EXHIBIT 2.3
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, is made and entered into as of the 3rd day of June,
2004, by and among One Stop School Shop, Inc., a Florida corporation ("Seller"),
Xxxxx Xxxxxx, Xxxxxx Xxxxxx and Xxxxx Xxxxx (collectively "Principals") and
Schoolpop, Inc. a Delaware corporation ("Buyer"). Buyer and Seller are referred
to collectively as the "Parties."
RECITALS:
A. Seller is engaged in the business of the sale of school supplies
promoted through schools and sold to parents of their students (the "Business");
and
B. Buyer desires to purchase and Seller desires to sell certain assets
related to the Business upon the terms and conditions set forth herein.
C. The Principals are shareholders and/or creditors of the Seller and
desire that Buyer purchase and the Seller sell certain assets related to the
Business upon the terms and conditions set forth herein.
AGREEMENTS:
NOW THEREFORE, in consideration of the foregoing and the mutual
agreements, covenants, representations, and warranties contained herein, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:
1. DEFINITIONS. For purposes of this agreement, the following terms are
defined as follows:
(a) "Ancillary Document" shall mean any agreement, letter, or
other document by and between (i) Buyer and (ii) Seller that is referred to
herein or relates to the transactions contemplated hereby.
(b) "Agreement" shall mean this Asset Purchase Agreement and
all schedules and exhibits attached hereto and referred to herein.
(c) "Closing" shall have the meaning given such term in
Section 3.1.
(d) "Closing Date" shall have the meaning given such term in
Section 3.1.
(e) "Excluded Assets" shall mean Seller's taxpayer and other
identification numbers, tax returns, minute books, ownership ledgers and other
documents of the Seller relating to the organization and existence of Seller as
a corporation (provided that Buyer shall have access thereto to the extent
reasonably necessary for the operation of the Business or the preparation of tax
returns and financial statements of Buyer following the Closing Date).
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(f) "Purchased Assets" shall have the meaning given such term
in Section 2.1.
(g) "Site" shall mean 0000 Xxxxxxx Xxxxx, Xxxx Xx. 0, Xxxxxxx,
Xxxxxxx 00000.
2. SALE AND PURCHASE OF ASSETS.
2.1 Transfer of Assets. On the terms and subject to the
conditions of this Agreement, Buyer shall purchase from Seller, and Seller shall
sell, assign, transfer and deliver to Buyer, on the Closing Date, all of the
properties and assets of such Seller related to, derived from, or used in the
operation of the Business, wherever located, excepting only the Excluded Assets
(the "Purchased Assets"), specifically including, without limitation, the
following:
(a) Equipment and Fixtures. All equipment, furniture,
fixtures, signs, motor vehicles and other personal property related to or used
in connection with the Business or located on the Site, including, without
limitation, the assets set forth on the attached Schedule 2.1(a).
(b) Inventory and Merchandise. All raw materials,
inventory, goods and supplies of whatsoever nature or kind and all wrapping,
packaging and advertising materials and any documents related thereto or located
on the Site, including, without limitation, the inventory set forth on the
attached Schedule 2.1(b).
(c) Contracts. All of Seller's right, title and
interest under agreements, contracts, indentures, mortgages, leases,
instruments, security interests, guaranties, other similar arrangements, and
rights thereunder relating to the Business or the Purchased Assets arising in
the ordinary course of business including, without limitation, the contracts
identified on the attached Schedule 2.1(c).
(d) Prepaid Assets. All deposits and prepaid assets
of Seller acquired in connection with the operation of the Business, including,
without limitation, those prepaid assets set forth in the attached Schedule
2.1(d).
(e) Intellectual Property. All intellectual property
related to the operation of the Business or use or ownership of the Purchased
Assets, including, but not limited to, those items set forth in the attached
Schedule 2.1(e), and more specifically described as follows (the "Intellectual
Property"):
(i) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof;
(ii) all trademarks, service marks, trade
dress, logos, trade names, and corporate names (including but not limited to the
xxxx "One Stop School Shop"), together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith;
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(iii) all copyrightable works, all
copyrights, and all applications, registrations, and renewals in connection
therewith;
(iv) all mask works and all applications,
registrations, and renewals in connection therewith;
(v) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals);
(vi) all computer software (including data
and related documentation);
(vii) all domain names (including but not
limited to the name "0xxxxxxxxxxxxxx.xxx");
(viii) all other proprietary rights; and
(ix) all copies and tangible embodiments
thereof (in whatever form or medium).
(f) Permits and Licenses. All permits, licenses,
orders, consents and approvals of any federal, state or local governmental or
regulatory authority related to the operation of the Business, to the extent
assignable, including, without limitation, the permits and licenses listed on
the attached Schedule 2.1(f).
(g) Cash and Accounts Receivable. All cash on hand,
accounts receivable, refunds and other rights to receive payment of the Seller;
(h) Books and records. All books, records, ledgers,
files, documents, correspondence, lists, plats, architectural plans, drawings,
and specifications, creative materials, advertising and promotional materials,
studies, reports, and other printed or written materials; and
(h) Other Assets. All other assets, properties,
claims and rights of Seller not part of the Excluded Assets related to or used
in the operation of the Business.
2.2 Consideration and Payment for Purchased Assets. The
aggregate purchase price to be paid by Buyer in consideration for the Purchased
Assets shall be as follows:
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(a) At Closing. At Closing Buyer shall deliver to
Seller:
(i) Twenty-Five Thousand and No/100 Dollars
$25,000.00) by cashiers check or wire transfer; and
(ii) 1,196,809 shares of Common Stock, $.001
par value, of LoyaltyPoint, Inc. (the "Parent Common Stock") (such number of
shares having been determined by dividing Two Hundred Twenty-Five Thousand and
No/100 Dollars ($225,000.00) by the average closing price of a share of Parent
Common Stock on the Over-the-Counter Bulletin Board for the five (5) consecutive
trading days ending on the third trading day prior to the Closing Date).
Notwithstanding the preceding, in the event that the Purchaser is not an
"accredited investor" as defined in the rules promulgated under the Securities
Act of 1933 (the "Securities Act"), the above-described shares of stock shall
not be delivered on the Closing Date, but shall delivered five (5) business days
following the date that (i) LoyaltyPoint, Inc., a Delaware corporation
("Parent"), files its 10-QSB for the period ended March 31, 2004 and any other
reports required to be filed with the SEC as provided in Rule 502 promulgated
under the Securities Act and (ii) the Seller has executed and delivered a
document acknowledging receipt of such reports; provided, however, in the event
that (i) has not occurred within twelve (12) months following the Closing Date,
Buyer shall deliver payment in the amount of $225,000 by cash in lieu of Parent
Common Stock.
(b) Contingent Earnout. As additional consideration,
Buyer shall pay Seller a contingent earnout based on the Net Profit (as defined
below) of Buyer during 2004 and 2005 as follows:
(i) Fifty Percent (50%) of the Net Profit
for the period commencing on the date of Closing and ending December 31, 2004
("2004 Earnout") shall be paid as follows:
(A) Forty Percent (40%) of the 2004
Earnout shall be paid by check or wire transfer on or before November 30, 2004;
(B) Ten (10%) of the 2004 Earnout
shall be paid by check or wire transfer on or before February 28, 2005; and
(C) Fifty Percent (50%) of the 2004
Earnout shall be paid by the issuance of a number of shares of Parent Common
Stock, determined by dividing Fifty Percent (50%) of the 2004 Earnout by (x) the
average closing price of a share of Parent Common Stock on the Over-the-Counter
Bulletin Board or such other principal securities exchange on which the Parent
Common Stock shall then be trading for the five (5) consecutive trading days
ending November 26, 2004, or (y) in the event the Parent Common Stock is not
traded on the Over-the-Counter Bulletin Board or any other securities exchange,
the fair market value of a share of Parent Common Stock as determined in good
faith by the Board of Directors of Parent, which shares shall be delivered to
the Escrow Agent on or before November 30, 2004 to be held, administered and
distributed in accordance with the terms of the Escrow Agreement in the form set
forth as Schedule 2.2 attached hereto (the "Escrow Agreement"),
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(ii) Ten Percent (10%) of the Net Profit for
the calendar year 2005 ("2005 Earnout") shall be paid as follows:
(A) Forty Percent (40%) of the 2005
Earnout shall be paid by check or wire transfer on or before November 30, 2005;
(B) Ten (10%) of the 2005 Earnout
shall be paid by check or wire transfer on or before February 28, 2006; and
(C) Fifty Percent (50%) of the 2005
Earnout shall be paid by the issuance of a number of shares of Parent Common
Stock, determined by dividing Fifty Percent (50%) of the 2005 Earnout by (x) the
average closing price of a share of Parent Common Stock on the Over-the-Counter
Bulletin Board or such other principal securities exchange on which the Parent
Common Stock shall then be trading for the five (5) consecutive trading days
ending November 25, 2005, or (y) in the event the Parent Common Stock is not
traded on the Over-the-Counter Bulletin Board or any other securities exchange,
the fair market value of a share of Parent Common Stock as determined in good
faith by the Board of Directors of Parent, which shares shall be delivered to
the Escrow Agent on or before November 30, 2005 to be held, administered and
distributed in accordance with the terms of the Escrow Agreement.
For purposes of this Section 2.2(b), "Net Profit" shall mean, for each
respective period, (a) the gross revenue (less refunds, rebates and returns)
generated by the Buyer from operating the Business (including for such purposes
the Lexile book program to be launched in 2004-2005), less (b) product costs,
fulfillment costs, delivery expense, amounts paid to schools and other direct
costs (and a reasonable allocation of overhead ) attributable to the products
sold in Business for such period, but excluding amounts attributable to the sale
or transfer of any products for less than cost.
(c) Assumed Liabilities. Except as expressly listed on the
attached Schedule 2.2(c), Buyer shall not assume any liabilities or obligations
of Seller or the Principals, and Seller and the Principals shall be solely
liable for all liabilities and obligations arising from the ownership and
operation of the Business and the Purchased Assets and the use and occupation of
the Site prior to the Closing Date, contingent or fixed, whether or not
reflected on the book and records of Seller or the Principals.
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3. CLOSING OF TRANSACTION.
3.1. Closing. Subject to the conditions contained herein, the
closing of the transactions to be effected hereunder (the "Closing") shall be
held at the offices of Buyer's counsel commencing at 10:00 a.m. local time on
the first business day following the satisfaction or waiver of all conditions to
the obligations of the Parties to consummate the transactions contemplated
hereby (other than conditions with respect to actions the respective Parties
will take at the Closing itself) or such other date as the Parties may mutually
determine; provided, however, that the Closing shall occur no later than the
date of this Agreement (the actual date of such Closing is herein called the
"Closing Date").
3.2 Deliveries at Closing. Subject to the terms and conditions
set forth in this Agreement, at the Closing (a) Seller and the Principals shall
deliver or cause to be delivered the various documents, certificates and
instruments listed in Article 6, hereof; and (b) Buyer shall cause to be
delivered the various documents, certificates and instruments listed in Article
7, hereof.
4. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller and the Principals, jointly and severally, represents
and warrants to Buyer that the following representations and warranties are
true, correct and complete as of the date hereof and will be true, correct and
complete as of the Closing Date
4.1 Organization and Good Standing of the Seller. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida. Seller has all requisite power and authority, licenses,
permits and franchises to own, lease and operate its properties and assets and
to carry on the Business as currently conducted. Seller has full power and
authority to make the representations, warranties and agreements made hereunder,
to execute and deliver this Agreement and the Ancillary Documents, and to
perform its obligations under this Agreement and the Ancillary Documents. Seller
is duly licensed or qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conduced by it makes such
qualification or licensing necessary, except for such failures to be so
licensed, qualified or in good standing which could not reasonably be expected
to have a material adverse effect on the Business.
4.2 Authorization of Agreement and Enforceability. This
Agreement and the Ancillary Documents have been (or will be prior to Closing)
duly and validly authorized, executed and delivered by Seller and the
Principals, and constitute legal, valid and binding obligations of Seller and
the Principals, enforceable against Seller and the Principals, in accordance
with their respective terms.
4.3 Effect of Agreement. Neither the execution, delivery, and
performance of this Agreement or the Ancillary Documents, nor the consummation
of the transactions contemplated hereby or thereby by Seller or the Principals
will (a) conflict with or result in a beach of any provision of the certificate
of incorporation or bylaws of the Seller, (b) constitute or result in the breach
of, conflict with or give rise to a right or forfeiture, termination,
cancellation or acceleration
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with respect to, any term, condition or provision of, any note, bond, mortgage,
indenture, license or other contract or obligation to which Seller or the
Principals is a party or by which any of their properties or assets may be
bound, except for such conflicts, breaches or defaults as to which written
waivers or consents shall have been obtained on or prior to the Closing Date, or
(c) violate any law, statute, regulation, judgment, order, writ, injunction, or
decree applicable to Seller or the Principals or any of their properties or
assets, which violation could reasonably be expected to have a material adverse
effect on the Business.
4.4 Government and Other Consents. To the knowledge of Seller
and the Principals no consent, order, authorization, qualification, or approval
of, or exemption by, or filing with any governmental, public, or regulatory body
or authority is required in connection with the execution, delivery and
performance by Seller or the Principals of this Agreement or any Ancillary
Document.
4.5 Title to Property; Absence of Liens and Encumbrances, Etc.
Seller owns and has good and marketable title to its respective personal
property and assets (including, without limitation, the Purchased Assets), free
and clear of all security interests, claims, liens, mortgages, charges and
encumbrances. At closing, Buyer will obtain from Seller good and marketable
title to all of the Purchased Assets free and clear of all security interests,
claims, liens, mortgages, charges and encumbrances.
4.6 Tax Matters. Seller has timely filed all federal, state,
local and other tax and information returns as required by law, and has paid all
taxes shown as due on such returns. Each such return is true, correct and
complete, and to the knowledge of Seller or the Principals, Seller does not have
or will not have any additional liability for taxes with respect to any return
heretofore filed.
4.7 Litigation. There is no claim, action, suit, proceeding,
arbitration, investigation or inquiry pending before any federal, state, local,
foreign or other court or governmental, administrative, or self-regulatory body
or agency, or any private arbitration tribunal, or to the knowledge of Seller or
the Principals threatened against Seller, the Principals, the Business, or any
of their properties or the transactions contemplated by this Agreement or the
Ancillary Documents; nor to the knowledge of Seller or the Principals is there
any basis for any such claim, action, suit, proceeding, arbitration,
investigation or inquiry which may have any adverse effect upon the Business,
the Purchased Assets or the transactions contemplated by this Agreement or the
Ancillary Documents.
4.8 Labor Disputes. To the knowledge of Seller and the
Principals, the Seller is in compliance with all applicable domestic (federal,
state and local) and foreign laws respecting employment and employment
practices, terms and conditions of employment, and wages and hours, and are not
engaged in any unfair labor practices, and have not discriminated on the basis
of age or sex in their employment conditions or practices.
4.9 Environmental Matters. With respect to Hazardous Materials
(as hereinafter defined), neither the Seller nor the Principals has:
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(a) participated in or received notice or has
knowledge of any current or prior use of the Business premises involving the
use, generation, release, treatment, discharge, emission, storage, handling,
transportation or disposal of Hazardous Materials;
(b) received notice or has knowledge that the
Business Premises is not free from contamination by or the presence of Hazardous
Materials or that the activities conducted thereon impose any significant hazard
to human health or the environment or violate applicable federal, state or local
statutes, laws, ordinances, rules and regulations pertaining to Hazardous
Materials (collectively, the "Environmental Laws"), including, without
limitation, the Federal Comprehensive Environmental Response, Compensation and
Liability Act and all amendments thereof; or
(c) has received or has knowledge that Seller
received any written complaint, order, citation or notice relating to the
happening of any event involving the use, generation, release, treatment,
discharge, emission, handling, storage, transportation, disposal or cleanup of
any Hazardous Materials or the Environmental Laws.
For purposes of this Section 4.9, "Hazardous Materials" includes, but is not
limited to, asbestos, radon, polychlorinated biphenyle, petroleum products and
other waste, substances and materials described as hazardous, toxic, polluting
or dangerous under the Environmental Laws.
4.10 Trademarks, Trade Names, Etc. None of Seller's trade
names (including One Stop School Shop and 1stopschoolshop), trademarks or domain
names (including 0xxxxxxxxxxxxxx.xxx) have been called into question or
challenged and, to the knowledge of Seller and the Principals, Seller is not
infringing upon any patents, trade names, trademarks, service marks, copyrights,
domestic or foreign, or any other intellectual property rights of any other
person, firm or entity. Seller has not granted any right, title or interest in
and to any of its trade names, trademarks or domain names to any other firm.
Seller is the owner thereof and has the exclusive right to use the same. Seller
has not received any notice (written or oral) claiming that the conduct of
Seller's Business infringes upon any patents, trademarks, trade names, service
marks or copyrights, domestic or foreign, or any other intellectual property
rights of any other person, firm or corporation.
4.11 Financial Statements. Attached hereto as Schedule 4.11
are copies of certain financial statements of Seller ("Financial Statements").
The Financial Statements fairly present the financial condition of Seller as of
the indicated dates and the results of operations of Seller for the indicated
periods and were correct and complete in all material respects as of their
respective dates and are consistent with the books and records of Seller. No
event has occurred since the preparation of the Financial Statements which
materially adversely affects the foregoing. The Financial Statements represent
bona fide transactions, and do not contain any untrue statement of any material
facts and do not omit to state any material fact necessary in order to make the
statements contained in this Section 4.11 or therein not misleading.
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4.12 Absence of Certain Changes or Events. Except as set forth
in Schedule 4.12, since the period end of the most recent Financial Statements,
Seller has not:
(a) taken any action that is not in accordance with
the ordinary course of Seller's business as such business was conducted prior to
the Balance Sheet Date; or
(b) suffered the occurrence of any events which,
individually or in the aggregate, have had, or might reasonably be expected to
have, a material adverse effect on its properties or assets, financial
condition, results or operations, business or prospects;
4.13 Real Property Leases. Schedule 4.13 sets forth a complete
and accurate list of all real property, office or warehouse space, or other
facilities leased, used or occupied by the Seller. Seller does not own any real
estate. With respect to each such lease, Seller is not in breach or default, and
no event has occurred which, with notice or lapse of time, would constitute a
breach or default by Seller.
4.14 Contracts. Schedule 4.14 lists the following contracts
and other agreements to which the Seller is a party:
(a) any agreement (or group of related agreements)
for the lease of personal property providing for lease payments in excess of
$500 per annum;
(b) any agreement (or group of related agreements)
for the purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services, which
cannot be terminated with thirty days notice, would result in a material loss to
Seller, or involves consideration in excess of $500;
(c) any agreement concerning a partnership or joint
venture;
(d) any agreement (or group of related agreements)
under which it has created, incurred, assumed, or guaranteed any indebtedness
for borrowed money, or any capitalized lease obligation, in excess of $500 or
under which it has imposed a security interest or lien on any of its assets,
tangible or intangible;
(e) any agreement concerning confidentiality or
noncompetition;
(f) any agreement involving any of the Principals and
their affiliates (other than Seller);
(g) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors, officers, and
employees;
(h) any collective bargaining agreement;
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(i) any agreement for the employment of any
individual on a full-time, part-time, consulting, or other basis providing
annual compensation in excess of $500 or providing severance benefits;
(j) any agreement under which it has advanced or
loaned any amount to any of its directors, officers, and employees outside the
ordinary course of business;
(k) any agreement under which the consequences of a
default or termination could have an adverse effect on the business, financial
condition, operations, results of operations, or future prospects of the Target;
or
(l) any other agreement (or group of related
agreements) the performance of which involves consideration in excess of $500
singly, or $2,500 in the aggregate.
Seller has delivered to the Buyer a correct and complete copy of each
written agreement listed in Schedule 4.14 (as amended as of the Closing Date)
and a written summary setting forth the terms and conditions of each oral
agreement referred to in Schedule 4.14. With respect to each such agreement: (i)
the agreement is legal, valid, binding, enforceable, and in full force and
effect; (ii) the agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby (to the extent that it is
being assigned and assumed hereunder); (iii) to the knowledge of Seller and the
Principals no party is in breach or default, and no event has occurred which
with notice or lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under the agreement; and (iv) no
party has repudiated any provision of the agreement.
4.15 No Broker or Finder. The Seller has not taken any action
which would give to any Person a right to a finder's fee or any type of
brokerage commission in relation to or in connection with the transactions
contemplated by this Agreement.
4.16 Other Information. None of the information and documents
which have been or may be furnished by Seller, or its representatives, or the
Principals to Buyer, or to any of its representatives, in connection with the
transactions contemplated by this Agreement, is or will be materially false or
misleading or contains or will contain any material misstatements of fact or
omits or will omit any material fact necessary to be stated in order to make the
statements therein not misleading, nor has Seller withheld from Buyer any
material facts relating to the assets, property or business of the Seller.
4.17 Investment. Seller (i) understands that Parent Common
Stock has not been, and will not be, registered under the Securities Act of 1933
(the "Securities Act"), or under any state securities laws, (ii) understands
that the Parent Common Stock will be subject to restrictions on transferability
or resale and may not be transferred or resold except as permitted under the
Securities Act and applicable state securities laws, (iii) is acquiring the
Parent Common Stock solely for its own account for investment purposes, and not
with a view to the distribution thereof (except to the Seller's Stockholders),
(iv) is a sophisticated investor with knowledge and experience in business and
financial matters, (v) has received certain information concerning LoyaltyPoint,
Inc., a Delaware corporation, and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and the risks inherent in
holding the Parent Common Stock, and (vi) is able to bear the economic risk and
lack of liquidity inherent in holding the Parent Common Stock.
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5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller and Principals that the
following representations and warranties are true, correct and complete as of
the date hereof and will be true, correct and complete as of the Closing Date:
5.1 Organization and Good Standing of Buyer. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has all requisite corporate power and authority to
make the representations, warranties and agreements made hereunder, to execute
and deliver this Agreement and the Ancillary Documents and to perform its
obligations hereunder and thereunder.
5.2 Authorization of Agreement and Enforceability. This
Agreement and the Ancillary Documents have been (or will be prior to Closing)
duly and validly authorized, executed and delivered by Buyer and constitute the
legal, valid and binding obligations of Buyer enforceable against Buyer in
accordance with their terms, except to the extent that such enforcement may be
limited by bankruptcy, insolvency, moratorium or other similar laws presently or
hereinafter in effect.
5.3 Effect of Agreement. Neither the execution, delivery, and
performance of this Agreement or the Ancillary Documents nor the consummation of
the transactions contemplated hereby by Buyer will (a) conflict with or result
in a beach of any provision of the certificate of incorporation or bylaws or the
Buyer or (b) constitute or result in the breach of, conflict with or give rise
to a right of termination, cancellation or acceleration with respect to, any
term, condition or provision of, any note, bond, mortgage, indenture, license or
other contract or obligation to which the Buyer is a party of by which Buyer or
any of its properties or assets may be bound, except for such conflicts,
breaches or defaults as to which written waivers or consents shall have been
obtained on or prior to the Closing Date, or (c) violate any law, statute,
regulation, judgment, order, writ, injunction, or decree applicable to Buyer or
any of its properties or assets.
5.4 Government and Other Consents. No consent, order,
authorization, qualification or approval of, or exemption by, or filing with any
governmental, public, or regulatory body or authority is required in connection
with the execution, delivery and performance by Buyer of this Agreement or any
Ancillary Document, except for filings required under state and federal
securities laws.
5.5 Litigation. There are no claims, actions, suits,
proceedings, arbitrations, investigations, or hearings or notice of hearings
pending, or to Buyer's knowledge, threatened before any federal, state, local or
foreign court or governmental, administrative or self-regulatory body or agency
that adversely affects the ability of Buyer to execute and deliver this
Agreement or the Ancillary Documents and perform its obligations hereunder or
thereunder or which otherwise relates to the consummation of the transaction
contemplated by this Agreement or any Ancillary Document.
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5.6 Other Information. None of the information and documents
which have been or may be furnished by Buyer, or its representatives, in
connection with the transactions contemplated by this Agreement, is or will be
materially false or misleading or contains or will contain any material
misstatements of fact or omits or will omit any material fact necessary to be
stated in order to make the statements therein not misleading, nor has Buyer
withheld from Seller or the Principals any material facts relating to the
assets, property or business of the Buyer.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer hereunder are subject to the fulfillment at
Closing of each of the following conditions to the reasonable satisfaction of
Buyer; provided that Buyer, in its discretion, may waive any one or more of such
conditions:
6.1 Accuracy of Representations and Warranties. The
representations and warranties of Seller and the Principals contained in this
Agreement and in any Ancillary Document shall be true in all material respects
on and as of the Closing Date except as affected by transactions contemplated
hereby and except to the extent that any such representations or warranties
which were made as of a specified date shall have been true on and as of such
date.
6.2 Performance of Agreements. Seller and the Principals shall
have performed all obligations and agreements and complied with all covenants
and conditions contained in this Agreement on its part to be performed or
complied with at or prior to the Closing Date.
6.3 Required Consents. Seller shall have obtained all consents
(in writing) required for the assignment to Buyer of the Purchased Assets.
6.4 Deliveries. Seller and the Principals shall have delivered
or caused to be delivered to Buyer at or prior to Closing all of the following:
(a) A certificate of the Seller and Principals, dated
the Closing Date, certifying as to the satisfaction of the conditions set forth
in Sections 6.1, 6.2 and 6.3 hereof;
(b) A certificate of the Seller, dated the Closing
Date, certifying (i) the resolutions adopted by the Board of Directors of the
Seller approving this Agreement, the Ancillary Documents and the transactions
contemplated thereby, (ii) the resolutions adopted by the stockholders approving
this Agreement, the Ancillary Documents and the transactions contemplated
thereby and (iii) the incumbency of each officer of the Seller executing this
Agreement and any Ancillary Documents to be executed by the Seller;
(c) One or more bills of sale, assignments, and other
instruments of transfer conveying good and marketable title to the Purchased
Assets to Buyer, in form and substance satisfactory to Buyer and its counsel;
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(d) The written consents contemplated by Section 6.3
in form and substance satisfactory to Buyer and its counsel;
(e) Executed confidentiality and non-compete
agreements among Buyer, Seller, Xxxxx Xxxxxx, Xxxxxx Xxxxxx and Xxxxx Xxxxx in
the forms set forth as Schedule 6.4(e) attached hereto;
(f) Executed Statement of Investment Intent in the
form set forth as Schedule 6.4(f) attached hereto;
(g) Executed Escrow Agreement; and
(h) Such other documents, opinions and certificates
as may be required under this Agreement or reasonably requested by Buyer.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER
The obligations of Seller are subject to the fulfillment at the Closing
of each of the following conditions to the reasonable satisfaction of Seller;
provided that Seller may waive any one or more of such conditions:
7.1 Accuracy of Representations and Warranties. The
representations and warranties of Buyer contained in this Agreement or in any
Ancillary Document shall be true in all material respects on and as of the
Closing Date with the same force and effect as though made on and as of the
Closing Date, except as affected by transactions contemplated hereby and except
to the extent that any such representations or warranties which were made as of
a specified date shall have been true on and as of such date.
7.2 Performance of Agreement. Buyer shall have performed all
obligations and agreements and complied with all covenants and conditions
contained in this Agreement to be performed or complied with by it at or prior
to the Closing Date.
7.3 Deliveries by Buyer. Buyer shall have delivered to Seller
at or prior to the Closing all of the following:
(a) The purchase consideration in accordance with
Section 2.2(a);
(b) A certificate of an executive officer of Buyer,
dated the Closing Date, certifying as to the satisfaction of the conditions set
forth in Sections 7.1 and 7.2 hereof;
(c) A certificate of the Secretary or Assistant
Secretary of Buyer, dated the Closing Date, certifying (i) the resolutions
adopted by the Board of Directors of Buyer approving this Agreement and the
transactions contemplated hereby and (ii) the incumbency of each officer of
Buyer executing this Agreement and any Ancillary Document; and
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d. Executed Escrow Agreement.
8. OBLIGATIONS AFTER CLOSING
8.1 Further Assurances by Seller. After the Closing hereunder,
Seller shall, at the request of Buyer, execute, acknowledge and deliver to Buyer
without further consideration, all such further assignments, conveyances,
endorsements, deeds, special powers of attorney, consents and other documents,
and take such other action, as Buyer may reasonably request (a) to transfer to,
vest and protect in Buyer and its right, title and interest in the Purchased
Assets, and (b) otherwise to consummate or effectuate the transactions
contemplated by this Agreement.
8.2 Employees and Employee Benefits. On the Closing Date,
Seller shall terminate all employees of Seller and Buyer may, but shall have no
obligation to, employ any such persons on terms and conditions acceptable to
Buyer, in its discretion. Seller shall cooperate with Buyer in communicating
with all employees of Seller that Buyer, in its discretion, desires to employ.
Buyer assumes no obligations or liabilities whatsoever with regard to any
employees, employee benefits or employee benefits plans provided by Seller to
its respective employees. Without limiting the generality of the foregoing,
Buyer specifically does not assume, and Seller shall indemnify and hold Buyer
harmless against, any liabilities arising out of termination of Seller's
employees or employee benefit plans, including, without limitation, liabilities
or obligations imposed by ERISA, COBRA or any other applicable federal, state,
or local laws, rules or regulations.
9. INDEMNIFICATION
9.1 Indemnification by Seller and Principals. Seller and
Principals shall, jointly and severally, indemnify and hold harmless Buyer from,
against and in respect of, any and all costs, losses, claims, liabilities,
fines, penalties, damages and expenses (including without limitation interest
which may be imposed in connection therewith, and court costs and reasonable
fees and disbursements of counsel) ("Loss") resulting from, arising out of or
incurred by Buyer in connection with either of the following:
(a) any breach of the representations or warranties
made by the Seller and/or the Principals in this Agreement or any Ancillary
Document;
(b) any failure or default by the Seller or the
Principals with regard to any of the covenants or agreements made by the Seller
or the Principals in this Agreement or any Ancillary Document, provided that in
the case of any failure or default with respect to any Ancillary Document to
which only one of the Principals is a party, such indemnification obligations
shall not be joint and several among the Principals but shall apply only to such
Principal and the Seller; provided further that failure or default by either of
the Principals with regard to his or her employment agreement or consulting
agreement entered into in connection with this Agreement shall be excluded from
the provisions of this Section 9.1; or
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(c) except for the Assumed Liabilities specifically
set forth on Schedule 2.3, any debts, obligations, liabilities, claims,
penalties, fines or damages pertaining to the Seller, its assets, or the
Business arising on or before or related to incidents and occurrences prior to
Closing, whether or not known to the Seller or the Principals.
The amount of any Loss shall be the amount of cash reimbursement or set-off
that, when received by Buyer, shall place Buyer in the same financial position
it would have been in if such Loss has not occurred.
9.2 Offset/ Reimbursement. Buyer shall have the right to
set-off against the purchase price, including payment of the 2004 Earnout and
the 2005 Earnout payable by Buyer as provided for herein (or, if such amounts
have theretofore been paid, then to receive prompt reimbursement from Seller of
an amount equal to) the amount of all Losses incurred by Buyer. Buyer shall
deliver to Seller a written notice explaining the nature and amount of each such
set-off or required reimbursement as promptly as is reasonably practicable after
Buyer shall have determined to make such set-off or to require such
reimbursement. Buyer may make such set-offs or require such reimbursements in
any order it chooses.
9.3 Limitation on Indemnification. The aggregate liability of
the Seller and Principals pursuant to Section 9.1 shall not exceed the
consideration paid by Buyer pursuant to Section 2.2. Notwithstanding the
preceding, the limitation on indemnification set forth in this Section 9.3 shall
not apply to claims for Losses based upon or relating to (i) any tax liability
pursuant to Section 4.7, or (ii) any liability relating to employees, employee
benefits or employee benefit plans pursuant to Section 8.2.
9.4 Indemnification by Buyer. Buyer shall indemnify and hold
harmless Seller and Principals from, against and in respect of, any and all
costs, losses, claims, liabilities, fines, penalties, damages and expenses
(including without limitation interest which may be imposed in connection
therewith, and court costs and reasonable fees and disbursements of counsel)
("Loss") resulting from, arising out of or incurred by Seller and Principals in
connection with either of the following:
(a) any breach of the representations or warranties
made by the Buyer in this Agreement or any Ancillary Document;
(b) any failure or default by Buyer with regard to
any of the covenants or agreements made by Buyer in this Agreement or any
Ancillary Document; or
(c) any of the Assumed Liabilities specifically set
forth on Schedule 2.3 and any debts, obligations, liabilities, claims,
penalties, fines or damages pertaining to the ownership, sale, license or use of
the Purchased Assets arising after the Closing, excluding any Loss subject to
indemnification pursuant to Section 9.1.
9.5 Limitation on Indemnification. The aggregate liability of
the Buyer pursuant to Section 9.4 shall not exceed the consideration paid by
Buyer pursuant to Section 2.2.
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The amount of any Loss shall be the amount of cash reimbursement that, when
received by Seller or the Principals, shall place Seller or the Principals in
the same financial position they would have been in if such Loss has not
occurred.
10. MISCELLANEOUS
10.1 Expenses, Etc. Each of the Parties shall pay their own
respective counsel, accountants and other experts' fees and expenses arising in
connection with the negotiation and preparation of this Agreement and the
Ancillary Documents and the consummation of the transactions contemplated hereby
and thereby.
10.2 Survival of Representations and Warranties. Each of the
Parties covenants and agrees that all of the representations, warranties,
covenants, and agreements set forth in this Agreement and in any Ancillary
Document shall survive the Closing and shall not be merged into any instruments
of transfer or other Ancillary Documents delivered by any of the Parties at
Closing or at any other time.
10.3 No Third Party Beneficiaries. Nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the Parties
or their respective heirs, successors and assigns any rights, remedies,
obligations, or other liabilities under or by reason of this Agreement.
10.4 Notices. All notices, requests, demands and other
communications which are required to be or may be given under this Agreement
shall be in writing and shall be deemed to have been duly delivered (a) on the
date of delivery if by personal delivery; (b) on the date of transmission with
confirmed receipt by telephone if delivered by telecopier; or (c) on the date on
which return receipt is signed or delivery is refused if dispatched by certified
or registered first class mail, Federal Express or similar service, postage
prepaid, return receipt requested, to the party to whom the same is so given or
made;
If to Seller, to: With a copy to:
One Stop School Shop, Inc. _____________________
000 Xxxxx Xxxxxx _____________________
Xxxxxxxx, Xxxxxxx 00000 _____________________
Attn: Xxxxxx Xxxxxx Attn: _______________
Telephone No.: (000) 000-0000 Telephone No.: ( ) _____
Facsimile No.: ( ) _________ Facsimile No.: ( ) _____
If to Principals, to: With a copy to:
Xxxxx and Xxxxxx Xxxxxx _____________________
000 Xxxxx Xxxxxx _____________________
Xxxxxxxx, Xxxxxxx 00000 _____________________
Telephone No.: (000) 000-0000 Attn: _______________
Facsimile No.: ( ) _________ Telephone No.: ( ) _____
Facsimile No.: ( ) _____
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Xxxxx Xxxxx _____________________
00000 Xxxx Xxxxxxx Xxxxx _____________________
Xxxxxxxx, Xxxxxxx 00000 _____________________
Telephone No.: (000) 000-0000 Attn: _______________
Facsimile No.: ( ) _________ Telephone No.: ( ) _____
Facsimile No.: ( ) _____
If to Buyer, to: With a copy to:
Schoolpop, Inc. Xxxxx Xxxxxx & Associates, P.A.
0000 Xxxx Xxxxx Xxxxxxx Xxxx XX 0000 XXX Xxxxxxxxx, Xxxxx 000
Xxxxx 000 Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000
Xxxxxxx, Xxxxxxx 00000 Attn: Xxxxx, X. Xxxxxx, Esq.
Attn: Xxxx Xxxxxxxx, CEO Telephone No.: (000) 000-0000
Telephone No.: (770) 000- 0000 Facsimile No.: (000) 000-0000
Facsimile No.: (000) 000-0000
or to such other address as such party shall have specified by notice to the
other party hereto.
10.5 Entire Agreement. This Agreement (including the Exhibits
and Schedules hereto) supersedes all prior agreements and understandings, oral
and written, between the Parties hereto with respect to the subject matter
hereof and thereof, and this Agreement, together with the Ancillary Documents
executed in connection herewith, constitutes the entire agreement of the Parties
as to the matters set forth herein and therein.
10.6 Headings. The article and section and other headings
contained in this Agreement are for reference purposes only and shall not be
deemed to be a part of this Agreement or to affect the meaning or interpretation
of this Agreement.
10.7 Counterparts. This Agreement may be executed in any
number of counterparts, each of which, when executed, shall be deemed to be an
original, and all of which together shall be deemed to be one and the same
instrument.
10.8 Governing Law. This Agreement shall be construed as to
both validity and performance and governed by and enforced in accordance with
the laws of the State of Delaware, without giving effect to the choice of law
principles thereof.
10.9 Severability. If any term, covenant, condition, or
provision of this Agreement or the application thereof to any circumstance shall
be invalid or unenforceable to any extent, the remaining terms, covenants,
conditions, and provisions of this Agreement shall not be affected thereby and
each remaining term, covenant, condition, and provision of this Agreement shall
be valid and shall be enforceable to the fullest extent permitted by law. If any
provision of this Agreement is so broad as to be unenforceable, such provision
shall be interpreted to be only as broad as is enforceable.
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10.10. Amendments. This Agreement may not be modified or
changed except by an instrument or instruments in writing signed by all Parties.
10.11 Assignment. No party hereto shall assign its rights or
obligations under this Agreement without the prior written consent of the other
Parties hereto, except that Buyer may assign this Agreement to any Affiliate of
Buyer without the consent of Seller.
10.12 Successors and Assigns. Subject to the provisions of
Section 10.11 hereof, the covenants, agreements, and conditions contained herein
or granted hereby shall be binding upon and shall inure to the benefit of the
Parties and their respective heirs, successors and permitted assigns.
10.12 No Joint Venture. Buyer, by entering this Agreement and
the Ancillary Documents, and consummating the transactions contemplated hereby
and thereby, shall not be and shall not be considered a partner or joint
venturer of the Seller.
10.13 Construction of Agreement. This Agreement and the
Ancillary Documents are documents negotiated at arm's-length by the Parties and
their respective counsel. Neither this Agreement nor any of the Ancillary
Documents shall be construed as having been "drafted" by any one Party and shall
not be construed against any Party as a drafting party.
10.4 Attorney's Fees. In the event that there is any
controversy or claim arising out of or relating to this Agreement, or to the
interpretation, breach or enforcement thereof, and any action or proceeding
including an arbitration proceeding is commenced to enforce the provisions of
this Agreement, the prevailing Party shall be entitled to an award by the court
or arbitrator, as appropriate, of reasonable attorney's fees, including the fees
on appeal, costs and expenses.
[Signature Page Attached]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
as of the date first written above.
BUYER:
SCHOOLPOP, INC., a Delaware corporation
By: _________________________________
Xxxx Xxxxxxxx, Chief Executive Officer
SELLER:
ONE STOP SCHOOL SHOP, INC., a Florida corporation
By: _________________________________
Xxxxxx Xxxxxx, Its Chief Executive Officer
PRINCIPALS:
____________________________________
XXXXX XXXXX
____________________________________
XXXXX XXXXXX
____________________________________
XXXXXX XXXXXX
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