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EXHIBIT 10.1
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ASSET PURCHASE AGREEMENT
between
RMK HOLDINGS, LLC,
LOGISOFT CORP.
and
ESTOREFRONTS.NET CORP.
Dated as of April 26, 2005
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TABLE OF CONTENTS
Page
ARTICLE 1 THE
SALE.................................................1
1.1 Transfer of
Assets...........................................1
1.2 Purchased
Assets.............................................1
1.3 Retained
Assets..............................................2
1.4 Assumption of
Liabilities....................................2
1.5 Procedures for Contracts Not
Transferable....................3
ARTICLE 2 PURCHASE PRICE;
CLOSING..................................3
2.1 Purchase
Price...............................................3
2.2 Manner of
Payment............................................3
2.3 Allocation of Purchase
Price.................................5
2.4 The
Closing..................................................5
2.5 Deliveries by
Sellers........................................5
2.6 Deliveries by
Buyer..........................................6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF
SELLERS................7
3.1
Organization.................................................7
3.2 Authorization;
Enforceability................................7
3.3 Consent and Approvals; No
Violations.........................7
3.4 Financial
Statements.........................................8
3.5 Absence of Certain Changes or
Events.........................8
3.6 Real
Property................................................8
3.7 Zoning and other Governmental
Actions........................9
3.8 Assumed
Contracts............................................9
3.9
Litigation...................................................9
3.10
Taxes.......................................................10
3.11 Compliance with
Laws........................................10
3.12 Title to
Assets.............................................11
3.13 Environmental
Matters.......................................11
3.14
Liabilities.................................................12
3.15 Sufficiency/Condition of Purchased
Assets...................12
3.16
Permits.....................................................12
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TABLE OF CONTENTS
Page
3.17 Employment
Matters..........................................13
3.18
Insurance...................................................13
3.19 Accounts
Receivable.........................................14
3.20 Full
Disclosure.............................................14
3.21
Brokers.....................................................14
3.22 Intellectual Property
Assets................................14
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF
BUYER.................15
4.1
Organization................................................15
4.2 Authorization;
Enforceability...............................15
4.3 Consents and
Approvals......................................15
4.4
Litigation..................................................15
4.5 Knowledge of Breach by
Sellers..............................15
ARTICLE 5 COVENANTS OF THE
PARTIES................................16
5.1 Conduct of
Business.........................................16
5.2 Financial
Statements........................................16
5.3 Access to
Information.......................................16
5.4 Further
Assurances..........................................16
5.5 Consummation of
Agreement...................................17
5.6 Employees; Employee
Benefits................................17
5.7 Use of Certain
Names........................................17
5.8 Balance Sheet
Accruals......................................17
5.9 Use of
Proceeds.............................................17
5.10 No Other
Negotiations.......................................18
ARTICLE 6 CLOSING
CONDITIONS......................................18
6.1 Mutual
Conditions...........................................18
6.2 Conditions to the Obligations of
Sellers....................18
6.3 Conditions to the Obligations of
Buyer......................18
ARTICLE 7 LIMITED SURVIVAL OF REPRESENTATIONS;
INDEMNIFICATION....19
7.1 Survival of
Representations.................................19
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7.2 Sellers' Agreement to
Indemnify.............................20
7.3 Buyer's Agreement to
Indemnify..............................20
7.4
Limitations.................................................21
7.5 Third-Party
Claims..........................................21
7.6 Exclusive
Remedy............................................22
7.7 Arbitration; Jurisdiction; Service of
Process...............22
ARTICLE 8
TERMINATION.............................................23
8.1
Termination.................................................23
8.2 Procedure and Effect of Termination or Failure to
Close.....24
ARTICLE 9 MISCELLANEOUS
PROVISIONS................................24
9.1 Expenses and
Prorations.....................................24
9.2 Amendment and
Modification..................................25
9.3 Waiver of Compliance;
Consents..............................25
9.4
Notices.....................................................25
9.5 Binding Agreement;
Assignment...............................26
9.6 No Rights in Third
Parties..................................26
9.7 Governing
Law...............................................26
9.8
Counterparts................................................26
9.9
Interpretation..............................................26
9.10
Confidentiality.............................................26
9.11 Entire
Agreement............................................27
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Exhibits
Exhibit A December 31, 2004 Balance Sheet
Exhibit B Form of Bill of Sale
Exhibit C Form of Assignment and Assumption of Agreement
Exhibit D Confidentiality Agreement
Exhibit E Noncompetition Agreement
Schedules
Schedule 1.2(a) Tangible Personal Property
Schedule 1.2(b) Assumed Contracts
Schedule 1.2(c) Intellectual Property Assets
Schedule 1.2(d) Leased Real Property
Schedule 1.2(e) Accounts Receivable
Schedule 1.3 Retained Assets
Schedule 3.4 Financial Statements
Schedule 3.5 Certain Changes or Events
Schedule 3.7 Zoning and Other Governmental Actions
Schedule 3.8 Assumed Contracts
Schedule 3.9 Litigation
Schedule 3.12 Title to Assets
Schedule 3.13 Environmental Matters
Schedule 3.14 Liabilities
Schedule 3.15 Inventory not owned by Seller
Schedule 3.16 Permits
Schedule 3.17(a) Employees
Schedule 3.17(b) Employment Matters
Schedule 3.18 Insurance
Schedule 3.21 Brokers
Schedule 3.22 Marks and Trade Names
Schedule 6.3 Conditions to the Obligations of Buyer
Schedule 6.3(d) Key Employees
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (as amended, supplemented or
modified from
time to time, this "Agreement"), dated as of April 26, 2005, is
by and between
LOGISOFT CORP., a New York corporation ("Logisoft"),
ESTOREFRONTS.NET CORP., a
New York corporation ("eStorefronts" and, together with
Logisoft, the "Sellers")
and RMK HOLDINGS, LLC, a Delaware limited liability company
("Buyer") (each is
sometimes referred to herein individually as a "Party" and,
collectively, are
sometimes referred to as the "Parties"). Capitalized terms used
in this
Agreement have the meanings given to them in Appendix I.
Statement of Purpose
Sellers currently conduct a business which consists of reselling
computer
software and hardware, sales, design, hosting and maintenance of
internet and
intranet websites, information technology consulting and
ecommerce software
development and consulting (the "Business"). Buyer desires to
purchase
substantially all of the assets of Sellers from Sellers and to
assume certain
liabilities relating to the Business, and Sellers desire to sell
such assets and
transfer such liabilities to Buyer, all subject to the terms and
conditions set
forth in this Agreement.
AGREEMENT
The Parties hereby agree as follows:
ARTICLE 1
THE SALE
1.1 Transfer of Assets . Upon the terms and subject to the
conditions of
this Agreement, Sellers hereby agree, at the Closing, to sell,
transfer, convey,
assign and deliver to Buyer, and Buyer hereby agrees, at the
Closing, to
purchase and accept from Sellers, all of the assets, rights and
properties used
or usable in connection with the Business, including the assets
referred to in
Section 1.2 below, other than the Retained Assets (the
"Purchased Assets").
1.2 Purchased Assets. Upon the terms and subject to the
conditions of this
Agreement, Sellers hereby agree, at the Closing, to sell,
transfer, convey,
assign and deliver to Buyer, and Buyer hereby agrees, at the
Closing, to
purchase and accept from Sellers, all right, title and interest
in and to any
and all assets, rights and properties of Sellers, other than the
Retained
Assets, including:
(a) all of the tangible personal property of Sellers used in
connection
with the Business, including all machinery, equipment, supplies,
spare parts,
inventories, raw materials, vehicles, furniture, computers,
computer software,
computer data, office equipment, marketing materials and
fixtures, including the
tangible personal property set forth on Schedule 1.2(a);
(b) all contracts, personal property leases, rental agreements,
tenancies,
licenses, engagements and commitments, whether written or oral,
expressed or
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implied, entered into in connection with the Business (the
"Assumed Contracts"),
including the Assumed Contracts set forth on Schedule
1.2(b);
(c) all Intellectual Property Assets and all goodwill
associated
therewith, licenses and sublicenses granted and obtained with
respect thereto,
all rights thereunder, remedies against infringement thereof and
rights to
protection of interest therein under Applicable Law, including
the Intellectual
Property Assets set forth on Schedule 1.2(c);
(d) all of the real property that is leased or subleased by
Sellers and
used or held for use in connection with the Business, including
all of Sellers'
right, title and interest, duties and future obligations as
lessee in and to the
leases listed on Schedule 1.2(d) (the "Leased Real
Property");
(e) all accounts receivable relating to the operation of the
Business
outstanding as of the Closing Date, including the accounts
receivable set forth
in Schedule 1.2(e);
(f) all capital stock, membership interests or other equity
securities of
the Subsidiaries and all corporate or limited liability company
looks and
records of the Subsidiaries;
(g) all prepaid items;
(h) all permits, licenses or authorizations necessary or
desirable for the
operation of the Business to the extent assignable (the
"Permits");
(i) all intangible property and goodwill associated with the
Business;
(j) all cash of the Business (the "Cash");
(k) all rights, claims, causes of action and suits that Sellers
may have
against third parties relating to any of the foregoing; and
(l) all files, records, documents, data, plans, proposals,
manuals,
warranties, books and other documentation relating to any of the
foregoing.
1.3 Retained Assets. The Purchased Assets shall not include any
of the
assets, rights or properties of Sellers described on Schedule
1.3 (the "Retained
Assets"), all of which shall be retained by Sellers.
1.4 Assumption of Liabilities. Buyer will assume and thereafter
in
accordance with their terms pay, perform, and discharge all
liabilities and
obligations of Sellers arising out of, or incurred under, the
terms of, or in
connection with (a) the Assumed Contracts; (b) accounts payable
of Sellers
incurred by Sellers in the ordinary course of business as set
forth on the Final
Closing Balance Sheet (other than intercompany payables); (c)
the liability of
Sellers for accrued vacation time of Buyer's Employees in the
amounts set forth
in Schedule 3.17(a); and (d) other liabilities set forth on the
Final Closing
Balance Sheet (other than intercompany liabilities) (the
"Assumed Liabilities").
Except for the Assumed Liabilities, Buyer shall not assume, take
subject to or
be liable for any liabilities or obligations of any kind or
nature, whether
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absolute, contingent, accrued, known or unknown, of the
Business, Sellers or any
affiliate of Sellers (including the Subsidiaries) (the "Retained
Liabilities"),
and Sellers shall retain, pay and perform all of such Retained
Liabilities. For
the avoidance of doubt, Assumed Liabilities shall not include
any liability for
Taxes with respect to the Pre-Closing Tax Period and the Keltic
Line of Credit.
1.5 Procedures for Contracts Not Transferable. Except as set
forth on
Schedule 3.8, to the extent the assignment of any Assumed
Contract and the
related assumption by Buyer of the obligations thereunder as
contemplated hereby
requires the consent of any third-party thereto and such consent
is not obtained
on or prior to the Closing Date, Buyer and Sellers agree to use
their
commercially reasonable efforts to obtain such consent within
the thirty-day
period following the Closing Date. To the extent any such
required consent is
not so obtained with respect to any Assumed Contract, Buyer and
Sellers agree to
use their commercially reasonable efforts to provide for Buyer
to obtain all of
the practical benefit of the rights arising under such Assumed
Contract on or
after the Closing Date (whether by subcontracting or otherwise).
To the extent
Buyer receives such practical benefit, Buyer will assume and
perform the
obligations under such Assumed Contract in accordance with the
provisions of
Section 1.4. To the extent Buyer has not been provided with such
rights and
benefit on or before the sixtieth day following the Closing
Date, the rights and
benefits with respect to such Assumed Contract shall not be a
Purchased Asset
and the corresponding obligations and liabilities with respect
to such Assumed
Contract shall not be assumed by Buyer pursuant to Section 1.4,
unless Buyer and
Sellers agree otherwise in writing. With respect to the Leased
Real Property, to
the extent one or more of the leases thereof are not assigned or
subleased to
Buyer according to the terms of such lease (including any
required consent of
the landlord or lessor thereof), Buyer shall and perform
Sellers' obligations
thereunder so long as Buyer has quiet enjoyment and undisturbed
possession of
such Leased Real Property, and in the event Buyer does not have
quiet enjoyment
and undisturbed possession of such Leased Real Property, such
lease or leases
shall not be an Assumed Contract and Buyer shall not assume or
perform any of
Sellers' obligations thereunder from and after the termination
of Buyer's quiet
enjoyment and undisturbed possession.
ARTICLE 2
PURCHASE PRICE; CLOSING
2.1 Purchase Price. In consideration of the transfer to Buyer of
the
Purchased Assets and the Assumed Liabilities and the performance
by Sellers of
their obligations under this Agreement, and subject to the terms
and conditions
hereof, Buyer shall pay to Sellers an amount (the "Purchase
Price") equal to
$1,400,000.00 plus an amount equal to the Net Book Value as of
the Closing.
2.2 Manner of Payment. The Purchase Price shall be paid as
follows:
(a) No later than the five business days prior to the Closing
Date,
Sellers shall deliver to Buyer (i) a balance sheet of Logisoft
as of April 22,
2005 (the "Draft Closing Balance Sheet") prepared in accordance
with GAAP
(except for the exclusion of other financial statements and the
notes required
by GAAP), and (ii) based on the Draft Closing Balance Sheet, a
schedule setting
forth the good faith estimate of Sellers of the Purchase Price
(the "Estimated
Purchase Price"), which shall describe in reasonable detail the
amount of the
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Net Book Value as of March 31, 2005. Buyer shall be entitled to
request, and
Sellers shall provide, all information reasonably required by
Buyer to confirm
that the Draft Closing Balance Sheet has been prepared in
accordance with GAAP
and the accuracy of the information set forth in the Draft
Closing Balance Sheet
and such schedule. Subject to the foregoing, upon the terms and
subject to the
conditions of this Agreement, at the Closing Buyer shall pay to
Sellers an
amount equal to the Estimated Purchase Price less the Escrow
Amount by wire
transfer of immediately available funds to an account or
accounts designated in
writing by Sellers at least two business days prior to the
Closing Date.
(b) Within 45 days after the Closing Date, Buyer shall provide
to Sellers
(i) a balance sheet of Logisoft as of 12:00:00 A.M. on the
Closing Date, (the
"Final Closing Balance Sheet") prepared in accordance with GAAP
(except for the
exclusion of other financial statements and the notes required
by GAAP), and
(ii) based on the Final Closing Balance Sheet, a schedule
setting forth the
Purchase Price, which shall describe in reasonable detail the
amount of the Net
Book Value as of 12:00:00 A.M. on the Closing Date. Sellers
shall be entitled to
request, and Buyer shall provide, all information reasonably
required by Sellers
to confirm that the Final Closing Balance Sheet has been
prepared in accordance
with GAAP and the accuracy of the information set forth in the
Final Closing
Balance Sheet and such schedule. The Draft Closing Balance Sheet
and the Final
Closing Balance Sheet shall be in similar form to the Company's
balance sheet as
of December 31, 2004, which for reference is attached hereto as
Exhibit A.
(c) The Buyer's calculation of the Purchase Price shall be
deemed final
and binding on all Parties unless Sellers object thereto by
giving written
notice (the "Purchase Price Objection Notice") to Buyer prior to
5:00 p.m.,
Charlotte, North Carolina time, on or before the tenth day after
Buyer has
delivered the Final Closing Balance Sheet to Sellers. The
Purchase Price
Objection Notice shall set forth in reasonable detail the basis
for Sellers'
objections. If Buyer and Sellers are unable to resolve the
disagreement within
10 days after delivery of the Purchase Price Objection Notice,
Buyer and Sellers
shall engage a mutually acceptable certified public accounting
firm to resolve
the issue(s) in dispute. If Buyer and Sellers are unable to
agree on an
accounting firm within 15 days after Sellers deliver the
Purchase Price
Objection Notice, Buyer shall provide Sellers with a list of two
certified
public accounting firms within five days thereafter, and Sellers
shall select
one such firm to resolve the dispute and shall notify Buyer of
the selection in
writing within five days of receiving the list. The accounting
firm's review
shall be limited in scope to the disputed issue(s) or amount(s),
and the
accounting firm shall not have the power to alter, modify,
amend, add to or
subtract from any term or provision of this Agreement. Buyer and
Sellers shall
instruct the accounting firm to render its decision within 30
days of its
engagement, and such accounting firm's determination shall be
final and binding
on Buyer and Sellers. Buyer and Sellers shall each pay one half
of the fees and
expenses of the accounting firm unless such accounting firm
determines that
Buyer's calculation of the Purchase Price is understated by
10.0% or more, in
which case Buyer shall pay for the fees and expenses of such
accounting firm.
(d) Within five business days after the Purchase Price is deemed
final and
binding as provided in Section 2.2(c), (i) if the Purchase Price
exceeds the
Estimated Purchase Price, then Buyer shall pay to Sellers such
excess, by wire
transfer of immediately available funds to an account or
accounts that Sellers
shall designate in writing, and (ii) if the Estimated Purchase
Price exceeds the
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Purchase Price, then Sellers and Parent, jointly and severally,
shall pay to
Buyer such excess, by wire transfer of immediately available
funds to an account
or accounts that Buyer shall designate in writing.
(e) The New York State Department of Taxation and Finance (the
"Tax
Department") has issued two Notices of Claim to Purchaser in
respect of the
transactions contemplated by this Agreement. The Parties have
agreed that Seller
shall withhold the Escrow Amount in order to protect Buyer
against Sellers'
nonpayment of any liability imposed by the Tax Department. Upon
the earlier of
(i) receipt from a New York State official of a determination by
the Tax
Department of the Sellers' liability in respect of sales Taxes
for the
Pre-Closing Tax Period and Buyer's receipt of written
confirmation of Sellers'
payment of the full amount of such liability or (ii) an
agreement among the
parties, Buyer shall pay to Seller an amount equal to the Escrow
Amount by wire
transfer of immediately available funds to an account or
accounts designated in
writing by Sellers. In the event Sellers do not pay the full
amount of the
liability to the Tax Department when due, Buyer shall be
entitled to remit to
the Tax Department the amount of such nonpayment by Sellers up
to the Escrow
Amount. For the avoidance of doubt, (x) Sellers shall be liable
for the full
amount of the liability determined by the Tax Department, (y) in
the event the
liability determined by the Tax Department exceeds the Escrow
Amount and Buyer
has paid the Escrow Amount to the Tax Department, Sellers shall
be liable for
and shall pay the Tax Department such excess and (z) upon
payment by Buyer of
the tax liability to the Tax Department, any portion of the
Escrow Amount held
by Buyer in excess of the amount paid by Buyer to the Tax
Department shall
promptly be paid by Buyer to Sellers.
2.3 Allocation of Purchase Price. As promptly as practicable,
but in any
event, within 30 days of the final determination of the Purchase
Price, Buyer
shall cause to be prepared and deliver to Sellers a schedule of
its proposed
allocation (the "Allocation Schedule") for tax purposes of the
Purchase Price
plus the Assumed Liabilities among the Purchased Assets. The
Allocation Schedule
shall be conclusive and binding on Sellers and Buyer, unless
Sellers provide
Buyer with a notice of objection (the "Objection Notice") within
30 days after
Sellers' receipt of the Allocation Schedule, which notice shall
state the
allocation proposed by Sellers (the "Seller Allocation
Schedule"). Buyer shall
have 15 days from receipt of the Objection Notice to accept or
reject the Seller
Allocation Schedule. The Seller Allocation Schedule shall be
conclusive and
binding on Sellers and Buyer unless Buyer provides Sellers with
notice of
objection within 15 days after receipt of the Seller Allocation
Schedule. In the
event that Buyer and Sellers are unable to agree on an
allocation after good
faith negotiations, then Buyer and Sellers agree to be bound by
an appraisal of
such assets by an independent nationally recognized firm of
valuation experts
mutually acceptable to Sellers and Buyer. The cost of such
appraisal shall be
borne equally by Sellers and Buyer. Such appraisal shall be
conclusive and
binding for the purposes of this Section 2.3 on Sellers and
Buyer. Following any
adjustment to the Purchase Price, Buyer and Sellers shall revise
such
allocations in a fashion consistent with the agreed-upon
allocation. Sellers and
Buyer agree to file all income Tax Returns or reports, including
without
limitation IRS Form 8594, for their respective taxable years in
which the
Closing occurs, to reflect the agreed-upon allocation (as such
schedule may be
revised in accordance with this Section 2.3) and agree not to
take any position
inconsistent therewith before any governmental authority charged
with the
collection of any Tax or in any judicial proceeding.
2.4 The Closing. The closing of the transactions contemplated by
this
Agreement (the "Closing") shall take place at the offices of
Mayer, Brown, Rowe
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& Maw LLP in Charlotte, North Carolina, at 11:00 A.M., local
time, on April 26,
2005, or on such other date or at such other time or place as
may be mutually
agreeable to the Parties (such selected date, the "Closing
Date").
2.5 Deliveries by Sellers. At the Closing, Sellers shall
deliver, or cause
to be delivered, to Buyer the following:
(a) one or more bills of sale substantially in the form of
Exhibit B (the
"Bill of Sale") executed by Sellers;
(b) one or more assignment and assumption agreements
substantially in the
form of Exhibit C (the "Assignment and Assumption Agreement")
executed by
Sellers;
(c) an assignment of lease in form and substance reasonably
satisfactory
to Buyer (the "Assignment of Lease") executed by Logisoft,
conveying to Buyer
leasehold title to the Leased Real Property, without any
exceptions other than
Permitted Liens;
(d) a noncompetition agreement substantially in the form of
Exhibit E (the
"Noncompetition Agreement"), executed by Sellers and Parent;
(e) a guarantee agreement executed by Parent pursuant to which
Parent will
agree to fully and unconditionally guarantee the payment and
performance of all
liabilities and obligations of Sellers under this Agreement and
any related
agreement;
(f) an updated Schedule 3.14 as of the Closing Date listing
all
liabilities of Sellers and the then current balance, accrued
interest through
the Closing Date and prepayment and other costs or expenses
payable by Sellers
in connection with the such liabilities;
(g) copies, certified by an officer of Sellers, of (w) the
articles of
incorporation of Sellers, certified as of a recent date by the
New York
Secretary of State, (x) Sellers' bylaws, (y) resolutions of the
board of
directors and shareholders of Sellers authorizing the execution,
delivery and
performance of this Agreement, of all instruments and documents
to be delivered
in connection herewith and the transactions contemplated hereby,
and (z) a
certificate of existence as of recent date of Sellers issued by
the New York
Secretary of State;
(h) certificates representing all capital stock or membership
interests of
the Subsidiaries, duly endorsed from transfer to Buyer;
(i) the certificate described in Section 6.3(a);
(j) title documentation for any titled vehicles included in the
Purchased
Assets, duly endorsed for transfer;
(k) evidence of the transfer of the Cash from Sellers to
Buyer;
(l) evidence of the release of the personal guarantee of the
Letters of
Credit as provided in Section 5.9; and
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(m) all other documents, certificates, instruments and writings
required
hereunder to be delivered to Buyer, or as may reasonably be
requested by Buyer
for the purpose of (i) evidencing the accuracy of any of
Sellers'
representations and warranties, (ii) evidencing the performance
by Sellers of,
or compliance by Sellers with, any covenant or obligation
required to be
performed or complied with by Sellers, (iii) evidencing the
satisfaction of any
condition referred to in this Agreement or (iv) otherwise
facilitating the
consummation or performance of the transactions contemplated by
this Agreement.
2.6 Deliveries by Buyer. At the Closing, Buyer shall deliver, or
cause to
be delivered, to Sellers the following:
(a) payment of the Purchase Price in accordance with Section
2.2(a);
(b) the Assignment and Assumption agreement executed by
Buyer;
(c) the Assignment of Lease, executed by Buyer;
(d) the Noncompetition Agreement, executed by Buyer;
(e) copies, certified by a Manager of Buyer, of (i) Buyer's
operating
agreement, (ii) Buyer's certificate of formation, certified as
of a recent date
by the Delaware Secretary of State, (iii) resolutions of the
managers and
members of Buyer authorizing the execution, delivery and
performance of this
Agreement, of all instruments and documents to be delivered in
connection
herewith and the transactions contemplated hereby, and (iv) a
certificate of
existence as of recent date of Buyer issued by the Delaware
Secretary of State;
(f) the certificate described in Section 6.2(a); and
(g) all other documents, certificates, instruments and writings
required
hereunder to be delivered to Sellers, or as may reasonably be
requested by
Sellers for the purpose of (i) evidencing the accuracy of any of
Buyer's
representations and warranties, (ii) evidencing the performance
by Buyer of, or
compliance by Buyer with, any covenant or obligation required to
be performed or
complied with by Buyer, (iii) evidencing the satisfaction of any
condition
referred to in this Agreement or (iv) otherwise facilitating the
consummation or
performance of the transactions contemplated by this
Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers jointly and severally represent and warrant to Buyer as
follows:
3.1 Organization. Each Seller is a corporation company duly
organized,
validly existing and in good standing under the laws of the
State of New York.
Sellers have the requisite power and authority to own, lease and
operate their
assets, and to carry on their business as now being conducted.
Each of the
Subsidiaries is a limited liability company duly formed under
the laws of its
jurisdiction of formation.
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3.2 Authorization; Enforceability. Sellers have the requisite
corporate
power and authority to execute and deliver this Agreement and to
consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement
and the consummation of the transactions contemplated hereby by
Sellers have
been duly and validly authorized by all necessary action on the
part of Sellers,
and this Agreement has been duly and validly executed and
delivered by Sellers
and constitutes a legal, valid and binding obligation of Sellers
enforceable
against Sellers in accordance with its terms, except as
enforcement may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or
similar laws affecting the rights of creditors generally or the
fact that
specific performance is a remedy within the discretion of any
court.
3.3 Consent and Approvals; No Violations. No permit, consent,
approval or
authorization of, or declaration to or filing with, any
governmental or
regulatory authority is required in connection with any aspect
of the execution,
delivery and performance of this Agreement. The execution,
delivery and
performance of this Agreement by Sellers will not (a) conflict
with any
provision of the articles of incorporation or bylaws of Sellers
or with the
articles of organization or operating agreement of the
subsidiaries, (b) result
in a default (or give rise to any right of termination,
cancellation or
acceleration) under any of the terms, conditions or provisions
of any note,
bond, mortgage, indenture, agreement, lease or other instrument
or obligation
relating to the Purchased Assets or to which any of the
Purchased Assets may be
subject, except for such defaults (or rights of termination,
cancellation or
acceleration) as to which requisite waivers or consents have
been obtained, (c)
result in the creation or imposition of any lien, security
interest, pledge,
mortgage, claim, option, lease or sublease, conditional sales
agreement, title
retention agreement, charge, restriction, title exception or
other encumbrance
("Liens") on any Purchased Asset pursuant to any indenture,
mortgage, deed of
trust, lease, note, or other contract, agreement or instrument
to which either
Seller is a party or to which any of the Purchased Assets may be
subject, or (d)
violate any law, statute, rule, regulation, order, writ,
injunction or decree of
any federal, state or local governmental authority or agency
("Laws").
3.4 Financial Statements. Attached as Schedule 3.4 are (i) the
balance
sheet and related statements of income and shareholders' equity
of Logisoft for
the fiscal years ended June 30, 2003, and June 30, 2004, and
(ii) the unaudited
balance sheet and related statements of income and shareholder's
equity of
Logisoft as of February 28, 2005 (the "Interim Financial
Statements" and
collectively with item (i) the "Financial Statements"). The
Financial Statements
fairly present the results of operations and financial condition
of Sellers as
of the dates and for the periods referred to in the Financial
Statements in
accordance with GAAP consistently applied throughout the periods
involved,
except, in the case of the Interim Financial Statements, for the
absence of
notes and subject to normal year-end adjustments.
3.5 Absence of Certain Changes or Events. Except as set forth on
Schedule
3.5, since December 31, 2004, Sellers have conducted their
business only in the
ordinary course and there has been no (i) damage, destruction or
casualty loss,
whether covered by insurance or not, affecting the Purchased
Assets or the
Business; (ii) entry into, termination of (except by reason of
the occurrence of
a contractually specified termination date), receipt of notice
of termination of
or amendment to any contract or license or permit to which
either Seller is a
party; (iii) creation of, or assumption of, any Lien upon any of
the Purchased
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Assets; or (iv) sale, assignment, lease, transfer or other
disposition of any of
the assets of the Business (other than the sale of inventory in
the ordinary
course of business).
3.6 Real Property.
(a) Each lease agreement with respect to the Leased Real
Property is
identified on Schedule 1.2(d). Each such lease agreement grants
Logisoft the
exclusive right to occupy the demised premises thereunder, and
Logisoft enjoys
peaceful and undisturbed possession under each such lease of the
Leased Real
Property. Logisoft has good and valid title to the leasehold
estate under each
such lease of the Leased Real Property, free and clear of all of
the Liens, and,
to the Logisoft's knowledge, the landlord under each such lease
has valid, good
and marketable fee simple title to all the real property that is
the subject of
such lease, free and clear of all of the Liens other than liens
for taxes not
yet due and payable and mortgage Liens that are subject to a
nondisturbance
agreement pursuant to which the lender holding such mortgage
Lien has agreed in
writing that the leasehold interest of Logisoft in such property
shall not be
disturbed upon any foreclosure of such lien, any conveyance in
lieu of
foreclosure or the exercise of any other right or remedy
available to such
lender. Logisoft has delivered or made available to Buyer copies
of the leases
and other instruments (whether or not recorded) by which
Logisoft acquired such
Leased Real Property interests, and copies of all title
insurance policies,
opinions, abstracts and surveys in the possession of Logisoft
and relating to
such leasehold property or interests.
(b) Sellers do not own or hold, and are not obligated under or a
party to,
any option, right of first refusal or other contractual right to
purchase,
acquire, sell or dispose of the Property, or any portion thereof
or interest
therein.
(c) Sellers do not owe any money to any architect,
contractor,
subcontractor or materialmen for labor or materials performed,
rendered or
supplied to or in connection with the Property, and there is no
construction or
other improvement work being done at nor are there any
construction or other
improvement materials being supplied to the Property.
3.7 Zoning and other Governmental Actions. Except as identified
on
Schedule 3.7, to the knowledge of Sellers, (i) the zoning of the
Leased Real
Property permits the presently existing improvements and the
continuation of the
Business presently being conducted on the Leased Real Property
as a conforming
use, (ii) there are no pending changes in laws (including
zoning) that will
render any part of the Business as presently conducted illegal,
and (iii) there
is no plan, study or effort by any governmental authority or any
Person that in
any way would materially and adversely affect all or any portion
of the
Purchased Assets.
3.8 Assumed Contracts. Sellers have delivered to Buyer a true
and correct
copy of each written Assumed Contract and a summary of each oral
Assumed
Contract. Schedule 3.8 contains an accurate and complete list of
all of the
Assumed Contracts, whether oral or written. Each Assumed
Contract is valid,
binding, in full force and effect and enforceable by Seller and,
to the
knowledge of Sellers, each other party thereto. Sellers are not
in default under
any Assumed Contract nor does there exist any condition or event
that after
notice, lapse of time or both would constitute a default by
Sellers under any
Assumed Contract. To the knowledge of Sellers, no other party to
any Assumed
Contract is in default or breach, or alleged to be in default or
breach, under
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any Assumed Contract nor does there exist any condition or event
which, after
notice, lapse of time or both, would constitute a default or
breach by any other
party to any Assumed Contract. Sellers have not received notice
that it is in
default under or in breach of any Assumed Contract or of the
election of any
party to any Assumed Contract to cancel, terminate or not to
renew any such
Assumed Contract whether in accordance with the terms of any
Assumed Contract or
otherwise. Sellers have not given notice to any other party to
any Assumed
Contract that such other party is in default thereunder or in
breach thereof or
given notice of the termination thereof. The enforceability of
the Assumed
Contracts (including the enforceability as owned by Buyer after
the Closing)
will not be affected by the transactions contemplated by this
Agreement. Except
as indicated on Schedule 3.8, Sellers have the right to assign
to Buyer each of
the Assumed Contracts without the consent of any other Person
and, upon such
assignment, at the Closing in the manner contemplated by this
Agreement, Buyer
shall have all of the rights of Sellers thereunder. All
obligations and
liabilities of Sellers under the Assumed Contracts have been
accrued on the
Financial Statements.
3.9 Litigation. Except as disclosed in Schedule 3.9, there are
no civil,
criminal or administrative actions, suits or investigations
pending or, to
Sellers' knowledge, threatened against Sellers in connection
with the operation
of the Business, involving the Purchased Assets or that could
prevent Buyer from
acquiring the Purchased Assets from Sellers according to the
terms set forth in
this Agreement.
3.10 Taxes.
(a) All federal, state, and local Tax returns, Tax reports and
information
returns or extensions required to be filed by Sellers or the
Subsidiaries have
been timely filed with the appropriate Tax authorities and all
applicable Taxes
that are due and payable, have been paid. Since December 31,
2001, neither
Sellers nor the Subsidiaries have incurred any liability for
Taxes other than in
the ordinary course of business. No income tax return of Sellers
or the
Subsidiaries is currently being audited by the Internal Revenue
Service or any
comparable state or foreign agency. There are no disputes
pending in respect of,
or claims asserted for, Taxes upon Sellers or the Subsidiaries
nor are there any
pending or, to the knowledge of Sellers, threatened audits or
investigations or
outstanding matters under discussion with any taxing authorities
with respect to
the payment of Taxes or Sellers' or the Subsidiaries' Tax
returns. There are no
liens with respect to Taxes (except for liens for taxes,
assessments or other
governmental charges not yet due and payable) upon any of the
Purchased Assets.
To the knowledge of Sellers, no facts exist or have existed that
would
constitute grounds for the imposition of any lien with respect
to Taxes upon any
of the Purchased Assets or that would otherwise obligate Buyer
to pay any Taxes
related to or arising out of the conduct of the Business of
Sellers prior to the
Closing. (b) Neither Parent nor Sellers nor the Subsidiaries
have waived any
statute of limitations in respect of Taxes or agreed to any
extension of time
with respect to a Tax assessment of deficiency.
(c) The amount provided on the Final Closing Balance Sheet for
all Taxes
will be adequate to cover all unpaid liabilities for Taxes,
whether or not
disputed, that have accrued with respect to or are applicable to
Pre-Closing Tax
Period and for which the Sellers or the Subsidiaries may be
directly or
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contingently liable in its own right or as a transferee of the
assets of, or
successor to, any Person.
(d) Neither Seller is a foreign person within the meaning of
section
1445(f)(3) of the Code.
(e) All Taxes which Sellers or the Subsidiaries are required by
law to
withhold or collect, including without limitation,
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