ASSET PURCHASE AGREEMENT
BY AND BETWEEN
▇▇▇▇▇▇▇▇▇.▇▇▇, INC
AND
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
Dated as of April 19, 2000
ASSET PURCHASE AGREEMENT
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ASSET PURCHASE AGREEMENT, dated as of April 19, 2000, by and
between ▇▇▇▇▇▇▇▇▇.▇▇▇, INC., a Delaware corporation ("Buyer"), and
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC., a New York corporation ("Seller").
W I T N E S S E T H :
WHEREAS, upon the terms and subject to the conditions
hereinafter set forth, Seller desires to sell, assign and transfer to Buyer, and
Buyer desires to purchase and acquire from Seller, all of Seller's right, title
and interest in the Assets (as defined herein);
WHEREAS, for federal income tax purposes, it is intended that
the Acquisition (as defined below) shall qualify as a reorganization under
section 368(a)(1)(C) of the Internal Revenue code of 1986, as amended (the
"Code"), pursuant to which substantially all of the Assets shall be transferred
to Buyer in exchange for Buyer voting stock and other consideration and pursuant
to such plan of reorganization Seller shall be liquidated with the stock and
other consideration distributed to the shareholders of Seller.
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto hereby agree as follows:
ARTICLE I
ACQUISITION AND TRANSFER OF ASSETS
Section 1.1. Assets to be Acquired.
Upon the terms and subject to the conditions hereinafter set
forth, Seller shall sell, assign, transfer, convey and deliver to Buyer, and
Buyer shall purchase, acquire and accept from Seller (the "Acquisition"), free
and clear of all Liens (as defined in Section 1.1(b) below), all right, title
and interest of Seller in, to and under all of the assets, properties, rights,
contracts, claims, operations and business of Seller (collectively, the
"Assets") (but excluding the Excluded Assets, as defined in Section 1.2 below),
whether or not appearing on the books of Seller, including, without limitation,
the following:
(i) all contracts and agreements to which Seller is a party
(collectively, the "Assigned Contracts") that are listed on Schedule
1.1(a) hereto;
(ii) all of the furniture, supplies, computers, office
equipment, fixtures and other fixed assets owned by Seller (the "Fixed
Assets");
(iii) all trademarks, tradenames, logos, service marks, brand
marks, brand names, domain names, patents, copyrights, inventions,
customer lists, and proprietary know-how or information owned or used
by Seller and all registrations thereof and pending applications
therefor (collectively, the "Intangible Property");
(iv) all trade accounts receivable of Seller;
(v) all papers, databases, computer programs, disks, software,
and other books, records, documents and materials owned by Seller (the
"Books and Records");
(vi) all assets of Seller (other than Excluded Assets) as to
which Buyer assumes any liability;
(vii) all rights of Seller under or pursuant to all
warranties, representations and guarantees made by suppliers,
manufacturers and contractors in connection with any of the foregoing
Assets; and
(viii) all goodwill relating to the foregoing Assets.
(b) For the purposes of this Agreement, "Lien" shall mean any
lien, pledge, mortgage, deed of trust, security interest, claim, lease, charge,
option, right of first refusal, easement or other real estate declaration,
covenant, condition, restriction or servitude, transfer restriction under any
shareholder or similar agreement, or encumbrance.
Section 1.2. Excluded Assets. Notwithstanding anything in Section 1.1
to the contrary, the parties hereto expressly agree that Seller is not hereunder
selling, assigning, transferring, conveying or delivering to Buyer, and Buyer is
not purchasing, acquiring or accepting, the following assets, rights and
properties (collectively, the "Excluded Assets"):
(ii) any insurance policies, bonds, letters of credit or other
similar items, or any cash surrender value in regard thereto;
(ii) any claim, right or interest in or to any refund for
federal, state or local franchise, income or other taxes or fees of any
nature whatsoever for periods on or prior to the Closing Date (as
defined in Section 9.1 below) and any interest (or similar amount)
thereon;
(iii) any of Seller's corporate books and records of internal
proceedings or tax records, and any books and records that Seller is
required by law to retain (the "Corporate Records"), but Buyer shall
have access to the same to the extent permitted by Section 10.3 below;
and
(iv) any employment, consulting or similar agreement.
Section 1.3. Assumed and Excluded Liabilities.
(a) Buyer shall not assume or be bound by any obligations,
liabilities (including without limitation, liabilities in respect of Taxes (as
defined in Section 3.13(a) below) and "employee benefit plans" (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended)
or any other pension plans or employee benefit arrangements) or commitments of
Seller or any of its affiliates of any kind, character or description, whether
absolute, accrued, known, unknown, asserted, unasserted, due or to become due,
contingent or otherwise ("Liabilities"), in connection with the Assets or
otherwise, other than the following:
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(i) obligations and liabilities arising after the Closing Date
under the Assigned Contracts in respect of the period following such
Closing Date; and
(ii) all trade accounts payable arising in the ordinary course
of business of Seller.
Any ad valorem Taxes relating to a period straddling the Closing Date shall be
prorated to the Closing Date, and the portion allocable to the period prior to
the Closing Date shall be promptly paid or reimbursed by Seller, and the portion
allocable to the period after the Closing Date shall be promptly paid or
reimbursed by Buyer. All other Liabilities of Seller shall remain the sole
responsibility of Seller.
ARTICLE II
CONSIDERATION
Section 2.1. Amount and Form of Consideration.
(a) The aggregate consideration (the "Initial Consideration")
to be paid on the Closing Date by Buyer to Seller for the Assets shall consist
of the following:
(i) $135,000 in cash (the "Cash Consideration"); plus
(ii) 83,214 fully paid and nonassessable shares of the common
stock, $.01 par value per share (the "Common Stock"), of ▇▇▇▇▇▇▇▇▇.▇▇▇,
Inc. (the "Parent Company"); a Florida corporation and the wholly
owning parent company of Buyer (the "Initial Stock Consideration");
plus
(iii) the assumption by Buyer of certain of the obligations
and liabilities of Seller pursuant to Section 1.3 above.
(b) In addition, Seller shall have the ability to earn
additional consideration (the "Additional Consideration" and, together with the
Initial Consideration, the "Consideration") payable in Common Stock on the
following terms:
(i) If the Gross Profit of the Business for the period from
April 1, 2000 to March 31, 2001 (a) equals or exceeds $860,724, then
Buyer shall cause Parent Company to issue to Seller or its designee on
May 15, 2001 shares of Common Stock valued at the Per Share Price with
an aggregate value of $400,000, or (b) exceeds $474,676 but is less
than $860,724, then Buyer shall cause Parent Company to issue to Seller
or its designee on May 15, 2001 shares of Common Stock valued at the
Per Share Price with an aggregate value equal to the product of (1)
$400,000 and (2) the quotient of the Gross Profit for such period less
$474,676 divided by $386,048.
(ii) If the Gross Profit of the Business for the period from
April 1, 2001 to March 31, 2002 (a)
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equals or exceeds $1,075,905, then Buyer shall cause Parent Company to
issue to Seller or its designee on May 15, 2002 shares of Common Stock
valued at the Per Share Price with an aggregate value of $400,000, or
(b) exceeds $860,724 but is less than $1,075,905 then Buyer shall cause
Parent Company to issue to Seller or its designee on May 15, 2002
shares of Common Stock valued at the Per Share Price with an aggregate
value equal to the product of (1) $400,000 and (2) the quotient of the
Gross Profit for such period less $860,724 divided by $215,181.
(iii) If the Gross Profit of the Business for the period from
April 1, 2002 to March 31, 2003 (a) equals or exceeds $1,344,881, then
Buyer shall cause Parent Company to issue to Seller or its designee on
May 15, 2003 shares of Common Stock valued at the Per Share Price with
an aggregate value of $400,000, or (b) exceeds $1,075,905 but is less
than $1,344,881 then Buyer shall cause Parent Company to issue to
Seller or its designee on May 15, 2003 shares of Common Stock valued at
the Per Share Price with an aggregate value equal to the product of (1)
$400,000 and (2) the quotient of the Gross Profit for such period less
$1,075,905 divided by $268,976.
(c) As used in Section 2.1(b) above, the terms set forth below
shall have the following meanings:
(i) "Business" means the business of selling tickets for live
theater performances through the Internet currently operated by Seller
and which is being sold to Buyer pursuant to this Agreement.
(ii) "Gross Profit" means all revenue generated from the sale
of tickets for live theater performances less cost of goods sold and
commissions paid in connection therewith.
(iii) "Per Share Price" means, as of each date on which Common
Stock is issued pursuant to Section 2.1(b), the average of (a) $14.00
and (b) the closing sale price of the Common Stock on the Nasdaq Stock
Market for the ten (10) trading days ending on the day immediately
preceding such issuance date; provided that the per share price shall
in no event be less than $14.00.
(d) The payments that may be made pursuant to Section 2.1(b)
are not contingent on ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ employment with the
Buyer.
Section 2.2. Allocation of Purchase Price. The Consideration and other
relevant items shall be allocated among the Assets acquired hereunder by Buyer
in accordance with the requirements of Section 1060 of the Internal Revenue Code
of 1986, as amended (the "Code"). Buyer shall provide Seller with a draft of
such allocation within 90 days after the Closing Date. Seller shall notify Buyer
within thirty (30) days of receipt of such draft allocation of any objection
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Seller may have thereto. Seller and Buyer agree to resolve any disagreement with
respect to such allocation in good faith consistent herewith. Seller and Buyer
each agree to report and file all Tax Returns (as defined in Section 3.13(a))
(including amended Tax Returns and claims for refund) consistent with such
allocation, and shall take no position contrary thereto or inconsistent
therewith (including, without limitation, in any audits or examinations by any
taxing authority or any other proceedings). Seller and Buyer shall cooperate in
the filing of any forms (including Form 8594) with respect to such allocation,
including any amendments to such forms required with respect to any adjustment
to the Consideration pursuant to this Agreement. Notwithstanding any other
provisions of this Agreement, the foregoing agreement shall survive the Closing
Date without limitation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
Section 3.1. Organization. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York,
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as now being conducted. All of the
outstanding capital stock of Seller is owned beneficially and of record by ▇▇▇▇
▇▇▇▇▇▇▇. Seller does not have any subsidiaries and does not own stock or
partnership or membership interests in any entity.
Section 3.2. Authorization of Agreement. Seller has full corporate
power and authority to execute and deliver this Agreement and each other
agreement, document, instrument or certificate contemplated by this Agreement or
to be executed by Seller in connection with the consummation of the transactions
contemplated by this Agreement (all such other agreements, documents,
instruments and certificates are hereafter collectively referred to as the
"Seller Documents") and to perform fully its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement and each
of the Seller Documents have been duly and validly authorized and approved by
the Board of Directors and shareholders of Seller and by all other necessary
corporate action on behalf of Seller. This Agreement has been, and on or prior
to the Closing each of the Seller Documents will be, duly and validly executed
and delivered by Seller and (assuming the due authorization, execution and
delivery by the other parties hereto and thereto) this Agreement constitutes,
and each of the Seller Documents when so executed and delivered will constitute,
the legal, valid and binding obligation of Seller, enforceable against Seller in
accordance with its respective terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
Section 3.3. Consents and Approvals; No Violation. 1. No filing with,
notification to or consent, authorization, waiver, approval, order, license,
certificate or Permit of, any Government Body (as defined in Section 3.14 below)
is necessary for Seller's execution, delivery or performance of this Agreement
or any of the Seller Documents or the consummation by Seller of the transactions
contemplated by this Agreement and the Seller Documents.
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(b) None of the execution and delivery by Seller of this
Agreement and the Seller Documents, the consummation of the transactions
contemplated hereby or thereby or compliance by Seller with any of the
provisions hereof or thereof will (i) conflict with or result in any breach of
any provision of the Certificate of Incorporation or By-laws of Seller, (ii)
violate any order, injunction, judgment, decree, ruling, writ, assessment or
arbitration award (each, an "Order") or statute, rule or regulation of any
Government Body by which Seller or any of its properties or assets is bound,
(iii) conflict with, violate, result in the breach or termination of, or (with
or without due notice or the lapse of time or both) constitute a default or give
rise to any "takeback" right or right of termination or acceleration or right to
increase the obligations under or otherwise modify any of the terms, conditions
or provisions of any note, bond, mortgage, license, franchise, Permit,
indenture, contract, agreement or other instrument or obligation to which Seller
is a party, or by which Seller or any of its properties or assets is or may be
bound, or (iv) result in the creation of any Lien upon any of the Assets.
Section 3.4. Title to Assets. Seller has good and marketable title to
all of the Assets, free and clear of all Liens. Upon the sale, assignment,
transfer and conveyance of the Assets to Buyer hereunder, there will be vested
in Buyer good and marketable title to such Assets, free and clear of all Liens
other than those placed thereon by Buyer.
Section 3.5 No Undisclosed Liabilities. Schedule 3.5 sets forth all
outstanding trade accounts payable of Seller. Except as set forth on Schedule
3.5, Seller has no Liabilities of any kind, and, to Seller's knowledge, there is
no basis for the assertion of any claim or Liability of any nature against
Seller. Seller has no indebtedness for borrowed money.
Section 3.6. Results of Operations. Seller's revenue and gross profit
for the first quarter of the year 2000, determined in accordance with generally
accepted accounting principles were no less than $966,000 and $118,000,
respectively. The foregoing revenue and gross profit amounts do not include any
extraordinary or non-recurring sources of revenue or any revenues resulting from
contracts that were not negotiated and entered into by Seller on an arm's length
basis.
Section 3.7. Litigation, etc. There is no judicial, administrative or
arbitral action, suit, proceeding (public or private), claim or governmental
proceeding (each, a "Legal Proceeding") pending or, to the knowledge of Seller,
threatened that questions the validity of this Agreement, the Seller Documents
or any action taken or to be taken by Seller in connection with the consummation
of the transactions contemplated hereby or thereby. (i) No investigation or
review by any Government Body with respect to Seller is pending or, to the
knowledge of Seller, threatened, nor has any Government Body indicated to Seller
an intention to conduct the same, (ii) there is no Legal Proceeding pending or,
to the knowledge of Seller, threatened against or affecting Seller or its assets
at law or in equity, or before any Government Body (and, to the knowledge of
Seller, there is no basis for any such Legal Proceeding not so set forth which,
if adversely determined, could adversely affect Seller or Buyer) and (iii) there
is no outstanding or, to the knowledge of Seller, threatened Order of any
Government Body against, affecting or naming Seller or affecting any of the
Assets. Except as set forth on Schedule 3.7 hereto, during the three years
preceding the date of this Agreement, no Legal Proceeding has been commenced or,
to the knowledge of Seller, threatened against or affecting Seller or its assets
at law or in equity, or before any Government Body. On and after the date hereof
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until the Closing, Seller will notify Buyer of the existence or threat of any
investigation, review, Legal Proceeding or Order which would be required to be
disclosed on Schedule 3.7.
Section 3.8. Compliance with Law. Seller has not violated or failed to
comply in any material respect with any statute, law, ordinance, regulation,
rule or Order of any Government Body.
Section 3.9. Employment Agreements. Seller is not now and has never
been a party to any employment, compensation, consulting, severance or
indemnification agreement or any other agreement with a present or former
employee of Seller that provides for severance payments or stay bonuses
contingent upon a change in control of Seller or a sale of its business or
assets.
Section 3.10. Certain Agreements.
(a) Except as set forth on Schedule 1.1(a) hereto, neither
Seller nor any of its properties or assets is a party to or bound by any (i)
lease or rental agreement, (ii) non-compete agreement, (iii) contract granting a
right of first refusal or for the acquisition, sale or lease of any assets of
Seller, (iv) mortgage, pledge, conditional sales contract, security agreement or
other similar contract with respect to any property of Seller, (v) loan
agreement, credit agreement, promissory note, guarantee, subordination
agreement, letter of credit or other similar type of contract, or (vi) any other
material contract. Seller has delivered to Buyer true, correct and complete
copies of the Assigned Contracts, including all amendments, modifications,
supplements, side letters or consents affecting the obligations of any party
thereunder.
(b) To the best of Seller's knowledge, each Assigned Contract
is valid and enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). Seller is not in
breach of or in default under any Assigned Contract and, to Seller's knowledge,
there has not occurred any event which, after the giving of notice or lapse of
time or both, would constitute a default under or result in a breach of an
Assigned Contract by any party subject thereto. No previous or current party to
any Assigned Contract (i) has given notice of or made a claim with respect to
any breach or default under any Assigned Contract or (ii) has given notice of
termination or non-renewal of any Assigned Contract. Except as set forth on
Schedule 3.10(b), each of the Assigned Contracts is freely transferable by
Seller to Buyer and no third party consents are required for such transfer.
Section 3.11. Real Property.
(a) Seller does not now own and has not ever owned any real
property.
(b) Other than the lease agreement, dated November 1999 (the
"Lease"), between Seller, as occupancy-sub-tenant, and Soups R Us, Inc., as
Tenant-landlord, Seller is not a party to any lease, sublease, license,
sublicense or other agreement or arrangement with respect to any real property,
and has not used or occupied, does not use or occupy, and does not have any
right to use or occupy, now or in the future, any real property.
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Section 3.12. Intangible Property. (a) Schedule 3.12 hereto sets forth
a list of each trademark, trade name, logo, service ▇▇▇▇, brand ▇▇▇▇, brand
name, domain name, patent, and copyright owned or used by Seller, and a list of
all registrations thereof and pending applications therefor. Except as set forth
on Schedule 3.12, each of the foregoing assets listed on such Schedule as being
owned by Seller is owned by Seller free and clear of any and all Liens and is in
good standing and no other person or entity (including any past or present
officer, employee or consultant of Seller) has any claim of ownership or right
of use with respect thereto. Except as set forth on Schedule 3.12, to the best
of Seller's knowledge, the use, modification, compilation, reproduction, public
display or performance, or distribution of the foregoing by Seller does not, and
the use, modification, compilation, reproduction, public display or performance,
or distribution thereof by Buyer immediately after the Closing will not,
conflict with, infringe upon, violate or interfere with or constitute an
appropriation of any right, title, interest or goodwill, including, without
limitation, any intellectual property right, trademark, trade name, service
▇▇▇▇, brand ▇▇▇▇, brand name, computer program, domain name, database, patent,
industrial design, copyright or any pending application therefor of any other
person or entity and there have been no claims made and Seller has not received
any notice or otherwise acquired any knowledge that any of the foregoing is
invalid or conflicts with the asserted rights of any other person or has not
been used or enforced or has been failed to be used or enforced in a manner that
would result in the abandonment, cancellation or unenforceability of any of the
Intangible Property.
(b) Seller is not a party to or bound by any contract, license
or other agreements relating to the Intangible Property.
Section 3.13. Taxes. (a) For purposes of this Agreement:
(i) "Tax" or "Taxes" shall mean all taxes, charges, fees,
imposts, levies or other assessments by any governmental authority,
including all net income, gross receipts, capital, sales, use, ad
valorem, value added, transfer, franchise, profits, inventory, capital
stock, license, withholding, payroll, employment, social security,
unemployment, excise, severance, stamp, occupation, property and
estimated taxes, customs duties, fees, assessments and charges of any
kind whatsoever, and all interest, penalties, fines, additions to tax
or other amounts imposed by any governmental authority which relate in
any way to the assessment of collection of any taxes or the filing of
any Tax Return, and shall include any transferee or successor liability
in respect of Taxes (whether by contract or otherwise) and any
liability in respect of any Tax as a result of being a member of any
Affiliated Group, including any consolidated, combined, unitary or
similar group.
(ii) "Tax Return" means any return (including any
consolidated, combined or unitary return in which Seller is, or was,
included or includible), declaration, report, claim for refund,
separate election or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
(iii) "Affiliated Group" means any affiliated group within the
meaning of Section 1504 of the Code, or any consolidated, combined,
unitary or similar group defined under a similar provision of state,
local or foreign law.
(b) Seller has (i) filed when due or will file when due
(taking into account extensions) with the appropriate federal, state, local,
foreign and
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other governmental agencies, all Tax Returns required to be filed by it or on
its behalf, all of which Tax Returns were true or will be true, complete and
correct as of the time of filing, (ii) paid when due and payable (and, until the
Closing Date, will timely pay) all required Taxes (except for Taxes which are
being contested in good faith, and for which adequate reserves will be
established in accordance with GAAP).
(c) There are no Taxes assessed or asserted or claimed in
writing to be due by any governmental authority or otherwise in respect of any
Tax Returns filed by Seller or on Seller's behalf, and no issues have been
raised (and are currently pending) by any governmental authority in connection
with any such Tax returns.
(d) Seller has duly and timely withheld and paid over to the
appropriate governmental authorities all Taxes and other amounts required to be
so withheld and paid over for all periods under all applicable laws in
connection with amounts paid or owing to any employee, independent contractor,
subcontractor, lender, stockholder or other third party or other personnel
supplied by any third party.
(e) There is no audit, examination, deficiency, or refund
proceeding pending with respect to any Taxes or Tax Returns of Seller, and no
governmental authority has given written notice of the commencement of any
audit, examination or deficiency proceeding with respect to any Taxes or Tax
Returns of Seller.
(f) Seller has heretofore provided Buyer with copies of all
federal, state, local, and foreign Tax Returns filed by, or on behalf of, Seller
for taxable periods commencing on or after January 1, 1995.
(g) Seller is not a party to or bound by any Tax sharing, Tax
indemnification or similar agreements (or portions of any agreements) with
respect to (or which relate to) the Assets.
(h) Seller does not have, nor has Seller ever had, with
respect to its business or the Assets, a permanent establishment (within the
meaning of any applicable tax treaty) in any foreign country, nor do they engage
or have they ever engaged in a trade or business in any foreign country that has
subjected its business or the Assets to tax in such foreign country.
(i) Seller is not, with respect to the Assets, a party to any
joint venture, partnership or other arrangement that constitutes a partnership
for federal income tax purposes.
(j) The performance of the transactions contemplated by this
Agreement will not (either alone or upon the occurrence of any additional or
subsequent event) result in, nor do the Liabilities assumed by Buyer in Section
1.3 otherwise provide for, any payment by Buyer that would constitute an "excess
parachute payment" within the meaning of Section 280G of the Code.
(k) None of the Assets are (i) property required to be treated
as being owned by another Person pursuant to the provisions of Section 168(f)(8)
of the Internal Revenue Code of 1954, as amended and in effect immediately prior
to the enactment of the Tax Reform Act of 1986; (ii) "tax-exempt use property"
within the meaning of Section 168(h)(l) of the Code; (iii) tax exempt bond
financed property within the meaning of Section 168(g) of the Code, or (iv)
property used "predominantly outside of the United States" within the meaning of
Section 168(g)(4).
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(l) Seller (and any predecessor of Seller) has since January
1, 2000 been and will be, up to and including the Closing Date, an S Corporation
within the meaning of Section 1361 of the Code and under all corresponding
provisions of applicable state and local Tax laws to the extent they recognize S
corporation status.
(m) Seller is not a "foreign person" within the meaning of
Section 1445 of the Code.
Section 3.14. Permits. Schedule 3.14 hereto sets forth a list of all
approvals, authorizations, consents, franchises, licenses, permits or
certificates (collectively, "Permits") granted by any government or governmental
or regulatory body thereof or political subdivision thereof, whether federal,
state, local or foreign, or any agency or instrumentality thereof, or any court
or arbitrator (public or private) (each, a "Government Body") and applications,
if any, for any of the foregoing, held by Seller. Seller is the holder of all
Permits necessary or appropriate to enable it to continue to conduct its
business in all material respects as presently conducted. Each of the Permits is
in full force and effect.
Section 3.15. Related Parties; Related Party Transactions. Neither
Seller nor any shareholder of Seller owns any direct or indirect interest of any
kind in, or controls or is a director, officer, employee or partner of, or
consultant to, or lender to or borrower from or has the right to participate in
the profits of, any Person which is (A) a competitor, supplier, customer,
landlord, tenant, creditor or debtor of Seller, (B) engaged in a business
related to the business of Seller, (C) participating in any transaction to which
Seller is a party, or (D) a party to any contract, agreement, indenture, note,
bond, loan, instrument, lease, conditional sale contract, mortgage, license,
franchise, insurance policy, commitment or other arrangement or agreement with
Seller.
Section 3.16. Options. There are no outstanding securities of Seller
convertible into or evidencing the right to purchase or subscribe for any shares
of capital stock of Seller and there are no outstanding or authorized options,
warrants, calls, subscriptions, rights, commitments or any other agreements of
any character obligating Seller to issue any shares of its capital stock or any
securities convertible into or evidencing the right to purchase or subscribe for
any shares of such stock.
Section 3.17. Year 2000. Each computer program used by Seller in its
business is Year 2000 Compliant. "Year 2000 Compliant" means that such program
is capable of managing and manipulating data involving dates after the year 1999
without any functional or data abnormality and without inaccurate results
related to such dates.
Section 3.18. Investor Representations. The shares of Common Stock
received by Seller pursuant to this Agreement will be acquired for Seller's own
account and not with a view to or in connection with the sale or distribution of
any part thereof except for distributions to the sole shareholder of Seller.
Section 3.19. Exemption from Registration; Restricted Securities.
Seller understands that the shares of Common Stock received by Seller pursuant
to this Agreement will not be registered under the Securities Act on the ground
that the sale provided for in this Agreement is exempt from registration under
the Securities Act, and that the reliance of Buyer on such exemption is
predicated in part on Seller's representations set forth in this Agreement. The
certificates representing the shares of Common Stock issued to Seller pursuant
to this Agreement will bear an appropriate legend reflecting such exempt
issuance without registration. Seller understands that the shares of Common
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Stock received by Seller pursuant to this Agreement are restricted securities
within the meaning of Rule 144 under the Securities Act.
Section 3.20. Brokers. Other than compensation payable by Seller to
▇▇▇▇▇ ▇▇▇▇ in an amount agreed upon between Seller and ▇▇▇▇▇ ▇▇▇▇, no broker,
finder or investment banker is entitled to any brokerage fee, finder's fee or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
Section 4.1. Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as now being conducted.
Section 4.2. Authorization of Agreement. Buyer has full corporate power
and authority to execute and deliver this Agreement and each other agreement,
document, instrument or certificate contemplated by this Agreement or to be
executed by Buyer in connection with the consummation of the transactions
contemplated hereby and thereby (all of such agreements, documents, instruments
and certificates required to be executed by Buyer being hereinafter referred to,
collectively, as the "Buyer Documents"), and to perform fully its obligations
hereunder and thereunder. The execution, delivery and performance by Buyer of
this Agreement and each Buyer Document have been duly authorized by the Board of
Directors of Parent Company and by all other necessary corporate action on the
part of Buyer and Parent Company. This Agreement has been, and at or prior to
the Closing, each of the Buyer Documents will be, duly and validly executed and
delivered by Buyer and (assuming the due authorization, execution and delivery
by the other parties hereto and thereto) this Agreement constitutes, and each of
the Buyer Documents when so executed and delivered will constitute, the legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its respective terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
Section 4.3. Consents and Approvals; No Violations.
(a) Assuming the accuracy of Seller's representation and
warranty set forth in the last sentence of Section 3.3(a) hereof, except for
filings, notifications, authorizations, consents and approvals as may be
required under federal and state securities or blue sky laws, no filing with,
notification to or consent, authorization, waiver, approval, order, license,
certificate or Permit of, any Government Body is necessary for Buyer's
execution, delivery or performance of this Agreement or any of the Buyer
Documents or the consummation by Buyer or Parent Company of the transactions
contemplated by this Agreement and the Buyer Documents.
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(b) None of the execution and delivery by Buyer of this
Agreement or the Buyer Documents, the consummation of the transactions
contemplated hereby or thereby or compliance by Buyer with any of the provisions
hereof or thereof will (i) conflict with or result in any breach of any
provision of the Articles of Incorporation or By-laws of Buyer, (ii) violate any
Order or statute, rule or regulation of any Government Body by which Buyer or
any of its properties or assets is bound, or (iii) conflict with, violate,
result in the breach or termination of, or (with or without due notice or the
lapse of time or both) constitute a default or give rise to any "takeback" right
or right of termination or acceleration or right to increase the obligations
under or modify any of the terms, conditions or provisions of any note, bond,
mortgage, license, franchise, Permit, indenture, agreement or other instrument
or obligation to which Buyer is a party, or by which Buyer or any of its
properties or assets is or may be bound.
Section 4.4. Litigation. There are no Legal Proceedings pending or, to
the knowledge of Buyer, threatened that question the validity of this Agreement,
the Buyer Documents or any action taken or to be taken by Buyer in connection
with the consummation of the transactions contemplated hereby or thereby. On and
after the date hereof until the Closing, Buyer will notify Seller of the
existence or threat of any such Legal Proceeding.
Section 4.5. SEC Reports; Financial Statements.
(a) Parent Company has filed all required forms, reports and
documents required to be filed by it ("SEC Reports") with the Securities and
Exchange Commission ("SEC"), each of which has complied as to form in all
material respects with all applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the Exchange Act, each as in effect
on the dates such forms, reports and documents were filed. The audited
consolidated financial statements of Parent Company included in the SEC Reports
were prepared in accordance with generally accepted accounting principles
("GAAP") and present fairly the consolidated financial position of Parent
Company and its consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial position for the
periods then ended.
(b) Brokers. No broker, finder or investment banker is
entitled to any brokerage fee, finder's fee or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Buyer.
ARTICLE V
COVENANTS OF SELLER
Section 5.1 Access to Information. From the date of this Agreement
until the Closing Date, Seller shall permit Buyer and its representatives,
including, without limitation, its legal counsel and accountants, to conduct an
appropriate due diligence examination and investigation with respect to Seller.
Seller will reasonably cooperate with Buyer's diligence, and such cooperation
will include, without limitation, the following:
(i) providing Buyer and its representatives with reasonable
access to all data, records and other information that they may request
in connection with their evaluation of the transactions contemplated by
this Agreement (including, without limitation, lists of contact
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persons, marketing information, and records of negotiations with
existing and prospective customers);
(ii) allowing Buyer and its representatives to conduct a
business, financial and legal review of all aspects of Seller;
(iii) affording Buyer and its representatives the opportunity
to discuss the affairs, finances, operations and accounts of Seller
with Seller's officers, directors, agents and other appropriate
personnel; and
(iv) facilitating conversations between Buyer and its
representatives and representatives of the other parties to the
Assigned Contracts.
Section 5.2 Conduct of Business. From the date of this Agreement until
the earlier of the Closing Date or the Termination Date (as defined in Section
12.1 below) Seller (i) shall not, without the prior written consent of Buyer,
amend or modify (or agree to amend or modify), enter into or cancel any
agreement of the type to be included in the Assets, (ii) shall use its best
efforts to preserve its present relationships with Persons having business
dealings with Seller, (iii) (A) shall maintain the books, accounts and records
of Seller in the ordinary course of business consistent with past practices and
(B) shall comply in all material respects with all contractual and other
obligations applicable to the operations of Seller, (iv) shall not subject any
of the properties or Assets (whether tangible or intangible) of Seller to any
Lien, or incur any indebtedness for borrowed money, (v) shall not acquire any
properties or assets or sell, assign, transfer, convey, lease or otherwise
dispose of any of the properties or Assets of Seller, (vi) shall not cancel or
compromise any debt or claim or waive or release any right of Seller, (vii)
shall not introduce any change with respect to the operation of Seller and
(viii) shall operate only in the ordinary course of business. The foregoing
shall not restrict Seller from canceling any agreement not included in the
Assets.
Section 5.3 Public Announcements. Seller agrees that it shall not issue
any press release or make any public statement, announcement or filing
concerning this Agreement or any aspect of the transactions contemplated hereby,
without Buyer's prior written consent.
Section 5.4 No Breach of Representations and Warranties. Seller agrees
that it shall not take any action, and shall use its reasonable commercial
efforts not to permit any event to occur, which would result in any of the
representations and warranties of Seller contained in this Agreement not being
true and correct in any material respect on and as of the Closing Date with the
same force and effect as if such representations and warranties had been made on
and as of the Closing Date.
Section 5.5 Updating Information. Seller shall promptly deliver to
Buyer any information concerning events subsequent to the date of this Agreement
which is necessary to supplement the representations and warranties contained
herein, including the Schedules hereto, or the information delivered by Seller
pursuant to any of the covenants contained herein, in order that such
representations and warranties (including such Schedules) or the information so
delivered be complete and accurate in all material respects, it being understood
and agreed that the delivery of such information shall not in any manner
constitute a waiver by Buyer of any of the conditions precedent to the Closing
hereunder, including, without limitation, the conditions contained in Section
7.1.
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Section 5.6 Restrictions on Transfer of Stock Consideration. Seller and
the Shareholders shall not, directly or indirectly, sell, transfer any
beneficial interest in, pledge, hypothecate or otherwise dispose, or offer to
sell, transfer any beneficial interest in, pledge, hypothecate or otherwise
dispose (collectively, "Transfer"), any shares of Common Stock constituting the
Initial Stock Consideration during the 12-month period following the Closing
Date. Notwithstanding the foregoing, Seller may distribute the Initial Stock
Consideration to the sole shareholder of Seller at any time and the sole
shareholder may pledge the Initial Stock Consideration to the Buyer pursuant to
the Indemnification Pledge Agreement (as defined in Section 6.3).
Section 5.7 Further Actions. Seller agrees to execute and deliver such
instruments and promptly take such other actions as may reasonably be required
to consummate the transactions contemplated hereby in accordance with the terms
hereof.
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ARTICLE VI
COVENANTS OF BUYER
Section 6.1 No Breach of Representations and Warranties. Buyer agrees
that it shall not take any action, and shall use its reasonable commercial
efforts not to permit any event to occur, which would result in any of the
representations and warranties of Buyer contained in this Agreement not being
true and correct in any material respect on and as of the Closing Date with the
same force and effect as if such representations and warranties had been made on
and as of the Closing Date.
Section 6.2 Confidentiality. Buyer agrees that any written information
provided to it in connection with this Agreement will be kept confidential by it
and its agents, advisors and employees; provided, however, that disclosure of
such information may be made (i) to personnel of Buyer and Parent Company, and
to the attorneys, accountants and agents of Buyer and Parent Company, (ii) to
the extent the same shall be or shall have otherwise become publicly available
other than as a result of a disclosure by Buyer, Parent Company or their agents,
advisors or employees, (iii) to the extent required to be disclosed by law or
during the course of or in connection with any litigation or other proceeding,
or (iv) with the written consent of Seller.
Section 6.3 Employment Agreements; Indemnification Pledge Agreement. At
the Closing, (i) Buyer shall enter into employment agreements, substantially in
the form of Exhibit B hereto (the "Employment Agreements"), with each of ▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and an indemnification pledge agreement,
substantially in the form of Exhibit A hereto (the "Indemnification Pledge
Agreement"), with Seller and the sole shareholder of Seller.
Section 6.4 Consents and Conditions. Buyer shall use its reasonable
efforts to assist Seller in causing each of the conditions precedent to the
obligations of Seller to be satisfied.
Section 6.5 Further Actions. Buyer agrees to execute and deliver such
instruments and take such other actions as may reasonably be required to
consummate the transactions contemplated hereby in accordance with the terms
hereof.
ARTICLE VII
CONDITIONS PRECEDENT TO buyer's OBLIGATIONS
Section 7.1 Conditions. The obligation of Buyer to consummate the
Acquisition on the Closing Date is subject to the satisfaction of the following
conditions (any or all of which may be waived by Buyer, in its sole discretion,
in whole or in part, to the extent permitted by applicable law):
(i) each of the representations and warranties of Seller
contained herein shall be true and correct in all material respects on
and as of the Closing Date with the same force and effect as though the
same had been made on and as of the Closing Date;
(ii) Seller shall have performed and complied, in all material
respects, with the covenants and provisions of this Agreement required
to be performed or complied with by it between the date hereof and the
Closing Date;
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(iii) since the date of this Agreement, no event or
circumstance shall have occurred that has had, or is reasonably likely
to have, a material adverse effect on the business, assets, properties,
liabilities, financial condition or results of operations of Seller;
(iv) (A) no Legal Proceeding shall have been instituted or
threatened or claim or demand made against Seller or Buyer seeking to
restrain or prohibit or to obtain damages with respect to the
consummation of the transactions contemplated by this Agreement, or
which might, in the reasonable opinion of Buyer, result in a material
adverse change in the business, assets, properties, liabilities,
financial condition or results of operations of Seller and (B) there
shall not be in effect any Order of a Government Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement;
(v) Theatre Direct International shall have consented to the
assignment to Buyer of the contract between Seller and Theatre Direct
International, as amended on April 14, 2000;
(vi) Buyer shall have received a certificate of the Secretary
of Seller, dated the Closing Date, setting forth resolutions of the
Board of Directors and of the shareholders of Seller authorizing the
execution and delivery of this Agreement and each document and
instrument required to be executed and delivered by Seller hereunder
and the consummation of the transactions contemplated hereby and
thereby, and certifying that such resolutions were duly adopted and
have not been rescinded or amended as of the Closing Date;
(vii) Seller and the sole shareholder of Seller shall have
executed and delivered to Buyer the Indemnification Pledge Agreement in
the form of Exhibit A hereto and each of ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ shall have executed and delivered to Buyer the Employment
Agreements in the form of Exhibit B hereto; and
(viii) Seller shall have executed and delivered to Buyer (A)
all documents to be delivered at the Closing in accordance with the
terms of this Agreement and (B) such other documents and instruments as
Buyer may reasonably request and which Seller can obtain with
reasonable commercial efforts in order to consummate the transactions
contemplated by this Agreement.
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ARTICLE VIII
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
Section 8.1 Conditions. The obligation of Seller to consummate the
Acquisition on the Closing Date is subject to the satisfaction of the following
conditions (any or all of which may be waived by Seller, at the sole option of
Seller, in whole or in part to the extent permitted by applicable law):
(i) each of the representations and warranties of Buyer
contained herein shall be true and correct in all material respects on
and as of the Closing Date with the same force and effect as though the
same had been made on and as of the Closing Date;
(ii) Buyer shall have performed and complied, in all material
respects, with the covenants and provisions of this Agreement required
to be performed or complied with by it between the date hereof and the
Closing Date;
(iii) Seller shall have received a certificate of the
Secretary of Parent Company, dated the Closing Date, setting forth
resolutions of the Board of Directors of Parent Company authorizing the
execution and delivery of this Agreement and each document and
instrument required to be executed and delivered by Buyer or Parent
Company hereunder and the consummation of the transactions contemplated
hereby and thereby, and certifying that such resolutions were duly
adopted and have not been rescinded or amended as of the Closing Date;
and
(iv) Buyer shall have executed and delivered to Seller (A) all
documents to be delivered at the Closing in accordance with the terms
of this Agreement and (B) such other documents and instruments as
Seller may reasonably request and which Buyer can obtain with
reasonable commercial efforts in order to consummate the transactions
contemplated by this Agreement.
ARTICLE IX
THE CLOSING
Section 9.1 Closing Date. Except as hereinafter provided, the closing
of the transactions contemplated by this Agreement (the "Closing") shall take
place at a mutually agreeable place and time or soon as practicable following
the date on which each of the conditions specified in Section 7.1 and Section
8.1 (other than those as to which the parties agree will be satisfied at the
Closing) of this Agreement has been fulfilled (or waived by the party entitled
to waive that condition). The date on which the Closing of the Acquisition
occurs is referred to herein as the "Closing Date."
Section 9.2 Proceedings at the Closing. All proceedings to be taken and
all documents to be executed and delivered by Seller in connection with the
Closing shall be reasonably satisfactory in form and substance to Buyer and its
counsel. All proceedings to be taken and all documents to be executed and
delivered by Buyer in connection with the Closing shall be reasonably
satisfactory in form and substance to Seller and its counsel. All proceedings to
be taken and all documents to be executed and delivered by both parties at the
Closing shall be deemed to have been taken and executed simultaneously, and no
proceedings shall be deemed taken nor any documents executed or delivered until
all have been taken and delivered.
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Section 9.3 Deliveries by Seller to Buyer. At the Closing, Seller shall
deliver, or shall cause to be delivered, to Buyer the following:
(i) a ▇▇▇▇ of sale and assignment and assumption agreement in
the form of Exhibit C hereto (the "▇▇▇▇ of Sale and Assignment and
Assumption Agreement"), duly executed by Seller;
(ii) an affidavit of Seller, in a form reasonably satisfactory
to Buyer, stating, under penalties of perjury, Seller's United States
taxpayer identification number and that Seller is not a foreign person
within the meaning of Section 1445(b)(2) of the Code; and
(iii) all other assignments and other instruments or documents
as shall be reasonably necessary in the judgment of Buyer to evidence
the sale, assignment, transfer and conveyance by Seller to Buyer of the
Assets in accordance with the terms hereof, free and clear of all
Liens.
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ARTICLE X
ADDITIONAL POST-CLOSING COVENANTS
Section 10.1 Further Assurances by Seller.
(b) From time to time after the Closing Date, Seller will, at
the request of Buyer, execute and deliver such other and further instruments of
sale, assignment, transfer and conveyance and take such other and further
actions as Buyer may reasonably request in order to make all the benefits of the
Assigned Contracts and rights of Seller included in the Assets available to
Buyer, to vest in Buyer and put Buyer in possession of the Assets and to
transfer to Buyer any contracts and rights of Seller relating to the Assets and
to assure to Buyer the benefits thereof and effectuate fully the purposes of
this Agreement.
Section 10.2 Seller to Change Name. On the Closing Date or as soon
thereafter as practicable (but in no event more than 5 business days
thereafter), Seller shall adopt (and shall make all appropriate filings so as to
adopt), and shall thereafter do business under, a new name which does not
contain the words Broadway or Theater or any variation thereof.
Section 10.3 Preservation of Corporate Records. Seller shall preserve
and keep the Corporate Records for a period of seven years from the Closing Date
and shall make such Corporate Records and personnel, if any, of Seller available
to Buyer as Buyer may reasonably require (i) in connection with, among other
things, any insurance claims by, Legal Proceedings against or governmental
investigations of Buyer or (ii) in order to enable Buyer to comply with its
obligations under the Code, any other applicable statute with respect to
taxation, this Agreement and each other agreement, document or instrument
contemplated hereby. If Seller wishes to destroy such Corporate Records after
such seven year period, then Seller shall first give 90 days prior written
notice to Buyer and Buyer shall have the right at its option and expense, upon
prior written notice given to Seller within that 90 day period, to take
possession of the Corporate Records within 180 days after the date of such
notice.
Section 10.4 Confidentiality. From and after the Closing Date, none of
Seller, any of its employees or the Shareholders shall divulge, furnish or make
available to any person any knowledge or information with respect to the Assets
or Buyer (other than in the regular course and in furtherance of the Buyer's
business) which is, or which Seller or the sole shareholder of Seller is advised
or has reason to believe is, confidential (including, but not limited to,
information relating to any marketing, financial or personnel matters in
connection with the Assets).
ARTICLE XI
INDEMNIFICATION
Section 11.1 Indemnification.
(a) Seller agrees to indemnify and hold Buyer harmless from
and against any and all losses, liabilities, obligations, judgments, damages,
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deficiencies, costs, penalties and expenses (including, without limitation,
reasonable attorneys' fees and expenses) (collectively, "Losses") based upon,
attributable to or resulting from:
(i) any misrepresentation or breach of warranty on the part of
Seller under this Agreement or any of the Seller Documents or (B) any
breach of covenant or other agreement on the part of Seller under this
Agreement, or any of the Seller Documents;
(ii) any Liabilities of Seller not expressly assumed by Buyer
under the terms of this Agreement, including, without limitation:
(A) any liabilities and obligations arising out of or based
upon the conduct of the business of Seller prior to the Closing Date (other than
obligations or liabilities that are expressly assumed by Buyer under the terms
of this Agreement);
(B) any claims for any injury to person or property
attributable to any services rendered by Seller prior to the Closing Date,
regardless of whether such claims are asserted prior to or after the Closing;
(C) any claims by any employee or former employee of Seller
arising out of the employment or termination of employment of the employee or
former employee on or prior to the Closing Date or as a result of the
transactions contemplated by this Agreement; and
(D) any third party claims with respect to occurrences or
events that occurred on or prior to the Closing Date and relate to Seller, its
employees or the Assets;
(iii) any liabilities and obligations, based in any way on
agreements, arrangements or understandings made by or on behalf of
Seller, for any brokerage fees, finder's fees, commissions or like
payments in respect of the transactions contemplated by this Agreement;
(iv) all actions, suits, proceedings, demands, assessments,
judgments, costs, penalties and expenses, including reasonable
attorneys' fees, incident to the foregoing.
(b) Buyer agrees to indemnify and hold Seller harmless from
and against any and all Losses attributable to or resulting from:
(i) (A) any misrepresentation or breach of warranty on the
part of Buyer under this Agreement or any of the Buyer Documents or (B)
any breach of covenant or other agreement on the part of Buyer under
this Agreement or any of the Buyer Documents;
(ii) any liabilities expressly assumed by Buyer pursuant to
Section 1.3 hereof;
(iii) to the extent Buyer is not indemnified with respect
thereto under Section 11.1(a), any claims that arise from Buyer's
ownership or operation of the Assets subsequent to the Closing Date,
including, without limitation, any claims by any employee or former
employee of Buyer arising out of the employment or termination of
employment of the employee or former employee subsequent to the Closing
Date or as a result of the transactions contemplated by this Agreement;
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(iv) any liabilities and obligations, based in any way on
agreements, arrangements or understandings made by or on behalf of
Buyer, for any brokerage fees, finder's fees, commissions or like
payments in respect of the transactions contemplated by this Agreement;
and
(v) all actions, suits, proceedings, demands, assessments,
judgments, costs, penalties and expenses, including reasonable
attorneys' fees, incident to the foregoing.
Section 11.2 Procedures for Indemnification. Whenever a claim shall
arise for indemnification under Section 11.1 above, with the exception of claims
for litigation expenses in respect of a litigation as to which a notice of
claim, as provided below in this Section 11.2, has previously been given, which
expenses shall be funded on an ongoing basis, the party entitled to
indemnification (the "Indemnified Party") shall promptly notify the party from
whom indemnification is sought (the "Indemnifying Party") of such claim and,
when known, the facts constituting the basis for such claim; provided, however,
that in the event of any claim for indemnification hereunder resulting from or
in connection with any claim or Legal Proceeding by a third party, the
Indemnified Party shall give such notice thereof to the Indemnifying Party not
later than 10 business days prior to the time any response to the asserted claim
is required, if possible, and in any event within 5 business days following
receipt of notice thereof. Notwithstanding anything in the preceding sentence to
the contrary, the failure of any Indemnified Party to so notify the Indemnifying
Party shall not relieve the Indemnifying Party from any liability for
indemnification it may have if and to the extent that the Indemnifying Party
shall not have been prejudiced by such omission. In the event of any such claim
for indemnification resulting from or in connection with a claim or Legal
Proceeding by a third party, the Indemnifying Party may, at its sole cost and
expense, assume the defense thereof; provided, however, that the Indemnifying
Party shall first have agreed in writing that it does not and will not contest
its responsibility for indemnifying the Indemnified Party in respect of Losses
attributable to such claim or Legal Proceeding; and, provided, further, that
Seller shall not be entitled to assume the defense of any claim or Legal
Proceeding against Buyer for Taxes with respect to a period ending after the
Closing Date. If an Indemnifying Party assumes the defense of any such claim or
Legal Proceeding, the Indemnifying Party shall be entitled to select counsel and
take all steps necessary in the defense thereof; provided, however, that no
settlement shall be made without the prior written consent of the Indemnified
Party, which consent shall not be unreasonably withheld (and if the Indemnified
Party shall withhold its consent to any monetary settlement proposed by the
Indemnifying Party and which the other party to the action has indicated it is
prepared to accept, the Indemnified Party shall in no event be deemed for
purposes of this Agreement, to have suffered Losses in connection with such
claim or proceeding in excess of the proposed amount of such settlement);
provided, further, that the Indemnified Party may, at its own expense,
participate in any such proceeding with the counsel of its choice without any
right of control thereof. So long as the Indemnifying Party is in good faith
defending such claim or Legal Proceeding, the Indemnified Party shall not
compromise or settle such claim without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld. If the
Indemnifying Party does not assume the defense of any such claim or Legal
Proceeding in accordance with the terms hereof, the Indemnified Party may defend
(and, in the case of any claim or Legal Proceeding against Buyer for Taxes with
respect to a period ending after the Closing Date, shall defend) against such
claim or Legal Proceeding in such manner as it may deem appropriate, including,
but not limited to, settling such claim or litigation (after giving prior
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written notice of the same to the Indemnifying Party and obtaining the prior
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld) on such terms as the Indemnified Party may deem
appropriate, and the Indemnifying Party will promptly indemnify the Indemnified
Party in accordance with the provisions of this Section 11.2; provided, however,
that if the Indemnified Party does not obtain the prior written consent of the
Indemnifying Party to any such settlement, and such written consent is not
unreasonably withheld by the Indemnifying Party, the Indemnified Party shall not
be entitled to indemnification hereunder from such Indemnifying Party with
respect to the claim settled. Notwithstanding anything in this Section 11.2 to
the contrary, if, in any claim or Legal Proceeding with respect to which the
Indemnified Party has given the notice required under this Section 11.2, (i) the
Indemnifying Party shall not have promptly employed counsel reasonably
satisfactory to the Indemnified Party or (ii) such Indemnified Party shall have
reasonably concluded, based upon the opinion of its outside legal counsel, that
there may be one or more legal defenses available to it that are different from
or additional to those available to the Indemnifying Party, then in either event
(x) the Indemnified Party may participate in any such proceeding with the
counsel of its choice, the expense for which shall be borne by the Indemnifying
Party (but in no event shall the Indemnifying Party be required to pay the fees
and expenses of more than one counsel employed by the Indemnified Party with
respect to such claim or proceeding) and (y) the Indemnifying Party shall not
have the right to direct the defense of any such action on behalf of the
Indemnified Party.
Section 11.3 Determination of Damages and Related Matters. (a) For
purposes of indemnification under Sections 11.1(a)(i)(A) and 11.1(b)(i)(A), any
breach of any representation or warranty shall be deemed to constitute a breach
of such representation or warranty notwithstanding any limitation or
qualification as to materiality set forth in such representation or warranty on
the scope, accuracy or completeness thereto, it being the intention of the
parties hereto that, each Indemnified Party shall be indemnified and held
harmless from and against any and all Losses arising out of or based upon or
with respect to the failure of any such representation or warranty to be true,
correct and complete in any respect. Notwithstanding the foregoing, no
Indemnifying Party shall be liable for purposes of indemnification under Section
11.1(a)(i)(A) or Section 11.1(b)(i)(A) until the amount of the Losses arising
thereunder exceed $20,000, at which time the Indemnifying Party shall be liable
for any and all Losses.
(a) To the extent any payment under this Article XI cannot
properly be treated as an adjustment to the Consideration for Tax purposes, then
any such amount shall be increased to take account of any net Tax cost incurred
by the Indemnified Party by reason of the receipt of any indemnity payment
(grossed-up for such increase). Any payment to an Indemnified Party pursuant to
this Article XI shall be reduced to take account of any net Tax benefit actually
realized by the Indemnified Party in respect of the taxable year in which such
Loss is incurred or paid and, with respect to a Tax benefit arising in a year
subsequent to the year in which the Loss is paid or incurred, the Indemnified
Party shall pay to the Indemnifying Party the amount of such Tax benefit
(including, as relevant, any member of its Affiliated Group) when such Tax
benefit is actually realized. In computing the amount of any such Tax cost or
Tax benefit, the Indemnified Party shall be deemed to recognize all other items
of income, gain, loss, deduction or credit before recognizing any item arising
from the receipt of any indemnity payment hereunder or the incurrence or payment
of any indemnified loss, liability, claim, damage or expense.
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(b) In the absence of fraud or willful misconduct on the part
of the Indemnifying Party or any of its employees or agents, an Indemnifying
Party shall not have liability for Losses indemnifiable under Section 11.1(a) or
Section 11.1(b) in excess of $2,500,000 in the aggregate; provided, however,
that the foregoing cap shall not apply to any Losses in respect of Taxes for
which Seller has indemnified Buyer under Section 11.1(a).
(c) Until the earlier of three years after the Closing Date
and such time as it is no longer possible in law or fact for the Indemnified
Party to sustain Losses by reason of any breach hereof or to assert a claim with
respect to any such breach or Losses, except as otherwise provided herein, the
indemnification provisions of this Article XI shall survive.
ARTICLE XII
TERMINATION
Section 12.1 Termination. This Agreement may be terminated (i) by the
written agreement of Seller and Buyer or, (ii) by either Seller or Buyer by
written notice to the other given after the date that is thirty (30) days after
the date of this Agreement if the Closing shall not have occurred on or before
such date.
Section 12.2 Liabilities After Termination. Upon any termination of
this Agreement pursuant to Section 12.1 above, no party hereto shall thereafter
have any further liability or obligation hereunder; provided, however, that no
such termination shall relieve any party hereto of any liability for any breach
of this Agreement prior to the date of such termination and provided, further,
that Seller shall remain bound by Section 5.3 above, Buyer shall remain bound by
Section 6.2 above, and each of Seller and Buyer shall remain bound by Section
13.5 below.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Survival of Representations and Warranties. Seller and
Buyer hereby agree that the representations and warranties contained in this
Agreement, as supplemented or modified by any amendments to the Schedules hereto
made on or prior to the Closing Date, shall survive the execution and delivery
of this Agreement and shall further survive the Closing hereunder for a period
of three years from the Closing Date, regardless of any investigation made by
the parties hereto; provided, however, that the representations and warranties
contained in Section 3.13 shall survive for the applicable statute of
limitations plus 90 days.
Section 13.2 Entire Agreement. This Agreement (with its Schedules and
Exhibits) contains, and is intended as, a complete statement of, all of the
terms and the arrangements between the parties hereto with respect to the
matters provided for herein, and supersedes any previous agreements and
understandings among the parties hereto with respect to those matters.
Section 13.3 Governing Law; Construction. This Agreement and all
agreements related thereto shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts to be made, executed,
delivered and performed wholly in such state, but without regard to conflicts of
law principles of such state. The table of contents, captions and headings in
this Agreement are for reference purposes only and shall be given no effect in
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the construction and interpretation of this Agreement. No provision of this
Agreement shall be construed against either party because such party drafted or
caused to be drafted such provision. Each provision of this Agreement shall be
construed as if such provision were proposed by both Buyer and Seller.
Section 13.4 Transfer Taxes. Seller shall pay when due (i) all transfer
and documentary taxes and fees imposed with respect to instruments of conveyance
in the transactions contemplated hereby and (ii) all sales, use and other
transfer or similar taxes on the transfer of the Assets contemplated hereby.
Buyer shall execute and deliver to Seller at the Closing any certificates or
other documents as Seller may reasonably request to perfect any exemption from
any such transfer, documentary, sales or use tax.
Section 13.5 Expenses. Each of Buyer and Seller shall bear its own
expenses (including, without limitation, all fees and expenses of financial
institutions, accountants, legal counsel, brokers, investment bankers and other
advisors), incurred in connection with the negotiation, preparation, execution,
review, delivery and performance of this Agreement, each of the other documents
and instruments executed in connection with or contemplated by this Agreement or
related hereto, and the consummation of the transactions contemplated hereby and
thereby.
Section 13.6 Notices. Any notice, request, instruction or other
communication to be given under this Agreement or otherwise in connection with
the Acquisition shall be in writing and shall be delivered by hand or prepaid
telecopy, or sent, postage prepaid, by registered, certified or express mail, or
reputable overnight courier service and shall be deemed given when so delivered
by hand or telecopied, or if mailed, three days after mailing (one business day
in the case of express mail or overnight courier service) to a party at the
following address (or at such other address as such party may have specified by
notice given to the other party pursuant to this provision):
if to Seller at: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
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and if to Buyer at: ▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, CEO
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 13.7 Severability. If any provision of this Agreement, or the
application of such provision to Buyer, Seller, or any Person or circumstance,
shall be held invalid, then the remainder of this Agreement, or the application
of such provision to persons, entities or circumstances other than those as to
which it is held invalid, shall not be affected thereby.
Section 13.8 Binding Effect; No Assignment.
(e) This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and permitted assigns.
Nothing in this Agreement shall create or be deemed to create any third party
beneficiary rights in any Person not party to this Agreement. Except as
expressly permitted below, no assignment of this Agreement or of any rights or
obligations hereunder may be made by either party (by operation of law or
otherwise) without the prior written consent of the other party hereto and any
attempted assignment without such required consent shall be void.
(f) Prior to the Closing, Buyer may assign any and all of its
rights and obligations under this Agreement to any third party, if Buyer
directly and unconditionally guarantees the obligations of such assignee under
this Agreement. After the Closing, Buyer may assign any or all of its rights and
obligations with respect to the Assets without the consent of Seller, provided
that Buyer shall cause its obligations to Seller under this Agreement in respect
of the Acquisition to be binding upon any successor to Buyer and Buyer shall
directly and unconditionally guarantee the obligations of such successor.
Section 13.9 Amendments. This Agreement may be amended, supplemented or
modified, and any provision hereof may be waived, only pursuant to a written
instrument making specific reference to this Agreement signed by each of the
parties hereto.
Section 13.10 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this
instrument as of the date and year first above written.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------
▇▇▇▇ ▇▇▇▇▇▇▇
President
▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By:/s/ W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Senior Vice President and General Counsel
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SCHEDULES
1.1(a) Assigned Contracts
3.5 Liabilities
3.7 Litigation, etc.
3.10(b) Consents
3.12 Intangible Property
3.13 Taxes
3.14 Permits
EXHIBITS
Exhibit A Form of Indemnification Pledge Agreement
Exhibit B Form of Employment Agreements
Exhibit C Form of ▇▇▇▇ of Sale and Assignment and Assumption Agreement