts due under the Note; provided, however, SLG may
not exercise such right of set off until (a) SLG has been held
accountable by judicial determination and (b) DP does not pay such
amount to SLG within thirty (30) days after SLG gives DP written notice
of intent to exercise such right of set off. Subject to the foregoing
sentence, the choice of whether to set off such amounts or to pursue
other remedies shall be at the discretion and designation of SLG, in
whole or in part.
9.02. Indemnification of DP by SLG.
(a) Representations, Warranties, Covenants and Agreements. SLG
agrees to indemnify DP and hold DP harmless against any and all loss,
liability, damage, claim, cost and expense of any nature whatsoever,
including, without limitation, attorneys' fees, arising from or in
connection with any representation or warranty made by SLG not being
complete, accurate and true at the date of this Agreement, or the
failure by SLG to fulfill and fully perform each covenant or agreement
to be performed on the part of SLG under this Agreement (including, but
not limited to, SLG's failure to discharge the Assumed Liabilities as
and when they become due subsequent to the Closing) or under any other
instrument or document executed and delivered by SLG in connection with
the transactions contemplated hereby, as any of the same may be amended
from time to time.
(b) Remedies Not Exclusive. The rights and remedies of DP
provided for in this Article or otherwise in this Agreement shall be
cumulative and in addition to and not in limitation or exclusion of all
other rights and remedies, whether by the terms of other provisions of
this agreement or at law or in equity or otherwise, which may exist on
the part of DP by reason of any misrepresentation or breach of
warranty, covenant or agreement on the part of SLG hereunder. Such
rights or remedies may be exercised at any time or from time to time,
and any failure or delay of DP in exercising any right or remedy at any
time shall not constitute a waiver thereof or restrict its subsequent
enforcement or the enforcement of any other right or remedy of DP.
9.03. Notice to Indemnifying Party. In the event that any party may be
entitled to, or intends to assert a claim for, indemnification hereunder, it
must notify the other party within thirty (30) days after actual notice of any
claim or the filing of any action giving rise to such claim for indemnification.
In case any action is threatened or brought against any indemnified party, and
it notifies the indemnifying party or parties thereof, the indemnifying party or
parties will be entitled to participate in or assume the defense thereof with
counsel reasonably satisfactory to such indemnified party and, after notice of
its election to assume the defense thereof, the indemnifying party or parties
will no longer be liable for any legal or other expense subsequently incurred by
the indemnified party in connection with the defense thereof; provided, however,
that the indemnified party shall be entitled at all times to participate in the
defense of any such action at its own cost.
9.04. Schedules. DP shall not have any liability for any
misrepresentation or breach of warranty, agreement or covenant under this
Agreement if and to the extent that the same is disclosed in any of the
Schedules or Exhibits hereto.
9.05. Damages. The effect of any misrepresentation, breach of warranty,
covenant or agreement of, or any indemnifiable claim against, DP or in respect
of this Agreement, or any document executed in connection herewith, and any
damages resulting therefrom, shall be determined based solely on actual damages
(i) on a net after-tax basis (that is, with the amount thereof reduced to
reflect the tax benefit resulting therefrom), and (ii) net of any amounts
recovered by or on behalf of SLG in respect thereof or in connection therewith
under any one or more policies of insurance maintained by any party hereto or
any third party.
9.06. Maximum Liability. Notwithstanding anything contained in this
Agreement to the contrary, in all events whatsoever, DP's entire liability to
SLG as a result of this Agreement, its breach or otherwise shall not exceed
$100,000 in the aggregate; provided that any claim arising out of fraudulent
misrepresentation or willful misconduct of DP shall not be subject to, or
considered a part of, the foregoing aggregate limitation.
10. CLOSING AND RISK OF LOSS.
10.01. Place and Time. The Closing shall take place on the Closing Date
at the offices of Gallop, Xxxxxxx & Xxxxxx, X.X., 000 Xxxxx Xxxxxx Xx., Xx.
Xxxxx, Xxxxxxxx 00000, or at such other place as may be agreed upon by SLG and
DP.
10.02. Risk of Loss. The entire risk of loss with respect to the Assets
will remain on DP until the transactions contemplated hereby are closed.
10.03. Simultaneous Performance. None of the transactions described in
Article II to be performed at the Closing will occur unless all such
transactions occur.
10.04. Transfer of Possession. Possession of the Assets shall be
delivered to SLG at Closing.
11. MISCELLANEOUS.
11.01. Commission. Seller shall pay any commission or fee of any third
party, retained by Seller or any affiliate of Seller, who may have a claim for
such amount arising out of the consummation of the transactions contemplated by
this Agreement.
11.02. Survival of Representations and Warranties. The representations
and warranties of SLG and of DP, respectively, contained herein, including
without limitation those contained in Section 3.13(b) and (c), shall survive the
Closing, regardless of any investigations made by or on behalf of or any
disclosure to SLG or DP, for thirteen (13) months following the Closing Date,
except that the representations and warranties provided under Section 3.03
(clear title to Assets), 3.13(a) (Ownership of Intellectual Property), and 3.21
(no misrepresentation) shall survive the Closing for the period of any statute
of limitations applicable thereto.
11.03. Incorporation of Schedules. The Schedules hereto shall be deemed
to be incorporated in and form a part of this Agreement.
11.04. Further Assurances. Each of the parties agrees to do, execute,
acknowledge and deliver, and cause to be done, executed, acknowledged and
delivered, all such further acts, assignments, transfers, instruments,
documents, deeds and assurances as shall be required in order to carry out this
Agreement and give effect hereto.
11.05. Limited Assumption of DP's Liabilities. EXCEPT FOR THE
POST-CLOSING OBLIGATIONS UNDER THE ASSIGNED CONTRACTS, SLG DOES NOT HEREBY, OR
OTHERWISE, ASSUME OR AGREE TO DISCHARGE OR PERFORM ANY LIABILITY OR OBLIGATION
OF DP, AND NO SUCH ASSUMPTION OF ANY LIABILITY OF DP SHALL ACCRUE TO SLG BY
OPERATION OF LAW OR OTHERWISE. In furtherance, and not by way of limitation, of
the foregoing, it is expressly understood and agreed that in no event shall SLG
assume or incur any liability or obligation under any other provision of this
Agreement in respect of any of the following:
(a) any liabilities or obligations arising out of or in
connection with the ownership, lease use or operation of any Assets
prior to the Closing;
(b) any liabilities or obligations arising out of any breach by
DP of any provision of any agreement, contract, commitment or lease,
including but not limited to liabilities or obligations arising out of
the failure of DP to perform any agreement, contract, commitment or
lease, including any Assigned Contract, in accordance with its terms
prior to the Closing;
(c) any product liability or similar claim for injury to person
or property, regardless of when made or asserted, which arises out of
or is based upon any express or implied representation, warranty,
agreement or guarantee made by DP, or alleged to have been made by DP,
or which is imposed or asserted to be imposed by operation of law, in
connection with any service performed or product sold or leased by or
on behalf of DP on or prior to the Closing, including without
limitation any claim related to damages or personal injury caused as a
result of any defective product, the return or replacement of defective
products or any claim seeking recovery for consequential damage, lost
revenue or income;
(d) any liability or obligation arising prior to or as a result
of the Closing to any employee, agent or independent contractor of DP,
whether or not employed by SLG after the Closing (with any such
employment being in the sole discretion of SLG), or under any benefit
arrangement with respect to any such employment; or
(e) any liability or obligation of DP arising prior to the
Closing related to any violation of any Environmental Law, whether or
not disclosed in any Schedule hereto.
11.06. Transfer Taxes. All sales, transfer, excise and other taxes, if
any, payable by reason of the transactions contemplated hereunder shall be paid
by DP.
11.07. Notices. Any notice, consent, request, claim or other
communication hereunder shall be in writing and shall be deemed to have been
duly given at the time of mailing by United States Certified, Registered or
Express mail, or by next business day courier (for example, Federal Express)
postage or charges prepaid, addressed as follows:
If to SLG:
Xxxxxx X. Xxxx, President
Siboney Learning Group, Inc.
000 Xxxxx Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
with a copy to:
Xxxx X. Xxxxx, Esq.
Gallop, Xxxxxxx & Xxxxxx, X.X.
16th Floor
000 Xxxxx Xxxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
If to DP:
The Denali Project, L.L.C.
Attn: Xx. Xxxxxxx Xxxxx, Managing Member
0000 Xxxxx Xxxxxxxx Xxxx, Xxxxx 000
Xxxx Xxxxxxx, XX 00000
with a copy to:
Xxxxx Xxxxx, Esq.
Xxxx Xxxxxx & Xxxxxx
00000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx Xxxxx, XX 00000
or to such other address as any party may designate by written notice
hereunder.
11.08. Entire Agreement. This Agreement embodies the entire Agreement
between the parties, and no representations, inducements, promises or other
agreements, oral or otherwise, not embodied herein, shall be of any force or
effect. This Agreement may not be modified or terminated except in writing
signed by the parties hereto.
11.09. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors, assigns, heirs
and personal representatives. In the event SLG sells all or substantially all of
the Assets to any third party, SLG will require the transferee to assume SLG's
obligations under the Note and SLG's obligations to make the Contingent
Payments. Such assumption, however, will not relieve SLG of its ultimate
obligation to cause such obligations to be fulfilled.
11.10. Third Parties. Nothing contained in this Agreement or in any
instrument or document executed by any party hereto in connection with the
transactions contemplated hereby shall create any rights in, or be deemed to
have been executed for the benefit of, any person, firm or corporation that is
not a party hereto.
11.11. Expenses of the Parties. All expenses involved in the
preparation, authorization and consummation of this Agreement, including,
without limitation, all fees and expenses of agents, representatives, counsel
and accountants in connection therewith, shall be borne solely by the party who
shall have incurred the same, and no other party shall have any liability in
respect thereof.
11.12. Further Assurances. SLG and DP agree to execute and deliver such
other documents and take such other actions as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
11.13. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
11.14. Headings. The headings in the Articles and Sections of this
Agreement are inserted for convenience only and shall not constitute a part
hereof.
11.15. Mail and Communications. After the Closing, each party will
promptly deliver to the other party the original of any mail or other
communication received by that party but pertaining to the business of the other
party.
11.16. [Intentionally Deleted.]
11.17. Missouri Law to Govern. This Agreement shall be governed by and
construed under the internal laws of the State of Missouri, without regard to
its conflict of law provisions or interpretations which would otherwise cause
the law of another jurisdiction to be applicable hereto, in any respect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
SIBONEY LEARNING GROUP, INC.,
a Texas corporation
By: /s/ Xxxxxx X. Xxxx
----------------------------------
Xxxxxx X. Xxxx, President
THE DENALI PROJECT, L.L.C.
a Delaware limited liability company
By: /s/ Xx. Xxxxxxx Xxxxx
----------------------------------
Xx. Xxxxxxx Xxxxx, Managing Member
The undersigned are signing this Agreement solely for the purpose of
agreeing to sign the Non-Competition Agreement in the form set forth in Schedule
7.12 to this Agreement.
--------------------------------------
Xx. Xxxxxxx Xxxxx
--------------------------------------
Xxx Xxxxxxxxx
SCHEDULE 1.01
DEFINITIONS
"Advances" means advances made by SLG to DP prior to Closing to promote
continuation of Summit Software development and preservation of the staff
employee in such development.
"Assets" means the following property, real, personal and mixed,
tangible or intangible, of DP: wherever located;
(a) All educational software products produced and/or marketed by
DP including without limitation, those products produced and/or
marketed under the "Summit Software" name;
(b) All furniture, fixtures and other items of tangible personal
property selected by SLG and listed on Schedule 1.01A;
(c) All computer software and other works of authorship, data
bases, technologies, methods, trade secrets, know-how, inventions,
copyrights, trade names, trademarks (and the goodwill of the Business
symbolized thereby), and other intangible property rights, including
the trademarks, copyrights and registrations therefor listed on
Schedule 3.13;
(d) All promotional and advertising materials and supplies and
all office materials and supplies and other products owned by DP or
otherwise under the control of DP as of the Closing Date relating to
the Business;
(e) All rights of DP under the Assigned Contracts, and all other
rights, privileges, claims, demands and chooses in action (except the
Pearson Lawsuit), including all rights under express or implied
warranties;
(f) All records of DP relating to Assigned Contracts; and
(g) The name "Summit Software" and all other names utilized by DP
in connection with the Business.
"Assigned Contracts" means the Authors' Agreements, contracts, and
other agreements listed in Schedule 3.16 to which DP is a party, a true copy of
each of which has been delivered to SLG by DP, which is not set forth in
Schedule 3.16, which Assigned Contracts will be assigned by DP to SLG at the
Closing, and the performance of which will be assumed by SLG at the Closing.
"Assumed Liabilities" means only the liabilities and obligations of DP
in respect of the obligations of DP for the performance of the Assigned
Contracts subsequent to the Closing (but without liability for any breach,
default or failure of performance prior to the Closing).
"Authors' Agreements" means those agreements listed in Schedule 1.01C
regarding development of computer software programs (the "Software Programs")
owned by the Company.
"Business" is defined in Recital A to this Agreement.
"Closing" means the consummation of the transactions contemplated by
this Agreement. DP and SLG may conduct the Closing by delivering to Gallop,
Xxxxxxx & Xxxxxx, X.X., in escrow, all agreements, documents and payments
required to be delivered at Closing, for distribution to the appropriate parties
upon confirmation by the escrow agent of receipt of all required items and
receipt by the escrow agent of the directions of DP and SLG to distribute such
items as required under this Agreement.
"Closing Customer List" is defined in Section 3.18.
"Closing Date" means 12:01 a.m. on May 4, 2001, or such other date and
time as are mutually agreed upon in writing by DP and SLG; however, if and so
long as all of the conditions to Closing have not been met, SLG shall have the
option to extend the Closing Date to a date not later than May 11, 2001, unless
agreed to in writing by SLG.
"Code" means the Internal Revenue Code of 1986, as amended, and rules
and regulations thereunder.
"Customer List" is defined in Section 3.18.
"DP" is defined in the first paragraph of this Agreement.
"Encumbrances" is defined in Section 3.03.
"Environmental Laws and Regulations" means any laws and related rules,
regulations and orders, relating to pollution, nuisance or the environment
including, without limitation: (i) the Federal Clean Air Act, 42
U.S.C.ss.ss.7401 et sec.; (ii) the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C.ss.ss.9601 et sec.; (iii) the Federal
Emergency Planning and Community Right-to-Know Act, 42 U.S.C.ss.ss.1101 et sec.;
(iv) the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.ss.ss.136
et sec.; (v) the Federal Water Pollution Control Act, 33 U.S.C.ss.ss.1251 et
sec.; (vi) the Solid Waste Disposal Act, 42 U.S.C.ss.ss.6901 et sec.; (vii) the
Toxic Substances Control Act, 15 U.S.C.ss.ss.2601 et sec.; (viii) laws relating
in whole or part to emissions, discharges, releases or threatened releases of
any Hazardous Material; and (ix) laws relating in whole or part to the
manufacture, processing, distribution, use, coverage, disposal, transportation,
storage or handling of any Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations thereunder.
"Excluded Assets" means all of DP's accounts receivable, tax refunds
and proceeds now existing or hereafter arising from the Pearson Lawsuit.
"Financial Statements" are defined in Section 3.04.
"Hazardous Materials" means any hazardous, infectious or toxic
substance, chemical, pollutant, contaminant, emission or waste which is or
becomes regulated by any local, state, federal or foreign authority, including,
without limitation, anything which is (i) defined as a "pollutant" under 33
U.S.C. ss. 1362(6); (ii) defined as a "hazardous waste" under 42 U.S.C. ss.
6921; (iii) defined as a "regulated substance" under 42 U.S.C. ss.6991; (iv)
defined as a "hazardous substance" under 42 U.S.C. ss. 9601(14); (v) defined as
a "pollutant or contaminant" under 42 U.S.C. ss. 9601(33); (vi) petroleum; (vii)
asbestos; and (viii) polychlorinated biphenyl.
"Note" is defined in Section 2.01(b).
"Pearson Lawsuit" means that certain civil action pending in the 30th
Circuit Court for the State of Michigan, titled Case No. 01-93041-CK-C30 and any
and all suits, actions, disputes, or claims, known or unknown, accrued or
unaccrued, arising out of or in any way related to the allegations in that civil
action against any person or entity, regardless of whether it is named in the
civil action or not. The Denali Project, L.L.C. v. Boxer Learning, Inc.,
Computer Curriculum Corp and Xxxxxxx, PLC, (Xxxxxx County, Michigan Circuit
Court).
"SLG" is defined in the first paragraph of this Agreement.
SCHEDULE 1.01A
TANGIBLE ASSETS SELECTED BY SLG
[See "The Denali Hard Asset List" attached]
SCHEDULE 1.01C
AUTHOR AGREEMENTS
Independent Contractor Agreements with:
1. Xxxxxxx Xxxxx (3-18-99);
2. Xxxx X. Xxxxxxx (5-27-98);
3. Xxxxx Xxxxxx (3-5-99);
4. Xxxxxx X. Xxxxxxxx (5-26-98);
5. Xxxx Xxxxxx (4-4-99);
6. Xxxxx Xxxxxx (2-17-99);
7. Xxxxxx Xxxxxxx (8-9-99);
8. Xxxxxx Xxxxxxxxx (2-19-99);
9. Xxxxx Xxxxx (2-11-99);
10. Xxx Xxxxx (2-19-99);
11. Xxxxxxx Xxxxxx (2-19-99);
12. Xxxxxxxx Xxxxx (6-28-99);
13. Xxxx Xxxxxxxxxx (2-26-99);
14. Xxxxx XxXxxxx (4-7-99);
15. Zone II, Inc., by Xxxxx Xxxxxxx (3-10-99);
16. Xxxxxx Dichoff (2-18-99);
17. Xxx Xxxxxxx (3-29-99);
18. Xxxx Xxxxx (4-22-99);
19. Wood Works Writing Service, by Xxx Xxxxxxx (3-19-99)
20. Xxxxx Xxxxx (3-21-99);
21. Xxxxxx Xxx Xxxxxx (2-18-99);
22. Xxxx Xxxxx (12-7-98);
23. Xxxxxxx Xxxxx (4-4-99);
24. Xxxx Xxxxxxx (4-21-99)
SCHEDULE 2.01(b)
Promissory Note
$50,000.00 May 4, 2001
FOR VALUE RECEIVED, the undersigned, Siboney Learning Group, Inc., a
Texas corporation ("SLG"), promises to pay to the order of The Denali Project,
L.L.C., a Delaware limited liability company ("DP"), the principal sum of Fifty
Thousand and No/100 Dollars ($50,000.00), without interest prior to default
hereunder, in one principal payment on the first anniversary date of this Note.
SLG may at any time prepay all or any part of the principal hereof,
without prepayment penalty.
If default be made in the payment of principal hereunder within 30 days
of date due or if a proceeding under the United States Bankruptcy Code is
initiated by or against SLG (and, if initiated against SLG, is not dismissed
within 60 days thereafter), DP may, at its option, declare all unpaid
indebtedness evidenced by this Note immediately due and payable. Failure of DP
to exercise such right shall not constitute a waiver of such right or preclude
or affect its right thereafter to exercise such option with respect to such
default or any subsequent default. For so long as a default exists after the
applicable cure period, if any, set forth above, the unpaid principal amount
shall bear interest at the rate of ten percent (10%) per annum, payable on
demand.
If this Note, or any installment, is not paid within the cure period
hereinabove set forth and is placed with an attorney for collection, SLG shall
pay, in addition to the principal amount of this Note, an amount equal to the
reasonable out-of-pocket attorneys' fees and expenses related to enforcement of
this Note.
Presentment, demand for payment, protest, notice of protest, notice of
dishonor and a diligence in bringing suit against any party hereof or any party
liable hereon are hereby waived by all present and future parties hereto,
whether as maker, endorsers, guarantors, sureties, or in any other capacity.
SIBONEY LEARNING GROUP, INC.,
a Texas corporation,
By
-----------------------------------
Xxxxxx X. Xxxx, President
Payable at: 0000 Xxxxx Xxxxxxxx Xxxx, Xxxx Xxxxxxx, XX 00000; or at any other
address DP may designate by written notice to SLG.
SCHEDULE 2.02(a)
XXXX OF SALE AND ASSIGNMENT
THE DENALI PROJECT, L.L.C., a Delaware limited liability company
("DP"), for and in consideration of certain payments made by SIBONEY LEARNING
GROUP, INC., a Texas corporation ("SLG"), pursuant to that certain Asset
Purchase Agreement dated May 4, 2001 (the "Agreement"), and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, does hereby GRANT, BARGAIN, SELL, TRANSFER, CONVEY and DELIVER
unto Buyer, its successors and assigns, good and marketable title to all of the
assets (tangible and intangible, real, personal and mixed) owned or used by
Seller and included in the definition of "Assets" in Schedule 1.01 of the
Agreement, with full warranties of title and with full substitution and
subrogation to all rights and actions of warranty against all preceding owners,
free and clear of all defaults, liens, claims, charges, encumbrances, security
interests, pledges, restrictions, deeds of trust, mortgages and title
impediments.
Capitalized terms used but not otherwise defined herein shall have the
meanings given to such terms in the Agreement.
TO HAVE AND TO HOLD, all and singular, the said personal property to
SLG and its successors and assigns, to and for their own use forever, free and
clear of all defaults, liens, claims, charges, security interests, mortgages,
deeds of trust, encumbrances, pledges, restrictions and title impediments.
DP shall execute and deliver from time to time hereafter, upon
reasonable request, all such further documents and instruments as may be
necessary to deliver the Assets to SLG.
All of the representations and warranties of DP with respect to the
Assets which are contained in the Agreement are incorporated herein by reference
and service after the date hereof for the periods set forth in the Agreement.
IN WITNESS WHEREOF, Seller, by its duly authorized officer has executed
this Xxxx of Sale as of the 4th day of May, 2001.
THE DENALI PROJECT, L.L.C.
By
-----------------------------------
Xx. Xxxxxxx Xxxxx, Managing Member
"DP"
SCHEDULE 2.02(b)
ASSUMPTION AGREEMENT
THIS ASSUMPTION OF LIABILITIES AGREEMENT (the "Assumption Agreement")
is made and entered into as of the 4th day of May, 2001, by and between THE
DENALI PROJECT, L.L.C., a Delaware limited liability company ("DP") and SIBONEY
LEARNING GROUP, INC., a Texas corporation ("SLG").
RECITALS
--------
DP and SLG entered into that certain Asset Purchase Agreement dated as
of April , 2001 (the "Agreement") pursuant to which SLG has agreed to purchase
specific assets in the Agreement (collectively, the "Assets") and to assume,
satisfy and discharge the Assumed Liabilities as defined in Section 1.01 of the
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. In consideration of the execution of this Assumption Agreement and
the transfer and conveyance of the Assets by DP to SLG thereunder, SLG hereby
assumes and agrees to satisfy and discharge the Assumed Liabilities as and when
they become due. Except for the Assumed Liabilities, SLG does not assume any
liabilities or obligations of DP.
2. This Assumption Agreement is binding upon and shall inure to the
benefit of the successors and assigns of the parties hereto.
3. This Assumption Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Missouri determined without
reference to conflicts of law principles.
4. All capitalized terms used in this Assumption Agreement shall have
the same definitions as set forth in the Agreement, unless otherwise defined in
this Assumption Agreement.
5. This Assumption Agreement may be executed in two or more
counterparts, all of which taken together shall be deemed one original.
IN WITNESS WHEREOF, DP and SLG have caused this Assumption Agreement to
be executed on and as of the day and year first above written.
DP: SLG:
THE DENALI PROJECT, L.L.C. SIBONEY LEARNING GROUP, INC.
By By
---------------------------------- ---------------------------------
Xx. Xxxxxxx Xxxxx, Managing Member Xxxxxx X. Xxxx, President
SCHEDULE 2.02(c)
GUARANTY BY SIBONEY CORPORATION
St. Louis, Missouri
May 4, 2001
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and to induce THE DENALI PROJECT, L.L.C., a
Delaware limited liability company ("Seller"); (i) to close the transactions
contemplated by that certain Asset Purchase Agreement dated as of May 4, 2001
(the "Purchase Agreement") between Seller and Siboney Learning Group, Inc., a
Texas corporation ("Purchaser"), which is a wholly owned subsidiary of Siboney
Corporation, a Maryland corporation ("Parent") and; (ii) to execute, deliver and
perform obligations under all agreements and documents to be delivered pursuant
to the Purchase Agreement, Parent hereby guarantees to Seller the full and
prompt payment and performance when due of any and all obligations or
liabilities required to be performed by Purchaser in favor of Seller under the
Purchase Agreement, including without limitation, the Promissory Note in
principal amount of $50,000 payable to the order of Purchaser pursuant to the
Purchase Agreement (collectively the "Obligations"); and Parent acknowledges and
agrees with Seller as follows:
1. Nothing except full performance and discharge of all of the
Obligations shall in any way exonerate Parent hereunder or modify, reduce, limit
or release the liability of Parent hereunder. This is an absolute, unconditional
and continuing guaranty of performance of the Obligations and it shall continue
to be in force and be binding upon Parent until all Obligations are performed in
full.
2. Parent represents and warrants to Seller that Parent is the parent
corporation of Purchaser and, as such, is deriving and expects to continue to
derive substantial direct benefit from the transactions contemplated by the
Purchase Agreement, and that this guaranty is given for a valid corporate
purpose.
3. The liability of Parent hereunder shall be without limitation as to
amount. The Obligations may be continued in any amount, whether or not in excess
of the amount currently set forth in the Purchase Agreement, without affecting
or impairing the liability of Parent hereunder.
4. Parent hereby waives any right of subrogation Parent may now or
hereafter have against Purchaser with respect to the Obligations. In addition,
Parent hereby waives any right to proceed against Purchaser, now or hereafter,
for contribution, indemnity, reimbursement, and any other suretyship rights and
claims, whether direct or indirect, liquidated or contingent, whether arising
under express or implied contract, or by operation of law, which Parent may now
have or hereafter have as against Purchaser with respect to the Obligations.
Parent agrees that in light of the immediately foregoing waivers, the execution
of this Guaranty shall not be deemed to make Parent a "creditor" of Borrower,
and that for purposes of Xxxxxxx 000 xxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy
Code (11 U.S.C. xx.xx. 547, 550) (the "Code"), Parent shall not be deemed a
"creditor" of Purchaser.
5. Parent will pay or reimburse the applicable Beneficiaries for all
reasonable out-of-pocket costs, expenses and attorneys' fees paid or incurred in
endeavoring to enforce this Guaranty.
6. Purchaser may enter into transactions resulting in the continuance
of any Obligations without any consent or approval by Parent and without any
prior or subsequent notice to Parent. The liability of Parent shall not be
affected or impaired by any of the following acts or things: (a) one or more
extensions or renewals of the Obligations or any modification in contractual
terms applicable to any of the Obligations or any amendment or modification of
any of the terms or provisions of any of the Obligations; (b) any waiver or
indulgence granted to Purchaser, any delay or lack of diligence in the
enforcement of Obligations or any failure to institute proceedings, file a
claim, give any required notices or otherwise protect any of the Obligations; or
(c) any full or partial release of, compromise or settlement with, or agreement
not to xxx, Purchaser or other person liable with respect to any of the
Obligations;
7. The undersigned waives any and all defenses and discharges available
to surety, guarantor, co-obligator or accommodation party, and Parent
specifically waives all defenses based on suretyship. Without limiting the
generality of the foregoing, Parent waives any and all defenses, claims, setoffs
and discharges of Purchaser pertaining to the Obligations, except the defense of
discharge by performance in full. The liability of Parent shall not be affected
or impaired by any voluntary or involuntary liquidation, dissolution, sale or
other disposition of all or substantially all of the assets, marshalling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of, or other similar event or proceeding affecting, Purchaser or any of
Purchaser's assets.
8. Parent hereby waives, to the fullest extent permitted by law, all
rights and benefits under any applicable state or federal law purporting to
reduce a guarantor's obligation in proportion to the principal obligation.
9. Upon the occurrence of any event of default on the obligations of
Purchaser, Seller may proceed to enforce this Guaranty against Parent. Parent
hereby waives any applicable law requiring Seller to exhaust its remedies
against any other parties before proceeding directly against Guarantor.
10. No election by Seller to proceed in one form of action or
proceeding, or against any party, or on any obligation shall constitute a waiver
of Seller's right to proceed in any other form of action or proceeding or
against any other party. Specifically, but without limiting the generality of
the foregoing, no action or proceeding by Seller against Purchaser under any
document or instrument evidencing or securing indebtedness of Purchaser to
Seller shall serve to diminish the liability of Parent, except to the extent
that Seller realizes payment by such action or proceeding. Parent hereby waives
any defense based upon an election of remedies by Seller, under any applicable
state or federal law, with respect to any property of Purchaser or any other
person which now or hereafter secures the obligations of Purchaser to Seller.
11. Parent waives presentment, demand for payment, notice of dishonor
or nonpayment and protest of any document evidencing the Obligations.
12. Parent represents and warrants to Seller that (a) Parent is a
corporation duly organized and existing in good standing under the laws of the
State of Maryland and has full power and authority to make and deliver this
guaranty; (b) the execution, delivery and performance of this guaranty by Parent
has been duly authorized by all necessary corporate action; (c) this guaranty
has been duly executed and delivered by an authorized officer of Parent and
constitutes the lawful, binding and legally enforceable obligation of Parent;
and (d) the authorization, execution, delivery and performance of this guaranty
do not require notification to, registration with, or consent or approval by,
any federal, state or local regulatory body or administrative agency.
13. This guaranty shall be effective upon delivery of a true copy of
this guaranty to Seller. This guaranty shall be binding upon Parent and the
successors and assigns of Parent and shall inure to the benefit of Seller and
its respective successors and assigns. Any invalidity or unenforceability of any
provision or application of this guaranty shall not affect other lawful
provisions and application thereof, and to this end the provisions of this
guaranty are declared to be severable. This guaranty may not be waived,
modified, amended, terminated, released or otherwise changed except by a writing
signed by the undersigned. This guaranty shall be governed by and construed in
accordance with the substantive laws (other than conflict laws) of the State of
Missouri.
IN WITNESS WHEREOF, this guaranty has been duly executed by PARENT as
of the day and year first above written.
SIBONEY CORPORATION, a Maryland corporation
By:_________________________________________
Title: _____________________________________
SCHEDULE 3.05
CHANGES TO FINANCIAL CONDITION
1. DP is in the process of shutting down its business and liquidating
its assets.
SCHEDULE 3.10
CHANGES TO BUSINESS & ORGANIZATION
SCHEDULE 3.11
EMPLOYMENT AGREEMENTS
1. Agreement with Xxxx Xxxxxxx (5-16-97);
2. Agreement with Xxxx Xxxxxxxx (7-10-97);
3. Agreement with Xxxxxx Xxxxx (4-21-99);
SCHEDULE 3.13
A. Trademarks and Tradenames
The Company does not have any registered trademarks or tradenames.
B. U.S. Copyright Registrations
The Company has not registered any of its work with any government
agency.
C. Other Copyrightable Materials
SCHEDULE 3.14
PERSONAL PROPERTY LEASES
1. Personal Property Lease with Newcourt Communications Finance
Corporation dated 9-28-00 for one (1) Partner AC5.
SCHEDULE 3.16
ASSIGNED CONTRACTS
1. Authors' Agreements listed on Schedule 1.01C.
2. Equipment and Service Agreement with Lucent Technologies dated
2-28-00 regarding various Partner items.
SCHEDULE 3.17
LIST OF SUPPLIERS
See "Denali Supplier/Vendor List 2001" attached.
SCHEDULE 7.01
May 4, 2001
Siboney Learning Group, Inc.
0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
We have acted as counsel for The Denali Project, L.L.C., a Delaware
limited liability company ("DP") in connection with that certain Asset Purchase
Agreement (including the Schedules and Exhibits thereto, the "Purchase
Agreement"), dated as of May 4, 2001, by and between Siboney Learning Group,
Inc., a Texas corporation ("SLG") and DP. Capitalized terms used in this opinion
and not otherwise defined herein shall have the meanings given them in the
Purchase Agreement. This opinion is furnished to you under Section 7.03 of the
Purchase Agreement.
In the preparation of this opinion, we have reviewed and rely upon:
1. The Purchase Agreement;
2. Resolutions of the [board of managers and owners] of DP, authorizing
the execution, delivery and performance of the terms of the Purchase Agreement
and consummation of the transactions contemplated thereby by DP, as certified to
us by [an officer] [manager] [authorized person] of DP;
3. Such other agreements, instruments and documents as are required to
be executed and performed under or in connection with the Closing of the
Purchase Agreement (the "Transaction Documents"), as delivered by or on behalf
of DP or Purchaser at the Closing;
4. A Certificate of Good Standing delivered to us by the Secretary of
State of the State of Delaware, evidencing the good standing of DP under the
laws of the State of Delaware, and verbal representations made to us by the
office of the Secretary of State of the State of Delaware, confirming that DP
remains in good standing as of the date of this opinion;
5. The factual representations and warranties of DP in the Purchase
Agreement and the Transaction Documents;
6. A copy of the Articles of Organization of DP, as certified by the
Secretary of State of the State of Delaware; and
7. A copy of the Operating Agreement of DP, as certified to us by an
[officer] [manager] [authorized person] of DP.
In addition, we have reviewed such matters of law and fact as we have
considered necessary for purposes of rendering the opinion letter. [DP's counsel
may add other customary limitations, subject to the reasonable approval of SLG.]
In the examination of such documents, we have assumed the genuineness
of all signatures, whether original or photostatic, except that of the
[officers] [managers] [authorized person] of DP the authenticity of all
documents submitted to us as originals and the conformity to the original
documents of all documents submitted to us as certified, photostatic or
conformed copies, the authenticity of the originals of all such latter
documents, and the truth and correctness of statements made by DP, including,
without limitation, the representations and warranties of DP contained in the
Purchase Agreement and the Transaction Documents, and we have relied upon the
accuracy of material factual matters contained therein.
The opinions expressed by us herein are expressly limited to the laws
of the State of Delaware and federal law, where applicable.
Whenever our opinion herein with respect to the existence or absence of
facts is indicated to be based on our knowledge, it is intended to signify only
that no information has come to the attention of our present partners or
associates who have devoted substantive attention to the Purchase Agreement or
Transaction Documents and the attorney primarily responsible for the
representation of the Seller that would give us actual knowledge of the
existence or absence of such facts. Except to the extent expressly set forth
herein, however, we have not undertaken any independent investigation to
determine the existence or the absence of such facts, and no inference as to our
knowledge of the existence or absence of such facts should be drawn from our
representation of DP.
Based solely on the foregoing, we are of the opinion that as of the
date hereof:
1. DP is a limited liability company validly existing and in good
standing under the laws of the State of Delaware and has all of the necessary
power and authority to own and lease its assets as now owned and leased and to
carry on its business as now being conducted.
2. DP has full limited liability company power and legal authority to
enter into the Agreement and to consummate the Transactions contemplated
thereby, which have been duly authorized by all proper and necessary limited
liability company and other action on the part of DP.
3. The Purchase Agreement and the Transaction Documents constitute the
legal, valid and binding obligations of DP, enforceable against DP in accordance
with their respective terms.
4. The execution, delivery and performance of the Purchase Agreement by
DP, and the execution, delivery and performance of the Transaction Documents and
do not violate any provision of the Articles of Organization or the Operating
Agreement or Bylaws of DP.
5. To our actual knowledge, except as described in the Purchase
Agreement, no consent, license, approval, or authorization of any governmental
authority or regulatory body, or of any other person or entity, is required to
be obtained by Seller or the Shareholders in connection with the due execution,
delivery and performance of the Purchase Agreement or the Transaction Documents
by DP.
6. To our actual knowledge, except as described in the Purchase
Agreement, DP is the owner, licensee or otherwise the authorized user of all
patents, trademarks, service marks, trade names and copyrights of all such items
used in connection with DP's Business and we have no knowledge of any claim that
DP's use of such items infringes upon or conflicts with any patent, trademark,
service xxxx, trade name or copyright of others.
7. To our actual knowledge, except as described in the Purchase
Agreement, no suit, action, decree, arbitration or legal, administrative or
other proceeding, controversy or investigation is pending or threatened against
DP which could adversely affect the Business or financial condition of DP or the
Assets, DP's right to transfer the same, the Transactions contemplated by the
Purchase Agreement, or the possession and use of the Assets, or the operation by
purchaser of a business similar to the Business, as heretofore conducted by DP,
subsequent to the Closing.
With respect to the opinions expressed herein, we advise you that we
express no opinion as to (i) conflicts of law or choice of law provisions; and
(ii) the availability of equitable remedies because such remedies are subject to
the discretion of the court before which a proceeding therefor may be brought.
In addition, the terms of the Purchase Agreement and the Transaction Documents
may be limited by the United States Bankruptcy Code, or other bankruptcy,
insolvency, fraudulent conveyance, moratorium, or similar laws affecting
creditors' rights or the relief of debtors generally, as may be in effect from
time to time.
This opinion is addressed to the Purchaser and is solely for the
Purchaser's use. Accordingly, it may not be relied upon by or disclosed to any
other person, or for any other purpose, other than in connection with the
transaction and documents referred to herein and is not to be used, circulated,
quoted, or otherwise referred to for any other purpose without the prior written
consent of this firm. We assume no obligation to advise Purchaser of any changes
concerning the above which may hereafter come or be brought to our attention.
Very truly yours,
SCHEDULE 7.04
[Separate Agreements to be signed by
Xx. Xxxxxxx Xxxxx and Xxx Xxxxxxxxx]
NON-COMPETITION AGREEMENT
This Non-Competition Agreement is entered into as of May 4, 2001, by
the undersigned ("Undersigned") and Siboney Learning Group, Inc., a Missouri
corporation ("SLG") in connection with the execution, delivery and consummation
of the transactions contemplated by certain Asset Purchase Agreement ("Purchase
Agreement"), dated May 4, 2001 between Denali Project, L.L.C., a Delaware
limited liability company ("DP") and SLG.
RECITALS
A. The Undersigned has occupied a position of trust and confidence with
DP prior to the date hereof and has become familiar with the assets of DP,
including the intellectual property assets and other assets being sold by DP to
SLG.
B. Among the conditions to the obligation of SLG to close purchase of
certain assets from DP under the Purchase Agreement is the requirement that the
Undersigned and others execute a Non-Competition Agreement on the terms
hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the undersigned, the undersigned
hereby agrees as follows:
1. For a period of two (2) years after the Closing (as defined in the
Purchase Agreement), the Undersigned agrees that the Undersigned will not,
directly or indirectly, license or sell any software to third parties in the
United States which has the look or feel of any of the Assets (as defined in the
Purchase Agreement), or any software that utilizes a substantial majority of the
source code, content or instructional design of any of the Assets.
2. If the undersigned breaches any of the covenants set forth in this
Agreement, SLG will be entitled to obtain injunctive or other equitable relief
to restrain any breach or threatened breach or otherwise to specifically enforce
the provisions of Section 1 of this Agreement, it being agreed that money
damages alone would be inadequate to compensate SLG and would be an inadequate
remedy for such breach. In addition, SLG will be entitled to such damages as it
may demonstrate from any such breach.
3. This Agreement is binding upon and inures to the benefit of the
Undersigned, SLG and their respective affiliates, successors and assigns.
4. The rights and remedies under this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power or privilege under this Agreement will operate as a waiver of such
right, power or privilege, and no single or partial exercise of any such right,
power or privilege will preclude any other or further exercise of such right,
power or privilege, or the exercise of any other right, power or privilege. To
the maximum extent permitted by applicable law: (a) no claim or right arising
out of this Agreement can be discharged by one party, in whole or in part, by a
waiver or renunciation unless in writing signed by the other party; and (b) no
waiver that may be given by a party will be applicable except in the specific
instance for which it is given.
5. SLG agrees that, if SLG is in default (after applicable cure period,
if any) under its payment obligations pursuant to the Note (as defined in the
Purchase Agreement), the restrictions in Section 1 of this Agreement shall
thereafter be of no force or effect.
6. This Agreement will be governed by the laws of the State of
Missouri, without regard to conflicts-of-laws principles.
7. Whenever possible, each provision and term of this Agreement will be
interpreted in a manner to be effective and valid, but if any provision or term
of this Agreement is held to be invalid, then such provision or term will be
ineffective only to the extent of such invalidity, without invalidating or
affecting in any manner whatsoever the remainder of such provision or term or
the remaining provisions or terms of this Agreement. If any of the covenants set
forth in Section 1 of this Agreement are held to be unreasonable, arbitrary or
against public policy, such covenants shall be considered divisible with respect
to scope, time and geographic area, and in such lesser scope, time and
geographic area will be effective, binding and enforceable against the
undersigned.
8. Any notices under this agreement must be in writing and will be
deemed to have been given when (a) delivered in person, (b) sent by facsimile
(with written confirmation of receipt), or (c) when received by addressee if
sent by nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and facsimile numbers set forth below (or
to such other addresses and facsimiles as a party may designate by notice to the
other parties):
SLG:
Siboney Learning Group, Inc.
000 Xxxxx Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, President
Facsimile No.(000) 000-0000
The undersigned:
_________________________________
_________________________________
_________________________________
Facsimile No.:___________________
IN WITNESS WHEREOF, the Undersigned and SLG have executed this
Agreement as of the date first above written.
______________________________________
Name:_________________________________
SLG:
SIBONEY LEARNING GROUP, INC., a Texas
corporation
By____________________________________
Title_________________________________
Schedule 7.06
May 4, 2001
The Denali Project, LLC
Attn: Xx. Xxxxxxx Xxxxxx, President
0000 Xxxxx Xxxxxxxx Xxxx, Xxxxx 000
Xxxx Xxxxxxx, Xxxxxxxx 00000
Gentlemen:
We have acted as counsel for Siboney Learning Group, Inc., a Texas
corporation ("SLG"), in connection with that certain Asset Purchase Agreement
(including the Schedules and Exhibits thereto, the "Purchase Agreement"), dated
as of May 4, 2001 by and between The Denali Project, LLC, a Delaware limited
liability company ("DP") and SLG. Capitalized terms used in this opinion and not
otherwise defined herein shall have the meanings given them in the Purchase
Agreement. This opinion is furnished to you pursuant to Section 8.03 of the
Purchase Agreement.
In preparation of this opinion, we have reviewed and we rely upon:
1. The Purchase Agreement and the Assignment and Assumption;
2. Written Consent of the Board of Directors of SLG, authorizing the
execution and delivery of the Purchase Agreement and execution and delivery of
the Assignment and Assumption and consummation of the transactions contemplated
by the Purchase Agreement and the Assignment and Assumption, as certified to us
by an officer of SLG;
3. Such other agreements, instruments and documents as are required to
be executed and performed under or in connection with the Closing of the
Purchase Agreement (the "Transaction Documents"), as delivered by or on behalf
of SLG or DP at the Closing;
4. A Certificate of Good Standing delivered to us by the Secretary of
State of the State of Texas, evidencing the good standing of SLG under the laws
of the State of Texas, and verbal representations made to us by the office of
the Secretary of State of the State of Texas, confirming that SLG remains in
good standing as of the date of this opinion;
5. A Certificate of Good Standing delivered to us by the Secretary of
State of the State of Missouri, evidencing the good standing of SLG or a foreign
corporation under the laws of the State of Missouri and verbal representations
made to us by the office of the Secretary of State of the State of Missouri
confirming that SLG remains in good standing as of the date of this opinion;
6. The factual representations and warranties of SLG in the Purchase
Agreement and the Transaction Documents;
7. A copy of the Articles of Incorporation of SLG, as certified by the
Secretary of State of the State of Texas; and
8. A copy of the Bylaws of SLG, as certified to us by an officer of
SLG;
In the examination of such documents, we have assumed the genuineness
of all signatures, whether original or photostatic, except that the officers of
SLG and Siboney, respectively, the authenticity of all documents submitted to us
as originals and the conformity to the original documents of all documents
submitted to us as certified, photostatic or conformed copies, the authenticity
of the originals of all such latter documents, and the truth and correctness of
statements made by SLG or Siboney, including, without limitation, the
representations and warranties of SLG contained in the Purchase Agreement and
the Transaction Documents, and we have relied upon the accuracy of material
factual matters contained therein. We have also assumed the due authorization,
execution and delivery by DP of the Purchase Agreement and any Transaction
Documents to which DP is a party.
The opinions expressed by us herein are expressly limited to the laws
of the State of Missouri, the statutory business corporation law of the State of
Texas and federal law, where applicable.
In addition, we have reviewed such matters of law and fact as we have
considered necessary for purposes of rendering the following opinions and have
examined and relied without independent investigation as to matters of fact upon
such certificates of public officials, such statements and certificates of
officers of DP and that such other corporate records, documents, certificates
and instruments as we have deemed necessary or appropriate in order to enable us
to render the opinions expressed herein. [May add additional customary
limitations subject to the reasonable approval of DP and its counsel.]
Whenever our opinion herein with respect to the existence or absence of
facts is indicated to be based on our knowledge, it is intended to signify only
that no information has come to the attention of our present partners or
associates who have devoted substantive attention to the Purchase Agreement or
Transaction Documents and the attorney primarily responsible for the
representation of the SLG or any of its affiliates that would give us actual
knowledge of the existence or absence of such facts. Except to the extent
expressly set forth herein, however, we have not undertaken any independent
investigation to determine the existence or the absence of such facts, and no
inference as to our knowledge of the existence or absence of such facts should
be drawn from our representation of SLG or any of its affiliates.
Based solely upon the foregoing and subject to the qualifications set
forth herein, we are of the opinion that as of the date hereof:
1. SLG is a Texas corporation validly existing and in good standing
under the laws of the State of Texas and has all of the necessary power and
authority to carry on its business as presently conducted.
2. SLG is duly qualified to transact business and is in good standing
as a foreign corporation under the laws of the State of Missouri.
3. SLG has full corporate power and legal authority to enter into the
Purchase Agreement and to consummate the Transactions contemplated thereby,
which have been duly authorized by all proper and necessary corporate and other
action on the part of SLG, and when executed and delivered by SLG the
Transaction Documents will constitute the valid and binding obligations of SLG,
enforceable against SLG in accordance with its terms.
4. To our knowledge, except as described in the Purchase Agreement, no
consent, license, approval, or authorization of any governmental authority or
regulatory body, or of any other person or entity, is required to be obtained by
SLG in connection with the due execution, delivery and performance of the
Purchase Agreement or the Transaction Documents by SLG.
With respect to the opinions expressed herein, we advise you that we
express no opinion as to: (I) conflicts-of-law or choice-of-law provisions; and
(ii) the availability of equitable remedies because such remedies are subject to
the discretion of the court before which a proceeding therefor may be brought.
In addition, the terms of the Purchase Agreement, and the Transaction Documents
may be limited by Title 11 of the United States Code, or other bankruptcy,
insolvency, fraudulent conveyance, moratorium, or similar laws affecting
creditors' rights or the relief of debtors generally, as may be in effect from
time to time.
To our knowledge, except as described in the Purchase Agreement, we
hereby confirm to you that no suit, action, decree, arbitration or legal,
administrative or other proceeding, controversy or investigation is pending or
threatened against SLG.
This opinion is addressed to the DP and is solely for DP's use.
Accordingly, it may not be relied upon by or disclosed to any other person, or
for any other purpose, other than in connection with the transaction and
documents referred to herein and is not to be used, circulated, quoted, or
otherwise referred to for any other purpose without the prior written consent of
this firm. We assume no obligation to advise DP of any changes concerning the
above which may hereafter come or be brought to our attention.
Very truly yours,
GALLOP, XXXXXXX & XXXXXX, X.X.
