EXHIBIT 2.6
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT made this 7th day of June, 1999;
Between: Cadapult Graphic Systems, Inc., a Delaware corporation
with offices located at 000 Xxxxxxxx Xxxxx, Xxxxxxxxx,
Xxx Xxxxxx 00000, hereinafter referred to alternatively as
"Cadapult" or "Purchaser";
And: WEB Associates, Inc., a Pennsylvania corporation with
offices located at 0000 Xxxxxxxx Xxxx, Xxxxxxxxxx,
Xxxxxxxxxxxx 00000, hereinafter referred to alternatively
as "WEB" or "Seller".
Whereas, both Purchaser and Seller are engaged in the sale and servicing of
computer graphics and imaging equipment and supplies; and,
Whereas, Purchaser is desirous of purchasing the Assets of Seller, as defined
hereinafter, and Seller is desirous of selling said Assets, for the
consideration and upon the terms and conditions set forth hereinafter.
Now Therefore, in consideration of the mutual covenants, promises and conditions
set forth herein, the parties hereto do hereby agree as follows:
1. Purchase and Sale.
1.01 Seller agrees to sell to Purchaser and Purchaser agrees to purchase
from Seller all of the Assets owned and used by Seller in the operation of its
business, including but not limited to the following:
A. Accounts Receivable, less allowances;
B. Inventory at lower of cost or fair market value;
C. Property and Equipment as listed on Exhibit A annexed to and
made a part hereof;
D. Use of the name "WEB Associates";
E. Customer lists and all files relating thereto;
F. Sales, service and vendor contracts and security deposits;
G. Existing telephone numbers (000) 000-0000, (000) 000-0000,
(000) 000-0000, (000) 000-0000;
H. Databases;
I. Other prepaid commitments as listed on Exhibit J for which
there shall be an adjustment at Closing.
The Assets which are the subject of the within sale, including those set forth
hereinabove, shall hereinafter be collectively referred to as "Assets".
1.02 In conjunction with purchase by Cadapult of the Assets, as defined
herein, Cadapult has agreed to assume the following Liabilities of Seller:
A. Trade payables as of the date of Closing;
B. Customer deposits payable as of the date of Closing;
Cadapult has not agreed to assume any other liabilities other than those set
forth hereinabove. Liabilities specifically EXCLUDED from assumption by
Cadapult include the following: (a) any monies due any governmental agency,
including any federal, state and/or local taxes; (b) any contingent
liabilities resulting from any claim or threatened claim against Seller which
may not, as of this date or date of Closing, have matured into a debt; (c)
any obligations arising out of any claim by Seller's personnel, including any
unpaid salaries, commissions, pension or other benefits, accrued vacation or
sick pay arising prior to the date of Closing, and, (d) any other undisclosed
liabilities.
2. Purchase Price and Terms of Sale.
2.01 Cadapult does hereby agree to assume the Liabilities referenced
in Subparagraphs A and B of Paragraph 1.02 hereinabove (hereinafter referred
to as "Liabilities") and to purchase the Assets referenced in Subparagraphs A
though J of Paragraph 1.01 hereinabove. It is anticipated that the dollar
value of the Assets purchased will exceed the Liabilities assumed, as
determined by generally accepted accounting principles (hereinafter referred
to as "Net Asset Value"), by Three Hundred, Ninety Thousand ($390,000.00)
Dollars. In such event, Cadapult shall then be obligated to tender to Seller
$300,000 in cash at Closing plus, in accordance with Paragraph 9L, that
number of Cadapult unregistered and restricted common shares equal to
$500,000 divided by the average Stock Price of Cadapult common stock for the
thirty (30) days prior to Closing, where the Stock Price is the average of
the high 'bid' and low 'ask' at the close of the trading day. The sum of
such $300,000 in cash plus such Cadapult common shares (subject to adjustment
as set forth in 2.01A and 2.01B below) shall be hereinafter referred to as
the "Initial Purchase Price."
A. In the event the Net Asset Value, as defined hereinabove, is
greater than $390,000, at Closing, Cadapult shall tender additional shares of
Cadapult unregistered and restricted common stock, the number of additional
shares being determined by dividing the Net Asset Value, less $390,000, by
the average aforesaid Stock Price of Cadapult common stock for the thirty
(30) days prior to Closing.
B. In the alternative, in the event the Net Asset Value is less
than $390,000, but greater than $90,000, then the difference between $390,000
and the Net Asset Value will reduce the cash tendered to the Seller by such
amount. In the event the Net Asset Value is less than $90,000, then no cash
will be tendered to the Seller and the number of shares of Cadapult common
stock will be reduced by the difference between the Net Asset Value and
$90,000, divided by the average aforesaid Stock Price of Cadapult common
stock for the thirty (30) days prior to Closing.
3. Escrow and Post Closing Adjustments. At Closing, fifty (50%) percent of
the common stock of Cadapult due Seller thereat, (hereinafter "Escrowed
Shares"), shall be endorsed in blank and delivered to the Joint Escrow Agents
designated herein, after which the Escrowed Shares shall be held in escrow
pending attainment of specified Gross Profit objectives in the first 12 and
second 12 months from the date of Closing. For the purposes of this
Paragraph 3, Gross Profit shall be defined in the manner set forth in Exhibit
C annexed to and made a part hereof.
If Seller attains, or exceeds, certain Gross Profit Targets, as defined
hereafter, during the first twelve (12) months following the Closing, 50% of
the Escrowed Shares will be released to Seller from the Escrow plus
additional unregistered and restricted shares as shall be issued to Seller by
Cadapult pursuant to the schedule of Gross Profit Targets annexed to and made
a part hereof as Exhibit D. (Such additional shares shall hereinafter be
referred to as "Additional Purchase Price.") In the alternative, failure to
attain Gross Profit Targets resulting in less than 50% of the Escrowed Shares
being issued to Seller at the end of the first twelve month period shall
result in those shares being returned to Cadapult and Seller forfeiting any
rights thereto.
The same process shall be repeated in the second twelve month period from the
date of the Closing.
The aforesaid shall be set forth in a separate Escrow Agreement to be
executed at Closing. The Joint Escrow Agents shall be one attorney
designated by Seller and another attorney designated by Purchaser. The Joint
Escrow Agents shall receive an agreed upon fee, as set forth in the Escrow
Agreement, for services rendered by them as Joint Escrow Agents.
4. Deposit. Simultaneously upon the execution of this Agreement,
Purchaser shall forward a check to Seller's attorney in the sum of
$50,000.00. This check shall be deposited into the attorney's trust account
of Seller's attorney, who shall be an attorney admitted to the Bar of the
State of Pennsylvania, and shall be held in escrow thereby pursuant to the
provisions of Paragraph 12 hereinunder. In the event a Closing does not
occur as a consequence of the failure of any conditions precedent to this
Agreement or Seller's breach, the within xxxxxxx money Deposit shall be
refunded to the Purchaser without any deduction or set off whatsoever within
forty-eight (48) hours of demand therefore.
5. Allocation of Purchase Price. The Purchase Price shall be allocated
amongst the various Assets in the manner set forth in Exhibit E annexed to
and made a part hereof. The Purchase Price shall equal the sum of the
Initial Purchase Price plus the Additional Purchase Price.
6. Employment Agreements. A condition precedent to Cadapult's obligation
to Close shall be : (1) Seller's shareholders, Xxxxx X. Xxxxxxx and Xxxxxxx
X'Xxxxx executing Employment Agreements in the form annexed to and made a
part hereof as Exhibit F, for a term of not less than two (2) and one (1)
years from Closing respectively; and (2) Seller obtaining from another
shareholder, Xxxxxxxxx Xxxxxxx, a written undertaking on the part of
Xxxxxxxxx Xxxxxxx that she shall be restricted from competing with, or
contacting or soliciting, any of Seller's customers for a period of not less
than three years from the date of Closing, said Restrictive covenant to be in
the form annexed hereto and made a part hereof as Exhibit I.
7. Closing. The Closing shall occur on or before July 1, 1999 at Seller's
offices or the offices of Seller's attorneys provided same are located within
15 miles of Philadelphia, Pennsylvania (hereinbefore referred to as "Closing
Date"). All monies due and payable at Closing shall be paid in the form of a
bank, certified or attorneys trust account check.
8. Conditions Precedent.
A. Purchaser agrees to accept an assignment of Seller's lease for its
current location. A true copy of said Lease is annexed hereto and made a
part hereof as Exhibit G. On or before the Closing, Seller shall obtain its
Landlord's consent to an assignment of said Lease to Cadapult.
B. Purchaser's satisfactory review of aspects of Seller's business,
including but not limited to, financial statements, Statements of Profits and
Losses and Balance Sheets for all of 1998 and at least the first 3 months of
1999. Management prepared financial statements for the three months of 1999
will be accepted for the purposes of Purchaser's review. Said review shall
be completed within 30 days of the date hereof at which time Purchaser shall
notify Seller in writing that it either (i) is willing to proceed to closing
based upon its review of the Seller's business or (ii) is unwilling to
proceed to closing based upon such review. Purchaser shall have the right to
make either of the aforesaid elections at its sole and absolute discretion.
In the absence of such notice, Purchaser shall be deemed to have elected not
to proceed.
C. Execution at Closing of the Employment Agreements referenced in
Paragraph 6 hereinabove.
9. Seller's Representations. Seller represents and warrants to Purchaser
as follows:
A. Title to Assets. Seller shall, as of the date of Closing, have
good and marketable title to the Assets, free and clear of restrictions on or
conditions to transfer or assignment as well as any and all liens, pledges,
charges, or encumbrances, except those specifically referred to 1.02
hereinabove. At Closing, Seller shall convey all such Assets.
B. Indemnification. Seller, and Seller's shareholders, do hereby
jointly and severally agree to protect, indemnify, and hold the Purchaser
harmless from and against any loss, damage or expense, as well as reasonable
counsel fees and costs, if incurred, resulting from any breach of the
warranties set forth in Subparagraph A of this Paragraph 9. Specifically,
the within Indemnification shall include any claim made against Purchaser for
any unpaid liability of Seller. Should any claim for indemnification arise
during the pendency of the Escrow as referenced in Paragraph 3 hereinabove,
the Purchaser shall have the right to request that any funds being held on
behalf of the Seller continue to be held pending resolution of such claim
and, further to pay the amount of such claim upon adjudication thereof from
said Escrowed Funds, should same remain unsatisfied. The allocation of any
liability among the Shareholders arising pursuant to the provisions of this
Paragraph shall be in proportion to the equity owned by each in WEB
Associates, Inc., and, except in the case of fraud, shall not exceed the
amount received by each Shareholder as his or her share of the consideration
paid pursuant to this Agreement.
C. Transfer Not Subject to Encumbrances or Third-Party Approval. The
execution and delivery of this Agreement by Seller, and the consummation of
the within contemplated transaction, will not result in the creation or
imposition of any valid lien, charge, or encumbrance on any of the Assets,
and will not require the authorization, consent, or approval of any third
party, including any lender or governmental or regulatory agency.
D. Corporate Existence. Seller is now, and on the Closing Date will
be, a corporation duly organized and validly existing and in good standing
under the laws of the State of Pennsylvania. At Closing, Seller shall
provide a copy of a Certificate of Good Standing issued by the State of
Pennsylvania and the Pennsylvania Department of Revenue. In addition, Seller
shall comply with all applicable governmental and legal requirements in
relation to the bulk sales of its Assets.
E. Authorization. The execution, delivery, and performance of this
Agreement has been duly authorized and approved by the Board of Directors and
shareholders of Seller having a majority of the issued and outstanding Common
Stock thereof, and this Agreement constitutes a valid and binding Agreement
of Seller in accordance with its terms.
F. Noncancelable Contracts. At the time of Closing, there will be no
leases (other than the Paragraph 8A lease), employment contracts, contracts
for services or maintenance, or other similar material contracts existing or
relating to or connected with the operation of Seller's business not
cancelable at Closing or within 30 days thereof.
G. Continued Operations. Seller will continue to conduct its business
up to the date of Closing in essentially the same manner as it has been
conducted in the past, and in accordance with all applicable laws and
regulations. Until Closing, Seller shall maintain all of its Assets in their
present condition. Seller shall use its best efforts to preserve, for
Purchaser, the goodwill of vendors, suppliers, customers and others having
business relations with it. Prior to Closing, Seller will not sell or
transfer any of the Assets which are the subject of this Agreement. Seller
has no knowledge of a business termination of a material customer, vendor or
supplier.
H. Withholding Taxes. Seller has paid in full, or will arrange for
the payment in full, in a timely manner, of all federal and State of
Pennsylvania taxes incurred by Seller, including, but not limited to income,
withholding, social security, unemployment insurance, and sales taxes due
through the Date of Closing, and shall hold Purchaser harmless therefrom.
I. Financial Records. Financial records and other documents delivered
by Seller to Purchaser in connection with the within transaction, including
profit and loss statements and balance sheets, contracts, and other books and
records, accurately reflect the financial condition of Seller. To the best
of Seller's knowledge, Seller is in compliance with all laws and regulations
affecting its business.
J. Employee Benefits. Except for its SEP retirement plan, health and
dental insurance plan, life insurance plan and disability plan, Seller does
not maintain any retirement or deferred compensation plan, savings,
incentive, stock option or stock purchase plan, unemployment compensation
plan, vacation pay, severance pay, bonus or benefit arrangement, insurance or
hospitalization program or any other fringe benefit arrangement for any
employee, consultant or agent of the Seller, whether pursuant to contract,
arrangement, custom or informal understanding, which constitute an "Employee
Benefit Plan" (as defined in Section 3(3) of ERISA. The Seller does not
maintain, nor has it ever contributed to, any Multi-employer Plan as defined
by Section 3(37) of ERISA. The Seller does not currently maintain any
Employee Pension Benefit Plan subject to Title IV of ERISA. There have been
no "prohibited transactions" (as described in Section 406 of ERISA or Section
4975 of the Code) with respect to an Employee Pension Benefit Plan or
Employee Welfare Benefit party. Seller has no written contracts with
employees. Seller shall be responsible for paying, prior to Closing, all
accrued vacation or sick pay entitlements. Seller and seller shareholders
shall indemnify and hold purchaser harmless from any liability or obligation
arising in relation to any employee benefit including, but not limited to any
of the employee benefit plans referred to in this Sub-Paragraph J. The
allocation of any liability among the Shareholders arising pursuant to the
provisions of this Paragraph shall be in proportion to the equity owned by
each in WEB Associates, Inc., and, except in the case of fraud, shall not
exceed the amount received by each Shareholder as his or her share of the
consideration paid pursuant to this Agreement.
K. Accuracy of Representations and Warranties. None of the
representations or warranties of Seller contain or will contain any untrue
statement of a material fact or omit or will omit or misstate a material fact
necessary in order to make statements in this Agreement not misleading.
Seller knows of no fact or circumstance that has resulted, or that in the
reasonable judgment of Seller will result, in a material change in the
business, operations, or assets of Seller that has not been previously
disclosed or set forth in this Agreement.
L. Seller's Agreement to Restriction on Sale of Seller's Stock
Conveyed Pursuant to the Within Agreement. The Sellers agree that any sale
or other disposition of the Securities after the one year anniversary of the
Closing Date shall be a bona fide transaction in accordance with Rule 144, as
promulgated under the Securities Act of 1933 as amended, conducted through a
major brokerage firm or such other firm as is mutually agreed by the parties
in writing, and shall be sold in a manner not to cause any materially adverse
effect on the market for the Corporation's common stock. These
representations by the Sellers are material to the Purchaser's decision to
enter into this Agreement and, Seller's agree that any violation hereof would
entitle the Purchaser to injunctive relief to preclude Securities sales
activity by the Sellers in contravention of these representations. Any
legend that would appear on the stock certificates is set forth on Exhibit K
attached hereto.
10. Purchaser's Representations. Purchaser represents and warrants to
Seller as follows:
A. Corporate Existance. Buyer is a DELAWARE corporation, duly
organized, validly existing and in good standing under the laws of the state
of Delaware and has the power and authority to carry on its business, as now
conducted, to own and operate its properties and assets, to execute the
Agreement and other agreements and instruments referred to therein and
delivering and carrying out the transactions contemplated.
B. Authorization. Execution and delivery of the Agreement and other
Agreements and instruments referred to have been duly authorized by the board
of directors and shareholders of Cadapult Graphic Systems, Inc. and
constitute legal, valid, binding and enforceable agreements and instruments.
Neither the execution, delivery or performance of the Agreement or any other
agreement or instrument executed and delivered by or on behalf of Cadapult
Graphic Systems, Inc., nor the consummation of the transactions nor
compliance with the terms and provisions of the Agreement contravenes the
Certificate of Incorporation, Articles of Incorporation, or bylaws or any
provision of law, statute, rule, regulation or order of any court or
governmental authority to which Cadapult Graphic Systems, Inc., is subject,
or any judgment, decree, franchise, order or permit applicable to it, or
conflicts or inconsistent with, or will result in any breach of or constitute
a default under, any contract, commitment, agreement, understanding,
arrangement or instrument, or result in the creation of or imposition of, or
the obligation to create or impose any lien, encumbrance or liability upon,
any of the property or assets of it, or will increase any such lien,
encumbrance, or liability.
C. Indemnification. Purchaser shall indemnify Seller against any and
all loss, liability, deficiency, or damage suffered or incurred by WEB, or
its shareholders, resulting from any untrue representation, breach of
warranty or non-fulfillment of any covenant or agreement by Cadapult Graphic
System, Inc. contained in the Agreement or in any certificate, document, or
instrument delivered to WEB in connection with the within transaction.
11. Mutual Indemnification. Purchaser and Seller agree to protect,
indemnify, and hold the other harmless against, and with respect to, any
loss, damage or expense occasioned by any breach or alleged breach, falsity,
or failure of any of the representations, covenants, warranties or agreements
of any such party contained herein or contained in any document exchanged
between Purchaser and Seller in connection with this transaction. This
Indemnification shall survive the Closing.
12. Default. In the event of a material breach, the non-breaching party
shall have the right, in addition to seeking damages, to choose to compel the
breaching party to perform under the terms of this Agreement (specific
performance). Irrespective of the aforesaid, and in addition thereto, in the
event of a material breach by Purchaser, Seller shall have the right to
retain the Deposit irrespective of whether Seller is able to establish
damages, seeks to compel specific performance, or ultimately obtains a
judgment for damages in excess of the Deposit provided however that in the
event of the latter, the amount of the Deposit shall be deducted from any
damage award.
13. Miscellaneous.
A. Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified, or supplemented only by a written
agreement signed by all of the parties hereto.
B. Notices. All notices, requests, consents, approvals or other
communications under this Agreement shall be in writing and mailed by
certified mail, return receipt requested, postage prepaid, or delivered by a
nationally recognized overnight courier service which obtains delivery
receipts (e.g., Federal Express), addressed:
Seller:
Xxxxx and Xxxxxxxxx Xxxxxxx
00 Xxxxxx Xxxx
Xxxxx Xxxxx, XX 00000
Xxxxxxx X'Xxxxx
000 Xxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxxxx, Esq.
Obermayer, Rebmann, Xxxxxxx & Hippel, LLP
19th Floor
0000 Xxxx X. Xxxxxxx Xxxx.
Xxxxxxxxxxxx, XX 00000-0000
Purchaser:
Cadapult Graphic Systems, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Xxxxx X. Xxxxxx, Esq.
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Either party may, by notice given as aforesaid, change its address for all
subsequent notices. All notices hereunder shall be effective upon receipt of
same.
C. Legal Fees in the Event of Dispute. In the event a dispute arises
between the parties in relation to the interpretation and/or implementation
of the within Agreement resulting in the filing of a legal proceeding in a
court of competent jurisdiction, the non-prevailing party shall reimburse the
prevailing party to the extent of reasonable counsel fees and costs incurred
by the latter.
D. No Broker. The Seller and Purchaser represent and warrant, each to
the other, that neither has engaged or in any way dealt with a broker,
finder, agent, or anyone in a similar capacity, in relation to the
transaction contemplated by the within Agreement. To this extent, Seller and
Purchaser do each hereby agree to indemnify, defend and hold the other
harmless from and against any and all loss, expense, including but not
limited to reasonable counsel fees and costs, damage or liability resulting
from any claim or claims arising from an alleged rendering of any services to
the indemnifying party in breach of the within warranty.
E. Titles and Captions. All section titles or captions contained in
this Agreement are for convenience only and shall not be deemed part of the
context nor affect the interpretation of this Agreement. All pronouns and
any variation thereof shall be deemed to refer to the masculine, feminine,
neuter, singular or plural as the identity of the person or persons may
require.
F. Entire Agreement. This Agreement contains the entire understanding
between and among the parties and supersedes any prior understanding and
agreements among them respecting the subject matter of this Agreement. Any
amendments to this Agreement must be in writing and signed by the party
against whom enforcement of that amendment is sought.
G. Presumption. This Agreement, or any Section thereof, shall not be
construed against any part due to the fact that said Agreement or any Section
thereof was drafted by said party.
H. Further Action. The parties hereto shall execute and deliver all
documents, provide all information and take or forebear from all such action
as may be necessary or appropriate to achieve the purpose of the Agreement.
I. Counterparts. This Agreement may be executed in several
counterparts and all so executed shall constitute one Agreement, binding on
all the parties hereto even though all the parties are not signatories to the
original or the same counterpart.
J. Savings Clause. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid. The remainder of this Agreement, or the application of such
provision to persons or circumstances other than those as to which it is held
invalid, shall not be affected thereby.
K. Governing Law. The parties agree that the terms of this Agreement,
as well as any dispute arising as a consequence thereof, shall be interpreted
in accordance with and governed by the laws of the State of Delaware.
L. Assignment. Seller shall have the right to assign its post-Closing
rights under this Agreement to its shareholders in connection with the
liquidation of Seller.
Executed as of the dates set forth below, in several counterparts, each of
which shall be deemed an original, but all constituting only one agreement.
Purchaser:
Cadapult Graphic Systems, Inc.
Date: June 7, 1999 By: /s/ Xxxxxxx Xxxxx
----------------------------
Xxxxxxx Xxxxx, President
Seller:
WEB Associates, Inc.
Date: June 7, 1999 By: /s/ Xxxxx Xxxxxxx
---------------------------
Xxxxx Xxxxxxx, Pres.
Solely as to the provisions of Paragraphs
6, 9B and 9J as same pertains to the
undersigned and as to no other provision
contained herein.
/s/ Xxxxxxxxx Xxxxxxx
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Xxxxxxxxx Xxxxxxx
/s/ Xxxxxxx X'Xxxxx
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Xxxxxxx X'Xxxxx
/s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
