Exhibit 2.1
Asset Purchase Agreement
Exhibit 2.1
Portions of this document have been redacted pursuant to a Request for
Confidential Treatment filed with the Securities and Exchange Commission.
Redacted portions are indicated with the notation "*****"
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of the
10th day of February, 2003, by and among L90, Inc., a Delaware corporation doing
business as "MaxWorldwide" ("Seller"), American List Counsel, Inc., a New Jersey
corporation ("Parent"), and Data Marketing New England, Inc., a New Jersey
corporation ("Purchaser").
R E C I T A L S
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A. Pursuant to an Asset Purchase Agreement dated May 14, 2002 by and
among Seller, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ III and Novus List Marketing, L.L.C., a
Minnesota limited liability company, Seller acquired, and now operates, a
traditional, offline list marketing services business, consisting of list
management services, database enhancement services, list rental fulfillment
services, modeling and analytical services and list maintenance hygiene services
but expressly excluding email list management, email brokerage and all other
online services. Such traditional, offline list marketing services business is
referred to herein as the "Business."
B. Purchaser is a wholly-owned subsidiary of Parent.
C. Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, substantially all the assets of the Business, as more
particularly described below.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto hereby mutually covenant and
agree as follows:
ARTICLE I.
PURCHASE AND SALE OF ASSETS
---------------------------
1.1 Purchase and Sale. Subject to the terms and conditions set forth
herein, at the Closing (as hereinafter defined), Seller agrees to sell, convey,
transfer, assign and deliver to Purchaser, and Purchaser agrees to purchase from
Seller, free and clear of all liens, mortgages, charges, security interests,
claims, restrictions, easements and encumbrances of any kind or nature
whatsoever (collectively, "Liens"), other than Permitted Liens, Seller's assets,
properties and rights used primarily in the Business that are set forth in
subsection 1.1.1 below, all of which are collectively referred to herein as the
"Assets." "Permitted Liens" shall mean (a) Liens for Taxes and assessments or
governmental charges or levies not at the time due or in respect of which the
validity thereof shall currently be contested in good faith by appropriate
proceedings; (b) Liens in respect of pledges or deposits under workers'
compensation laws or similar legislation, carriers', warehousemen's, mechanics',
laborers' and materialmen's and similar Liens, if the obligations secured by
such
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Liens are not then delinquent or are being contested in good faith by
appropriate proceedings; (c) Liens incidental to the conduct of the business of
Seller which were not incurred in connection with the borrowing of money or the
obtaining of advances or credits and which do not in the aggregate materially
detract from the value of its property or materially impair the use thereof in
the operation of the Business; and (d) such other Liens as are listed in
Schedule 1.1 annexed hereto. Notwithstanding the foregoing, no Lien shall be a
Permitted Lien if such Lien materially impacts the value or usefulness of the
Assets to which it is attached unless such Lien is identified in Schedule 1.1 by
a designation that expressly states that such Lien may materially impact the
value or usefulness of the Assets to which it is attached.
1.1.1 Assets. The Assets shall consist of the following:
(a) the equipment, machinery and other tangible personal
property used primarily in the Business (collectively, the "Equipment"),
including without limitation the Equipment set forth in Schedule 1.1.1(a), and
all manufacturers' warranties, if any, express or implied, existing for the
benefit of Seller in connection with the Equipment to the extent transferable;
(b) all of Seller's patents, patent applications,
trademarks (both registered and unregistered), tradenames, copyrighted works
(both registered and unregistered), trade secrets (including those trade secrets
previously used, currently used or intended in the future to be used by the
Seller in the Business), product development rights, permits, licenses and other
intangible assets used in the Business set forth on Schedule 1.1.1(b) annexed
hereto, including all registrations and applications to register such intangible
assets;
(c) all notes receivable and accounts receivable
relating to the Contracts (as defined herein) assigned to the Purchaser
hereunder, together with all related agreements, collateral, guarantees,
security interests and other Liens and all rights of, or amounts owing to,
Seller relating primarily to the Business (collectively, the "Accounts
Receivable");
(d) the prepaid expenses and deposits relating primarily
to the Business set forth on Schedule 1.1.1(d) annexed hereto;
(e) all of Seller's right, title and interest under
customer orders, commitments, customer contracts, equipment, furniture and
personal property leases, bids, contracts, license agreements, distributor
agreements and other agreements ("Contracts") of Seller relating primarily to
the Business, including list management agreements, agreements for the purchase
of AMSS Software services, fulfillment orders, insertion orders, other customer
orders and all other Material Contracts (as hereinafter defined); subject to
Seller's retention of rights necessary to fulfill its indemnification
obligations with respect to the Contracts as set forth in Article VI below;
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(f) all rights of Seller under or pursuant to all
warranties, representations and guarantees made by suppliers in connection with
products or services furnished to Seller relating primarily to the Business;
(g) all of the books and records relating primarily to
the Assets or primarily to the Business, including, without limitation, sales
and promotional literature, manuals and data, sales and purchase correspondence,
vendor lists, catalogs or research material and billing and collections
information;
(h) all rights, choses in action and claims, known or
unknown, matured or unmatured, accrued or contingent, against third parties
related primarily to the Assets and the Assumed Liabilities (as defined below);
(i) all of Seller's leasehold and other interests in the
real estate and leases described in Schedule 3.5.2 annexed hereto; and
(j) all goodwill and other intangible assets generated
by or associated with the Assets set forth in subparagraphs (a) through (i)
above.
For purposes of this Agreement and the Schedules annexed hereto, the "AMSS
Software" shall mean the A.M.S.S. Advanced Marketing Selectivity System owned by
Seller, including, without limitation, all the related executable files, source
code, object code, documentation and databases.
1.1.2 Excluded Assets. All assets and properties of Seller other
than the Assets (collectively, the "Excluded Assets") shall be excluded from the
Assets, which Excluded Assets shall include, without limitation:
(a) Seller's corporate record books; provided, however,
that Purchaser shall have a right to retain copies of, and use, any corporate
record books of Seller relating primarily to the Business;
(b) Seller's cash and cash equivalents;
(c) subject to the rights expressly granted to Purchaser
and Parent herein pursuant to Section 5.5 hereof, Seller's right, title and
interest to the "MaxWorldwide," "Max," "MaxOnline" and "MaxDirect" names and
marks and all derivatives of the same and all of the Seller's domain names;
(d) Seller's rights, choses in action and claims, known
or unknown, matured or unmatured, accrued or contingent, against third parties
related to the Excluded Liabilities (as defined below);
(e) Seller's right, title and interest under Seller's
insurance policies;
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(f) Seller's right, title and interest under the offline
and e-mail list management agreement between Seller and ▇▇▇▇▇▇▇▇▇.▇▇▇;
(g) all assets and any rights under any plan or any
agreement relating to employee benefits, employment or compensation of Seller or
its respective employees;
(h) subject to Purchaser's rights (which Seller shall
not unreasonably impede) at Purchaser's sole expense to obtain electronic and
written copies of all data regarding the Business included in Seller's Clipper
and Mercury software as of the date hereof and subject to the Purchaser's rights
under the Transition Services Agreement (as defined herein), all Seller's right,
title and interest to its Clipper and Mercury software; and
(i) the letter of credit provided by the Seller pursuant
to its Parenting list management agreement (the "Letter of Credit"), which
Letter of Credit Seller agrees to maintain in place for ninety (90) days after
the Closing.
1.1.3 Limited Assumption of Liabilities. Subject to the terms and
conditions of this Agreement, upon consummation of the Closing, Purchaser shall
assume, and agrees to pay, perform and discharge in due course, all of the
liabilities and obligations of Seller set forth in Schedule 1.1.3 hereto
(collectively, the "Assumed Liabilities").
1.1.4 Limitations. EXCEPT FOR THE ASSUMED LIABILITIES SET FORTH IN
SECTION 1.1.3, NEITHER PURCHASER NOR PARENT SHALL ASSUME OR DISCHARGE ANY DEBTS,
OBLIGATIONS, LIABILITIES OR COMMITMENTS OF SELLER OR THE BUSINESS, WHETHER
ACCRUED NOW OR HEREAFTER, WHETHER FIXED OR CONTINGENT, AND WHETHER KNOWN OR
UNKNOWN (the "Excluded Liabilities").
1.2 Purchase Price. Subject to the terms and conditions set forth
herein and in partial consideration for the sale, transfer, assignment,
conveyance and delivery of the Assets, (i) at the Closing, Purchaser shall pay
to Seller the Closing Cash Consideration (as defined below) in accordance with
the provisions of Section 1.2.1 below, (ii) subsequent to the Closing, Purchaser
shall pay to the Seller the Additional Cash Consideration (as defined below) in
accordance with the provisions of Section 1.2.2 below and (iii) subsequent to
the Closing, Purchaser shall pay to the Seller the Earnout (as defined below),
if any, in accordance with the provisions of Section 1.2.3 below. The Closing
Cash Consideration, the Additional Cash Consideration and the Earnout are
hereinafter referred to collectively as the "Purchase Price."
1.2.1 At Closing, Purchaser shall pay to Seller an aggregate amount
of Two Million Dollars ($2,000,000) (the "Closing Cash Consideration") by wire
transfer of immediately available funds to an account designated in writing by
Seller or by certified or bank cashier's check.
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1.2.2 During the period beginning on the Closing Date and ending
one (1) year following the Closing Date (the "Collection Period"), Purchaser
shall pay to the Seller, or such other Person as Seller may direct, within
fifteen (15) days following the end of each calendar month (each, a "Collection
Month") during the Collection Period, an amount equal to the product obtained by
multiplying (A) the Applicable Percentage (as defined below) by (B) the excess
(the "Excess Amount") of (x) the sum of all amounts collected or received by
Purchaser or Parent (the "Collected Accounts Receivable") during such Collection
Month from the Accounts Receivable acquired by Purchaser pursuant to this
Agreement and (y) the sum of the accounts payable amounts assumed by the
Purchaser pursuant to this Agreement, if any, directly related to such Collected
Accounts Receivable to be paid or payable to the list owners as provided in the
applicable Contracts with such list owners. For purposes of clarity and as
illustrated below, where only a percentage of the Account Receivable is
collected in any particular month or during the Collection Period, as
applicable, only that percentage of the account payable directly related to such
Collected Accounts Receivable shall be deemed paid or payable during the
applicable month or the Collection Period, as applicable, for purposes of
determining the Excess Amount by which to multiply the Applicable Percentage.
For purposes of this Section 1.2.2, the "Applicable Percentage"
shall equal ninety-two and one half percent (92.5%) with respect to all
Collected Accounts Receivable collected or received by Purchaser or Parent
during the first six (6) months of the Collection Period and shall equal
forty-six and one-quarter percent (46.25%) with respect to all Collected
Accounts Receivable collected or received by Purchaser or Parent during the last
six (6) months of the Collection Period. In addition, for purposes of this
Section 1.2.2, in calculating any Collected Accounts Receivable amount, third
party collection fees and expenses (if any) paid or payable by Purchaser or
Parent in connection with the collection of such Collected Account Receivable
shall not be taken into account if such fees are incurred during the first six
(6) months of the Collection Period, and third party collection fees and
expenses (if any) paid or payable by Purchaser or Parent in connection with the
collection of such Collected Accounts Receivable shall be taken into account if
such fees are incurred during the last six (6) months of the Collection Period.
For illustrative purposes only, if Purchaser acquires an Account
Receivable for $100.00 and assumes a related account payable to a list owner for
$90.00, then for every $1.00 collected or received by Purchaser or Parent during
the first six (6) months of the Collection Period with respect to such Account
Receivable, the Excess Amount with respect to such dollar would be equal to
$0.10 and Purchaser shall pay to Seller $0.0925 within fifteen (15) days
following the end of the calendar month during which such dollar was collected
or received by Purchaser or Parent and for every $1.00 collected or received by
Purchaser or Parent during the last six (6) months of the Collection Period with
respect to such Account Receivable, the Excess Amount with respect to such
dollar would be $0.10 and Purchaser shall pay to Seller $0.04625 within fifteen
(15) days following the end of the calendar month during which such dollar was
collected or received by Purchaser or Parent. In this example, if Purchaser
collected $50.00 with respect to such $100.00 Account Receivable during the
first month of the Collection Period, then Purchaser shall pay to Seller
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$4.625 within fifteen (15) days following the end of the calendar month during
which such amount was collected or received by Purchaser or Parent, and if
Purchaser collected $50.00 with respect to such $100.00 Account Receivable
during the seventh month of the Collection Period, then Purchaser would pay to
Seller $2.3125 within fifteen (15) days following the end of the calendar month
during which such amount was collected or received by Purchaser or Parent. In
addition, if in the above example Purchaser collected the $50.00 during the
first six months of the Collection Period with the assistance of a third party
collection agency and paid such collection agency $10.00, then Purchaser would
be deemed to have received $50.00 for purposes of the Collected Accounts
Receivable and the collection fees would be disregarded. If, however, such
collection was made during the last six (6) months of the Collection Period,
then such collection fees would be taken into account and Purchaser would be
deemed to have received $40.00 for purposes of the Collected Accounts
Receivable.
Purchaser acknowledges and agrees that if, during the Collection
Period, it or Parent should collect or receive any amount from a client with
whom Purchaser has an outstanding account receivable balance, then such
collected amount shall be treated as a Collected Accounts Receivable for which
payment shall be made by Purchaser to Seller pursuant to this Section 1.2.2 if
(x) such client designates that its payment is being made against an Account
Receivable acquired by Purchaser hereunder or (y) in the absence of any
designation by such client, if Purchaser determines (in accordance with this
Section 1.2.2) that client intends such payment to be made against an Account
Receivable acquired by Purchaser. If (a) such client designates that its payment
is being made against an account receivable that was not acquired by Purchaser
hereunder, or (b) in the absence of any designation by such client, if Purchaser
determines (in accordance with this Section 1.2.2) that client does not intend
such payment to be made against an Account Receivable acquired by Purchaser
hereunder, then such payment shall not be treated as a Collected Accounts
Receivable for which payment shall be made pursuant to this Section 1.2.2. If
such client fails to specify whether such payment is being made against an
outstanding Account Receivable balance or fails to specify which account
receivable balance is being paid if there is more than one account receivable
balance applicable to such client, Purchaser shall act in good faith and
reasonably to determine whether such client intends such payment to be made
against an outstanding Account Receivable acquired by Purchaser hereunder and,
if there is more than one account receivable balance applicable to such client,
which account receivable balance is being paid. In all instances, the
specification made by each client as to which account receivable it is paying
shall be binding on the parties hereto for purposes of this Section 1.2.2. The
sum of all payments made to Seller under this Section 1.2.2 shall be referred to
as the "Additional Cash Consideration." It is understood that amounts collected
by Purchaser or Parent after the Collection Period on the Accounts Receivable
purchased by Purchaser hereunder shall be the property of Purchaser and shall
not be subject to the provisions of this Section 1.2.2. For purposes of this
Agreement, "Person" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, incorporated organization,
association, corporation, institution, public benefit corporation, any national,
federal, state, municipal, local, territorial, foreign or other government or
any
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department, commission, board, bureau, agency, regulatory authority or
instrumentality thereof, any court, judicial, administrative or arbitral body or
public or private tribunal or other entity.
During the Collection Period, Purchaser shall treat, and use the
same efforts to collect, all Accounts Receivable acquired by Purchaser pursuant
to this Agreement in the same manner as Parent treats and attempts to collect
its own accounts receivable. Within fifteen (15) days following the end of each
calendar month during the Collection Period, Purchaser shall provide a written
report to Seller with each payment of Additional Cash Consideration for the
calendar month preceding such report, each such report to show in reasonable
detail the customer payment information, including the individual amounts
received by Purchaser, customer names and invoice numbers. Purchaser further
agrees that during the Collection Period, it shall accurately and fairly
maintain its books of accounts and records in accordance with GAAP (as defined
below). In addition, during the Collection Period, Purchaser shall permit Seller
and its representatives to have access to and to examine Purchaser's books and
records (and to copy and make extracts therefrom) at such reasonable times and
intervals as Seller may request for purposes of reviewing the Additional Cash
Consideration payments paid or payable by Purchaser.
1.2.3 Earnout Provision.
(a) As additional consideration for the Assets, Seller
shall have the right to receive additional cash (the "Earnout"), payable, if
applicable, in accordance with the terms of this Section 1.2.3.
(b) For purposes of this Agreement, "Revenue" shall mean
all revenue (calculated in accordance with GAAP whether or not such revenue is
collected, provided, however, that with respect to amounts invoiced prior to the
Closing relating to mailings occurring after the Closing, the term "Revenue"
shall not include any such amounts except to the extent collected by Purchaser
or Parent) generated from ▇▇▇▇▇▇▇▇, exchange charges, analytical charges and
mail fulfillment charges (collectively, "Sales"): (i) related to or arising from
the operation of the Assets (including without limitation, all Revenue generated
hereunder at any place by any Person from Sales related to or arising under the
list management Contracts assigned hereunder or the AMSS Software acquired),
(ii) to the extent not included in clause (i) above, related to or arising out
of the office or the analytical and mail fulfillment team presently located at
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Minnesota Office") or such
future location to which such office or analytical and mail fulfillment team may
move and (iii) to the extent not included in clause (i) above, related to or
arising out of the work of the sales team (the "Max Sales Team") operating under
▇▇▇▇▇ ▇▇▇▇▇'▇ management (including any successor to ▇▇. ▇▇▇▇▇) presently
located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Valhalla Office") or
such future location to which such sales team may move (including future sales
people hired with respect to the Max Sales Team or future sales people reporting
under ▇▇▇▇▇ ▇▇▇▇▇ (or any successor to ▇▇. ▇▇▇▇▇) (whether to replace any former
Max Sales Team employee or as an addition to the
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Max Sales Team)). Parent and Purchaser agree to maintain the separate existence
of the Max Sales Team for a period beginning on the Closing Date and ending on
the first anniversary of the Closing Date; provided, however, that neither
Purchaser nor Parent shall be prohibited from terminating in good faith without
cause the employment of any Max Sales Team employee or from terminating with
cause the employment of any Max Sales Team employee.
(c) If Revenue during the first 365 days after the
Closing Date (the "Earnout Period") is equal to at least $2,500,000 (the "First
Target"), then Purchaser shall pay to Seller an amount equal to $500,000 (the
"First Earnout"). If Revenue during the Earnout Period is equal to at least
$3,500,000 (the "Second Target"), then Purchaser shall pay to Seller an amount,
in addition to the First Earnout, equal to $1,000,000 (the "Second Earnout" and,
together with the First Earnout, the "Earnout"); provided, however, that the
Second Earnout shall be increased an additional $0.50 for every $1.00 that the
Revenue for the Earnout Period exceeds the Second Target. In the event that
Revenue during the Earnout Period is less than the First Target, no First
Earnout shall be payable by Purchaser or Parent hereunder, and in the event that
Revenue during the Earnout Period is less than the Second Target, no Second
Earnout shall be payable by Purchaser or Parent hereunder.
(d) The Earnout, if any, shall be promptly paid by
Purchaser to Seller, or to such Persons as Seller may direct, as follows:
(i) The First Earnout shall be paid within thirty
(30) days after the date on which Revenue exceeds $2,500,000; and
(ii) The Second Earnout shall be paid in two (2)
equal installments on the ninetieth (90th) and one hundred and twentieth (120th)
days after the end of the Earnout Period.
To the extent Seller disputes Purchaser's calculation of the Earnout, Seller and
Purchaser shall negotiate in good faith for thirty (30) days to resolve such
dispute and payment of the Earnout shall be deferred until such dispute is
resolved. Notwithstanding the provisions of Article VI hereof, to the extent
Seller and Purchaser are unable to resolve such dispute within such 30 day
period, Seller and Purchaser shall select a mutually acceptable nationally
recognized independent accounting firm (other than an accounting firm then
engaged by Seller or Purchaser) to resolve such dispute within thirty (30) days
after submission of all applicable materials by the parties. The determination
of such accounting firm as to the calculation of the Earnout shall be conclusive
and binding upon the parties for purposes of this Section 1.2.3. The fees and
expenses of such accounting firm shall be borne equally by Seller and Purchaser.
1.3 Transferee Liability. The parties hereto acknowledge and agree
that:
(a) all consent fees, sales Tax, use, excise, transfer,
value added and similar Taxes and assignment or transfer fees, and other fees
and charges and Taxes
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payable in connection with the transactions contemplated hereby, if any, shall
be paid by Seller; and
(b) all Federal and state income Taxes, if any, incurred
by Purchaser or Seller shall be borne by the party incurring such Taxes.
ARTICLE II.
THE CLOSING
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2.1 Closing. The transactions contemplated by this Agreement shall
be consummated (the "Closing") concurrently with the execution of this Agreement
at the offices of Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, ▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇, New York, New York or on such other date and such other place as
the parties shall mutually agree (the "Closing Date").
2.2 Deliveries of Purchaser. At the Closing and subject to the terms
and conditions set forth herein, Purchaser shall:
2.2.1 assume the Assumed Liabilities, and in furtherance thereof
shall execute and deliver to Seller the Assignment Agreement (as defined below);
and
2.2.2 pay the Closing Cash Consideration to Seller by wire transfer
of immediately available funds to an account designated in writing by Seller or
by certified or bank cashier's check;
2.2.3 execute and deliver to Seller a certificate of the Secretary
of Purchaser in the form of Exhibit A annexed hereto; and
2.2.4 execute and deliver to Seller a transition services agreement
in the form of Exhibit B annexed hereto (the "Transition Services Agreement").
2.3 Deliveries of Seller. At the Closing and subject to the terms
and conditions set forth herein, Seller shall:
2.3.1 convey, assign, transfer and deliver to Purchaser all of
Seller's right, title and interest in and to the Assets, free and clear of all
Liens (other than the Permitted Liens), and in furtherance thereof shall deliver
to Purchaser a General Assignment and Assumption Agreement and ▇▇▇▇ of Sale in
substantially the form attached hereto as Exhibit C (the "Assignment
Agreement"), together with such other deeds, bills of sale, assignments,
certificates of title, documents and other instruments of transfer and
conveyance as Purchaser and its legal counsel shall reasonably request;
2.3.2 *****
***** Material is confidential and has been omitted and filed separately with
the Securities and Exchange Commission.
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2.3.3 execute and/or deliver to Purchaser a certificate of the
Secretary of Seller in the form of Exhibit D annexed hereto;
2.3.4 deliver to Purchaser satisfactory evidence that all Liens
(other than the Permitted Liens) on any of the Assets have been released and
that all consents or waivers from governmental entities and other Persons
required in order for Seller to consummate the transactions contemplated
hereunder have been received; and
2.3.5 execute and deliver to Purchaser the Transition Services
Agreement.
2.4 Deliveries of Parent. At the Closing, Parent shall:
2.4.1 execute and deliver to Seller a guaranty in the form of
Exhibit E annexed hereto (the "Guaranty"); and
2.4.2 execute and/or deliver to Seller a certificate of the
Secretary or Assistant Secretary of Parent and Purchaser in the form of Exhibit
F annexed hereto.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
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OF SELLER
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As an inducement to Purchaser and Parent to enter into this
Agreement and to consummate the transactions contemplated hereby, Seller hereby
represents and warrants to, and covenants with, Purchaser and Parent as follows:
3.1 Organization and Authority. Seller (a) is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, (b) has full corporate power and authority to own and lease
the Assets and to carry on the Business as and where the Assets are now owned or
leased and the Business is now conducted, and (c) is qualified to do business as
a foreign corporation in each jurisdiction where the ownership or operation of
its properties or conduct of its business requires such qualification, except
where the failure to be so qualified, when taken together with all other such
failures, is not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect.
For purposes of this Agreement, "Material Adverse Effect" means any
change in or effect that, individually or in the aggregate (taking into account
all other such changes or effects) is, or is reasonably likely to be, materially
adverse to the Business or the liabilities, results of operations or condition
(financial or otherwise) of the Assets or Business; provided that (a) the
failure to retain or hire employees and the consequences thereof shall not
itself be deemed to be a Material Adverse Effect or itself be considered in any
determination of whether a Material Adverse Effect has occurred or is
continuing, (b) circumstances, developments, changes in or effects on general
economic or financial or securities market conditions in the United States and
elsewhere or changes affecting the
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industry generally in which the Business operates (whether or not such
circumstances, developments, changes or effects are the direct or indirect
result of the initiation, continuation, escalation or cessation of armed
hostilities involving or the declaration of war by or against the United States
or its territories), provided that such changes do not affect the Assets or the
Business in a materially disproportionate way, shall not itself be deemed to be
a Material Adverse Effect or itself be considered in any determination of
whether a Material Adverse Effect has occurred or is continuing, (c) the
initiation, continuation, escalation or cessation of armed hostilities against
or involving or the declaration of war by or against the United States or its
territories shall not itself be deemed to be a Material Adverse Effect or itself
be considered in any determination of whether a Material Adverse Effect has
occurred or is continuing, provided that such changes do not affect the Assets
or the Business in a materially disproportionate way, (d) any change or effect
caused by or relating to, the announcement of the transactions contemplated by
this Agreement shall not itself be deemed to be a Material Adverse Effect or
itself be considered in any determination of whether a Material Adverse Effect
has occurred or is continuing, (e) any change or effect relating to the Seller's
online business and operations shall not itself be deemed to be a Material
Adverse Effect or itself be considered in any determination of whether a
Material Adverse Effect has occurred or is continuing, (f) any adverse change
arising from or relating to any change in accounting requirements or principles
or any change in applicable laws, rules or regulations or the interpretation
thereof shall not itself be deemed to be a Material Adverse Effect or itself be
considered in any determination of whether a Material Adverse Effect has
occurred or is continuing and (g) any loss of customers from the Business to
Purchaser or Parent shall not itself be deemed to be a Material Adverse Effect
or itself be considered in any determination of whether a Material Adverse
Effect has occurred or is continuing.
3.2 Absence of Conflicts. Neither the execution and delivery
of this Agreement by Seller, the compliance by Seller with the terms and
conditions hereof nor the consummation by Seller of the transactions
contemplated hereby will (a) conflict with any of the terms, conditions or
provisions of the certificate of organization, bylaws or other charter documents
of Seller, (b) violate any provision of, or require any consent, authorization
or approval under, any law or administrative regulation or any judicial,
administrative or arbitration order, award, judgment, writ, injunction or decree
applicable to the Assets or the Business, or any governmental permit or license
issued to Seller, (c) violate or be in conflict with, result in a breach or
constitute (with or without notice or lapse of time or both) a default under, or
accelerate or permit the acceleration of the performance required by, or except
as set forth in Schedule 3.2 annexed hereto, require any consent, authorization
or approval under, any term or provision of any Lien, lease, agreement or
instrument to which Seller is a party or by which the Business or the Assets are
bound, (d) result in the creation of any Lien upon any of the Assets or (e) give
to others any rights or interests (including rights of purchase, termination or
cancellation) under any such Lien, lease, agreement or instrument, except in the
case of (b), (c), (d) or (e) above, for a conflict, breach, default or
acceleration that does not render consummation of the Closing illegal and is
not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect.
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3.3 Power and Authority.
3.3.1 Seller has all requisite corporate power and
authority and has taken all corporate action necessary in order to execute,
deliver and carry out all the terms and provisions of this Agreement and to
perform its obligations under this Agreement. Seller has taken, or caused to
have been taken, all necessary action, corporate or otherwise, to authorize
Seller's execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby. Consummation of the
transactions contemplated hereby does not require the approval of Seller's
stockholders.
3.3.2 This Agreement constitutes, and upon the execution
and delivery by Seller of the other agreements among the parties referred to
herein and each instrument and certificate delivered by Seller pursuant hereto,
such agreements, instruments and certificates shall constitute, the legal, valid
and binding obligations of Seller, enforceable against Seller in accordance with
their respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
fraudulent conveyance, reorganization, moratorium and other similar laws of
general application relating to or affecting the enforcement of creditors'
rights and to general equitable principles (the "Bankruptcy and Equity
Exception").
3.4 Financial Statements. Seller has previously delivered or
made available to Purchaser (a) an unaudited balance sheet of the Business as of
December 31, 2002 (the "Balance Sheet Date") and an unaudited statement of
revenue for the twelve month period then ended for the Business (such financial
statements, collectively, the "Financial Statements"). The balance sheet
included in the Financial Statements fairly presents, in all material respects,
the financial position of the Business as of its date and the statement of
revenue included in the Financial Statements fairly presents, in all material
respects, the revenue of the Business for the period set forth therein (subject
to footnotes and normal year-end audit adjustments), in each case in accordance
with accounting principles generally accepted in the United States ("GAAP")
consistently applied (except for the absence of footnotes and year-end audit
adjustments).
3.5 Title to Property; Encumbrances.
3.5.1 Except as set forth on Schedule 3.5.1 annexed
hereto, the Assets are all of the assets necessary to conduct the Business of
Seller as currently being conducted. Seller has, and upon consummation of the
transactions contemplated by this Agreement at the Closing, Purchaser will have,
good and marketable title to all of the Assets, real and personal, moveable and
immovable, tangible and intangible, free and clear of any and all Liens (other
than the Permitted Liens and other than Liens which do not materially affect the
value of such property or do not materially interfere with the use of such
property by Seller).
3.5.2 Seller owns no real property and, with respect to
the Business, does not lease or license any personal property to any third
party. Schedule 3.5.2 annexed hereto contains a list of all real property
leases, licenses and personal property leases relating
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primarily to the Business under which Seller is the lessee or licensee. All
leases and licenses relating primarily to the Business pursuant to which Seller
leases or licenses from others real or personal property are valid and
subsisting in full force and effect in accordance with their respective terms,
and there is not, under any real property lease, personal property lease or
license, any existing material default by or event of default (or event that,
with notice or passage of time, or both, would constitute a material default by
Seller, or would constitute a basis of force majeure or other claim of excusable
delay or nonperformance). To Seller's knowledge, there is not, under any real
property lease, personal property lease or license set forth on Schedule 3.5.2,
any existing material default by or event of default (or event that, with notice
or passage of time, or both, would constitute a material default) by any other
party thereto. Except as set forth in Schedule 3.5.2, no such lease or license
will require the consent of the lessor or licensor to or as a result of the
consummation of the transactions contemplated by this Agreement.
3.6 Proprietary Information.
3.6.1 Schedule 3.6.1 annexed hereto contains a true and
complete list of all Internet domain names, letters patent, patent applications,
trade names, trademarks, service marks, trademark and service ▇▇▇▇ registrations
and applications, copyrights, copyright registrations and applications, grants
of a license or right to Seller with respect to the foregoing, both domestic and
foreign, claimed by Seller and used or proposed to be used by Seller primarily
in the conduct of the Business, whether registered or not (collectively herein,
"Registered Rights"). Except as described in such Schedule 3.6.1, Seller is not
obligated or under any liability whatever to make any payments by way of
royalties, fees or otherwise to any owner or licensor of, or other claimant to,
any Registrable Right with respect to the use thereof in the conduct of the
Business or otherwise.
3.6.2 Except as set forth on Schedule 3.6.2 annexed
hereto, Seller owns, is transferring such ownership to Purchaser hereunder and
has the unrestricted right to use every trade secret, customer and supplier
list, promotional idea, marketing and purchasing strategy, computer program,
discovery, know-how, confidential data and all other intellectual property and
information required for the operation of the Business (collectively herein,
"Proprietary Information"), free and clear of any right, equity or claim of
others. Notwithstanding the foregoing sentence, "Proprietary Information" shall
not include the lists owned by customers of the Business, which lists are
managed by Seller as part of the Business.
3.6.3 Seller has not sold, transferred, assigned,
licensed or subjected to any right, Lien, encumbrance or claim of others, any
Registrable Rights or Proprietary Information or any interest therein. There are
no claims or demands of any Person pertaining to, or any proceedings that are
pending or, to the knowledge of Seller, threatened, which challenge the rights
of Seller in respect of any Registrable Rights or Proprietary Information.
3.6.4 Schedule 3.6.4 annexed hereto indicates the name
and address of any Person which owns any patent, patent application, trademark,
trademark application,
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trade name or copyright primarily used by Seller in the Business. There are no
outstanding Liens, whether written, oral or implied, inconsistent with the
transfer of the right, title and interest of Seller in all of Seller's patents,
patent applications, trademarks, copyrighted works, trademarks, trade names and
service marks which are to be transferred to Purchaser pursuant to this
Agreement. All required annuities, renewal fees, maintenance fees, amendments,
and/or other filings which are necessary to preserve and maintain in full force
and effect the patents, patent applications, trademarks, copyrighted works,
trademarks, trade names and service marks identified in such Schedule 3.6.4 have
been filed and/or paid. Each of the patents, trademark registrations, copyright
registrations, trademarks, trade names and service marks identified in such
Schedule 3.6.4 was obtained in compliance with the statutes, rules and
regulations governing the issuance of patents, trademark registrations,
copyright registrations, trademarks, trade names and service marks. To Seller's
knowledge, the use, marketing and or sale of any products presently used,
marketed or sold by the Business do not infringe any patents, trademarks,
copyrights or other proprietary rights of any third parties. Seller has
furnished or made available to Purchaser a true and complete list of all
drawings, sketches and blueprints used by Seller in connection with the Business
and has, as of the date hereof, furnished to Purchaser the source codes used by
Seller in connection with the Business.
3.7 Insurance. Seller maintains insurance policies with
respect to the operation of the Business ("Insurance Policies") with reputable
insurers against such risks and in such amounts as management reasonably has
determined to be prudent in accordance with industry practices. To Seller's
knowledge, all Insurance Policies are in full force and effect. Schedule 3.7
annexed hereto sets forth a list of all such Insurance Policies maintained by
the Seller since May 14, 2001 and a summary description of all claims with
respect to the Business made under any such the Insurance Policies since May 14,
2001.
3.8 Employees and Labor Matters. Schedule 3.8 annexed hereto
contains a true and complete list of all current employees of Seller relating
primarily to the Business and describes their base compensation, bonuses and
other compensation during the twelve months ended December 31, 2002. Except as
set forth on Schedule 3.8 annexed hereto, all such employees, as of the date
hereof, are actively at work (or on vacation or on temporary sick leave) and no
such employee is currently on a leave of absence, suspension, extended sick
leave (more than two weeks), short or longer term disability, family leave or
military leave. Except as set forth on Schedule 3.8 annexed hereto, none of such
Seller's employees is subject to any collective bargaining agreement or any
written employment agreement to which Seller is a party or is bound. Except in
each case as is not, individually or in the aggregate, reasonably likely to have
a Material Adverse Effect, with respect to the Business, the Business is in
compliance with all federal and state laws respecting employment and employment
practices and has not engaged in any unfair labor practice. To the knowledge of
Seller, no union or other labor organization has attempted to organize any of
the employees of Seller relating to the Business. Seller is not aware of any
worker's compensation or similar claims relating to or involving the Business
that has been filed, or threatened to be filed, with Seller or any governmental
authority and is currently pending. Seller has made
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available to Purchaser copies of all currently effective employee handbooks
utilized in connection with the Business since May 14, 2001. Since October 31,
2002, there has not been in respect of the Business any plant closing or mass
layoff of employees as those terms are defined in the Worker Adjustment
Retraining and Notification Act of 1988, as amended, or any similar state or
local law or regulation applicable to employees of the Business. There has not
been in respect of the Business any plant closing or mass layoff of employees as
those terms are defined in the Worker Adjustment Retraining and Notification Act
of 1988, as amended, or any similar state or local law or regulation.*****
Each material bonus, incentive, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock, stock option, employment, termination,
severance, compensation, medical, health, welfare, fringe benefits or other
material plan, policy, agreement or other arrangement that covers current
employees or directors of Seller with respect to service for Seller relating
primarily to the Business (the "Compensation or Benefit Plans") and any trust
agreement or insurance contract forming a part of any such Compensation or
Benefit Plans is listed in Schedule 3.8 and has been made available to Purchaser
prior to the date hereof. Except in each case as is not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect, with respect to
the Business, the Seller is not in default with respect to any Compensation or
Benefit Plans. No Compensation or Benefit Plan has terms requiring assumption by
Purchase or Parent.
There are no actions or claims existing or pending (other than
routine claims for benefits) to which Seller has received notice or, to Seller's
knowledge, threatened with respect to any Compensation or Benefit Plan that
could have a material effect on Seller's ability to consummate the transaction
or the Assets, and neither Seller nor any other ERISA Affiliate has been
notified of any audit or investigation of a Compensation or Benefit Plan by any
governmental entity. "ERISA Affiliate" means any entity, trade or business that
would be treated as under common control with Seller or as a member of a
controlled group including any Seller within the meaning of Section 414 of the
U.S. Internal Revenue Code (the "Code") or Section 4001 of the Employee
Retirement Income Security Act as from time to time amended ("ERISA").
No event has occurred and no condition exists with respect to any
"multi-employer plan" (as defined in ERISA Section 3(37)) that Seller or any
ERISA Affiliate has ever had an obligation to contribute to, that could result
in the imposition of a Lien or any other claim against any of the Assets of the
Business or for which Purchaser or Parent could have any liability as a result
of the transactions contemplated by this Agreement.
Seller has paid and discharged promptly when due all liabilities and
obligations arising under ERISA or the Code of a character which if unpaid or
unperformed
***** Material is confidential and has been omitted and filed separately with
the Securities and Exchange Commission.
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could result in the imposition of a Lien or any other claim against any of the
Assets of the Business or for which Purchaser or Parent could have any liability
as a result of the transactions contemplated by this Agreement.
3.9 Litigation. Except as disclosed in any registration
statement, report, proxy statement or information statement (including all
annexes, supplements, restatements and amendments thereto) prepared by Seller
since January 28, 2000, and filed with the Securities and Exchange Commission
(the "SEC") (collectively, including any such reports filed with the SEC
subsequent to the date hereof, the "Seller Reports") or except as set forth on
Schedule 3.9 annexed hereto, there is no legal action, suit, arbitration or
other legal, administrative or governmental investigation, inquiry or proceeding
(whether federal, state, local or foreign) pending or, to Seller's knowledge,
threatened in writing against or affecting the Business or the Assets except for
those that are not, individually or in the aggregate, reasonably likely to have
a Material Adverse Effect. Except as disclosed in the Seller Reports filed prior
to the date hereof or except as set forth on such Schedule 3.9, Seller is not in
default with respect to any order, writ, judgment, injunction, decree,
determination or award of any court or of any governmental agency or
instrumentality (whether federal, state, local or foreign). The Seller Reports
disclose that the SEC and Nasdaq have undertaken an investigation of certain
acts or omissions pertaining to Seller and certain former officers and directors
of Seller (the "SEC Investigation"). To Seller's knowledge, the SEC
Investigation has not involved the Business in any respect. To Seller's
knowledge, the subject matter of the SEC Investigation relates to Seller's
online business and does not relate to the Business in any respect.
3.10 Taxes.
3.10.1 Seller: (1) has or will have filed (taking into
account any extension of time within which to file) all Tax Returns (as defined
below) relating to the Business or the Assets required to be filed by it and all
such filed Tax Returns are or will be complete and accurate in all material
respects; (2) except for Taxes properly and adequately reserved for on its
financial statements in accordance with GAAP, has timely paid all Taxes relating
to the Business or the Assets due and payable by it and (3) has withheld from
amounts owing to any employee, creditor or other Person all Taxes relating to
the Business or the Assets required by applicable laws to be withheld and has
paid over to the proper governmental authority all such withheld amounts to the
extent due and payable, except where the failure to file such Tax Returns or pay
or withhold such Taxes or the failure of such Tax Returns to be complete and
accurate in all material respects would not be reasonably likely to have a
Material Adverse Effect;
3.10.2 There are not pending or, to Seller's knowledge,
threatened in writing any audits, examinations, investigations, litigation, or
other proceedings in respect of Taxes of Seller relating to the Business.
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3.10.3 No deficiencies for any Taxes relating to the
Business have been proposed, asserted or assessed against Seller, which have not
been fully paid or adequately provided for in the appropriate financial
statements of Seller.
3.10.4 No waivers or comparable consents of the time to
assess any Taxes relating to the Business are outstanding, and no power of
attorney granted by Seller with respect to any Taxes relating to the Business is
currently in force.
As used in this Agreement, (i) the term "Tax" (including, with
correlative meaning, the terms "Taxes", and "Taxable") shall mean all federal,
state, local and foreign income, profits, premium, franchise, gross receipts,
environmental, customs duty, capital stock, severance, stamp, payroll, sales,
employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other Taxes, duties or governmental
levies of any nature whatsoever, together with all interest, penalties and
additions imposed with respect to such amounts and any interest in respect of
such penalties and additions, and (ii) the term "Tax Return" means any return,
declaration, report, claim for refund, information return or statement relating
to Taxes, including any schedule or attachment thereto, and including any
amendment thereof, to be filed (whether on a mandatory or elective basis) with
any governmental authority.
3.11 No Undisclosed Liabilities. Except (a) to the extent set
forth or provided for in the Financial Statements, (b) as set forth on Schedule
3.11 annexed hereto or (c) for current liabilities incurred since the Balance
Sheet Date in the usual and ordinary course of business (none of which,
individually or in the aggregate, are material to the Assets or the Business),
the Business has no debts, liabilities or obligations of the type to be
disclosed on a financial statement prepared in accordance with GAAP or in notes
thereto that, individually or in the aggregate, has had or is reasonably likely
to have a Material Adverse Effect. All of the Assumed Liabilities have arisen in
the ordinary course of business of the Business.
3.12 Permits, Licenses, Etc. Except in each case as is not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect, Seller possesses, and is operating the Business in compliance with, all
material franchises, licenses, permits, certificates, authorizations, rights and
other approvals of governmental bodies, agencies and instrumentalities thereof
necessary to conduct the Business as currently conducted (the "Permits").
Schedule 3.12 annexed hereto sets forth a list of all such Permits. The
consummation of the transactions contemplated by this Agreement will not result
in the revocation, suspension or limitation of any material Permit and no
material Permit will require the consent of its issuing authority to, or as a
result of, the consummation of the transactions contemplated hereby.
3.13 Consents. All consents, authorizations and approvals of
any court, governmental body or agency or instrumentality thereof or any
arbitrator or any other Person necessary to the consummation of the transactions
contemplated by this Agreement
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("Required Consents"), except as described in Schedule 3.13(a) annexed hereto,
have been duly obtained. Seller has listed the Required Consents in Schedule
3.13(b) annexed hereto.
3.14 Material Contracts. Schedule 3.14 annexed hereto
contains a true and complete list of all material Contracts (other than purchase
orders from advertisers) relating primarily to the Business (collectively,
"Material Contracts") to which Seller is a party or by which Seller, the
Business or the Assets are bound or affected. For purposes of this Section 3.14,
any Contract shall be deemed "material" if it (a) involves performance by any
party more than 90 days after the date hereof, (b) involves payments to or
receipts by Seller in excess of $25,000 or (c) restricts Seller from carrying on
the Business. All such Material Contracts are valid and effective in accordance
with their terms. Neither Seller, nor to the knowledge of Seller, any other
party is in material breach of or in material default under any of the Material
Contracts.
3.15 Compliance with Law. Except in each case as is not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect or except as set forth on Schedule 3.15, the Business has not been
conducted and is not being conducted in violation of any applicable material
federal, state or local statute, law, rule, regulation, ordinance, permit,
order, decree of, or other lawful obligation imposed by, any court or
governmental authority or instrumentality. Except in each case as is not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect, Seller has made all required registrations and filings with all
applicable material federal, state and local government authorities relating to
the Business as currently conducted. Seller has not received notice nor has
knowledge of any violation of any applicable zoning regulation, zoning ordinance
or land use law or regulation (including setback requirements) relating to the
Business or any real property owned, operated or leased by Seller.
3.16 Absence of Certain Changes. Except as set forth on
Schedule 3.16 annexed hereto or in the Seller Reports filed prior to the date
hereof, since the Balance Sheet Date:
3.16.1 there has been no material change in the
business, assets, liabilities, results of operations or financial condition of
the Business or Seller relating to the Business;
3.16.2 there has been no material damage, destruction or
loss to the material properties relating to the Business, whether or not covered
by insurance;
3.16.3 the Business has been operated in the ordinary
course and consistent with its prior practices, and not otherwise;
3.16.4 the Assets have been maintained in good order,
repair and condition, ordinary wear and tear excepted;
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3.16.5 with respect to the Business, there has not been
any change in accounting methods, principles or practices affecting in any
material respect the Assets, the Assumed Liabilities or the Business other than
as required by GAAP or applicable laws or as disclosed in the Seller Reports
filed prior to the date hereof;
3.16.6 there has been no dividend or other distribution
or purchase or redemption of securities which has reduced the assets used in the
Business;
3.16.7 there has been no strike, labor stoppage, labor
dispute or threat of strike, labor stoppage or labor dispute involving any
employees of the Business, or any attempt or threat to organize or unionize the
employees of the Business;
3.16.8 there has been no increase or decrease in the
rates of compensation payable to any of the officers, employees or agents of the
Business over or under the rates in effect during the twelve months ended on the
Balance Sheet Date, other than general increases not in excess of five percent
(5%) made in accordance with past practices;
3.16.9 there has been no execution, amendment or
termination of any material Contract to which the Seller (with respect to the
Business) is a party or by which it may be bound;
3.16.10 there has been no catastrophic event, such as,
but not limited to, fire, explosion, earthquake, accident, flood, cancellation
or threatened cancellation of insurance policies (including without limitation
workmen's compensation and health insurance), condemnation, act of God or public
enemy, riot or civil disturbance, affecting the Assets or the Business; and
3.16.11 no governmental authority or agency has taken
any position materially adverse to any aspect of the Business.
3.17 Customers. Schedule 3.17 annexed hereto contains a
complete and accurate list setting forth, for the twelve months prior to the
Balance Sheet Date, the top fifteen (15) customers of the Business (the "Major
Customers"), the total dollar amount of business transacted with each of the
Major Customers during such period, and, if applicable, the reasons such
contracts were terminated. Except as set forth in such Schedule 3.17 annexed
hereto, the Seller has not been notified that any of the Major Customers intends
to terminate or change significantly its relationship with the Business on or
after the Closing Date.
3.18 Affiliations. Except as set forth on Schedule 3.18
annexed hereto or in the Seller Reports filed prior to the date hereof, none of
Seller, any officer, director or employee of Seller or any associate or
affiliate of Seller or any of such Persons has, directly or indirectly, (a) an
interest in any corporation, partnership or other entity that (i) furnishes or
sells, or proposes to furnish or sell, services or products that are furnished
or sold to or by
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Seller relating to the Business or (ii) purchases from or sells or furnishes, or
proposes to purchase from or sell or furnish, to Seller any goods or services
relating to the Business or (b) a beneficial interest in any entity which has a
Contract relating to the Business to which Seller is a party or by which it or
any Assets are bound or affected.
3.19 Brokers and Finders. Neither Seller nor any of its
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in connection
with this Agreement or the transactions contemplated in this Agreement, except
that Seller has employed, and incurred a fee to, ▇▇▇▇▇ & Company Incorporated.
Seller acknowledges that neither Purchaser nor Parent has any obligations to pay
any portion of such fee.
3.20 Other Intangibles. All documentation relating to
customers lists, processes, computer programs and other technical data used
primarily in the Business is included within the records to be transferred to
Purchaser hereunder. Except as set forth on Schedule 3.20 annexed hereto, Seller
is the sole owner of each of such documents and all of its trade secrets free
and clear of any Liens, encumbrances, restrictions or legal or equitable claims
of others. Seller has taken all reasonable security measures to protect the
secrecy, confidentiality and value of its trade secrets, including without
limitation appropriate notice to and/or agreements with its employees and any
other person who may have had access to such trade secrets. All of Seller's
material trade secrets pertaining to the Business have been communicated to
Purchaser.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PARENT
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Each of Purchaser and Parent hereby represents and warrants to
Seller as follows:
4.1 Organization and Good Standing. Each of Purchaser and
Parent (a) is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey, (b) has full corporate power
and authority to own and operate its properties and assets and to carry on its
business as presently conducted and (c) is qualified to do business as a foreign
corporation in each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such qualification, except where
the failure to be so qualified, when taken together with all other such
failures, is not, individually or in the aggregate, reasonably likely to have a
material adverse effect on the business, liabilities, properties, assets or
condition (financial or otherwise) of Parent.
4.2 Absence of Conflicts. Neither the execution and delivery
of this Agreement by Purchaser or Parent, the compliance by Purchaser or Parent
with the terms and conditions hereof nor the consummation by Purchaser and
Parent of the transactions contemplated hereby will (a) conflict with any of the
terms, conditions or provisions of the certificate of incorporation, bylaws or
other charter documents of Purchaser or Parent, (b) violate any provision of, or
require any consent, authorization or approval under, any law or
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administrative regulation or any judicial, administrative or arbitration order,
award, judgment, writ, injunction or decree applicable to, or any governmental
permit or license issued to Purchaser or Parent, (c) violate or be in conflict
with, result in a breach or constitute (with or without notice or lapse of time
or both) a default under, or accelerate or permit the acceleration of the
performance required by, or require any consent, authorization or approval
(other than those required to be obtained which have been, or prior to the
Closing will be, duly obtained by Purchaser) under, any term or provision of any
Lien, lease, agreement or instrument to which Purchaser or Parent is a party or
by which Purchaser or Parent or the assets of Purchaser or Parent are bound, (d)
result in the creation of any Lien upon any of the assets of Purchaser or Parent
or (e) give to others any rights or interests (including rights of purchase,
termination or cancellation) under any such Lien, lease, agreement or
instrument, except in the case of (b), (c), (d) or (e) above, for a conflict,
breach, default or acceleration that does not render consummation of the Closing
illegal and is not, individually or in the aggregate, reasonably likely to have
a material adverse effect on the business, liabilities, properties, assets or
condition (financial or otherwise) of Parent.
4.3 Power and Authority.
(a) Each of Purchaser and Parent has all requisite
corporate power and authority and has taken all corporate action necessary in
order to execute, deliver and carry out all the terms and provisions of this
Agreement and to perform its obligations under this Agreement. Each of Purchaser
and Parent has taken, or caused to have been taken, all necessary action,
corporate or otherwise, to authorize Purchaser's and Parent's, as the case may
be, execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby. Consummation of the transactions
contemplated hereby does not require the approval of the stockholders of Parent
or Purchaser.
(b) This Agreement constitutes, and upon the execution
and delivery by each of Purchaser and Parent of the other agreements among the
parties referred to herein and each instrument and certificate delivered by each
of Purchaser and Parent pursuant hereto, such agreements, instruments and
certificates shall constitute, the legal, valid and binding obligations of
Purchaser or Parent, as the case may be, enforceable against Purchaser and
Parent in accordance with their respective terms, subject to the Bankruptcy and
Equity Exception.
4.4 Consents. All necessary consents, authorizations and
approvals of any court, governmental body or agency or instrumentality thereof
or any arbitrator or any other Person relating to Purchaser's or Parent's
consummation of the transactions contemplated by this Agreement have been duly
obtained.
4.5 Brokers and Finders. None of Purchaser, Parent or any of
their respective officers, directors or employees has employed any broker or
finder or incurred any liability for any brokerage fees, commissions or finders'
fees in connection with this Agreement or the transactions contemplated in this
Agreement. Each of Purchaser
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and Parent acknowledges that Seller has no obligation to pay any portion of such
fee and shall indemnify, defend and hold Seller harmless from any claim with
respect to such fee.
ARTICLE V.
COVENANTS OF THE PARTIES.
-------------------------
5.1 Online Services. It is understood that no provision in
this Agreement is intended to preclude Seller, Parent or Purchaser from
providing online services either prior or subsequent to the Closing.
5.2 Covenant Against Competition.
5.2.1 Prohibited Acts. Seller hereby agrees that from
and after the Closing Date, it will not, directly or indirectly, whether through
an affiliated company or otherwise, in any capacity whatsoever, do any of the
following:
(a) At any time during the first twenty-four (24)
months after the Closing, engage, directly or indirectly, in any business which
(i) operates an offline list marketing services business, consisting of one or
more of list management services, database enhancement services, list rental
fulfillment services, modeling and analytical services or list maintenance
hygiene services (but expressly excluding email list management, email brokerage
and all other online services) and (ii) does business anywhere in the United
States.
(b) Except as required by law or pursuant to the
SEC Investigation, at any time disclose or furnish to any third parties any
confidential information concerning the Assets, the Assumed Liabilities and/or
the Business, including without limitation any trade secrets, the names of
customers or suppliers, the methods of operations, pricing, the techniques of
distribution or any other similar information;
(c) For a period of two (2) years after the
Closing, cause or induce any person employed by the Business at any time to
leave his or her employment with the Business except with the written consent of
Purchaser; or
(d) For a period of two (2) years after the
Closing, use the name "MaxDirect" or any name substantially equivalent thereto
(it being understood that the use of the names "MaxWorldwide," "Max " or
"MaxOnline" shall not violate this Section 5.2.1(d)).
5.2.2 Damages for Breach. Seller hereby acknowledges
that the covenants contained in Section 5.2.1 are of the essence of this
Agreement and that if it violates any such covenants, monetary damages would be
inadequate. Seller hereby agrees that in the event of any such violation,
Purchaser and Parent shall be entitled to injunctive
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relief, as a matter of right, and to all other remedies and rights to which
Purchaser and Parent may be entitled at law or in equity and under this
Agreement.
5.2.3 Other Matters. Seller agrees that each of the
provisions of this Section 5.2, including without limitation the period of time,
geographical area and types and scope of the restrictions on Seller's activities
specified herein, are intended to be and shall be divisible. Seller further
acknowledges the reasonableness of these provisions as an integral part of the
terms of this Agreement. If any provision of this Section 5.2 (including any
sentence, clause or part thereof) shall be adjudicated to be invalid or
unenforceable, such provision shall be deemed amended to delete therefrom the
portion thus adjudicated to be invalid or unenforceable, such deletion to apply
only with respect to the operation of such provision in the particular
jurisdiction in which such adjudication is made. In addition, if any particular
provision contained in this Section 5.2 shall for any reason be held to be
excessively broad as to duration, geographical scope, activity or subject, it
shall be construed by limiting and reducing such provision as to such
characteristic so that the provision is enforceable to the fullest extent
compatible with the applicable law as it shall then appear.
5.3 Employees.
5.3.1 Purchaser or Parent shall have extended offers to
all of Seller's employees of the Business (the "Potentially Transferred
Employees"), on the terms and conditions set forth below, of employment and none
of such offers shall be withdrawn prior to the Closing. Each offer of employment
to the Potentially Transferred Employees shall be for a substantially similar
position as such Potentially Transferred Employees held immediately prior to the
Closing, for employment on an "at-will" basis, and for at least the same base
salary or regular wage and target bonus and commissions, if applicable, as such
Potentially Transferred Employees received immediately prior to the Closing;
provided, however, that on and after the first anniversary of the Closing such
base salary or regular wage, position and all other compensation and benefits
shall be otherwise determined in the sole discretion of the Purchaser or Parent
or any of their respective successors or assigns. Notwithstanding the foregoing,
subject to Section 5.3.4, Purchaser shall have the right to terminate the
services of any such Potentially Transferred Employee at any time in its
discretion. Purchaser or Parent may, in compliance with applicable law,
interview and conduct background investigations with respect to all Potentially
Transferred Employees. Potentially Transferred Employees who accept Purchaser's
or Parent's offer of employment and commence such employment with the Purchaser
or Parent, as the case may be, upon the Closing are heretofore and hereinafter
collectively referred to as the "Transferred Employees." Effective on the
Closing Date, Seller shall, and hereby does, release all Transferred Employees
from any of their post-Closing obligations under any employment, non-compete
and/or confidentiality agreement previously entered into between the Seller and
such Transferred Employees solely to the extent necessary to allow such
Transferred Employees to serve Purchaser or Parent, or their successors or
assigns; provided, however, that Seller is not hereby releasing any Transferred
Employee from any employment, non-
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compete or confidentiality agreement as such agreement relates to any portion of
Seller's or its affiliates' businesses other than the Business.
5.3.2 Each of Purchaser and Parent shall recognize each
of the Transferred Employees' service with Seller and Novus List Marketing prior
to the Closing as service with the Purchaser or Parent, as the case may be, in
connection with any pension plan, 401(k) savings plan or other employee benefit
plans (including vacations and holidays) maintained and made available by the
Purchaser or Parent, as the case may be, following the Closing in which such
Transferred Employees elect to participate solely for purposes of vesting and
eligibility (but excluding benefit accruals other than for vacation and sick day
accruals). Each of Purchaser and Parent shall cause any welfare benefit plan
that such Transferred Employees may be eligible to participate in after the
Closing maintained by the Purchaser or Parent, as the case may be, to the extent
not prohibited by applicable laws, to waive any preexisting condition
limitation, exclusion or waiting period for Transferred Employees and their
dependents, to the same extent such limitations, exclusions or waiting periods
were satisfied, covered or waived under similar Seller's welfare benefit plans
prior to the Closing. Each of Purchaser and Parent shall also recognize each of
the Transferred Employees' service with Seller prior to the Closing as service
with the Purchaser or Parent, as the case may be, in connection with the paid
vacation policy maintained by Purchaser or Parent, as the case may be.
5.3.3 Seller shall take all reasonable actions
(including, without limitation, amendment of Seller's 401(k) plan), necessary to
permit lump sum or eligible rollover distributions to be made to Transferred
Employees of their account balances under Seller's 401(k) plan within a
reasonable period of time following the Closing.
5.3.4 In the event that any Transferred Employee is
dismissed by Parent or Purchaser without cause under circumstances in which such
Transferred Employee would be entitled to receive severance under Parent's
severance plans or policies, Parent shall cause such Transferred Employee to
receive severance under Parent's severance plans and policies as if such
Transferred Employee had been retained by Parent from the date such Transferred
Employee commenced service with Seller, or if earlier, the date such Transferred
Employee commenced service with Novus List Marketing. Except as otherwise
expressly provided herein and except for any probationary periods applicable to
Parent's employee benefit plans, during the first twelve months after the
Closing, the Transferred Employees in Purchaser's employ shall be entitled to
participate in the same, or substantially the same, employee benefit plans as
the employee benefit plans in which Parent's employees generally participate.
5.3.5 This Section 5.3 confers no legal rights or
responsibilities upon any Person other than Purchaser, Parent and Seller.
Without further limitation, no past, present or future employee of either
Purchaser, Parent or Seller shall have any rights hereunder.
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5.3.6 Except as set forth in Section 6.3.6, neither
Purchaser nor Parent shall adopt, maintain, sponsor contribute to or have any
obligation whatsoever under or with respect to any Compensation or Benefit Plan,
including without limitation the Seller's Offline 2001 and 2002 Bonus Plan, or
any other benefit plan maintained by or on behalf of the Seller. Except as set
forth in Section 6.3.6, Seller shall remain solely responsible for all
obligations under the Compensation or Benefit Plans, including without
limitation the Seller's Offline 2001 and 2002 Bonus Plan, and any other benefit
plan maintained by or on behalf of the Seller.
5.4 Taxes.
5.4.1 Responsibility. Any Tax liability with respect to
the Business or the Assets relating to any period prior to the Closing Date
(including Taxes occasioned by the recapture of depreciation and Tax credits)
and any Tax liability with respect to the transactions contemplated hereby will
be the responsibility of and will be paid by Seller.
5.4.2 Access. Each party shall provide the other with
access to all relevant documents and other information that may be needed by
such other party for the purpose of preparing Tax Returns or responding to an
audit by any governmental authority with respect to the Business or the Assets.
Such access will be provided during normal business hours.
5.5 MaxDirect. For a period of one year after the Closing
Date, Purchaser and Parent may include the statement "formerly MaxDirect" when
referring to the Business in press releases or other marketing or promotional
materials.
5.6 Reporting. During the 395 days following the Closing, in
order to permit Seller to monitor the conditions relating to the payment of the
Earnout, Parent shall, at its expense, within thirty (30) days of the end of
each calendar month after the Closing, deliver to Seller a certificate of its
Chief Financial Officer setting forth in reasonable detail the Revenue for such
calendar month. In addition, during the first year following the Closing, Parent
shall, at its expense, within fifteen (15) days following the end of each
calendar month after the Closing, deliver to Seller the report of Additional
Cash Consideration as described in more detail in Section 1.2.2. Promptly, but
in no event more than ten (10) days, after the date hereof, the Seller shall
deliver to the Purchaser a reasonably detailed report setting forth the dollar
amount of each Account Receivable as of the Closing.
5.7*****
***** Material is confidential and has been omitted and filed separately with
the Securities and Exchange Commission.
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5.8 Non-Compete Agreement. The Seller has delivered to the
Purchaser a copy of a Non-Compete Agreement, dated as of May 14, 2002, by and
between Seller and Novus List Marketing LLC (the "Non-Compete Agreement"). At
the Purchaser's request, the Seller shall, during the term of the Non-Compete
Agreement, take all steps reasonably designated by the Purchaser to enforce the
Non-Compete Agreement, including, without limitation, executing any and all
documents reasonably acceptable to Seller necessary to enable the Purchaser to
enforce the Non-Compete Agreement. The Purchaser shall reimburse the Seller for
all out-of-pocket expenses incurred by the Seller in taking such actions at the
Purchaser's request.
5.9 Software Cross-License and Support Agreement. The Seller
has delivered to the Purchaser a copy of a Software Cross-License and Support
Agreement by and among MIH, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, III, Novus List Marketing,
LLC, Novus Print Media Inc. and Seller dated as of May 14, 2001 (the "Support
Agreement"). At the Purchaser's request, the Seller shall, during the term of
the Support Agreement, take all steps reasonably designated by the Purchaser to
enforce Section 3 of the Support Agreement, including, without limitation,
executing any and all documents reasonably acceptable to Seller necessary to
enable the Purchaser to enforce the Support Agreement. The Seller shall use
reasonable commercial efforts to obtain a license or sub-license under the
Support Agreement to access data relating to the Business stored pursuant to the
Mercury and Clipper systems. The Purchaser shall reimburse the Seller for all
out-of-pocket expenses incurred by the Seller in taking such actions at the
Purchaser's request.
5.10 Payment of Amounts Collected. From and after the date
hereof, the Seller shall pay to the Purchaser by check or wire transfer of
immediately available funds to an account designated in writing by the Purchaser
all amounts received by the Seller with respect to all Accounts Receivable
assigned to the Purchaser hereunder. Contemporaneously, the Seller shall deliver
to the Purchaser copies of all relevant documentation with respect to such
payments. The Seller shall provide to the Purchaser (upon reasonable notice to
the Seller and during normal business hours) access to the Seller's books and
records as they relate to the receipt by the Seller of any payments on the
Accounts Receivable.
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5.11 No Liability. Provided that the Seller performs its
obligations under Sections 5.7, 5.8 and 5.9, the Seller shall have no liability
to the Purchaser or the Parent (a) *****, (b) under the Non-Compete Agreement if
Novus List Marketing LLC fails to perform thereunder or (c) under the Support
Agreement if MIH, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, III, Novus List Marketing or LLC, Novus
Print Media Inc. fail to perform thereunder.
5.12 Letter of Credit. Within ninety (90) days from the date
hereof, the Purchaser or the Parent shall obtain the consent and approval of the
customer holding the Letter of Credit to terminate the Letter of Credit.
ARTICLE VI.
SURVIVAL; INDEMNIFICATION
-------------------------
6.1 All representations, warranties and agreements made by
Seller, Parent or Purchaser in this Agreement, the schedules annexed hereto, the
documents delivered at the Closing and in any certificates delivered pursuant
hereto or thereto will survive the Closing; provided, however, that any such
representations and warranties shall survive only for the applicable "Survival
Period" (as hereinafter defined), and shall thereafter be of no further force or
effect. Seller, Parent and Purchaser shall be entitled to rely upon the
representations and warranties made by each other in this Agreement regardless
of any information or knowledge obtained in the course of any investigation or
otherwise, and shall be entitled to all available rights and remedies at law and
in equity in the event of the breach of any such warranties or representations
made by such other party. Additionally, the parties agree that the
indemnification obligations set forth in this Article VI shall survive with
respect to all claims for indemnification made within the applicable Survival
Period until finally determined in accordance with the terms hereof. The
representations, warranties, covenants, and agreements contained in this
Agreement shall not be affected by any investigation, verification, or
examination by any party hereto or by any Person acting on behalf of any such
party. For purposes of this Agreement, the representations in Sections 3.1, 3.2,
3.3, 4.1, 4.2 and 4.3 shall have a "Survival Period" ending on the last day on
which claims may be brought under this Agreement under any applicable statute of
limitations, the representations in Section 3.10 shall have a "Survival Period"
ending on the last day on which claims may be brought against the Seller or the
Purchaser under any applicable statute of limitations governing Tax matters, the
representations in Section 3.6 shall have a "Survival Period" ending two (2)
years from the date hereof and all other representations herein shall have a
"Survival Period" ending eighteen (18) months from the date hereof.
6.2 Indemnification of Purchaser and Parent. Upon
consummation of the Closing, Seller will indemnify, defend and hold Purchaser
and Parent and their respective officers and directors harmless from and
against:
6.2.1 All claims, costs, losses, suits, proceedings,
judgments, out-of-pocket expenses (including without limitation reasonable
attorneys' fees) and damages
***** Material is confidential and has been omitted and filed separately with
the Securities and Exchange Commission.
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(collectively, "Losses") caused by or arising out of the material untruth,
inaccuracy or breach of any Unqualified Representation or Warranty (or any
material omission therefrom) made by Seller in this Agreement, the documents
delivered by Seller at the Closing or any other documents or certificates
delivered pursuant hereto or thereto and all Losses caused by or arising out of
the untruth, inaccuracy or breach of any Qualified Representation or Warranty
(or any omission therefrom) made by Seller in this Agreement, the documents
delivered by Seller at the Closing or any other documents or certificates
delivered pursuant hereto or thereto; and
6.2.2 All Losses arising out of or relating to (i) any
failure by Seller or any shareholder of Seller to pay or discharge any Tax
liabilities relating to the Business or the Assets arising on or before the
Closing Date, (ii) any failure to comply with bulk sales laws (excluding bulk
sales laws under the Uniform Commercial Code) enforced by any Taxing authority
in connection with the transactions contemplated hereby, (iii) any breach by
Seller of any covenant or agreement made by Seller hereunder and (iv) claims
based on any of the following:
(a) Any claim for any commission or finders' fee with
respect to the transactions contemplated hereby from any broker engaged by or on
behalf of Seller or its shareholders;
(b) Any claim arising with respect to any liability
of Seller not expressly assumed by the Purchaser hereunder;
(c) Any claim arising after the Closing Date under
any lease, contract or purchase order of the Seller other than any liability
identified or described in Schedule 1.1.3;
(d) Any claim by any governmental authority relating
to the SEC Investigation; and
(e) Any claim based on any employment agreement,
Compensation and Benefit Plan or other employment arrangement or benefit
applicable to the Business in effect at or prior to the Closing Date except for
those liabilities assumed by Purchaser pursuant to Section 5.3.
6.3 Indemnification of Seller. Upon consummation of the
Closing, Purchaser and Parent will indemnify, defend and hold Seller and the
officers and directors of the Seller harmless from and against:
6.3.1 All Losses caused by or arising out of the
material untruth, inaccuracy or breach of any Unqualified Representation or
Warranty (or any material omission therefrom) made by Purchaser in this
Agreement, the documents delivered by Purchaser and Parent at the Closing or any
other documents or certificates delivered pursuant
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hereto or thereto and all Losses caused by or arising out of the untruth,
inaccuracy or breach of any Qualified Representation or Warranty (or any
omission therefrom) made by Purchaser in this Agreement, the documents delivered
by Purchaser and Parent at the Closing or any other documents or certificates
delivered pursuant hereto or thereto;
6.3.2 All Losses arising from any breach by Purchaser or
Parent of any covenant or agreement made by Purchaser or Parent hereunder
6.3.3 All Losses arising out of any claim for any
commission or finders' fee with respect to the transactions contemplated hereby
from any broker engaged by or on behalf of Purchaser or Parent or their
shareholders;
6.3.4 All Losses arising out of or relating to the
failure by the Purchaser to pay or discharge any of the Assumed Liabilities;
6.3.5 All Losses relating to the Purchaser's operation
of the Business after the Closing, but only with respect to liabilities arising
after the Closing;
6.3.6 All payments required to be made by the Seller or
its affiliates to Potentially Transferring Employees under the Seller's accrued
vacation plan or policy, provided that (a) such payments are required to be made
as a result of the transactions contemplated hereby and (b) in no event shall
Purchaser or Parent be required to pay more than a total of $19,263 pursuant to
this Section 6.3.6; and
6.3.7 All Losses arising out of Purchaser's or Parent's
use, transfer or other disposition of the Software Licenses set forth on
Schedule 3.2 hereto on or after the Closing Date (including, without limitation,
claims of unlicensed or unauthorized use of such Software Licenses).
6.4 Limitations. Notwithstanding any provision herein to the
contrary:
6.4.1 No claim for indemnification shall be brought
under Section 6.2.1 or 6.3.1 unless the aggregate amount of Losses for all
claims brought under Section 6.2.1 or 6.3.1, whichever is applicable, shall
exceed $50,000 (the "Indemnity Basket"), in which case the indemnification
available hereunder shall not include the first $50,000 of such Losses.
6.4.2 The maximum amount of indemnification payable
under either Section 6.2.1 or Section 6.3.1 (the "Indemnity Cap") shall be the
Purchase Price actually paid by Purchaser hereunder from the Closing through and
including the date of such claim for indemnification; provided, however, should
Seller be entitled to receive from Purchaser additional amounts thereafter which
constitute part of the Purchase Price, such additional amounts shall be
recoverable by Purchaser to the extent that Purchaser has incurred Losses
indemnifiable hereunder for which Purchaser has not received indemnification
hereunder.
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6.4.3 No claim shall be made for indemnification
pursuant to Section 6.2.1 or 6.3.1 after the expiration of the applicable
Survival Period. Notwithstanding any provision herein to the contrary, neither
the Indemnity Basket nor the Indemnity Cap shall apply to any claim for Losses
relating to or arising from the provisions of Section 1.2 or from the breach of
any other covenant in this Agreement. Furthermore, notwithstanding any provision
herein to the contrary, neither Seller, on one hand, nor Purchaser or Parent, on
the other hand, shall have any liability to indemnify the other for any Losses
resolved by the parties pursuant to Section 1.2.3.
6.5 Procedures for Third-Party Claims. In the case of any
claim for indemnification arising from a claim of a third party, an indemnified
party shall give written notice, within twenty (20) days following such
indemnified party's receipt of such claims or demand, to the indemnifying party
of any claims or demand of which such indemnified party has knowledge and as to
which it may request indemnification hereunder; provided, however, that the
failure to provide notice within such twenty (20) day time period shall reduce
the indemnification obligations of the indemnifying party only to the extent
that the indemnifying party is prejudiced by such failure. The indemnifying
party shall have the right to defend and to direct the defense against any such
claims or demand, in its name or in the name of the indemnified party, as the
case may be, at the expense of the indemnifying party, and with counsel selected
by the indemnifying party unless (i) such claim or demand seeks an order,
injunction or other equitable relief against the indemnified party, or (ii) the
indemnified party shall have reasonably concluded that (x) there is a conflict
of interest between the indemnified party and the indemnifying party in the
conduct of the defense of such claim or demand or (y) the indemnified party has
one or more defenses not available to the indemnifying party. Notwithstanding
anything in this Agreement to the contrary, the indemnified party shall, at the
expense of the indemnifying party, cooperate with the indemnifying party, and
keep the indemnifying party fully informed, in the defense of such claim or
demand. The indemnified party shall have the right to participate in the defense
of any claim or demand with counsel employed at its own expense; provided,
however, that, in the case of any claim or demand described in clause (i) or
(ii) of the second preceding sentence or as to which the indemnifying party
shall not in fact have employed counsel to assume the defense of such claim or
demand, the reasonable fees and disbursements of such counsel shall be at the
expense of the indemnifying party. The indemnifying party shall have no
indemnification obligations with respect to any such claim or demand which shall
be settled by the indemnified party without the prior written consent of the
indemnifying party, which consent shall not be unreasonably withheld or delayed.
6.6 Fees and Expenses. In the event that any claim for
indemnification hereunder results in litigation that is not resolved prior to
the rendering of a judgment thereunder, the successful party in such litigation
shall be entitled to receive from the other party in such litigation
compensation for all reasonable attorneys' fees and expenses incurred by such
successful party in connection with such litigation.
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6.7 Exclusive Remedy. Except for fraud and except with
respect to the provisions of Section 1.2, and subject to any party's right for
equitable relief, the indemnification provisions of this Article VI shall
constitute the sole and exclusive remedy of the parties hereto for any Losses
arising under Sections 6.2.1 and 6.3.1, and the parties each waive any other
remedy which they or any other Person entitled to indemnification hereunder may
have at Law or otherwise with respect to such Losses.
6.8 Definitions. For purposes of this Article XI, the term
"Qualified Representation and Warranty" means any representation or warranty
that is qualified by concepts of materiality or Material Adverse Effect and the
term "Unqualified Representation and Warranty" means any representation or
warranty that is not so qualified.
ARTICLE VII
GENERAL PROVISIONS
------------------
7.1 Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party or parties incurring the same.
7.2 Bulk Sales Law Compliance. Seller shall not be liable to
Purchaser or Parent for failure to comply with the bulk sales laws, other than
bulk sales laws enforced by any Tax authority.
7.3 Notices. All notices and other communications under or in
connection with this Agreement shall be in writing and shall be deemed given (a)
if delivered personally, upon delivery, (b) if delivered by registered or
certified mail (return receipt requested), upon the earlier of actual delivery
or three days after being mailed, or (c) if given by telecopy, upon confirmation
of transmission by telecopy, in each case to the parties at the addresses set
forth on the signature page hereto.
7.4 Publicity; Non-Disparagement. Without the prior consent of the
other parties hereto, no party shall, and each party shall cause its directors,
officers, senior employees and advisors not to, make any public statement or
press release or statement to any Person (other than such party's advisors,
financing sources, employees, officers and directors and other Persons with a
need to know such information) with respect to the terms of this Agreement or
with respect to any other party's purposes for entering into this Agreement;
provided, however, that if a disclosure is required by law (including the
securities laws), the party required to make such disclosure shall be permitted
to make such disclosure as it reasonably believes is required and thereafter the
information so disclosed shall not be covered by this Section 7.4. No party
hereto shall disparage (a) any other party hereto, (b) such other party's
directors, officers or affiliates or (c) the Business. The covenants set forth
in this Section 7.4 shall terminate two (2) years from the date hereof.
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7.5 Further Assurances. Each party will from time to time at the
request of the other parties, whether on or after the Closing Date, do, make,
execute, acknowledge and deliver (or cause the doing of the same) all such other
further acts and instruments of conveyance, assignment, transfer and consent as
may reasonably be required for the more effective implementation of any of the
transfers or transactions contemplated herein.
7.6 Attorneys' Fees. If any litigation shall ensue between the
parties concerning the interpretation of or performance under this Agreement,
the prevailing party shall recover from the nonprevailing party or parties its
reasonable attorneys' and other fees as fixed by the court.
7.7 Risk of Loss. The risk of loss by fire or other casualty with
respect to the Assets to be transferred hereunder shall remain with Seller until
12:01 a.m. of the day following the Closing Date.
7.8 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or entity
or any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision, and (b) the remainder of this Agreement and the application of such
provision to other Persons or entities or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
7.9 No Implied Waivers. No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by applicable laws.
7.10 No Third Party Beneficiaries. This Agreement is not intended to
confer upon any Person, other than the parties hereto, any rights or remedies
hereunder.
7.11 Successors and Assigns. No party hereto shall assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the other parties hereto and any such attempted assignment without
such prior written consent shall be void and of no force and effect. The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective permitted successors and assigns.
7.12 Headings. The article and section headings used herein are
inserted for reference purposes only and shall not in any manner affect the
meaning or interpretation of the terms of this Agreement.
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7.13 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York, without regard to
choice of law principles.
7.14 Modification or Amendment. Subject to the provisions of
applicable laws, the parties hereto may modify or amend this Agreement only by
written agreement executed and delivered by duly authorized officers of the
respective parties.
7.15 Complete Agreement. This Agreement, including the exhibits,
annexes and schedules hereto (a) constitutes the entire agreement and supersedes
all other prior and contemporaneous agreements and undertakings, both written
and oral, between the parties hereto with regard to the subject matter hereof
including, without limitation, that letter dated November 5, 2002 from Purchaser
to Seller but expressly excluding that certain Confidentiality Agreement dated
October 29, 2002 (the "Confidentiality Agreement") by and between Seller and
Parent, the provisions of which shall survive execution and delivery of this
Agreement and continue in full force and effect in accordance with the terms
contained therein; (b) is not intended to confer upon any Person any rights or
remedies hereunder or with respect to the subject matter hereof except as
specifically provided in this Agreement; and (c) may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
counterparts shall together constitute a single agreement.
7.16 Waiver of Jury Trial. Each party hereto ("Party") hereby waives
to the fullest extent permitted by applicable law, any right it may have to a
trial by jury in respect to any suit, action or other proceeding directly or
indirectly arising out of, under or in connection with this Agreement or any
transaction contemplated hereby. Each Party (a) certifies that no representative
of any other Party has represented, expressly or otherwise, that such other
Party would not, in the event of any suit, action or other proceeding, seek to
enforce that foregoing waiver and (b) acknowledges that it and the other Parties
have been induced to enter into this Agreement, by, among other things, the
mutual waivers and certifications in this Section 7.16.
7.17 Consent to Jurisdiction. Each Party irrevocably submits to the
exclusive jurisdiction of any federal court located in the State of New York and
any New York state court, for the purposes of any suit, action or other
proceeding arising out of this Agreement or any agreement ancillary hereto or
any transaction contemplated hereby or thereby. Each party further agrees that
service of any process, summons, notice or document by U.S. registered mail to
such Party's respective address set forth herein shall be effective service of
process, summons or notice for any such suit, action or proceeding pursuant to
this Section. Each Party irrevocably and unconditionally waives and agrees not
to plead or claim in any such court that any action, suit or proceeding brought
in any such court has been brought in an inconvenient forum.
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[ASSET PURCHASE AGREEMENT]
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or has caused this Agreement to be executed on its behalf by a
representative duly authorized, all as of the date first above set forth.
L90, INC.,
a Delaware corporation doing business as "MaxWorldwide"
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President & CEO
Address for Notices:
MaxWorldwide, Inc.
Attention: General Counsel
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
AMERICAN LIST COUNSEL, INC.,
a New Jersey corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
Address for Notices:
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇
▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇ ▇▇ ▇▇▇▇
Telecopy: 609-580-2888
and a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
-▇▇-
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, INC.,
A New Jersey corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
Address for Notices:
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇
▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇ ▇▇ ▇▇▇▇
Telecopy: 609-580-2888
and a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
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EXHIBITS
Exhibit Description
------- -----------
A Certificate of the Secretary of Purchaser
B Transition Services Agreement
C General Assignment and Assumption Agreement and ▇▇▇▇ of Sale
D Certificate of the Secretary of Seller
E Guaranty
F Certificate of the Secretary of Parent
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