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** CERTAIN CONFIDENTIAL
MATERIAL CONTAINED IN THIS
DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE
406 OF THE SECURITIES ACT OF
1933, AS AMENDED.
EXHIBIT 10.13
EXECUTION COPY
ASSET PURCHASE AGREEMENT
between
INFOBEAT INC.
(the Seller)
and
SONY MUSIC, A GROUP OF SONY MUSIC ENTERTAINMENT INC.
(the Buyer)
Dated December 15, 1998
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ASSET PURCHASE AGREEMENT
AGREEMENT (the "AGREEMENT"), dated December 15, 1998, among INFOBEAT
INC., a Delaware corporation (the "SELLER") and SONY MUSIC, A GROUP OF SONY
MUSIC ENTERTAINMENT INC., a Delaware corporation (the "BUYER").
WHEREAS, Seller desires to sell, and Buyer desires to purchase,
substantially all of the assets of Seller relating to the operation of Seller's
Publishing Business (as hereinafter defined), upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants and agreements herein contained, the parties hereto hereby
agree as follows:
ARTICLE I
DEFINITIONS
The capitalized terms used in this Agreement shall have the meanings
specified in this ARTICLE I. As used in this Agreement, all pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, neuter,
singular, or the plural, as the context may require. The words "this Agreement,"
"herein," "hereof" and "hereunder" and other words of similar import refer to
this Agreement as a whole, including the Exhibits and Schedules hereto, as the
same may from time to time be amended or supplemented. The word "including" when
used herein is not intended to be exclusive, or to limit the generality of the
preceding words, and means "including, without limitation."
"ACTIVE SUBSCRIBERS" shall mean a unique e-mail address that is enabled
to receive e-mail from the Publishing Business and, as of the Closing Date, (i)
is subscribed to at least one service of the Publishing Business and (ii) has
been sent an e-mail of the latest issue of the service for which it is
subscribed.
"ADJUSTMENT FACTOR" shall have the meaning set forth in SECTION 2.5(B).
"ADVERTISING AGREEMENT" shall mean any Contract pursuant to which
Seller has agreed to provide advertising space on the Web Site or on e-mails
distributed as part of the Publishing Business.
"AFFILIATE" shall mean, with respect to any Person, a Person who
directly or indirectly, through one or more intermediaries, has control of, is
controlled by, or is under common control with, such Person. For these purposes,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management of any Person, whether through the
ownership of voting securities, by contract or otherwise.
"ASSETS" shall have the meaning set forth in SECTION 2.1.
"ASSUMED LIABILITIES" shall have the meaning set forth in SECTION 2.3.
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"BROADCAST SERVICES" shall have the meaning set forth in SECTION
9.3(c).
"BUSINESS DAY" shall mean a day other than Saturday or Sunday on which
banks are open for business in New York City.
"BUYER" shall have the meaning set forth in the Preamble to this
Agreement.
"BUYER INDEMNITEES" shall mean the Buyer, Buyer's current and future
Affiliates and their respective successors and assigns.
"CLAIM" shall have the meaning set forth in SECTION 11.2.
"CLOSING" shall have the meaning set forth in SECTION 2.4.
"CLOSING ▇▇▇▇ SERVICES" shall have the meaning set forth in SECTION
9.3(c).
"CLOSING DATE" shall have the meaning set forth in SECTION 2.4.
"COMMERCE AGREEMENT" shall mean any contract pursuant to which Seller
receives payment (including payment which Seller has waived) for delivering
visitors to a Web site of a third party.
"CONTENT" shall mean any graphical, audio, visual, audiovisual,
textual, or multimedia materials displayed or displayable on and over the
Internet or distributed by e-mails.
"CONTENT AGREEMENT" shall mean any Contract pursuant to which Seller
has acquired any right to Content for use in the Publishing Business, excluding
the Excluded Assets.
"CONTRACT" shall mean any contract, indenture, mortgage, deed of trust,
note, instrument, lease, license, arrangement or other agreement, whether oral
or written, including without limitation, all Content Agreements, Subscriber
Agreements, Technology Licenses, Advertising Agreements, Commerce Agreements and
Distribution Agreements.
"CORE PERSONNEL" shall have the meaning set forth in SECTION 9.3(A).
"DISTRIBUTION AGREEMENT" shall mean any agreement pursuant to which
Seller has acquired rights to distribute the Web Site or any other element of
the Publishing Business, including any agreement for co-branded Web sites,
whether such distribution is by means of a third Person Web site or otherwise,
or any other agreement for Subscriber acquisition.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"EXCLUSIVE NEGOTIATION PAYMENT" shall mean an amount equal to one
hundred percent (100%) of any fee paid by Buyer to Seller for the right to
exclusive negotiation with respect to the Assets and Service Bureau Business as
set forth in paragraph 10(g) of the Letter of Intent, provided that, if the
Closing shall occur after December 31, 1998, the Exclusive Negotiation Payment,
for purposes of calculating the Initial Payment, shall equal zero (0).
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"EXCLUDED ASSETS" shall have the meaning set forth in SECTION 2.2.
"EXCLUDED LIABILITIES" shall have the meaning set forth in SECTION 2.3.
"FINANCIAL STATEMENTS" shall have the meaning set forth in SECTION
3.11.
"GAAP" shall mean generally accepted accounting principles in the
United States of America, as in effect from time to time, applied on a
consistent basis.
"GOVERNMENTAL AUTHORITY" shall mean any federal, state, local, foreign
or other governmental or administrative body, instrumentality, department or
agency or any court, tribunal, administrative hearing, arbitration panel,
commission or other similar dispute resolving panel or body.
"HTML E-MAILS" shall mean the electronic mail in HTML format delivered
to Subscribers as part of the Publishing Business.
"INFOBEAT DOMAIN NAMES" shall mean all domain names used by Seller in
connection with the Publishing Business, including the domain names set forth in
SCHEDULE 3.5(b).
"INFOBEAT MARKS" shall mean all trade names, trademarks and service
marks used by Seller in connection with the Publishing Business and all marks
and logos associated therewith, including such trade names, trademarks and
service marks set forth in SCHEDULE 3.5(b).
"INFOBEAT SOFTWARE" shall mean the computer programs developed or
designed by employees of the Seller, or by consultants on Seller's behalf, or
otherwise acquired, and owned by Seller, used in the Publishing Business, other
than the Excluded Assets.
"INFOBEAT TECHNOLOGY" shall mean the computer hardware, processes,
inventions and technology, other than the InfoBeat Software, designed or
developed by Seller, or by consultants on Seller's behalf, or otherwise
acquired, and owned by Seller, used in the Publishing Business, other than the
Excluded Assets.
"INDEMNIFIED PARTY" shall have the meaning set forth in SECTION 11.1.
"INITIAL PAYMENT" shall have the meaning set forth in SECTION 2.5(a).
"INDEMNIFYING PARTY" shall have the meaning set forth in SECTION 11.1.
"INTELLECTUAL PROPERTY RIGHTS" shall mean all industrial and
intellectual property rights of Seller used in the Publishing Business other
than such intellectual property rights that are Excluded Assets, including
patents, patent applications, patent rights, trademarks, trademark applications,
trade names, service marks, service ▇▇▇▇ applications, copyrights, copyright
registrations, know-how, certificates of public convenience and necessity,
franchises, licenses, trade secrets, proprietary processes, computer programs
and other computer software, technology and formulae, including any and all
rights of Seller with respect thereto as a licensee.
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"LIEN" shall mean any mortgage, charge, pledge, lien, security
interest, claim, encumbrance or restriction of any kind or nature.
"LETTER OF INTENT" shall mean the Letter of Intent Subject to Contract,
dated November 11, 1998, between Buyer and Seller.
"MATERIAL ADVERSE EFFECT" shall mean any event or circumstance which
results in, or is reasonably likely to result in, a material adverse effect on
the value of the Assets, any of the rights in the Assets herein granted to Buyer
or the Publishing Business.
"OFFSET AMOUNT" shall have the meaning set forth in SECTION 2.10.
"PERMITTED USE PERIOD" shall mean the period commencing on the Closing
Date and ending on the earlier to occur of (a) the date which is six (6) months
after the Closing Date and (b) the date on which Seller shall acquire ownership
of or a license to use a trademark for use in connection with the Service Bureau
Business which does not incorporate the words "InfoBeat" or "Mercury" (or any
variant thereof) and is not confusingly similar to any of the InfoBeat Marks or
InfoBeat Domain Names.
"PERSON" shall mean any individual, partnership, corporation, limited
liability company, unincorporated organization or association, trust, or other
entity.
"POST CLOSING PAYMENT" shall have the meaning set forth in SECTION
2.5(a).
"PROCEEDING" shall mean any claim, audit, threat, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding) or prosecution.
"PUBLISHING BUSINESS" shall mean the Internet-based service operated by
Seller as of the date of execution of the Letter of Intent, which provides daily
customized news and information e-mails to a base of Subscribers on topics that
include entertainment, sports, news, finance, snow and weather, including the
Web Site.
"PURCHASE PRICE" shall have the meaning set forth in SECTION 2.5(a).
"PURCHASE PRICE REDUCTION" shall have the meaning set forth in SECTION
2.5(b).
"REDUCTION RATIO" shall have the meaning set forth in SECTION 2.5(b).
"SELLER" shall have the meaning set forth in the Preamble to this
Agreement.
"SELLER INDEMNITEES" shall mean the Seller, the Seller's current and
future Affiliates and their respective successors and assigns.
"SERVICE AGREEMENT" shall mean the Service Agreement in the form
attached as EXHIBIT A hereto, between Buyer and Seller, pursuant to which Seller
shall furnish to Buyer services of the Service Bureau Business, including,
without limitation, bulk e-mail distribution, daily back-ups of the database,
database security, a disaster recovery plan, customer service and support and
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engineering support, and shall include the warrant to be issued to Buyer
pursuant to Section 12.2 of the Service Agreement the form of which is attached
as Exhibit H thereto.
"SERVICE BUREAU BUSINESS" shall mean the business operated by Seller
which provides bulk e-mail distribution services currently under the name
"InfoBeat Express".
"STATEMENT" shall have the meaning set forth in SECTION 2.5(b).
"SUBSCRIBER" shall mean any registered subscriber of the Publishing
Business.
"SUBSCRIBER AGREEMENT" shall mean any Contract setting forth the terms
and conditions pursuant to which Subscribers subscribe to the transmission of,
request e-mail from, or consent to the transmission of e-mail from, the
Publishing Business.
"SUBSCRIBER DATA" shall mean the names of each Subscriber, all
information contained in the Subscriber profile completed by each Subscriber,
and any other data concerning Subscribers and all other databases and other
information derived therefrom or related thereto, including the database schema
with respect to the Subscribers as such database schema shall exist on the
Closing Date.
"SYSTEMS" shall have the meaning set forth in SECTION 3.16.
"TAX" or "TAXES" shall mean any and all taxes, charges, fees, levies or
other assessments of any nature whatsoever (including, without limitation, all
federal, state, local and foreign income taxes, estimated taxes, withholding
taxes, excise taxes, sales taxes, use taxes, transfer taxes, gross receipts
taxes, franchise taxes, employment and payroll related taxes, property taxes and
import duties) together with any related penalties, interest and additions to
taxes.
"TECHNOLOGY LICENSE" shall mean any Contract pursuant to which Seller
has acquired any right with respect to any invention, process, design, computer
program, computer hardware or other form of technology for use in the Publishing
Business.
"TOTAL SUBSCRIBERS" shall mean all Active Subscribers and other unique
e-mail addresses that were once Active Subscribers but are no longer Active
Subscribers.
"WEB SITE" shall mean the multimedia, interactive computer program, or
group of programs, designed to run on the World Wide Web protocol of the
Internet, and currently accessible at the url: ▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇ and all
elements thereof, including without limitation, all Content displayed or
displayable thereon, any and all rights therein under any copyright, patent,
trademark, trade secret or other laws affecting intellectual property, any
associated computer programs (including any server applications) and any
proprietary information contained thereon (other than the Excluded Assets).
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ARTICLE II
SALE AND PURCHASE OF ASSETS
2.1 SALE AND PURCHASE OF ASSETS. On the Closing Date, Seller shall
convey, sell, transfer, assign and deliver to Buyer or its designee, all of
Seller's right, title and interest in and to the assets and properties of every
kind and description, wherever located, used, owned or held by Seller for use in
the Publishing Business, tangible and intangible, and whether or not
specifically referred to herein (collectively, the "ASSETS"), including, without
limitation, the Subscriber Data (which shall be electronically transferred); all
of Seller's rights under all Subscriber Agreements, Content Agreements,
Technology Licenses, Distribution Agreements, Advertising Agreements and
Commerce Agreements and other Contracts relating to the Publishing Business; all
of Seller's right, title and interest in and to the Content; all of Seller's
rights with respect to any InfoBeat Technology and InfoBeat Software, the
InfoBeat Marks and InfoBeat Domain Names and any variations or derivations
thereof, in perpetuity, including all logos, trademarks and other materials
containing such names and all good will of the Publishing Business as a going
concern; all other Intellectual Property Rights; the Web Site; all vendor and
customer lists relating to the Publishing Business (which shall be
electronically transferred); works in progress and computerized information with
respect to the Publishing Business; and any certifications, licenses, permits,
authorizations and approvals issued by any domestic or foreign Governmental
Authority in connection with the Publishing Business; all of the Seller's claims
and causes of action against others arising out of or relating to the Publishing
Business; all of the Seller's rights, privileges and franchises relating to or
arising out of the Publishing Business; and originals or copies of all of the
Seller's books, records, forms, promotional materials and documents relating to
the Publishing Business or the Assets.
2.2 EXCLUDED ASSETS. Seller shall retain all of its right, title and
interest in and to all of Seller's assets other than the Assets, including,
without limitation, the following assets (the "EXCLUDED ASSETS"):
(a) Cash and cash equivalents;
(b) Accounts receivable;
(c) Any and all leases of real property; and
(d) All assets of the Service Bureau Business including, without
limitation, the intellectual property rights set forth on SCHEDULE
2.2 hereof.
2.3 ASSUMPTION OF LIABILITIES. Subject to the terms and conditions set
forth herein, on the Closing Date, Buyer or its designee shall assume all
monetary and non-monetary obligations of Seller arising subsequent to the
Closing Date and to be performed after the Closing Date, under the Subscriber
Agreements, as well as the Content Agreements, Technology Licenses, Distribution
Agreements, Advertising Agreements, Commerce Agreements and other Contracts set
forth in SCHEDULE 3.4(a), 3.4(b), 3.4(c), 3.4(d), and 3.4(e) (the "ASSUMED
LIABILITIES"). Seller acknowledges that it shall remain liable for all other
monetary and non-monetary obligations under any Contract not specifically
included in the Assumed Liabilities;
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provided that if any Contract has been inadvertently excluded from the
aforementioned Schedules, Buyer shall be entitled to the benefits of such
Contract so long as it agrees to accept the monetary and non-monetary
obligations of Seller under such Contract arising subsequent to, and to be
performed after, the date from which Buyer begins to receive the benefits
thereof. Except for the Assumed Liabilities, Buyer shall not incur or assume any
of Seller's liabilities or obligations of any kind or nature whatsoever, whether
known or unknown, liquidated or contingent, with respect to the Assets or
otherwise. Without limiting the generality of the foregoing, Buyer shall not
assume the following liabilities (the "EXCLUDED LIABILITIES"):
(a) any liability or obligation, direct, indirect or contingent, of the
Seller to the extent the same was required to be (without giving effect to any
applicable grace period) paid, performed or discharged prior to the Closing Date
including, without limitation, any liability for breach of any Contract on or
prior to the Closing Date;
(b) any liability or obligation, direct, indirect or contingent, of the
Seller to any Affiliate of Seller, for borrowed money or otherwise;
(c) any liability or obligation, direct, indirect or contingent, of the
Seller arising out of or in connection with any Claim, or Proceeding (regardless
of whether made or instituted prior to or subsequent to the Closing Date) to the
extent arising out of or in connection with any transaction or event which
occurred on or prior to the Closing Date (including, without limitation, in
respect of any audit by any Person relating to royalties or other amounts
payable pursuant to a Subscription Agreement, Content Agreement, Technology
License, Distribution Agreement, Advertising Agreement, Commerce Agreement or
other Contract, to the extent that such audit relates to royalties or other
amounts accrued prior to the Closing Date);
(d) any liability or obligation, direct, indirect or contingent,
arising under or with respect to any employment agreements and employee benefit
and pension plans, including any liability arising under or with respect to any
employee benefit plan within the meaning of Section 3(3) of ERISA at any time
sponsored by, maintained by or contributed to by the Seller or any Affiliate of
the Seller or with respect to which the Seller or any Affiliate at any time had
any obligation to make any contributions;
(e) any liability or obligation, direct, indirect or contingent, of the
Seller for Taxes, except as set forth in SECTION 2.7;
(f) any liability or obligation, direct, indirect or contingent, of the
Seller arising out of or in connection with non-compliance with any law,
regulation or order applicable to the Publishing Business, the Assets or the
Excluded Assets (including, without limitation, those relating to occupational
safety and health, privacy, protection of minors, foreign and corrupt practices,
antitrust, hiring, wages, hours, employee benefit plans and programs, collective
bargaining, exchange control, environmental conditions, or the payment of
withholding, social security and other Taxes) on or prior to the Closing Date;
or
(g) any liability or obligation, direct, indirect or contingent,
arising out of or relating to any Excluded Asset.
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2.4 Closing. The closing (the "CLOSING") of the transactions
contemplated in this ARTICLE II shall take place at 10:00 a.m. on the fifth
Business Day after the fulfillment or waiver of the last of the conditions
specified in ARTICLE VII OR VIII hereof, but in no event later than December 31,
1998, at the offices of Rosenman & Colin LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇. The date on which the Closing shall take place is herein referred to
as the "CLOSING DATE". The Closing may be held at such other date, time and
place as may be agreed upon in writing by the parties.
2.5 Purchase Price.
(a) In consideration of Seller's representations, warranties and
agreements hereunder and Buyer's purchase of the Assets, Buyer, or its designee,
shall pay to Seller (i) on the Closing Date, the sum of Five Million
($5,000,000) Dollars, less the amount of any Exclusive Negotiation Payment (the
"INITIAL PAYMENT") and (ii) promptly after the date that is six (6) months after
the Closing Date, the sum of One Million Five Hundred Thousand ($1,500,000)
Dollars (the "POST CLOSING PAYMENT" and, together with the Initial Payment, the
"PURCHASE PRICE"). The Purchase Price shall be reduced by the Purchase Price
Reduction.
(b) On or prior to December 15, 1998 (or, if earlier, the Closing
Date), Seller shall deliver to Buyer a statement setting forth (i) the number of
Active Subscribers and Total Subscribers and (ii) the number of HTML E-Mails
opened by Subscribers, during the period from and including November 1, 1998 to
and including December 15, 1998 (the "STATEMENT"). Buyer shall have the right to
review the Statement and to directly, or through an independent accounting firm
retained by Buyer, audit the records of the Seller upon reasonable notice,
during normal business hours, in order to verify the accuracy of such Statement.
If Buyer does not object to any items contained in the Statement within five (5)
days after receipt thereof, the Statement shall be final and binding on the
parties. In the event Buyer objects to any items contained in the Statement,
Buyer and Seller shall attempt in good faith to resolve such objections and, if
so resolved, the Statement shall be deemed modified to reflect the agreed
resolution. If, after ninety (90) days, Buyer and Seller shall not be able to
resolve such objections, Buyer and Seller shall submit such dispute for
determination to a member of a "big five" accounting firm or representative from
▇▇▇▇▇▇▇ I/Pro or a similar auditing firm located in New York, New York,
satisfactory to both Buyer and Seller. The decision of such arbitrator shall be
binding on the parties and upon such decision, the Statement shall be deemed
modified to reflect such decision. The Purchase Price shall be reduced by an
amount equal to the product obtained by multiplying (a) the Purchase Price by
(b) the Reduction Ratio (the reduction as so calculated, the "PURCHASE PRICE
REDUCTION"). The "REDUCTION RATIO" is the sum derived by subtracting one (1)
from the quotient of (w) the number of HTML E-Mails opened by Subscribers as set
forth in the Statement divided by (x) 22,500,000; provided, however, that, if
the number of Active Subscribers is greater than or equal to [ ** ] and
the number of Total Subscribers is greater than or equal to [ ** ], then
the Purchase Price Reduction shall be decreased by the amount by which the
Reduction Ratio exceeds the result of subtracting one (1) from the quotient of
(y) the number of Total Subscribers divided by (z) [ ** ] (the "ADJUSTMENT
FACTOR"). In no event, however, shall the Adjustment Factor be greater than 0.2.
Examples of the calculation of the Purchase Price Reduction are set forth on
EXHIBIT B. Seller shall pay over the Purchase Price Reduction to Buyer by wire
transfer to an account designated by Buyer within one (1) Business Day after the
amount thereof shall have been determined,
** INDICATES CONFIDENTIAL TREATMENT REQUESTED
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provided that the Purchase Price Reduction may, at Buyer's option, be offset
against the Service Fee (as defined in the Service Agreement) under the terms of
the Service Agreement for the third and fourth quarterly period of the first
Contract Year (as defined in the Service Agreement) thereof, and for all or any
portion of the Service Fee for the second and third Contract Years, up to the
full amount of the Purchase Price Reduction; and, provided further that if the
Buyer has not yet paid the Post Closing Payment, the Purchase Price Reduction
may, at Buyer's option, be offset against the Post Closing Payment.
(c) The Initial Payment shall be reduced by an amount equal to the
product obtained by multiplying (i) the total compensation, cash or otherwise,
received by Seller pursuant to the Advertising Agreements which have been
delivered as of the Closing Date and (ii) one (1) minus the quotient obtained by
dividing (a) the number of guaranteed impressions, downloads or new customer
bounties under such Advertising Agreements which have been delivered as of the
Closing Date by (b) the total number of guaranteed impressions, downloads or new
customer bounties under such Advertising Agreements (provided such amount is not
less than zero (0)), pursuant to a procedure to be negotiated in good faith by
the parties prior to the Closing.
2.6 Nonassignable Assets and Nonassumable Liabilities. Subject to
SECTION 7.7 hereof, to the extent that the assignment or attempted assignment of
any Asset, or the assumption of any Assumed Liability hereunder would be invalid
or would constitute a breach of any Contract or other commitment to which Seller
is a party or by which it or any of the Assets may be bound, or if any consent
of a licensor would be required in connection with the assignment of any such
Contract or commitment, this Agreement shall not constitute an assignment of
such Asset or assumption of such Assumed Liability; provided, however, that any
such Asset or Assumed Liability, as applicable, shall be held and/or received by
Seller for the benefit of Buyer, its successors and assigns. Seller will use its
reasonable efforts to obtain all consents required for the assignment of any
Asset to or the assumption of any Assumed Liability by Buyer. Until such consent
is obtained, Seller will cooperate with Buyer, its successors and assigns in any
reasonable arrangement designed to provide for Buyer, its successors and assigns
the benefit of such Asset or Assumed Liability, as applicable, including
enforcement for the benefit of Buyer, its successors and assigns, of any and all
rights of Seller arising out of the breach or cancellation of any Contract or
other commitment constituting such Asset or Assumed Liability, as applicable.
2.7 Transfer Tax. Buyer shall be responsible for the payment of any and
all sales, use, recordation, gains, transfer or similar Taxes or fees imposed by
the State of New York or any locality therein with regard to the sale of the
Assets hereunder, and shall deliver copies of any Tax returns or other
documentation filed with respect thereto to Seller promptly after filing. Seller
shall be responsible for the payment of any and all sales, use, recordation,
gains, transfer or similar Taxes or fees imposed by the State of Colorado or any
locality therein with regard to the sale of the Assets hereunder, and shall
deliver copies of any Tax returns or other documentation filed with respect
thereto to Buyer promptly after filing
2.8 Seller's Rights to Use Names. Notwithstanding the provisions of
SECTION 2.1 and SECTION 2.3, Seller, as long as it shall comply with the terms
and conditions of this Agreement, shall have (i) a limited, worldwide, exclusive
license to use the ▇▇▇▇ "InfoBeat
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Express" and the domain name "▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇" solely in connection with the
marketing of the Service Bureau Business and solely for the Permitted Use
Period, and (ii) a limited, non-exclusive, worldwide, license, for a period
commencing on the date of expiration of the Permitted Use Period and expiring on
the date ninety (90) days thereafter, to use the ▇▇▇▇ "InfoBeat Express", but
not the domain name "▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇" solely in conjunction with the word
"formerly" (ie. "formerly, InfoBeat Express" or "formerly ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇")
and solely for the purpose of informing Persons that Seller no longer markets
any goods or services under the "InfoBeat" ▇▇▇▇. Buyer shall not use the ▇▇▇▇
"InfoBeat Express" and the domain name "▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇" during the
Permitted Use Period.
2.9 Receipt of Funds. From and after the Closing Date, if Seller
receives any amounts arising out of or on account of the conduct of the
Publishing Business or the Assets, but not such amounts arising out of or on
account of the exploitation of the Excluded Assets, following the Closing,
Seller shall promptly pay such amounts to Buyer.
2.10 Right of Offset. Seller agrees that, notwithstanding anything to
the contrary contained in this Agreement, and in addition to any other remedy
which is available to Buyer hereunder or under the Service Agreement, if at the
time of any payment or payments payable by Buyer to Seller under the provisions
of this Agreement or the Service Agreement there is any amount due and payable
(the "Offset Amount") to the Buyer arising out of or relating, directly or
indirectly, to this Agreement, or the Service Agreement, and the transactions
contemplated hereby, including the indemnification provisions set forth in
SECTION 11 hereof, the amount otherwise payable to Seller under this Agreement,
or the Service Agreement, may be applied by the Buyer in whole or in part to the
extent necessary to offset in whole or in part such amount owing by Seller;
provided, that, if Seller disputes such Offset Amount, Buyer shall place such
amount in escrow until such dispute is conclusively adjudicated in a court
proceeding pursuant to SECTION 12.4 hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller hereby represents and warrants to the Buyer Indemnitees as
follows:
3.1 Organization; Good Standing; Qualification. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Seller has the power and authority to own and operate the
Assets and to carry on the Publishing Business and the Service Bureau Business
as now being conducted. Seller uses no trademarks, trade names or service marks,
other than the InfoBeat Marks set forth on SCHEDULE 3.5(b). The Seller is duly
qualified or licensed to do business as a foreign corporation and is in good
standing in the jurisdictions set forth on SCHEDULE 3.1, which jurisdictions
constitute all jurisdictions in which it is required to be so qualified or
licensed, except where the failure to be so qualified or licensed has not had
and will not have a Material Adverse Effect.
3.2 Authorization and Validity of Agreement. Except as set forth in
SCHEDULE 3.2, Seller has the corporate power and authority and has taken all
necessary corporate actions to
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execute and deliver this Agreement and the Service Bureau Agreement, to
consummate the transactions contemplated hereby and thereby and to take all
other actions required to be taken by it pursuant to the provisions hereof and
thereof. This Agreement has been duly executed and delivered by the Seller. This
Agreement is, and the Service Agreement when executed and delivered will be,
legal, valid and binding upon and enforceable against the Seller, in accordance
with their respective terms, except as such enforceability may be limited by
bankruptcy, moratorium, insolvency, fraudulent conveyance, reorganization, or
other similar laws affecting the enforcement of creditors' rights. Except as set
forth in SCHEDULE 3.2, neither the execution, delivery or performance of this
Agreement or the Service Agreement, nor the consummation of the transactions
contemplated hereby or thereby will (a) violate (with or without the giving of
notice or the lapse of time or both) any law, rule, regulation, court order,
writ, judgment, injunction or decree applicable to the Seller, (b) violate or
breach the Certificate of Incorporation, Bylaws or other governing instruments
of the Seller or (c) violate or breach, or constitute a default under or grounds
for termination of, or result in the acceleration of the performance of the
obligations of the Seller under any Contract relating to the Publishing Business
to which Seller is a party or by which Seller or any of its respective assets
(including the Assets) are bound or affected.
3.3 No Approvals, Consents or Notices Required. Except as set forth on
SCHEDULE 5.5, no authorization, approval, order, license, permit, franchise or
consent of, and no registration, declaration, notice or filing by or with, any
third Person or any domestic or foreign Governmental Authority is required in
connection with the execution, delivery and performance of this Agreement or the
Service Agreement by Seller, or the consummation by Seller of the transactions
contemplated hereby or thereby, including the assignment and transfer of the
Contracts included in the Assets to Buyer or its designee, which shall be an
Affiliate thereof.
3.4 Contracts.
(a) SCHEDULE 3.4(a) is a complete and correct list of all Content
Agreements to which Seller is a party, including the name of the Content
provider, a brief description of the Content delivered, and to be delivered, and
the expiration date of each such Content Agreement. SCHEDULE 3.4(b) is a
complete and correct list of all Distribution Agreements to which Seller is a
party and the expiration date of each such Distribution Agreement. SCHEDULE
3.4(c) is a complete and correct list of all Advertising Agreements to which
Seller is a party, including the name of each advertiser, a summary of the rates
charged under each such Agreement, the term of each advertising commitment and
the number of guaranteed impressions thereunder. SCHEDULE 3.4(d) is a complete
and correct list of all Commerce Agreements, including the name of each
affiliate, and the expiration date of each Commerce Agreement. SCHEDULE 3.4(e)
is a complete and correct list of all other Contracts (which are not Content
Agreements, Distribution Agreements, Advertising Agreements, Commerce Agreements
or Technology Licenses) included in or relating to any of the Assets to which
Seller is a party.
(b) Each Content Agreement, Technology License, Distribution Agreement,
Subscriber Agreement, Advertising Agreement, Commerce Agreement and other
Contract included in the Assets is a legal, valid and binding obligation of
Seller and each of the other parties signatory thereto, enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, moratorium, insolvency, fraudulent conveyance, reorganization,
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or other similar laws affecting the enforcement of creditors' rights, and is in
full force and effect, and there are no defaults (or events which, with notice
or lapse of time or both, would constitute a default) by Seller or, to Seller's
knowledge, by any other Person party to any such Content Agreement, Technology
License, Distribution Agreement, Advertising Agreement, Commerce Agreement or
other Contract included in the Assets. Seller has made available to Buyer or its
advisers true and complete copies of the Content Agreements, Technology
Licenses, Distribution Agreements, Advertising Agreements, Commerce Agreements
and other Contracts set forth on SCHEDULES 3.4(a), 3.4(b), 3.4(c), 3.4(d), and
3.4(e), for review.
(c) Except as otherwise set forth on SCHEDULE 5.5, all of the Content
Agreements, Technology Licenses, Distribution Agreements, Subscriber Agreements,
Advertising Agreements, Commerce Agreements and other Contracts included in the
Assets are freely assignable, in whole or in part by Seller without the consent
of any other Person. No Content Agreement, Technology License, Distribution
Agreement, Subscriber Agreement, Advertising Agreement, Commerce Agreement or
other Contract included in the Assets contains a provision permitting it to be
terminated upon a change of control or ownership of the Publishing Business or a
sale of the Assets or if a specific individual ceases to be employed by or
otherwise associated with the Publishing Business. No waiver of any right of
first refusal or consent of any third party is required for the consummation of
the transactions contemplated hereby by Seller, including, without limitation,
for the transfer of the Assets to Buyer.
(d) The Seller (i) owns all right, title and interest in, or possesses
valid licenses to use for all purposes material to the operation of the
Publishing Business, the Content, (ii) has not granted to any other Person any
of its interest in the Content or any element thereof, as licensee or otherwise,
and (iii) has filed all certificates, affidavits and other documents, and taken
all other actions, necessary to retain its title to such Content which it owns
and to keep the same in effect. The Content does not infringe upon or violate
the rights of any Person, including any rights of privacy or publicity, any
moral rights or any rights under the laws of copyright, patent, trademark and
trade secret, and no claim alleging any such infringement or violation has been
received by Seller. The Content does not contain any material errors, omissions,
deficiencies, inaccuracies, obscenities or defamatory or libelous materials or
information.
(e) There are no pending royalty claims, requests for audits, or
pending audits and disputes or, to the best knowledge of Seller, threats thereof
against Seller, in connection with any Contract.
3.5 InfoBeat Software and Technology; Other Proprietary Rights.
(a) SCHEDULE 3.5(a) is a complete and correct list and brief
description of all InfoBeat Software and InfoBeat Technology. The Seller (i)
owns all right, title and interest in each item of InfoBeat Software and
InfoBeat Technology, free and clear of all Liens, (ii) has not granted to any
other Person any interest in or right to exploit any such InfoBeat Software or
InfoBeat Technology, as licensee or otherwise, and (iii) none of such InfoBeat
Software or InfoBeat Technology infringes upon or violates the rights of any
Person, including any rights under the laws of copyright, United States patent,
trademark and trade secret, and no claim alleging any such infringement or
violation has been made to the Seller. There are no sums owing or to become due
to any Person in respect of Seller's ownership or exploitation of such
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InfoBeat Software or InfoBeat Technology. Set forth in SCHEDULE 3.5(a) is a list
of all registrations and applications for registration filed with the United
States Copyright Office, the United States Patent and Trademark Office or any
similar foreign intellectual property rights depository with respect to the
InfoBeat Software and InfoBeat Technology. Except as set forth in SCHEDULE
3.5(a), Seller does not own any patents, patent applications, registered
copyrights or copyright applications used in or related to the Publishing
Business.
(b) SCHEDULE 3.5(b) is a complete and correct list of the InfoBeat
Marks and InfoBeat Domain Names. The Seller (i) owns all right, title and
interest in each of the InfoBeat Marks and the InfoBeat Domain Names, free and
clear of all Liens, (ii) has not granted to any other Person any interest in any
of the InfoBeat Marks or InfoBeat Domain Names, as licensee or otherwise, and
(iii) has filed all certificates, affidavits and other documents, required to be
filed under the U.S. Trademark Act, and taken reasonable precautions necessary
to retain its title to such InfoBeat Marks and the InfoBeat Domain Names and to
keep the same in effect. None of the InfoBeat Marks or InfoBeat Domain Names is
invalid and none infringes upon or violates the rights or claimed rights of any
Person, including any rights under the laws of copyright, patent, trademark and
trade secret, and no claim alleging any such infringement or violation has been
received by Seller. The representations in this SECTION 3.5(b) shall not apply
to any intellectual property rights which are Excluded Assets.
(c) SCHEDULES 3.4(a), 3.4(b), 3.4(c), 3.5(a) and 3.5(b) set forth all
of the Intellectual Property Rights used in or required by Seller in the normal
operation and conduct of the Publishing Business, other than such Intellectual
Property Rights, the absence of which would not, individually or in the
aggregate, have a Material Adverse Effect and such intellectual property rights
which are Excluded Assets.
(d) Seller owns all right, title and interest in, or possesses valid
licenses to use for all purposes material to the operation of the Publishing
Business, all the Intellectual Property Rights included in the Assets and not
set forth on SCHEDULES 3.4(a), 3.4(b), 3.4(c), 3.5(a) and 3.5(b) (collectively,
the "RESIDUAL INTELLECTUAL PROPERTY"), free and clear of all Liens. Seller has
not granted to any other Person any interest in any Residual Intellectual
Property, as licensee, sublicense or otherwise. The Residual Intellectual
Property does not infringe upon the rights of any Person, including any rights
under the laws of copyright, patent, trademark or trade secret, and no claim
alleging any such infringement or violation has been received by Seller. The
representations in this SECTION 3.5(d) shall not apply to any intellectual
property rights which are Excluded Assets.
(e) The Content, the InfoBeat Technology, the InfoBeat Software, and
the Residual Intellectual Property does not contain any copy protection,
computer virus, malicious code, or destructive feature. The representations in
this SECTION 3.5(e) shall not apply to any intellectual property rights which
are Excluded Assets.
3.6 Ownership; Liens. All of the Assets are owned directly by the
Seller, free and clear of all Liens. No Affiliate of Seller owns or holds any
right, title or interest in or to any of the Assets.
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3.7 Taxes. Seller has filed within the time (subject to applicable
extensions, if any) and in the manner prescribed by law all federal, state,
local and foreign Tax returns which are required to be filed by Seller. Such
returns reflect accurately all liability for Taxes for the period covered
thereby. All such Taxes have been paid when due (subject to applicable
extensions, if any). There are no claims against Seller for any alleged
deficiency in Tax, and there are no current or pending Tax audits or Proceedings
with respect to Seller. There are no Liens for Taxes on any Asset.
3.8 Legal Proceedings. Except as set forth on SCHEDULE 3.8, there are
no Proceedings pending or, to the knowledge of Seller, threatened against Seller
or affecting any of the Assets. Seller is not subject to any judgment, order or
decree of any Governmental Authority.
3.9 Compliance With Law. Seller has operated the Publishing Business so
as to comply with all applicable domestic and foreign, Federal, state and local
statutes, laws, ordinances, codes, governmental rules and regulations
(including, without limitation, those relating to occupational safety and
health, privacy, protection of minors, foreign and corrupt practices, antitrust,
hiring, wages, hours, employee benefit plans and programs, collective
bargaining, exchange control, environmental conditions, or the payment of
withholding, social security and other Taxes). Seller is not in violation of any
foreign or domestic statutes, laws, ordinances, codes, governmental rules or
regulations, or any judgment, order or decree (federal, state, local or foreign)
to which it is subject. Except as set forth in SCHEDULE 5.5, no licenses,
permits, franchises or other governmental authorizations are necessary for the
ownership or operation of the Assets or the conduct of the Publishing Business
as presently conducted.
3.10 Title to and Condition of Properties. Seller has good and
merchantable title to all tangible personal property included in the Assets,
free and clear of all Liens. All tangible personal property included in the
Assets is in good condition and repair, normal wear and tear excepted.
3.11 Financial Information. Seller has furnished to Buyer (i) its
unaudited balance sheet as at October 31, 1998 and the related statement of
income, cash flow and stockholders' equity for the ten-month period then ended,
and (ii) its audited balance sheet as at December 31, 1997 and the related
statement of income, cash flow and stockholder's equity for the year then ended
(collectively, the "FINANCIAL STATEMENTS"). The Financial Statements, (x) are in
accordance with the books and records of the Seller, (y) fairly present the
financial condition of Seller as at the respective dates indicated and the
results of operations of Seller for the respective periods indicated and (z)
have been prepared in accordance with GAAP applied consistently with past
practices of Seller. There has been no fact, change, event or circumstance which
has caused a Material Adverse Effect since October 31, 1998. Since October 31,
1998, the Seller has conducted the Publishing Business only in the ordinary
course. Except as set forth on SCHEDULE 3.11, since October 31, 1998, there has
not been any of the following:
(a) Any damage, destruction or loss relating to the Assets, whether or
not covered by insurance, having or which could have a Material Adverse Effect;
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(b) Any liability created, assumed, guaranteed or incurred, or any
material transaction, contract or commitment entered into, by the Seller,
affecting the Assets, or the Publishing Business, other than in the ordinary
course of business;
(c) Any payment, discharge or satisfaction of any material Lien or
liability by Seller or any cancellation by Seller of any material debts or
claims or any amendment, termination or waiver of any rights of Seller having or
which could have a Material Adverse Effect;
(d) Any license, sale, transfer, pledge, mortgage or other disposition
of any material tangible or intangible Asset (including any Intellectual
Property Rights) of Seller, other than in the ordinary course of business;
(e) Any termination of, or written indication of an intention to
terminate or not renew, any material Contract relating to the Publishing
Business;
(f) Any material write-down or write-up of the value of any Asset or
any material reduction in Subscribers;
(g) Any agreement, understanding, authorization or proposal, whether in
writing or otherwise, for Seller to take any of the actions specified in
paragraphs (a) through (f) above.
3.12 Liabilities. Except as set forth on SCHEDULE 3.12, Seller does not
have any liabilities, absolute, contingent or otherwise, direct or indirect,
matured or unmatured, which are not reflected in the Financial Statements or
disclosed with reasonable specificity in the Schedules to this Agreement and
which are associated with the Assets or the Publishing Business.
3.13 Advertising Customers. SCHEDULE 3.13 hereto is a complete and
correct list of all current advertising customers of the Publishing Business.
3.14 Employees; Independent Contractors; Contracts. All of the current
and past employees of Seller who are or were involved in the creation of
Intellectual Property Rights are or were employed pursuant to "work-for-hire"
agreements which also contain or contained appropriate assignments to Seller of
such employees' work product, including invention assignment agreements, where
appropriate. Seller has executed appropriate contracts with all independent
contractors of Seller involved in the creation of Intellectual Property Rights
containing assignments to Seller of all rights of such independent contractors
in their work product.
3.15 Brokerage Commissions. Seller has not incurred any liability for
finder's, brokerage, agent's or advisory fees or commissions in connection with
this Agreement, the Service Agreement or the transactions hereby or thereby
contemplated.
3.16 Year 2000. All of the software, data and data bases included in
the Assets (collectively, the "SYSTEMS") comply with the following standards:
(i) the occurrence in or use by the Systems of dates before, on or after January
1, 2000 will not adversely affect the performance of the Systems with respect to
date-dependent data, computations, output or other functions, including, without
limitation, calculating, comparing and sequencing; (ii) the Systems
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will not abnormally end or provide invalid or incorrect results as a result of
date-dependent data; and (iii) the Systems can accurately process and manipulate
date-dependent data, including, without limitation, single century formulas and
leap years. The representations set forth in this Section 3.16 shall not apply
to output, results, errors or abnormal terminations caused by (a) any
modifications to the Systems made after the Closing other than such
modifications made by or on behalf of Seller or (b) any data provided to the
Systems which does not specify the century or is incorrect, other than any such
data provided by or on behalf of Seller.
3.17 Web Site Software. The items set forth on SCHEDULE 3.5(a)
constitute all of the computer programs necessary to operate the Web Site.
3.18 Full Disclosure. Neither this Agreement nor any written
information furnished by or on behalf of Seller to Buyer in connection with the
negotiation of this Agreement and the transactions contemplated hereby, contains
any untrue statement of a material fact or omits to state a material fact
required to be stated herein or therein necessary to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer hereby represents and warrants to the Seller Indemnitees as follows:
4.1 Organization; Good Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Buyer has the corporate power and authority to own or lease and operate its
properties and to carry on its business and activities as now being conducted.
4.2 Authorization and Validity of Agreement. Buyer has the corporate
power and authority and has taken all necessary corporate actions to execute and
deliver this Agreement and the Service Agreement, to consummate the transactions
contemplated hereby and to take all other actions required to be taken by it
pursuant to the provisions hereof. This Agreement is, and the Service Agreement
when executed and delivered will be, valid and binding upon and enforceable
against Buyer in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, moratorium, insolvency, fraudulent
conveyance, reorganization, or other similar laws affecting the enforcement of
creditors' rights. Neither the execution, delivery or performance of this
Agreement or the Service Agreement, nor the consummation of the transactions
contemplated hereby will (a) violate (with or without the giving of notice or
the lapse of time or both) any law, rule, regulation, court order, writ,
judgment, injunction or decree applicable to Buyer, (b) violate or breach the
Certificate of Incorporation, Bylaws or other governing instruments of Buyer, or
(c) violate or breach, or constitute a default under or grounds for termination
of, or result in the acceleration of the performance of the obligations of the
Buyer under any Contract to which Buyer is a party or by which Buyer or any of
its assets are bound or affected.
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4.3 No Governmental Approvals or Notices Required. Except as set forth
in SCHEDULE 5.5, no authorization, approval, order, license, permit, franchise
or consent of, and no registration, declaration, notice or filing by or with,
any domestic or foreign Governmental Authority, is required in connection with
the execution, delivery and performance of this Agreement or the Service
Agreement by Buyer, or the consummation by Buyer of the transactions
contemplated hereby or thereby.
4.4 Brokerage Commissions. Buyer has not incurred any liability for
finder's, brokerage, agent's or advisory fees or commissions in connection with
this Agreement or the Service Agreement or the transactions hereby or thereby
contemplated.
ARTICLE V
PRE-CLOSING COVENANTS OF SELLER
From and after the date hereof to the Closing Date:
5.1 Conduct of Business. Seller shall conduct the Publishing Business
in the ordinary course of the Publishing Business and shall not take any action,
or omit to take any action which could diminish the value of the Publishing
Business, the Service Bureau Business or the Assets. Specifically, without
limiting the foregoing, Seller shall not, without Buyer's consent:
(a) Sell, transfer or assign any of the Assets or any rights therein;
(b) Place or permit any Person to place any Liens on the Assets;
(c) Commit any material breach of any material Subscriber Agreement,
Content Agreement, Distribution Agreement, Technology License , Advertising
Agreement, Affiliate Agreement or other Contract; or
(d) Amend or waive any material defaults under any Subscriber
Agreement, Content Agreement, Distribution Agreement, Technology License,
Advertising Agreement, Commerce Agreement or other Contract.
5.2 No Breach of Representations and WarrantieS. Seller will not take
any action which would cause or constitute a material breach, or would, if it
had been taken prior to the date hereof, have caused or constituted a material
breach, of any of the representations and warranties set forth in ARTICLE III
hereof. Seller will, in the event of, or promptly after the occurrence of, or
promptly after obtaining knowledge of the occurrence of or the impending or
threatened occurrence of, any fact or event which would cause or constitute a
material breach of any of the representations and warranties set forth in
ARTICLE III hereof as of the Closing Date, give reasonably detailed notice
thereof to Buyer; and Seller will use its best efforts to prevent, or promptly
remedy, such breach.
5.3 Access by Buyer. The directors, officers, employees and
representatives of Buyer will be permitted, at Buyer's cost, access, on
reasonable prior notice, during usual business hours, and as often as may be
reasonably requested, to, and will be permitted to make
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copies of and extracts from, the Subscriber Agreements, Content Agreements,
Distribution Agreements, Technology Licenses, Advertising Agreements, Commerce
Agreements and other Contracts of Seller, Seller's books and records to the
extent such books and records relate to the Publishing Business and such other
information relating to the Assets and the Publishing Business as Buyer shall
request.
5.4 No Solicitation. Seller will not, directly or indirectly, (i)
solicit, initiate or encourage the submission of inquiries, proposals or offers
or accept any such proposals or offers from any Person relating to, or otherwise
negotiate or cooperate with any Person or entity in respect of, any acquisition
or purchase of all or any portion of the Publishing Business or any of the
Assets, or (ii) participate in any discussion or negotiation regarding, or
furnish to any other Person any financial or other information with respect to,
any of the foregoing.
5.5 Consents. Seller will use its best efforts to obtain all those
third party consents and approvals of Governmental Authorities set forth on
SCHEDULE 5.5, including, without limitation, any consents necessary from
Subscribers to secure the consent of each such Subscriber to the transfer of
names and identifying data to Buyer or its designee as contemplated herein.
5.6 Confidential Treatment. In obtaining the consents and approvals set
forth on SCHEDULE 5.5, Seller will use its best efforts to obtain agreements
from such entities from which such consents are required not to disclose the
transaction that is the subject of this Agreement or any other confidential
information of Buyer, which agreements shall provide that Buyer shall be a third
party beneficiary thereof, and, upon Buyers request and at Buyer's expense,
enforce such agreements.
5.7 Best Efforts. Seller will use its best efforts to effectuate the
transactions hereby contemplated and to fulfill the conditions to Buyer's
obligations under ARTICLE VII of this Agreement.
ARTICLE VI
PRE-CLOSING COVENANTS OF BUYER
6.1 No Breach of Representations and Warranties. Buyer will not take
any action which would cause or constitute a material breach, or would, if it
had been taken prior to the date hereof, have caused or constituted a material
breach, of any of the representations and warranties set forth in ARTICLE IV
hereof. Buyer will, in the event of, or promptly after the occurrence of, or
promptly after obtaining knowledge of the occurrence or the impending or
threatened occurrence of, any fact or event which would cause or constitute a
material breach of any of the representations and warranties set forth in
ARTICLE IV hereof as of the Closing Date, give reasonably detailed notice
thereof to Seller; and Buyer will use its best efforts to prevent, or promptly
to remedy, such breach.
6.2 Best Efforts. Buyer will use its best efforts to effectuate the
transactions hereby contemplated and to fulfill the conditions to Seller's
obligations under ARTICLE VIII of this Agreement.
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ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
All obligations of Buyer under this Agreement are subject to fulfillment
at the Closing of each of the following conditions, any or all of which may be
waived in whole or in part, at or prior to the Closing Date, by Buyer in its
sole discretion:
7.1 Representations and Warranties. The representations and warranties
of Seller contained in ARTICLE III hereof shall be true (i) as of the date of
this Agreement in all material respects, and (ii) at and as of the Closing Date
as though such representations and warranties were made at and as of such time
except for such changes occurring between the date hereof and the Closing Date
as will not result in a Material Adverse Effect.
7.2 Covenants. Seller shall have performed and complied in all material
respects with all covenants, agreements and conditions on its part required by
this Agreement to be performed or complied with prior to or at the Closing Date.
7.3 Officer's Certificate. Buyer shall have received a certificate of
an officer of the Seller, dated the Closing Date, certifying to the fulfillment
of the conditions specified in SECTIONS 7.1 and 7.2 hereof.
7.4 Opinion of Counsel. Buyer shall have received an opinion of counsel
for Seller, dated the Closing Date, in form and substance reasonably acceptable
to Buyer.
7.5 Good Standing Certificate. Buyer shall have received a Good
Standing Certificate for Seller dated within ten (10) days of the Closing Date,
issued by the Secretary of State of the state of incorporation of the Seller.
7.6 Institution of Proceedings; Injunction. There shall not have been
instituted by any Person (including any Governmental Authority) any bona fide
Proceeding to restrain or invalidate the transactions contemplated by this
Agreement, and there shall not be in effect any injunction or restraining order
issued by a court of competent jurisdiction in a Proceeding against the
consummation of the transactions contemplated by this Agreement.
7.7 Consents. Seller shall have delivered to Buyer all consents of
third Persons and governmental approvals set forth on SCHEDULE 7.7.
7.8 ▇▇▇▇ of Sale and Assignment. Buyer shall have received from Seller
a ▇▇▇▇ of Sale transferring title to the Assets, in form and substance
satisfactory to Buyer.
7.9 Assignment of Copyrights, Patents, Marks and Domain Names. Buyer
shall have received from Seller the following:
(a) An assignment of copyright, in a form suitable for recordation in
the United States Copyright Office, for each registered copyright and copyright
application included in the Assets, in form and substance satisfactory to Buyer.
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(b) An Assignment of trademark, in a form suitable for recordation in
the United States Patent and Trademark Office, for each registered trademark and
service ▇▇▇▇ included in the Assets, in form and substance satisfactory to
Buyer.
(c) An executed Registrant Name Change Agreement - Transfers, in a form
suitable for recordation with Network Solutions, Inc. for each domain name
included in the Assets, in form and substance satisfactory to Buyer.
7.10 Service Agreement. Buyer shall have received the Service
Agreement, duly executed by Seller.
7.11 Key Man Employment Agreement. Seller shall have delivered an
employment agreement executed by ▇▇▇▇ ▇▇▇▇▇▇▇, satisfactory to Buyer pursuant to
which ▇▇. ▇▇▇▇▇▇▇ shall agree to continue his employment with Seller for a
period of six (6) months from the Closing Date.
7.12 ▇▇▇ Agreement. Seller shall have obtained amendments to its Agency
Representation Agreement dated January 1, 1998 with ▇▇▇ Interactive Sales, Inc.,
to include a revised list of "non-commissionable" clients comprised of the
"Total E" and the Sony Parties (as defined in the Service Agreement).
7.13 Documentation. All documentation and instruments necessary to give
effect to the transaction contemplated hereby shall be satisfactory in form and
substance to Buyer.
7.14 Seller's Obligations. Seller shall have used its best efforts to
satisfy all outstanding financial obligations related to the Publishing Business
as of the Closing.
7.15 Other Deliveries. Seller shall deliver or cause to be delivered
such other documents and instruments as may reasonably be requested by Buyer or
its counsel to consummate the transactions contemplated hereby.
ARTICLE VIII
CONDITIONS TO SELLER'S OBLIGATIONS
All obligations of Seller under this Agreement are subject to the
fulfillment, at the Closing Date, of each of the following conditions, any or
all of which may be waived in whole or in part, at or prior to the Closing Date,
by Seller in its sole discretion:
8.1 Representations and Warranties. The representations and warranties
of Buyer contained in ARTICLE IV hereof shall be true in all material respects
(i) as of the date of this Agreement, and (ii) at and as of the Closing Date as
though such representations and warranties were made at and as of such time.
8.2 Covenants. Buyer shall have performed and complied in all material
respects with all agreements and conditions on its part required by this
Agreement to be performed or complied with prior to or at the Closing Date.
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8.3 Officer's Certificate. Seller shall have received a certificate of
an officer of Buyer, dated the Closing Date, certifying to the fulfillment of
the conditions specified in SECTIONS 8.1 and 8.2 hereof.
8.4 Purchase Price. The Initial Payment shall have been paid as set
forth in SECTION 2.5.
8.5 Opinion of Counsel. Seller shall have received an opinion of
counsel for Buyer, dated the Closing Date, in form and substance reasonably
acceptable to Seller.
8.6 Good Standing Certificate. Seller shall have received a Good
Standing Certificate for Buyer dated within ten (10) days of the Closing Date,
issued by the State of Delaware.
8.7 Institution of Proceedings; Injunction. There shall not have been
instituted by any Person (including any Governmental Authority) any bona fide
Proceeding to restrain or invalidate the transactions contemplated by this
Agreement or the Service Agreement, and there shall not be in effect any
injunction or restraining order issued by a court of competent jurisdiction in a
Proceeding against the consummation of the transactions contemplated by this
Agreement or the Service Agreement.
8.8 Consents. Buyer shall have delivered to Seller all consents of
third Persons and governmental approvals set forth on SCHEDULE 5.5.
8.9 Service Agreement. Seller shall have received the Service Agreement
duly executed by Buyer.
8.10 Other Deliveries. Buyer shall deliver or cause to be delivered
such other documents and instruments as may reasonably be requested by Seller or
its counsel to consummate the transactions contemplated hereby.
ARTICLE IX
POST-CLOSING COVENANTS
9.1 Further Assurances. From and after the Closing Date, each party to
this Agreement shall, at any time and from time to time, make, execute and
deliver, or cause to be made, executed and delivered, such assignments, deeds,
bills of sale, drafts, checks, returns, filings and other instruments,
agreements, consents and assurances, and take or cause to be taken all such
actions as counsel for the other party may reasonably request to effectuate the
transactions contemplated by this Agreement. Seller shall cause its employees to
reasonably cooperate with Buyer as needed from and after the Closing Date to
facilitate the transfer of the Assets and Publishing Business and shall make
such employees reasonably available to answer questions relating to the
Subscriber Agreements, Content Agreements, Distribution Agreements, Technology
Licenses, Advertising Agreements, Commerce Agreements other Contracts and other
Assets being transferred.
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9.2 Public Announcements. Except as provided in the next sentence, the
parties hereto shall not (and each party shall cause its directors, officers,
employees and agents not to) issue or cause the publication of any press release
or other public announcement with respect to the transactions contemplated by
this Agreement prior to the Closing without the prior written consent of the
other party hereto. After the Closing, Buyer shall be permitted to issue such a
press release or make such a public announcement without the consent of Seller,
provided that (i) Buyer shall obtain Sellers Consent, which shall not be
unreasonably withheld or delayed, solely with respect to the text of any
references to Seller or the InfoBeat Marks contained in any such press release,
and (ii) Buyer shall afford Seller a reasonable time (which in no event shall
exceed three (3) days) to notify its employees of such transaction prior to such
press release or pubic announcement. If any party hereto is required to make any
public disclosure or filing with respect to the transactions contemplated by
this Agreement by applicable law or pursuant to any listing agreement with, or
the rules or regulations of, any securities exchange on which the securities of
such party or any of its Affiliates are listed or traded, such party shall use
reasonable efforts to give the other party prior notice of such disclosure and,
to the extent confidential treatment of such information is available, to use
reasonable efforts to obtain such treatment. Notwithstanding the provisions of
this SECTION 9.2, after the Closing, Seller shall be permitted to confirm to
third Persons the fact that Buyer is a customer of the Service Bureau Business
(but shall not disclose any term of the Service Agreement).
9.3 Noncompetition; Nonsolicitation. (a) Seller covenants and agrees
that from and after the Closing Date it shall not, and shall cause any of its
Affiliates in which Seller has a fifty percent (50%) or greater ownership
interest or of which Seller otherwise exercises management control ("RESTRICTED
ENTITIES") not to, at any time prior to the expiration of the initial or any
renewal term of the Service Agreement, directly or indirectly, own, manage,
operate, join or control, participate in, consult for, be employed by, render
services to, or invest in or otherwise be connected with in any manner any
entity which is engaged in a business the same as, similar to or competitive
with, the Publishing Business; provided, that, nothing contained in this SECTION
9.3 shall preclude the Seller from effecting a sale of the Company in its
entirety, whether by means of a merger, reorganization, sale of assets or other
similar transaction. Nothing in this SECTION 9.3 shall prohibit Seller from
rendering consulting services to clients of the Service Bureau Business on
issues relating to the publishing business provided that (i) all members of
Seller's editorial staff (including ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇), customer
service staff and advertising sales staff (including ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ Rope and ▇▇▇▇▇▇▇ ▇▇▇▇▇) providing services to Buyer pursuant to the
Service Agreement (the "CORE PERSONNEL") shall not have any involvement in such
consulting services and shall be placed behind a "Chinese wall" with respect
thereto, (ii) Seller shall not reassign any Core Personnel away from providing
Services (as defined in the Service Agreement) to Buyer for the sole purpose of
avoiding the intent and spirit of the agreement of the parties as expressed in
clause (i) of this SECTION 9.3(a), (iii) Seller shall provide Buyer with no less
than thirty (30) days' written notice of any reassignment of any Core Personnel,
which notice shall include the name, job title and tenure, and job functions of
such Core Personnel, (iv) Buyer shall have a one-time right, during the Initial
Term or the Additional Term (as such terms are defined in the Service Agreement)
of the Service Agreement, to veto a reassignment of certain designated Core
Personnel, (v) ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ shall not, for a period of six
months after the Closing Date, perform any consulting services related to any of
the service categories currently offered by Seller as part of the Publishing
Business or any other services categories which Buyer
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may create after the Closing Date, (vi) Seller shall not be permitted to use any
confidential information relating to the service categories currently operated
by Seller as part of the Publishing Business or any other information learned by
Seller in the course of providing Services (as such term is defined in the
Service Agreement) under the Service Agreement, including information concerning
subscription popularity, subscriber feedback, editorial staffing, subscriber
acquisition, future product plans, market research, surveys, and content
acquisition, and (vii) Buyer shall, at no additional charge, have reasonable
access to Seller's consulting staff and shall generally have the benefit of the
knowledge of such staff at a level commensurate with Buyer's status as a
top-level customer of the Service Bureau Business.
Seller covenants and agrees that, from and after the Closing, it shall
not and shall cause each of its Restricted Entities not to, at any time prior to
the expiration of the initial or any renewal term of the Service Agreement, for
itself or on behalf of any other Person, or by action in concert with any other
Person, solicit, induce or encourage any other Person known by it to have a
contractual relationship with the Publishing Business acquired by Buyer to
discontinue, terminate, cancel or refrain from entering into any contractual
relationship with the Buyer or any of its Affiliates.
(c) Notwithstanding any provision in this SECTION 9.3 to the contrary,
so long as Seller shall have fulfilled its obligations hereunder and under the
Service Agreement, and Seller's involvement in such services is not visible to
the users thereof, (i) Seller shall be permitted to provide to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ &
Co., Inc., on a "private label" basis, the services known as "Full Closing
▇▇▇▇", "Early Closing ▇▇▇▇" and "Weekender", in their currently existing form,
(collectively the "CLOSING ▇▇▇▇ SERVICES") for the term of the Service
Agreement, (ii) Seller shall be permitted to provide ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc.
with services known as "Alerts", "Morning Call", "Midday Update", "Currencies",
"Commodities", "Internet Daily" and "Money Daily" (collectively, the "BROADCAST
SERVICES") for a period of one (1) year from the Closing Date, and (iii) Seller
shall be permitted to provide the Closing ▇▇▇▇ Services to other financial
service clients, provided, that Seller shall pay Buyer a monthly fee in an
amount equal to $.02 per subscriber for the first 250,000 subscribers (in the
aggregate, exclusive of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and Co., Inc.) and $.03 per subscriber
for each subscriber over 250,000. Seller agrees to credit Buyer under the
Service Agreement for its proportionate share of fees for Editorial Services and
reimburse Buyer for its proportionate share of Content license fees relating to
Content used in such Closing ▇▇▇▇ Services.
(d) Notwithstanding any provision in this SECTION 9.3 to the contrary,
Seller shall be permitted to continue to provide services to American Express
Travel Related Services Company, Inc. for a period of up to ninety (90) days
from the Closing Date, in accordance with the level and extent of services being
provided by Seller to such company as of the Closing Date.
(e) The parties acknowledge that the time, scope, geographic area and
other provisions of this SECTION 9.3 have been specifically negotiated by
sophisticated commercial parties and agree that all such provisions are
reasonable under the circumstances of the transactions contemplated by this
Agreement. If any portion of this SECTION 9.3 shall be determined to be invalid
or unenforceable as written, each such portion shall be enforced to the extent
reasonable under the circumstances and such determination shall not affect the
validity or enforceability of the balance hereof, and such balance shall remain
in full force and effect. It is
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understood that Seller is entering into this non-competition and
non-solicitation agreement in order to induce Buyer to enter into this
Agreement. Seller agrees that any breach by Seller of the covenants in this
SECTION 9.3 shall cause irreparable harm which cannot be reasonably or
adequately compensated for in damages in an action at law, and that, in addition
to any other remedies Buyer may have, Buyer shall be entitled to injunctive
relief to enforce the provisions of this SECTION 9.3.
9.4 Use of Marks; Linking. (a) Buyer hereby grants Seller a limited,
non-transferable, non-exclusive, royalty-free license to use the ▇▇▇▇ "Closing
▇▇▇▇" together with the ▇▇▇▇ "InfoBeat" solely for purposes of marketing the
Closing ▇▇▇▇ Services, provided that (i) Seller shall at all times use such
marks together as "InfoBeat's Closing ▇▇▇▇", (ii) such marks shall not be
viewable by the subscribers of such Closing ▇▇▇▇ Services marketed by Seller,
(iii) Seller shall obtain Buyer's prior consent before distributing any
advertising or marketing materials containing such marks, and (iv) all good will
derived by the use of such marks by Seller as contemplated by this SECTION
9.4(a) shall inure to Buyer. In the event Buyer elects to use a different name
to describe the service currently known as "Closing ▇▇▇▇", Seller shall cease
all use of the foregoing marks and use the new marks designated by Buyer, and
Buyer shall grant Seller a license with respect to such marks under the same
terms as set forth in this SECTION 9.4(a).
(b) Seller shall use its best efforts to cease all use of the marks
"InfoBeat Express" and the domain name "▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇" on or prior to the
date which is ninety (90) days after the Closing Date, and, in any event, shall
cease all use of such ▇▇▇▇ and such domain name, or any other ▇▇▇▇ or domain
name confusingly similar to the InfoBeat Marks and InfoBeat Domain Names, on or
prior to the expiration of the Permitted Use Period. Seller shall use its best
efforts to cause its corporate name to be changed from "InfoBeat, Inc." to
another name not incorporating the words "InfoBeat" or "Mercury", and not
confusingly similar to any of the InfoBeat Marks or InfoBeat Domain Names, and
correct all necessary corporate and tax registrations, within fourteen (14) days
after the Closing Date, and, in any event shall have caused such corporate name
change and corrections to occur on or prior to the date which is ninety (90)
days from the Closing Date. Except as set forth in this SECTION 9.4 and in
SECTION 2.8, Seller shall cease all use of the words "InfoBeat" and "Mercury",
the InfoBeat Marks and the InfoBeat Domain Names as of the Closing Date, and
shall, at Buyer's option, deliver to Buyer or destroy any marketing materials in
the possession of Seller containing any of the InfoBeat Marks or the InfoBeat
Domain Names.
(c) Commencing on the Closing Date, until the expiration of the
Permitted Use Period, (i) Seller shall place a hypertext link on its
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Web site, in a prominent location on such Web site, linking
such Web site to the Web Site (ii) Buyer shall place hypertext links on the Web
Site in a prominent location on such Site, linking such Site to Seller's
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Web site.
(d) Buyer hereby agrees to maintain the "Select" content program
operated by Seller as part of the Publishing Business for a period of ninety
(90) days from the Closing Date, provided that (i) Seller shall on Buyer's
behalf, remove from the "Select" program any "Select" content provider the
subscription for which grows by five thousand or more Subscribers during such
ninety (90) days period and (ii) Seller shall pay over to the Buyer any and all
amounts
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received by Seller on account of operation of the "Select" program for
such period. Seller hereby grants Buyer a limited, royalty-free, worldwide,
non-exclusive license to place hypertext links on the Web Site linking the Web
Site to the Web sites of such "Select" program members for such period.
9.5 Access to Books and Records. Seller covenants and agrees that from
and after the Closing Date the directors, officers, employees and
representatives of Buyer will be permitted access, on reasonable prior notice,
during usual business hours, and as often as may be reasonably requested, to,
and will be permitted to make copies of and extracts from Seller's books and
records to the extent such books and records are not included in the Assets but
relate to the Publishing Business.
9.6 MailCity. If, on or prior to the Closing, Seller has not made such
modifications to its systems to enable distribution of e-mails to subscribers of
the MailCity e-mail service, Seller shall, promptly after the Closing, convert
e-mails sent to such subscribers from HTML E-Mails to text e-mails.
9.7 Transfer of Subscriber Data. Promptly after the Closing, and in any
event within fifteen (15) days after such event, Seller shall execute an
electronic transfer of a copy of all Subscriber Data to a secure location off of
Seller's premises as a means of disaster avoidance.
9.8 Ad Server. Seller shall use its best efforts as expeditiously as
possible to improve the performance of the ad server currently employed by
Seller so that it more closely meets the performance expectations for such
server of Accipiter Inc. and performs substantially consistently with the
traffic reported by the audit server currently employed by Seller.
9.9 ▇▇▇▇▇▇.▇▇▇. Seller shall, promptly upon notice delivered by Buyer
to Seller after the Closing, change all hypertext links to the ▇▇▇▇▇▇.▇▇▇ Web
site to links to the "Total E" Web site.
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) By mutual consent of Buyer and Seller;
(b) By Buyer, if there has been a material violation or breach by
Seller of any agreement, representation, warranty, or condition contained in
this Agreement not cured to the reasonable satisfaction of Buyer prior to the
Closing Date;
(c) By Seller, if there has been a material violation or breach by
Buyer of any agreement, representation, warranty, or condition contained in this
Agreement not cured to the reasonable satisfaction of Seller prior to the
Closing Date; or
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(d) By Seller or Buyer, if the Closing has not been consummated on or
prior to December 31, 1998, other than by reason of a material violation or
breach by the party electing to terminate of any agreement, representation,
warranty, or condition contained in this Agreement.
10.2 No Waiver. Neither the Closing nor any termination of this
Agreement pursuant to SECTION 10.1, shall be deemed to constitute a release or
waiver by either party of any claim against the other party based on any breach
by such party of its agreements, representations and warranties contained
herein.
ARTICLE XI
INDEMNIFICATION
11.1 Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants of each party pursuant to this
Agreement shall survive the Closing and shall expire on the second anniversary
of the Closing Date; provided, however, that if, at any time prior to the
Survival Date, any party seeking indemnification under this SECTION 11 (an
"INDEMNIFIED PARTY") (acting in good faith) delivers to the party from whom such
indemnification is sought (an "INDEMNIFYING PARTY") a written notice alleging
the existence of a breach of any of the representations and warranties made by
the Indemnifying Party or a breach of any covenant contained herein (and setting
forth in reasonable detail the basis for such Indemnified Party's belief that
such a breach may exist) and asserting a claim for recovery under SECTION 11.2
or SECTION 11.3, whichever is applicable, based on such alleged breach, then the
claim asserted in such notice shall survive the Survival Date until such time as
such claim is fully and finally resolved.
11.2 By Seller. Seller agrees to indemnify and hold harmless the Buyer
Indemnitees from and against, and to reimburse the Buyer Indemnitees on demand
with respect to, any and all loss, damage, liability, claims, cost and expense,
including reasonable attorneys' and accountants' fees (collectively, "CLAIMS"),
incurred by the Buyer Indemnitees by reason of or arising out of or in
connection with (i) any Excluded Asset, (ii) the breach of any representation or
warranty contained in ARTICLE III hereof or in any certificate or other document
delivered to Buyer pursuant to the provisions of this Agreement, (iii) the
failure of the Seller to perform any act required under this Agreement or the
Service Agreement, (iv) a Claim by any third party with respect to any
liability, obligation, Contract, other commitment or state of facts which
constitutes a breach of any representation or warranty contained in ARTICLE III
hereof or in any certificate or other document delivered by or on behalf of
Shareholder or Seller to the Buyer pursuant to the provisions of this Agreement,
(v) any liability or obligation of Seller or any of its Affiliates which is not
an Assumed Liability, including, without limitation, all those liabilities and
obligations set forth in SECTIONS 2.3(a) through (g) hereof, or (vi) any breach
by Seller of the agreements set forth on SCHEDULE 3.2, or the agreements set
forth on SCHEDULE 5.5 the consents to which shall not be obtained by Seller on
prior to the Closing Date, caused by Seller's execution of and delivery and
performance under this Agreement or the Service Agreement . The Buyer agrees to
give prompt notice to Seller of any Claim for which Buyer seeks indemnification
hereunder, which notice shall include a reasonably detailed description of such
Claim. If any Claim is brought against Buyer for which indemnification is sought
from Seller
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under this SECTION 11.2, then Buyer shall control the contest, defense,
settlement or compromise of any such Claim (including the engagement of counsel
in connection therewith), at Seller's cost and expense (if indemnification is
finally determined to be due pursuant to this SECTION 11.2), including the cost
and expense of reasonable attorneys' fees in connection with such contest,
defense, settlement or compromise, and Seller shall have the right to
participate in the contest, defense, settlement or compromise of any such Claim
at its own cost and expense, including the cost and expense of attorneys' fees
in connection with such participation; provided, however, that the Buyer shall
not settle or compromise any such Claim without the prior written consent of
Seller, which consent shall not be unreasonably withheld. Any amounts owed to
Buyer pursuant to this SECTION 11.2 shall be reimbursed to Buyer by Seller
within five (5) Business Days after notice by Buyer, furnished pursuant to
SECTION 12.2, of such amounts, and if not so reimbursed, such amounts may, at
Buyer's election, be offset against the Post Closing Payment or otherwise as
provided in SECTION 2.10, including against any amounts owing by Buyer to Seller
under the Service Agreement.
11.3 By Buyer. Buyer agrees to indemnify and hold harmless the Seller
Indemnitees from and against, and to reimburse the Seller Indemnitees with
respect to, any and all Claims against the Seller Indemnitees by reason of or
arising out of or in connection with (i) the breach of any representation or
warranty contained in ARTICLE IV hereof, or any certificate or other document
delivered by the Buyer to Seller under this Agreement, (ii) the failure of the
Buyer to perform any act required under this Agreement, (iii) a Claim by any
third party with respect to any liability, obligation, Contract, other
commitment or state of facts which constitutes a breach of any representation or
warranty contained in said ARTICLE IV or in any certificate or other document
delivered by or on behalf of Buyer to Seller pursuant to the provisions of this
Agreement or (iv) any Assumed Liability. Seller agrees to give prompt notice to
the Buyer of any Claim for which Seller seeks indemnification hereunder, which
notice shall include a reasonably detailed description of such Claim. If any
Claim is brought against Seller for which indemnification is sought from Buyer
under this SECTION 11.3, then Seller shall control the contest, defense,
settlement or compromise of any such claim (including the engagement of counsel
in connection therewith), at Buyer's cost and expense (if indemnification is
finally determined to be due pursuant to this SECTION 11.3), including the cost
and expense of attorneys' fees in connection with such contest, defense,
settlement or compromise, and Buyer shall have the right to participate in the
contest, defense, settlement or compromise of any such Claim at its own cost and
expense, including the cost and expense of attorneys' fees in connection with
such participation; provided, however, that Seller shall not settle or
compromise any such Claim without the prior written consent of Buyer, which
consent shall not be unreasonably withheld. Any amounts owed to Seller pursuant
to this SECTION 11.3 shall be reimbursed to Seller within five (5) Business Days
after notice by Seller, furnished pursuant to SECTION 12.2, of such amounts.
11.4 Threshold; Ceiling.
(a) Subject to SECTION 11.4(b), an Indemnifying Party shall not be
required to make any indemnification payment pursuant to SECTIONS 11.2 or 11.3,
as applicable, until such time as the total amount of all damages that have been
directly or indirectly suffered or incurred by an Indemnified Party pursuant to
a Claim, or to which an Indemnified Party has otherwise become subject, exceeds
$100,000 in the aggregate. At such time as the total amount of all
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damages pursuant to a Claim exceed $100,000, the Indemnified Party shall be
entitled to be indemnified against the total amount of such damages (and not
merely the portion of such damages exceeding $100,000). Notwithstanding the
foregoing, the provisions of this SECTION 11.4(a) shall not apply to any Claim
with respect to the Assumed Liabilities or the Excluded Liabilities.
(b) Claims for indemnity pursuant to the provisions of SECTIONS 11.2 or
11.3, as applicable, shall be limited to (i) during the period terminating on
the first anniversary of the Closing Date for all claims other than those
relating to the representation of Seller in SECTION 3.16 ("Year 2000"), and
during the period terminating eighteen months after the Closing Date for any
claim relating to the representation of Seller in SECTION 3.16 ("Year 2000"), an
amount equal to the Purchase Price, and (ii) during the period after the first
anniversary of the Closing Date, for all claims other than those relating to the
representation of Seller in SECTION 3.16 ("Year 2000"), and during the period
commencing eighteen months after the Closing Date for any claim relating to the
representation of Seller in SECTION 3.16 ("Year 2000") an amount equal to Three
Million Dollars ($3,000,000). Notwithstanding the foregoing, the provisions of
this SECTION 11.4(b) shall not apply to (i) any Claim with respect to the
Assumed Liabilities or the Excluded Liabilities or (ii) any willful misconduct,
fraud, gross negligence, bad faith or recklessness on the part of the
Indemnifying Party.
11.5 Exclusivity of Indemnification Remedies. The Buyer and the Seller
shall have no claim or cause of action, whether in contract, tort, under statute
or otherwise, for monetary damages arising out of, or relating to, this
Agreement apart from the right to indemnification pursuant to this SECTION 11
other than claims or causes of action based on fraud.
ARTICLE XII
MISCELLANEOUS
12.1 Survival of Representations and Warranties. Notwithstanding any
right of any party hereto to investigate the affairs of any of the parties
hereto and notwithstanding any knowledge of facts determined or determinable by
any party hereto pursuant to such investigation or right of investigation or
otherwise acquired or learned by any of the parties hereto, each of the parties
shall have the right to rely fully upon the representations, warranties,
covenants and agreements of the other party hereto contained in this Agreement
and to pursue all rights and remedies in connection therewith. All
representations, warranties, covenants and agreements made herein shall survive
the Closing Date.
12.2 Notices. All communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered personally with receipt acknowledged, (ii) sent by registered or
certified mail, return receipt requested, (iii) sent by telecopy with
confirmation or (iv) sent by overnight courier for next Business Day delivery,
addressed to the parties at the following addresses and facsimile numbers or to
such other addresses or facsimile numbers as any party shall hereafter specify
by communication to the other parties in the manner provided herein:
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If to Seller: InfoBeat Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇, President
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ Godward LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ C.T. Linfield, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer: Sony Music, a Group of
Sony Music Entertainment Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Senior Vice President, Business Affairs
and Administration
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: 212-833-
With a copy to: Sony Music, a Group of
Sony Music Entertainment Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Senior Vice President and General Counsel
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
and: Rosenman & Colin LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇, Esq.
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Notice of change of address shall be deemed given when actually received or upon
refusal to accept delivery thereof; all other communications shall be deemed to
have been given, received and dated on the earlier of: (i) when actually
received or upon refusal to accept delivery thereof, (ii) on the date when
delivered personally or via telecopy, (iii) one (1) Business Day after being
sent by overnight courier and (iv) four (4) Business Days after mailing, as
aforesaid.
12.3 Severability. In case any one or more of the provisions contained
in this Agreement shall be invalid or unenforceable in any respect, the validity
and enforceability of the
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remaining provisions contained herein shall not in any way be affected or
impaired thereby and shall be valid and enforceable to the fullest extent
permitted by law.
12.4 Interpretation, Jurisdiction. This Agreement shall be interpreted
and construed in accordance with the laws of the State of New York without
giving effect to the principles of conflicts of laws thereof. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the courts of the State
of New York, sitting in New York County, and the courts of the United States for
the Southern District of New York. Each party irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding brought in any such
court, any claim that any such suit, action or proceeding brought in such a
court has been brought in an inconvenient forum and the right to object, with
respect to any such suit, action or proceeding brought in any such court, that
such court does not have jurisdiction over such party. In any such suit, action
or proceeding, each party waives, to the fullest extent it may effectively do
so, personal service of any summons, complaint or other process and agrees that
the service thereof may be made by certified or registered mail, addressed to
such party at its address set forth in SECTION 12.2.
12.5 Entire Agreement. The parties hereto agree that all understandings
and agreements heretofore made between them with respect to the subject matter
hereof are merged in this Agreement, which fully and completely expresses their
agreement with respect to the subject matter hereof. There are no promises,
agreements, conditions, understandings, warranties, or representations, oral or
written, express or implied, among the parties hereto, other than as set forth
in this Agreement. All prior agreements among the parties with respect to the
subject matter hereof are superseded by this Agreement, which integrates all
promises, agreements, conditions and understandings among the parties with
respect to the Assets.
12.6 Termination, Revocation, Waiver, Modification or Amendment. No
termination, revocation, waiver, modification or amendment of this Agreement
shall be binding unless agreed to in writing and signed by an authorized officer
of each of the parties hereto.
12.7 Counterparts; Effective Date. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original and all of
which shall constitute one agreement. The signature of any party to a
counterpart shall be deemed to be a signature to, and may be appended to, any
other counterpart. This Agreement is dated and shall be effective among the
parties as of the date first above written.
12.8 Assignability. This Agreement shall not be assignable by any party
hereto without the prior written consent of the other party hereto, provided
that Buyer may assign its rights under this Agreement, in whole or in part, to
any Person, so long as Buyer remains jointly and severally liable with such
assignee for its obligations hereunder.
12.9 Binding Effect. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
permitted assigns.
12.10 Waiver. No consent or waiver, express or implied, by any party
hereto to or of any breach or default by any other party in the performance by
any other party of its
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obligations hereunder shall be deemed or construed to be a consent to or waiver
of any other breach or default in the performance by such other party of the
same or any other obligation of such party hereunder. Failure on the part of a
party to complain of any act or failure to act of any other party or to declare
such other party in default, irrespective of how long such failure continues,
shall not constitute a waiver by such party of its rights hereunder.
12.11 Additional Remedies. The rights and remedies of any party hereto
under this Agreement shall not be mutually exclusive. The respective rights and
obligations hereunder shall be enforceable by specific performance, injunction
or other equitable remedy, but nothing herein contained is intended to, nor
shall it limit or affect, any other rights in equity or any rights at law or by
statute or otherwise of any party aggrieved as against the other for breach or
threatened breach of any provision hereof, it being the intention of this
SECTION 12.11 to make clear the agreement of the parties hereto that their
respective rights and obligations hereunder shall be enforceable in equity as
well as at law or otherwise.
12.12 Expenses. Each of the parties hereto shall pay the fees and
expenses incurred by it in connection with the negotiation, preparation,
execution and performance of this Agreement, including, without limitation,
attorneys' fees and accountants' fees. Except as set forth in SECTION 2.7,
Seller shall pay all income, capital gains, franchise or other Taxes, together
with any fees or other charges, imposed on it in respect of the transfer of the
Assets to Buyer.
12.13 No Reliance by Third Parties. The provisions of this Agreement
are not for the benefit of any creditor or other Person other than the parties
hereto, and no creditor or Person other than the parties hereto shall obtain any
rights under this Agreement or by reason of this Agreement.
12.14 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement,
or have caused this Agreement to be duly executed on their behalf, as of the day
and year first hereinabove set forth.
INFOBEAT INC.
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
---------------------------------------------
SONY MUSIC, A GROUP OF SONY MUSIC
ENTERTAINMENT INC.
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
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TABLE OF CONTENTS
Page
ARTICLE I Definitions.................................................................................1
ARTICLE II Sale and Purchase of Assets.................................................................5
2.1 Sale and Purchase of Assets............................................................................5
2.2 Excluded Assets........................................................................................6
2.3 Assumption of Liabilities..............................................................................6
2.4 Closing................................................................................................8
2.5 Purchase Price.........................................................................................8
2.6 Nonassignable Assets and Nonassumable Liabilities......................................................9
2.7 Transfer Tax...........................................................................................9
2.8 Seller's Rights to Use Names..........................................................................10
2.9 Receipt of Funds......................................................................................10
2.10 Right of Offset.......................................................................................10
ARTICLE III Representations and Warranties of Seller...................................................10
3.1 Organization; Good Standing; Qualification............................................................10
3.2 Authorization and Validity of Agreement...............................................................11
3.3 No Approvals, Consents or Notices Required............................................................11
3.4 Contracts.............................................................................................11
3.5 InfoBeat Software and Technology; Other Proprietary Rights............................................13
3.6 Ownership; Liens......................................................................................14
3.7 Taxes.................................................................................................14
3.8 Legal Proceedings.....................................................................................14
3.9 Compliance With Law...................................................................................14
3.10 Title to and Condition of Properties..................................................................14
3.11 Financial Information.................................................................................15
3.12 Liabilities...........................................................................................15
3.13 Advertising Customers.................................................................................16
3.14 Employees; Independent Contractors; Contracts.........................................................16
3.15 Brokerage Commissions.................................................................................16
3.16 Year 2000.............................................................................................16
3.17 Web Site Software.....................................................................................16
3.18 Full Disclosure.......................................................................................16
ARTICLE IV Representations and Warranties of Buyer....................................................17
4.1 Organization; Good Standing...........................................................................17
4.2 Authorization and Validity of Agreement...............................................................17
4.3 No Governmental Approvals or Notices Required.........................................................17
4.4 Brokerage Commissions.................................................................................17
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Page
ARTICLE V Pre-Closing Covenants of Seller............................................................18
5.1 Conduct of Business...................................................................................18
5.2 No Breach of Representations and Warranties...........................................................18
5.3 Access by Buyer.......................................................................................18
5.4 No Solicitation.......................................................................................18
5.5 Consents..............................................................................................19
5.6 Confidential Treatment................................................................................19
5.7 Best Efforts..........................................................................................19
ARTICLE VI Pre-Closing Covenants of Buyer.............................................................19
6.1 No Breach of Representations and Warranties...........................................................19
6.2 Best Efforts..........................................................................................19
ARTICLE VII Conditions to Buyer's Obligations..........................................................20
7.1 Representations and Warranties........................................................................20
7.2 Covenants.............................................................................................20
7.3 Officer's Certificate.................................................................................20
7.4 Opinion of Counsel....................................................................................20
7.5 Good Standing Certificate.............................................................................20
7.6 Institution of Proceedings; Injunction................................................................20
7.7 Consents..............................................................................................20
7.8 ▇▇▇▇ of Sale and Assignment...........................................................................21
7.9 Assignment of Copyrights, Patents, Marks and Domain Names.............................................21
7.10 Service Agreement.....................................................................................21
7.11 Key Man Employment Agreement..........................................................................21
7.12 Cox Agreement.........................................................................................21
7.13 Documentation.........................................................................................21
7.14 Seller's Obligations..................................................................................21
7.15 Other Deliveries......................................................................................22
ARTICLE VIII Conditions to Seller's Obligations.........................................................22
8.1 Representations and Warranties........................................................................22
8.2 Covenants.............................................................................................22
8.3 Officer's Certificate.................................................................................22
8.4 Purchase Price........................................................................................22
8.5 Opinion of Counsel....................................................................................22
8.6 Good Standing Certificate.............................................................................22
8.7 Institution of Proceedings; Injunction................................................................22
8.8 Consents..............................................................................................23
8.9 Service Agreement.....................................................................................23
8.10 Other Deliveries......................................................................................23
ARTICLE IX Post-Closing Covenants.....................................................................23
9.1 Further Assurances....................................................................................23
9.2 Public Announcements..................................................................................23
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Page
9.3 Noncompetition; Nonsolicitation.......................................................................24
9.4 Use of Marks; Linking.................................................................................26
9.5 Access to Books and Records...........................................................................27
9.6 MailCity..............................................................................................27
9.7 Transfer of Subscriber Data...........................................................................27
9.8 Ad Server.............................................................................................27
9.9 ▇▇▇▇▇▇.▇▇▇............................................................................................27
ARTICLE X Termination................................................................................27
10.1 Termination..........................................................................................27
10.2 No Waiver............................................................................................28
ARTICLE XI Indemnification............................................................................28
11.1 Survival of Representations, Warranties and Covenants.................................................28
11.2 By Seller.............................................................................................28
11.3 By Buyer..............................................................................................29
11.4 Threshold; Ceiling....................................................................................30
11.5 Exclusivity of Indemnification Remedies...............................................................30
ARTICLE XII Miscellaneous..............................................................................30
12.1 Survival of Representations and Warranties............................................................30
12.2 Notices...............................................................................................31
12.3 Severability..........................................................................................32
12.4 Interpretation, Jurisdiction..........................................................................32
12.5 Entire Agreement......................................................................................32
12.6 Termination, Revocation, Waiver, Modification or Amendment............................................32
12.7 Counterparts; Effective Date..........................................................................33
12.8 Assignability.........................................................................................33
12.9 Binding Effect........................................................................................33
12.10 Waiver................................................................................................33
12.11 Additional Remedies...................................................................................33
12.12 Expenses..............................................................................................33
12.13 No Reliance by Third Parties..........................................................................34
12.14 Headings..............................................................................................34