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EXHIBIT 10.10
ASSET PURCHASE AGREEMENT
DATED NOVEMBER 1, 1999
BETWEEN
▇▇▇▇▇▇▇▇▇▇.▇▇▇, LLC
AND
INTELLISOFT DEVELOPMENT CORPORATION
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SECTION 1: DEFINED TERMS........................................................................................ 1
1.1 Terms Defined in this Section.................................................................. 1
1.2 Terms Defined Elsewhere in this Agreement...................................................... 4
1.3 Rules of Construction.......................................................................... 5
SECTION 2: SALE AND PURCHASE OF ASSETS.......................................................................... 5
2.1 Agreement to Sell and Buy...................................................................... 5
2.2 Excluded Assets................................................................................ 6
2.3 Purchase Price................................................................................. 7
2.4 Adjustments and Prorations..................................................................... 7
(a) Working Capital Adjustment............................................................ 7
(b) Prorations............................................................................ 7
(c) Manner of Determining Adjustments and Prorations...................................... 8
2.5 Payment of Initial Payment..................................................................... 9
(a) Payments to Reflect Adjustments....................................................... 9
2.6 Assumption of Liabilities and Obligations...................................................... 9
SECTION 3: REPRESENTATIONS AND WARRANTIES OF SELLER........................................................... .10
3.1 Organization, Standing and Authority.......................................................... 10
3.2 Authorization and Binding Obligation.......................................................... 10
3.3 Absence of Conflicting Agreements............................................................. 10
3.4 Licenses and Assumed Contracts................................................................ 11
3.5 Real and Personal Property.................................................................... 10
3.6 Intangibles................................................................................... 11
3.7 Consents...................................................................................... 11
3.8 Information on the Business................................................................... 12
(a) Customers; Billing Rate.............................................................. 11
(b) Account Balances..................................................................... 11
(c) Commitments.......................................................................... 12
3.9 Insurance and Bonds........................................................................... 12
3.10 Personnel Matters............................................................................. 12
3.11 Claims and Legal Actions...................................................................... 12
3.12 Compliance with Laws.......................................................................... 12
3.13 Taxes and Tax Returns......................................................................... 13
3.14 Conduct of Business in Ordinary Course........................................................ 13
3.15 Transactions with Affiliates.................................................................. 13
3.16 Financial Statements.......................................................................... 13
3.17 Broker........................................................................................ 13
3.18 Year 2000 Compliance.......................................................................... 13
SECTION 4: REPRESENTATIONS AND WARRANTIES OF BUYER............................................................. 14
4.1 Organization, Standing and Authority.......................................................... 14
4.2 Authorization and Binding Obligation.......................................................... 14
4.3 Absence of Conflicting Agreements............................................................. 14
4.4 Litigation.................................................................................... 14
SECTION 5: COVENANTS AND AGREEMENTS............................................................................ 15
5.1 Confidentiality............................................................................... 15
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5.2 Accounts Receivable........................................................................... 15
5.3 Employee Matters.............................................................................. 15
5.4 Allocation.................................................................................... 15
5.5 Further Assurances............................................................................ 15
5.6 Sale of Website............................................................................... 15
SECTION 6: CLOSING AND CLOSING DELIVERIES...................................................................... 15
6.1 Closing....................................................................................... 15
6.2 Deliveries by Seller.......................................................................... 16
(a) Transfer Documents................................................................... 16
(b) Consents............................................................................. 16
(c) Power of Attorney.................................................................... 16
(d) Secretary's Certificate.............................................................. 16
(e) Contracts, Business Records, Etc..................................................... 16
(f) Employment Agreements................................................................ 16
(g) Lease Agreement...................................................................... 16
6.3 Deliveries by Buyer........................................................................... 16
(a) Purchase Consideration............................................................... 16
(b) Assumption Agreements................................................................ 16
(c) Employment Agreements................................................................ 17
(d) Lease Agreement...................................................................... 17
(e) Officer's Certificates............................................................... 17
SECTION 7: SURVIVAL OF REPRESENTATIONS AND WARRANTIES,
AND INDEMNIFICATION.................................................................................... 17
7.1 Representations and Warranties................................................................ 17
7.2 Indemnification by Seller..................................................................... 17
7.3 Indemnification by Buyer...................................................................... 17
7.4 Procedure for Indemnification................................................................. 18
7.5 Affiliates.................................................................................... 18
7.6 Guaranty...................................................................................... 18
(a) Terms................................................................................ 18
(b) Waivers.............................................................................. 19
(c) Representations and Warranties....................................................... 19
SECTION 8: MISCELLANEOUS....................................................................................... 19
8.1 Fees and Expenses............................................................................. 19
8.2 Notices....................................................................................... 19
8.3 Benefit and Binding Effect.................................................................... 20
8.4 Laws of the State of Illinois................................................................. 20
8.5 Entire Agreement.............................................................................. 21
8.6 Waiver of Compliance; Consents................................................................ 21
8.7 Bulk Sales Law................................................................................ 21
8.8 Severability.................................................................................. 21
8.9 Counterparts.................................................................................. 21
8.10 Arbitration Procedure......................................................................... 21
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LIST OF SCHEDULES
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Schedule 2.2 -- Excluded Assets
Schedule 2.3 -- Performance Standards
Schedule 3.3 -- Conflicting Agreements
Schedule 3.4 -- Licenses and Contracts
Schedule 3.5 -- Real and Personal Property
Schedule 3.6 -- Intangibles
Schedule 3.7 -- Consents
Schedule 3.8 -- Information on the Business
Schedule 3.9 -- Insurance and Bonds
Schedule 3.10 -- Personnel Matters
Schedule 3.11 -- Claims and Legal Actions
Schedule 3.12 -- Compliance with Laws
Schedule 3.15 -- Transactions with Affiliates
EXHIBIT
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Exhibit A -- Territory
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "AGREEMENT") is dated November 1,
1999 by and between ▇▇▇▇▇▇▇▇▇▇.▇▇▇, LLC, a Delaware limited liability company
("BUYER"), and INTELLISOFT DEVELOPMENT CORPORATION, an Illinois corporation
("SELLER").
RECITALS:
A. Seller owns and operates a business that publishes, builds,
designs, maintains and manages various websites, including, without limitation,
the "▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇" website and the "▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇"
website (collectively, the "WEBSITES") for, and provides related marketing
services to, automobile dealerships and other related customers (collectively,
the "BUSINESS").
B. Seller desires to sell, and Buyer wishes to buy, substantially
all of Seller's assets, tangible and intangible, real, personal and mixed, used
or useful in the operation of the Business, on the terms and conditions
hereinafter set forth.
AGREEMENTS:
In consideration of the covenants and agreements contained herein,
Buyer and Seller agree as follows:
SECTION 1: DEFINED TERMS
1.1 TERMS DEFINED IN THIS SECTION. The following terms shall have
the following meanings in this Agreement:
"ACCOUNTS RECEIVABLE" means all rights of Seller to payment for
services to be provided by the Buyer's W3 Division directly or indirectly
through the Business after the Closing Date, including for (i) services provided
to Customers of the Business, (ii) the sale of any Websites, and (iii) other
services related to the Business or the Purchased Assets.
"AFFILIATE" means any person, corporation or partnership directly or
indirectly, controlling, controlled by or under common control with either Buyer
or Seller, as the case may be, or any of its officers, directors, shareholders,
or general partners. As used in this definition, "control" (including, with
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other common interests, by contract or otherwise).
"ASSUMED CONTRACTS" means all Contracts listed in Schedule 3.4 hereto.
"CLOSING ACCOUNTS RECEIVABLE" means all rights of Seller to payment for
services provided by Seller directly or indirectly through the Business prior to
the Closing Date, including
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for (i) services provided to Customers of the Business, (ii) the sale of any
Websites, and (iii) other services related to the Business or the Purchased
Assets.
"CLOSING" means the consummation of the transactions contemplated to
occur on the Closing Date in accordance with the terms hereof.
"CLOSING DATE" means the date of the Closing.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder, or any subsequent legislative enactment thereof, as in
effect from time to time.
"COMPENSATION ARRANGEMENT" means any plan or compensation arrangement
other than an Employee Plan, whether written or unwritten, which provides to
employees, former employees, officers, independent contractors, directors and
shareholders of Seller or any entity related to Seller (under the terms of
Sections 414(b), (c), (m) or (o) of the Code) any compensation or other
benefits, whether deferred or not, in excess of base salary or wages and
excluding overtime pay, including any bonus or incentive plan, stock rights
plan, deferred compensation arrangement, life insurance, stock purchase plan,
severance pay plan and any other perquisites and employee fringe benefit plan.
"CONSENTS" means all of the consents, permits or approvals of
government authorities and other third parties necessary to transfer the
Purchased Assets to Buyer or otherwise to consummate the transaction
contemplated hereby.
"CONTRACTS" means all Licenses, deeds, leases, easements,
rights-of-way, customer agreements, and other agreements, written or oral
(including any amendments and other modifications thereto) to which Seller is a
party or which are binding upon Seller and which relate to the Purchased Assets
or the Business, and including, without limitation, all web-development and
web-hosting contracts and other production contracts.
"CUSTOMER" means any individual, entity or organization to whom Seller
provides services or products through the Business, or with respect to the
second paragraph of Schedule 2.3 and Exhibit A of the Employment Agreement, any
individual, entity or organization to whom the W3 Division of Buyer provides
services or products through the Business.
"EFFECTIVE TIME" means 12:01 a.m., Eastern Standard Time, on the
Closing Date.
"EMPLOYEE PLAN" means any pension, retirement, profit-sharing, deferred
compensation, vacation, severance, bonus, incentive, medical, vision, dental,
disability, life insurance or any other employee benefit plan as defined in
Section 3(3) of ERISA to which either of the Seller or any entity related to
Seller (under the terms of Sections 414 (b), (c), (m) or (o) of the Code)
contributes or which either of Seller or any entity related to Seller (under the
terms of Sections 414 (b), (c), (m) or (o) of the Code) sponsors or maintains,
or by which Seller or any such entity is otherwise bound.
"ENCUMBRANCES" means any pledge, claim, liability, mortgage, lien,
charge, encumbrance, restriction on transfer, or security interest of any kind
or nature whatsoever.
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"ENFORCEABILITY EXCEPTIONS" means the exceptions or limitations to the
enforceability of contracts under bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally, and by the
application of general principles of equity.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations thereunder, as in effect from time to
time.
"EXCLUDED ASSETS" means certain assets of Seller that are not being
sold, transferred, or otherwise conveyed to Buyer hereunder, as specified in
Section 2.2.
"EXCLUDED LIABILITIES" means certain liabilities of Seller that are not
being assumed, transferred or otherwise conveyed to Buyer hereunder, as
specified in Section 2.6.
"GAAP" means generally accepted accounting principles in the United
States of America, as in effect at the relevant date.
"INTANGIBLES" means all copyrights, trademarks, trade names, licenses,
permits, privileges, and other similar intellectual property rights and
interests (and any goodwill associated with any of the foregoing) applied for,
issued to, or owned by Seller or under which Seller is licensed or franchised
and used or held for use by Seller in the operation of the Business as currently
conducted.
"LEGAL REQUIREMENTS" means applicable common law and any applicable
statute, ordinance, code or other law, rule, regulation, order, technical or
other standard, requirement or procedure enacted, adopted, promulgated or
applied by any governmental authority, including any applicable order, decree or
judgment which may have been handed down, adopted or imposed by any governmental
authority.
"LICENSES" means all licenses, authorizations and permits relating to
the Business granted to Seller by any governmental instrumentality, and all
applications (if any) submitted by Seller for any of the foregoing.
"PERMITTED ENCUMBRANCES" means (i) liens for current taxes and other
government charges not yet due and payable or which are being contested in good
faith in appropriate proceedings and for which adequate reserves have been set
aside in the Business's financial statements, (ii) materialmen's, mechanics',
carriers', workmen's, repairmen's and other similar person's liens arising in
the ordinary course of business for sums not yet delinquent or being contested
in good faith to the extent reserved against in the Financial Statements, (iii)
Encumbrances arising under the Assumed Contracts, and (iv) liens that relate to
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security.
"PERSONAL PROPERTY" means all of the equipment (including, without
limitation, electronic and computer apparatus, databases and database systems,
software and software systems, documentation and source codes), tools, vehicles,
furniture, leasehold improvements, inventory, spare parts, and other tangible
personal property which are used or held for use by Seller in the operation of
the Business as currently conducted.
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"PURCHASED ASSETS" means all of the assets (other than the "Excluded
Assets"), tangible and intangible, real, personal and mixed, owned or held by
Seller and used or held for use by Seller in the operation of the Business as
currently conducted, which assets are being sold, transferred, or otherwise
conveyed by Seller to Buyer hereunder, as specified in detail in Section 2.1.
"REAL PROPERTY" means all of the fee estates and buildings and other
improvements thereon, leasehold interests, easements, licenses, rights to
access, rights-of-way, and other real property interests which are owned or held
by Seller and used or held for use by Seller in the operation of the Business.
"REVENUE" means any revenue derived from the Business determined in
accordance with Seller's current practices for recording revenue, consistently
applied, as of the Closing Date.
"TAX" OR "TAXES" means any and all federal, state, local, or foreign
taxes, assessments, deficiencies, fees and other governmental charges or
impositions, together with any interest, additions, or penalties with respect
thereto and any interest in respect of such additions or penalties.
"TAX RETURN" means any federal, state, or local Tax return, report,
statement and other similar filings required to be filed by Seller with respect
to Taxes.
"TERRITORY" means the area described on Exhibit A attached hereto.
1.2 TERMS DEFINED ELSEWHERE IN THIS AGREEMENT. In addition to (i)
the defined terms in the preamble, recitals and Section 1.1 hereof, or (ii)
certain defined terms used solely within a single section hereof, the following
is a list of terms used in this Agreement and a reference to the section hereof
in which such term is defined:
Term Section
----------------------- --------------
Assumed Liabilities Section 2.6
Business Recital A
Business Records Section 2.1(g)
Buyer's Damages Section 7.2
Cash Equivalents Section 2.2(a)
Claimant Section 7.4(a)
Closing Cash Payment Section 2.5
Deferred Payment Section 2.3(b)
Excluded Assets Section 2.2
Financial Statements Section 3.16
Guarantor Section 7.6
Indemnifier Section 7.4(a)
Initial Payment Section 2.3(a)
Purchase Price Section 2.3
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Seller's Damages Section 7.3
Websites Recital A
1.3 RULES OF CONSTRUCTION. Words used in this Agreement,
regardless of the gender and number specifically used, shall be deemed and
construed to include any other gender and any other number as the context
requires. As used in this Agreement, the word "including" is not limiting, and
the word "or" is both conjunctive and disjunctive. Except as specifically
otherwise provided in this Agreement in a particular instance, a reference to a
section or schedule is a reference to a section of this Agreement or a schedule
hereto, and the terms "hereof," "herein," and other like terms refer to this
Agreement as a whole, including the Schedules to this Agreement, and not solely
to any particular part of this Agreement. The descriptive headings in this
Agreement are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement.
SECTION 2: SALE AND PURCHASE OF ASSETS
2.1 AGREEMENT TO SELL AND BUY. Subject to the terms and conditions
set forth in this Agreement, Seller hereby agrees to sell, convey, transfer,
assign and deliver to Buyer on the Closing Date, and Buyer agrees to purchase,
all of Seller's rights, title and interest in, to and under the Purchased Assets
(other than the Excluded Assets), free and clear of any Encumbrances (except for
Permitted Encumbrances), more specifically described as follows:
(a) The Personal Property; (b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles;
(f) The Accounts Receivable;
(g) Any and all books and records relating to the conduct
or operations of the Business (except as expressly excluded by Section 2.2(d)),
including any and all executed copies of the Assumed Contracts, any and all
equipment warranties, any and all technical information and data, computer
discs, diagrams, blueprints and schematics relating to the Business
(collectively, the "BUSINESS RECORDS");
(h) Any and all intangible assets of Seller relating to
the Business and not specifically described above, including, without
limitation, all of Seller's goodwill associated with the Business;
(i) Any and all right, title and interest of Seller in
and to the Websites, and any assets used in support of or for the operation of
such Websites;
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(j) Any and all Internet, electronic, on-line rights or
domain names associated with the Business, including, without limitation, the
domain names "▇▇▇▇▇▇▇▇.▇▇▇" and "▇▇▇▇▇▇▇▇▇▇.▇▇▇";
(k) Any and all existing copy, films, artwork,
photographs and other reproduction materials, tapes, master videos and other
components relating to the Business, whether in possession of Seller;
(l) Any and all existing lists, including lists rented or
owned by Seller, documents and records of Seller relating to users of the
Websites;
(m) Any and all existing lists, mailing lists (in both
printed form and computer media), documents and records of Seller relating to
all past, present or prospective advertisers in the Business and copies of all
call reports and advertiser status reports; and
(n) Any and all existing lists, documents and records of
Seller relating to past, present and prospective purchasers of mailing lists
relating to the Business.
Notwithstanding anything in this Agreement to the contrary, Seller
retains all of its rights, title and interest in, and possession of, and Seller
does not hereby sell, assign, convey, transfer or deliver to Buyer, any right,
title or interest of Seller in, to or under, the Excluded Assets.
2.2 EXCLUDED ASSETS. The Purchased Assets shall exclude the
following assets of Seller (collectively, the "EXCLUDED ASSETS"):
(a) Seller's cash and cash equivalents on hand as of the
Effective Time and all other cash in any of Seller's bank or savings accounts;
any and all insurance policies and contracts of insurance and any claims and
rights of Seller thereunder (including any claims and rights of Seller to
reserves, unearned premiums and returns of premiums arising thereunder), letters
of credit, or other similar items and, in each case, any cash surrender value in
regard thereto; and any stocks or bonds, any options, warrants or rights to
acquire any securities, certificates of deposit and similar investments
(collectively, the "CASH EQUIVALENTS");
(b) Any and all Contracts, other than the Assumed
Contracts, specifically identified on Schedule 2.2 hereto;
(c) Any and all Employee Plan, Compensation Arrangement,
and any and all collective bargaining agreements;
(d) Any and all books and records which Seller is
required by law to retain and Seller's corporate name, minute books, other books
and records related to internal corporate matters and financing arrangements,
subject to the right of Buyer to have access and to copy for a period of three
(3) years from the Closing Date;
(e) The Real Property that is the subject of the Lease
Agreement described in Section 6.2(h);
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(f) Any and all intercompany accounts between Seller and
any Affiliates of Seller relating to the Business;
(g) All rights of Seller under this Agreement and the
agreements, documents and instruments delivered in connection with the
transactions contemplated hereby;
(h) Any other assets of Seller described on Schedule 2.2
hereto; and
(i) Any and all Closing Accounts Receivable.
2.3 PURCHASE PRICE. The purchase price (the "PURCHASE PRICE") for
the Purchased Assets is Five Million One Hundred Thousand Dollars ($5,100,000),
and is comprised of the following:
(a) an initial payment of Four Million One Hundred
Thousand Dollars ($4,100,000) (the "INITIAL PAYMENT"), which (i) shall be
adjusted, if necessary, as provided in Section 2.4(b), and (ii) is being paid by
Buyer to Seller at Closing in accordance with Section 2.5 by wire transfer of
immediately available funds; and
(b) a deferred payment of One Million Dollars
($1,000,000) (the "DEFERRED PAYMENT"), which Buyer shall pay to Seller in three
annual installments of Three Hundred Thirty Three Thousand Three Hundred Thirty
Three Dollars ($333,333) each; provided, however, that no such installment will
be paid, and Seller shall irrevocably lose the right hereunder to receive or
claim such installment for any particular year, unless Seller satisfies the
performance standard for that year described in Schedule 2.3 hereto. Each such
installment, if payable by Buyer to Seller in accordance with the prior
sentence, shall be paid on or prior to January 3, 2000, February 15, 2001 and
February 15, 2002, respectively.
2.4 PRORATIONS.
(a) Intentionally omitted.
(b) PRORATIONS. The Initial Payment shall be increased or
decreased as required to effectuate the proration of income and expenses as set
forth herein. All income and expenses arising from the operation of the Business
through the Effective Time, including, without limitation, Customer fees,
advertising fees, service charges, rental charges, utility charges, real and
personal property taxes and assessments levied against the Purchased Assets,
salesmen advances, property and equipment rentals, applicable copyright or other
fees, sales and services charges, taxes (except for taxes arising from the
transfer of the Purchased Assets hereunder and from any taxes on income earned
by Seller), and similar prepaid and deferred items, shall be prorated between
Buyer and Seller in accordance with the principle that Seller shall be
responsible for all expenses, costs, obligations and liabilities, and shall be
entitled to receive all income, allocable to or arising from the operation of
the Business for the period prior to the Effective Time, and Buyer shall be
responsible for all expenses, costs, obligations and liabilities, and shall be
entitled to receive all income, allocable to or arising from the operation of
the Business after the Effective Time; provided, however, that there shall be no
adjustment for, and Seller shall remain solely liable with respect to any
obligations arising under any Contracts not included in the Assumed Contracts,
or any other obligation or liability not being assumed by Buyer in accordance
with Section 2.6 whether such obligations arise before, at or after the
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Effective Time, and Buyer shall be entitled to all income from Accounts
Receivable included in the Purchased Assets.
(c) MANNER OF DETERMINING PRORATIONS. The Initial
Payment, taking into account the prorations pursuant to Section 2.4(b), will be
determined in accordance with the following procedures:
(1) Intentionally Omitted.
(2) Within sixty (60) days after Closing, Buyer
shall prepare and deliver to Seller a final settlement statement (the
"FINAL SETTLEMENT STATEMENT"), which shall be prepared by Buyer in good
faith and shall (A) contain all information reasonably necessary to
determine the prorations to the Initial Payment under Section 2.4(b),
and (B) be certified by Buyer to be true and complete to Buyer's
knowledge as of the date thereof.
(3) Within thirty (30) days after the date that
the Final Settlement Statement is delivered by Buyer to Seller pursuant
to Section 2.4(c)(2) hereof, Seller shall complete its examination
thereof and may deliver to Buyer a written report setting forth any
proposed adjustments to the Final Settlement Statement. If Seller
notifies Buyer of its acceptance of the amount shown on the Final
Settlement Statement, or if Seller fails to deliver its report of
proposed adjustments to the Final Settlement Statement within the
thirty-day period specified in the preceding sentence, the amount shown
on the Final Settlement Statement shall be conclusive and binding on
the parties as of the last day of the thirty-day period.
(4) After Closing, Buyer and Seller shall use
good faith efforts to resolve any dispute relating to the Final
Settlement Statement or otherwise involving the determination of the
Initial Payment. If the parties are unable to resolve the dispute
within fifteen (15) days following the delivery of Seller's written
report pursuant to Section 2.4(c)(3), Buyer and Seller shall jointly
designate an independent certified public accountant in the Chicago,
Illinois business area, who shall be knowledgeable in the operation of
businesses that design and operate websites, to resolve the dispute. If
the parties are unable to agree on the designation of an independent
certified public accountant, the selection of the accountant to resolve
the dispute shall be submitted to arbitration in the Chicago, Illinois
business area in accordance with the commercial arbitration rules of
the American Arbitration Association. The accountant's resolution of
the dispute shall be final and binding on the parties, and a judgment
may be entered thereon in any court of competent jurisdiction. Any fees
of this accountant, and, if necessary, for arbitration to pick such
accountant, shall be split equally between the parties.
(5) Seller and Buyer shall reasonably cooperate
with each other to enable the other party to review or prepare, as
applicable, the Final Settlement Statement, including, without
limitation, by providing the other party with all books, records,
accounts and other information reasonably requested by the other party
to enable it to compute the prorations to the Initial Payment
contemplated by Section 2.4(b).
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2.5 PAYMENT OF INITIAL PAYMENT. At the Closing, Buyer shall pay or
cause to be paid to or for the account of Seller the amount of the
Initial Payment (such amount, the "CLOSING CASH PAYMENT") by federal
wire transfer of immediately available funds pursuant to wire transfer
instructions which shall have been delivered by Seller to Buyer not
fewer than two (2) business days before the Closing Date.
(a) [PAYMENTS TO REFLECT PRORATIONS
(i) If the Initial Payment as finally determined
pursuant to Section 2.4 exceeds the Closing Cash Payment, Buyer shall pay to
Seller, in immediately available funds within five (5) days after the date on
which the Initial Payment is finally determined pursuant to Section 2.4, the
difference between the Initial Payment (as finally determined) and the Closing
Cash Payment.
(ii) If the Initial Payment as finally determined
pursuant to Section 2.4 is less than the
Closing Cash Payment, Seller shall pay to Buyer, in immediately available funds
within five (5) days after the date on which the Initial Payment is finally
determined pursuant to Section 2.4, the difference between the Initial Payment
(as finally determined) and the Closing Cash Payment.]
2.6 ASSUMPTION OF LIABILITIES AND OBLIGATIONS. As of the Effective
Time, Buyer shall assume, pay, discharge and perform (i) all the obligations and
liabilities of Seller under the Assumed Contracts insofar as they relate to the
time period after the Effective Time, (ii) all obligations and liabilities of
Seller to any Customer of the Business for any advance payments or deposits, if
and to the extent that an adjustment was made to the Initial Payment with
respect to such advance payments or deposits pursuant to Section 2.4(b) above,
and (iii) all obligations and liabilities arising out of events occurring after
the Effective Time related to Buyer's ownership of the Purchased Assets or its
operation of the Business after the Effective Time (collectively, the "ASSUMED
LIABILITIES"). All other obligations and liabilities of Seller (collectively,
the "EXCLUDED LIABILITIES"), including, without limitation, (a) obligations with
respect to the Excluded Assets, including under any Contract not included in the
Assumed Contracts, (b) any obligations under the Assumed Contracts relating to
the time period prior to the Effective Time, (c) any claims or pending
litigation or proceedings relating to the operation of the Business prior to the
Effective Time, and (d) all accounts payable to Affiliates of Seller and loans
payable by Seller, shall remain and be the obligations and liabilities solely of
Seller.
SECTION 3: REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer, to the knowledge of its
President, ▇▇▇▇ ▇▇▇▇▇▇▇▇, as follows:
3.1 ORGANIZATION, STANDING AND AUTHORITY. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Illinois, and is qualified to conduct business in Illinois. Seller has
all requisite corporate power and authority (i) to own, lease and use the
Purchased Assets as presently owned, leased and used, (ii) to conduct and
operate the Business as presently conducted and operated, and (iii) to execute,
deliver and perform this Agreement and the documents contemplated hereby in
accordance with their
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respective terms. Seller is not a participant in any joint venture or
partnership with any other person or entity with respect to any part of the
Business's operations, the Purchased Assets or the Assumed Liabilities.
3.2 AUTHORIZATION AND BINDING OBLIGATION. The execution, delivery
and performance of this Agreement and the documents contemplated hereby by
Seller have been duly authorized by all necessary corporate actions on the part
of Seller. This Agreement has been and the documents contemplated hereby will be
upon the execution and delivery thereof on behalf of Seller, duly executed and
delivered by Seller and constitute or will constitute, as applicable, the legal,
valid and binding obligation of Seller, enforceable against Seller in accordance
with their respective terms, except to the extent such enforceability may be
limited by Enforceability Exceptions.
3.3 ABSENCE OF CONFLICTING AGREEMENTS. Except as set forth in
Schedule 3.3 or Schedule 3.7, the execution, delivery and performance of this
Agreement and the documents contemplated hereby and the consummation by Seller
of the transactions contemplated hereby (with or without the giving of notice,
the lapse of time, or both): (i) do not require the consent of, notice to, or
filing with any governmental authority or any other third party under any
License or other Contract; (ii) do not conflict with any provision of Seller's
articles of incorporation or bylaws, each as currently in effect; (iii) assuming
receipt of all Consents listed in Schedule 3.7, will not conflict with, result
in a breach of, or constitute a default under any Legal Requirement to which
Seller is bound; (iv) assuming receipt of all Consents listed in Schedule 3.7,
will not conflict with, constitute grounds for termination of, result in a
breach of, constitute a default under, or accelerate or permit the acceleration
of any performance required by the terms of any License or other Contract; and
(v) assuming receipt of all Consents listed in Schedule 3.7, will not result in
the creation of any Encumbrance upon the Purchased Assets.
3.4 LICENSES AND ASSUMED CONTRACTS. Schedule 3.4 contains a list
or description of all Licenses and all Contracts, except for employment
contracts described in Schedule 3.10. Seller has delivered to Buyer copies of
the written Licenses and written Contracts listed on Schedule 3.4 (together with
all amendments thereto). The Licenses and Assumed Contracts listed or described
on Schedule 3.4, together with the agreements described in the exceptions listed
above, comprise all licenses and contracts necessary to own and operate the
Business as currently conducted. The Licenses and Assumed Contracts are in full
force and effect and are valid, binding and enforceable against Seller and, to
the knowledge of Seller, the other parties thereto in accordance with their
terms, except to the extent such enforceability may be limited by the
Enforceability Exceptions. Except as described on Schedule 3.4, none of the
Licenses or Assumed Contracts will be breached by virtue of the consummation of
the transactions contemplated hereby or by virtue of the assignment thereof by
Seller to Buyer pursuant hereto. Except as disclosed on Schedule 3.4, (i) there
is not under any Assumed Contract any default by Seller or, to Seller's
knowledge, any other party thereto which would have a material adverse effect on
the Business, and (ii) Seller is in compliance with the material terms of the
Licenses.
3.5 REAL AND PERSONAL PROPERTY. Schedule 3.5 contains descriptions
of all material items of Personal Property owned by Seller as of the date
hereof. Seller holds no Real Property in connection with the operation of the
Business other than the Real Property described in Section 2.2(e). Except for
tangible Personal Property leased by Seller under leases listed in
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Schedule 3.5, Seller has good and marketable title to all of the tangible
Personal Property, free and clear of all Encumbrances, except for Permitted
Encumbrances. Except as specified on Schedule 3.5, all tangible Personal
Property is (a) in good condition and repair (ordinary wear and tear excepted),
and (b) available for immediate use in the same manner as currently used in the
operation of the Business.
3.6 INTANGIBLES. Schedule 3.6 contains a description of the
Intangibles (exclusive of those required to be listed in Schedule 3.4 and
inclusive of those relating to software used in connection with the Business),
all of which are valid and in full force and effect and uncontested except as
described in Schedule 3.11. None of the Intangibles infringes upon any
trademarks, copyrights, patents or any other rights or other Intangibles of any
other person, and none is subject to any outstanding order, decree, judgment,
stipulation, injunction, written restriction or agreement restricting the scope
of use thereof. Except as described in Schedule 3.6, Seller has not granted any
license, franchise or permit to any person or entity to use any of Seller's
Intangibles and Seller has the right to assign and transfer the Intangibles in
accordance with the terms of this Agreement.
3.7 CONSENTS. Except for the Consents described in Schedule 3.7,
no consent, approval, permit or authorization of, or filing with any
governmental authority or any other third party is required to be obtained by
Seller (i) to consummate this Agreement and the transactions contemplated
hereby, (ii) to permit Seller to assign or transfer the Purchased Assets to
Buyer, or (iii) to enable Buyer to conduct or operate the Business in
essentially the same manner as the Business is currently conducted or operated.
3.8 INFORMATION ON THE BUSINESS.
(a) CUSTOMERS; BILLING RATE. The Business (i) has at
least 320 Customers, and (ii) has a billing rate for Customers as described on
Schedule 3.8. The Business generated Revenues of at least $1,338,812.70 for the
ten (10) consecutive months ending on October 31, , 1999.
(b) ACCOUNT BALANCES. All the account balances of
Customers to the Business are actual and bona fide receivables representing
obligations for services rendered in the regular course of Seller's business, in
the total dollar amount thereof shown on the books of Seller and are collectible
in full in the ordinary course, subject to Enforceability Exceptions.
(c) COMMITMENTS. Except as described on Schedule 3.8,
there are no unfulfilled binding material commitments for capital improvements
which Seller is obligated to make in connection with the Business. There are no
obligations or liabilities to Customers which are material to the operation of
the Business, except: (i) with respect to deposits made by such Customers or
such other users; and (ii) the obligation to supply services to Customers in the
ordinary course of business. Except with respect to deposits and any other item
which is to be adjusted for pursuant to Section 2.4 hereof, Seller has no
obligation or liability for the refund of monies or for the provision of rebates
to Customers of the Business.
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3.9 INSURANCE AND BONDS. Schedule 3.9 comprises a list of all
insurance policies of Seller, currently in full force and effect, which insure
the Business or any part of the Purchased Assets, and a list of all surety and
performance bonds in connection with the Business.
3.10 PERSONNEL MATTERS. Schedule 3.10 contains a list of all
employees of the Business (the "EMPLOYEES") along with their job titles and
rates of pay and Employee Plans. Except as described in Schedule 3.10, Seller
has no written or oral contracts of employment with any employee of the Business
other than oral employment agreements terminable at will without penalty. Seller
is not a party to or subject to any collective bargaining agreements with
respect to the Business. Seller has furnished Buyer with true and complete
copies of all employee handbooks, employee rules and regulations, and Employee
Plans, if any. None of Seller's employees is represented by a union or other
representative for collective bargaining purposes, no union or other
representative claims to represent any of Seller's employees for such purposes
and Seller has not received a request for recognition from any union or other
representative seeking to represent any of Seller's employees for such purposes.
Seller's employees are not engaged in or subject to any organizing activity with
respect to any labor union or other representative seeking to represent Seller's
employees and no such organizing activity is threatened. There is no strike,
picketing, work slow down or other labor disputes or controversies or
proceedings pending or threatened involving or relating to any of Seller's
employees. No Employee Plan is a "Multiemployer Plan," as defined in Section
3(37) of ERISA, and neither Seller nor any entity related to Seller (under the
terms of Sections 414(b), (c), (m) or (o) of the Code) has within the last ten
years, or reasonably expects to incur, any "withdrawal liability," as defined
under Section 4201 et seq. of ERISA. No Employee Plan is covered by Title IV of
ERISA and neither the Seller nor any entity related to Seller (under the terms
of Sections 414(b), (c), (m) or (o) of the Code) has within the last ten years
terminated any Employee Plan which was covered by Title IV of ERISA, other than
pursuant to a standard termination under Section 4041(b) of ERISA. No Employee
Plan or Compensation Arrangement provides medical or death benefit coverage to
former employees, except for "COBRA" benefits required by Section 4980B of the
Code as further described in Schedule 3.10.
3.11 CLAIMS AND LEGAL ACTIONS. Except as set forth on Schedule
3.11, there is no claim, legal action, arbitration, governmental investigation
or other legal, administrative or tax proceeding, nor any order, decree or
judgment, in progress or pending, or to the knowledge of Seller threatened,
against or relating to Seller, the Purchased Assets, or the operation of the
Business.
3.12 COMPLIANCE WITH LAWS. Except as disclosed on Schedule 3.12,
Seller has complied with, and the Business and Purchased Assets are in
compliance, in all material respects, with all applicable Legal Requirements.
Seller is licensed in all material respects to operate all the facilities
required by law to be licensed.
3.13 TAXES AND TAX RETURNS. All Tax Returns relating to the
Purchased Assets or the operation of the Business have been timely filed with
the appropriate governmental agencies in all jurisdictions in which such Tax
Returns are required to be filed, all such Tax Returns are true, correct and
complete in all material respects, and all Taxes due for the periods covered by
such Tax Returns have been properly accrued or paid to the extent such Taxes
have become due. Seller has received no notice of any notice of deficiency or
proposed assessment from any taxing
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governmental authority with respect to Taxes relating to the Business or the
Purchased Assets. There are no Tax liens on any of the Purchased Assets.
3.14 CONDUCT OF BUSINESS IN ORDINARY COURSE. From June 30, 1999
through and including the Closing Date, Seller has operated the Business only in
the ordinary course and has not (i) made any material increase in compensation
payable or to become payable to any of the employees of the Business, or any
material change in personnel policies, insurance benefits or other compensation
arrangements affecting the employees of the Business, (ii) made any sale,
assignment, lease or other transfer of any of Seller's properties other than
Excluded Assets, obsolete assets no longer usable in the operation of the
Business, or other assets sold or disposed of in the normal course of business
with suitable replacements being obtained therefor, and (iii) suffered any
material adverse change in the assets, properties, financial condition, or
results of operations of the Business, including any material damage,
destruction, or loss affecting any assets used or useful in the operation of the
Business.
3.15 TRANSACTIONS WITH AFFILIATES. Except as disclosed in the
Financial Statements and described on Schedule 3.15, Seller has not been
involved in any business arrangement or relationship with any Affiliate of
Seller, and no Affiliate of Seller has provided services to Seller, has incurred
on behalf of Seller expenses unreimbursed by Seller, or owns any property or
right, tangible or intangible, that is used in the operation of the Business.
3.16 FINANCIAL STATEMENTS. Seller has furnished Buyer with true and
complete copies of an unaudited balance sheet and profit and loss statement as
at, and for the fiscal year ended, December 31, 1998 and the ten month period
ended October 26, 1999 (collectively, the "FINANCIAL STATEMENTS"). The Financial
Statements have been prepared from the books and records of Seller, accurately
reflect the books, records and accounts of Seller (which books, records and
accounts are complete and correct in all material respects), and present fairly
the financial condition of Seller as at their respective dates and the results
of operations for the periods then ended, except that the Financial Statements
do not include footnotes or customary year-end adjustments and there are no
automobiles owned by the Company.
3.17 BROKER. Neither Seller nor any person or entity acting on
Seller's behalf has employed any broker or lender or incurred any liability for
any finders' or brokers' fees or commissions in connection with the transactions
contemplated by this Agreement.
3.18 YEAR 2000 COMPLIANCE. Seller has no current actual knowledge
that Seller's information technology (including without limitation all of the
computer hardware and software owned, leased or used by Seller in connection
with the Websites or otherwise in the ordinary course of the operation of the
Business) is not Year 2000 Compliant. For purposes of this section, "YEAR 2000
COMPLIANT" means, with respect to Seller's information technology, that the
information technology is designed to be used prior to, during, and after the
calendar Year 2000 A.D., and the information technology used during each such
time period will accurately receive, provide and process date/time data
(including, but not limited to, calculating, comparing and sequencing) from,
into and between the twentieth and twenty-first centuries, including the years
1999 and 2000, and leap year calculations, and will not malfunction, cease to
function, or provide invalid or incorrect results as a result of date/time data,
to the extent that other
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information technology, used in combination with the information technology
being acquired by Buyer hereunder, properly exchanges date/time data with it.
SECTION 4: REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 ORGANIZATION, STANDING AND AUTHORITY. Buyer is a limited
liability company duly organized, validly existing and in good standing under
the laws of Delaware. Buyer has all requisite limited liability company power
and authority to execute, deliver and perform this Agreement and the documents
contemplated hereby in accordance with their respective terms.
4.2 AUTHORIZATION AND BINDING OBLIGATION. The execution, delivery
and performance of this Agreement and the documents contemplated hereby by Buyer
have been duly authorized by all necessary limited liability company actions on
the part of Buyer. This Agreement has been, and the documents contemplated
hereby will be upon the execution and delivery on behalf of Buyer, duly executed
and delivered by Buyer and constitute or will constitute, as applicable, the
legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with their respective terms, except to the extent such enforceability
may be limited by the Enforceability Exceptions.
4.3 ABSENCE OF CONFLICTING AGREEMENTS. The execution, delivery and
performance of this Agreement and the documents contemplated hereby and thereby
and the consummation of the transactions contemplated hereby and thereby by
Buyer (with or without the giving of notice, the lapse of time, or both): (i) do
not require the consent of, notice to, or filing with any governmental authority
or any other third party under any License or other Contract; (ii) do not
conflict with any provision of Buyer's articles of organization or operating
agreement, each as currently in effect; (iii) will not conflict with, result in
a breach of, or constitute a default under any Legal Requirement to which Buyer
is bound; and (iv) will not conflict with, constitute grounds for termination
of, result in a breach of, constitute a default under, or accelerate or permit
the acceleration of any performance required by the terms of any License or
other Contract.
4.4 LITIGATION. There is no claim, legal action, arbitration,
governmental investigation or other legal or administrative proceeding, nor any
order, decree or judgment, in progress or pending, or to the knowledge of Buyer
threatened, against or relating to Buyer which would enjoin, rescind or
condition the transactions contemplated hereunder.
SECTION 5: COVENANTS AND AGREEMENTS
5.1 CONFIDENTIALITY. Buyer and Seller, for themselves and for
their respective Affiliates, each agrees that it will use commercially
reasonable efforts to keep confidential (except for such disclosure to its
advisors and representatives as may be appropriate in the furtherance of this
transaction and except for such disclosure as may be necessary to comply with
applicable law) all information of a confidential nature obtained by it from the
other in connection with the transactions contemplated by this Agreement.
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5.2 ACCOUNTS RECEIVABLE. At the Closing, Seller shall assign to
Buyer all Accounts Receivable included in the Purchased Assets. Seller shall
deliver to Buyer on the Closing Date a complete and detailed statement of such
Accounts Receivable, showing the account number and date of issuance, the name
and address of the account payor, the aggregate amount of such receivable, and
the balance due as of Closing Date on each such Account Receivable. Any payments
received by Seller from account payors on or after the Closing Date with respect
to such Accounts Receivable shall be remitted by Seller to Buyer.
5.3 EMPLOYEE MATTERS. On the Closing Date, Seller shall terminate
the employment of the Employees, and effective on the Closing Date, Buyer shall
hire and continue the employment of the Employees in comparable positions, at
comparable salaries and with comparable benefits (including health and life
insurance). Seller shall be responsible for and shall cause to be discharged and
satisfied in full all amounts owed to any employee, including, without
limitation, wages, salaries, commissions, bonuses, severance, sick pay, vacation
pay, and any other benefits due to an employee under any Employee Plan or
Compensation Arrangement for the period prior to the Closing Date.
5.4 ALLOCATION. Buyer and Seller shall use commercially reasonable
good faith efforts to agree on the allocation of the Purchase Price and the
Assumed Liabilities in accordance with the rules under Section 1060 of the Code;
provided however, that if the parties are unable to agree to such allocation,
each party may make such allocation as it may determine in its sole discretion.
5.5 FURTHER ASSURANCES. After the Closing, Seller and Buyer will
take such actions, and execute and deliver to Buyer or Seller, as appropriate,
such further deeds, bills of sale, assignments or other transfer documents as,
in the reasonable opinion of counsel for Buyer or Seller, as appropriate, may be
necessary to evidence or complete the transfer of the Purchased Assets to Buyer
pursuant to this Agreement.
5.6 SALE OF WEBSITE. After the Closing, Buyer covenants and agrees
with Seller to extend to ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇ the right to
approve any prospective purchaser of the "▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇" website
from Buyer, with such approval not to be unreasonably withheld by ▇▇. ▇▇▇▇
▇▇▇▇▇▇▇▇ or ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇.
5.7 CLOSING ACCOUNTS RECEIVABLE. Seller shall deliver to Buyer
promptly after the Closing Date a complete and detailed statement of the Closing
Accounts Receivable, showing the account number and date of issuance, the name
and address of the account payor, the aggregate amount of such receivable, and
the balance due as of Closing Date on each such Closing Account Receivable.
Buyer agrees to use its normal business efforts, for a period of one hundred
eighty (180) days, as collection agent for Seller, to diligently collect the
Closing Accounts Receivable following the Closing Date in the ordinary course of
business in accordance with the Buyer's standard collection practice, provided
however, that the Buyer shall not be required to take any extraordinary measures
including instituting a legal proceeding or utilizing any collection agency. Any
funds received by the Buyer payable in respect to Closing Accounts Receivable
shall be held for the account of the Seller in a segregated bank account and all
funds accumulated shall be wire transferred to the Seller on a monthly basis or
as agreed to by the Seller and the Buyer. Nothing herein shall preclude the
Seller from taking any action to collect the Closing Accounts Receivable.
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SECTION 6: CLOSING AND CLOSING DELIVERIES
6.1 CLOSING. The Closing Date shall be on the same date as the
date of this Agreement at such place and by such means as Buyer and Seller shall
mutually agree.
6.2 DELIVERIES BY SELLER. On the Closing Date, Seller shall
deliver to Buyer the following, in form and substance reasonably satisfactory to
Buyer and its counsel:
(a) TRANSFER DOCUMENTS. Duly executed bills of sale,
assignments and other transfer documents which shall be sufficient to vest good
and marketable title to the Purchased Assets, including, without limitation, the
Assumed Contracts and the Accounts Receivable, in the name of Buyer, free and
clear of any Encumbrances except for Permitted Encumbrances;
(b) CONSENTS. The original of each Consent with, as a
result of obtaining such Consent, no adverse change having been made in the
terms of the License or Assumed Contract with respect to which such Consent has
been obtained;
(c) POWER OF ATTORNEY. A power of attorney sufficient to
enable Buyer to collect the Accounts Receivable being conveyed to Buyer at the
Closing, including the endorsement of any payments by check made by Customers;
(d) SECRETARY'S CERTIFICATE. A certificate dated as of
the Closing Date, executed by Seller's Secretary, certifying that the
resolutions attached to such certificate were duly adopted by Seller's Board of
Directors and Stockholders authorizing and approving the execution of this
Agreement and the consummation of the transaction contemplated hereby and that
such resolutions remain in full force and effect;
(e) CONTRACTS, BUSINESS RECORDS, ETC. Copies of all
Assumed Contracts, customer, advertiser, purchaser and user lists used or
maintained by Seller (including, without limitation lists described in Section
2.1), computer master tapes or disks with customer and user information and
copies of the Websites, blueprints, schematics, working drawings, plans,
projections, statistics, films, artwork, photographs and other reproduction
materials, master videos, engineering records and other books and records owned
or maintained by Seller relating to the operation of the Business (other than
those excluded by Section 2.2(d));
(f) EMPLOYMENT AGREEMENTS. Employment Agreements, dated
as of the Closing Date (the "EMPLOYMENT Agreements"), and duly executed by ▇▇.
▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇, as appropriate; and
(g) LEASE AGREEMENT. The Lease Agreement, dated as of the
Closing Date (the "LEASE AGREEMENT"), and duly executed by Seller or ▇▇. ▇▇▇▇
▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇ (as applicable) as lessor thereunder.
6.3 DELIVERIES BY BUYER. Prior to or on the Closing Date, Buyer
shall deliver to Seller the following, in form and substance reasonably
satisfactory to Seller and its counsel:
(a) PURCHASE CONSIDERATION. The Closing Cash Payment as
provided in Section 2.5;
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(b) ASSUMPTION AGREEMENTS. Appropriate assumption
agreements and other documents reasonably requested by Seller pursuant to which
Buyer shall assume and undertake to perform Seller's obligations arising on and
after the Closing Date under the Assumed Contracts;
(c) EMPLOYMENT AGREEMENTS. The Employment Agreements,
duly executed by Buyer;
(d) LEASE AGREEMENT. The Lease Agreement, duly executed
by Buyer as lessee thereunder; and
(e) OFFICER'S CERTIFICATES. A certificate dated as of the
Closing Date, executed by a duly authorized officer of Buyer, certifying that
the resolutions attached to such certificate were duly adopted by the requisite
parties authorizing and approving the execution of this Agreement and the
consummation of the transactions contemplated hereby and that such resolutions
remain in full force and effect.
SECTION 7: SURVIVAL OF REPRESENTATIONS AND WARRANTIES, AND INDEMNIFICATION
7.1 REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Buyer and Seller herein shall be deemed continuing
representations, warranties and covenants, and shall survive the Closing for a
period of twelve (12) months after the Closing Date. Any investigations by or on
behalf of any party hereto shall not constitute a waiver as to enforcement of
any representation, warranty, or covenant contained in this Agreement.
7.2 INDEMNIFICATION BY SELLER. Seller shall indemnify and hold
Buyer harmless against and with respect to, and shall reimburse Buyer for any
and all losses, liabilities or damages resulting from (collectively, "BUYER'S
DAMAGES"):
(a) any breach of any representation or warranty, or any
nonfulfillment of any covenant by Seller contained in this Agreement;
(b) Any and all obligations of Seller not assumed by
Buyer pursuant to the terms hereof; and
(c) the operation or ownership of the Business or the
Purchased Assets prior to the Effective Time.
Notwithstanding the foregoing, (a) Seller shall be required to
indemnify Buyer for Buyer's Damages only to the extent that the aggregate
Buyer's Damages exceed $50,000 in the aggregate (provided that no claim may be
counted toward such $50,000 unless it exceeds $5,000), (b) Seller shall not be
required to indemnify Buyer for Buyer's Damages in an aggregate amount in excess
of the amount which is the after-tax amount of the amount of the Initial
Payment, as adjusted, and the Deferred Payment, actually received by Seller
(which the parties agree shall be assumed to be 75%), and (c) any claim for
indemnification under Section 7 hereof must be made during the applicable
survival period set forth in Section 7.1 hereof.
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7.3 INDEMNIFICATION BY BUYER. Buyer shall indemnify and hold
Seller harmless against and with respect to, and shall reimburse Seller for any
and all losses, liabilities or damages resulting from (collectively, "SELLER'S
DAMAGES"):
(a) any breach of any representation or warranty, or any
nonfulfillment of any covenant by Buyer contained in this Agreement;
(b) any and all obligations of Seller assumed by Buyer
pursuant to the terms hereof; and
(c) the operation or ownership of the Business or the
Purchased Assets after the Effective Time.
7.4 PROCEDURE FOR INDEMNIFICATION. The procedure for
indemnification shall be as follows:
(a) The party claiming indemnification (the "CLAIMANT"),
shall give notice to the other party (the "INDEMNIFIER") of any claim, whether
between the parties or brought by a third party, within fifteen (15) business
days of receiving notice, or becoming aware thereof, and specifying (i) the
factual basis for such claim, and (ii) the amount of the claim.
(b) Following receipt of notice from the Claimant of a
claim, the Indemnifier shall have thirty (30) days to make such investigation of
the claim as the Indemnifier deems necessary or desirable. For the purposes of
such investigation, the Claimant agrees to make available to the Indemnifier
and/or its authorized representative(s) the information relied upon by the
Claimant to substantiate the claim. If the Claimant and the Indemnifier agree at
or prior to the expiration of said thirty (30) day period (or any mutually
agreed upon extension thereof) to the validity and amount of such claim, the
Indemnifier shall immediately pay to the Claimant the full amount of the claim.
If the Claimant and the Indemnifier do not agree within said period (or any
mutually agreed upon extension thereof), the parties agree to arbitrate the
matter pursuant to Section 8.10.
(c) With respect to any claim by a third party as to
which either Buyer or Seller is claiming indemnification hereunder, the
Indemnifier, subject to its acknowledgment of its indemnity obligations
hereunder, shall have the right at its own expense to assume control of the
defense. If the Indemnifier elects to assume control of the defense of any
third-party claim, the Claimant shall have the right to participate in the
defense of such claim at its own expense. If the Indemnifier does not elect to
assume control or otherwise participate in the defense of any third-party claim,
it shall be bound by the results obtained by the Claimant with respect to such
claim.
7.5 AFFILIATES. The indemnification rights provided in Sections
7.2 and 7.3 shall, in any instance, extend to any Affiliate of each of Buyer and
Seller although any indemnification claims by such parties shall be made by and
through the Claimant.
7.6 GUARANTY.
(a) TERMS. By their execution hereof with respect to this
Section 7.6, ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇, the principle stockholders
of Seller (collectively,
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"GUARANTOR"), jointly and severally, irrevocably and unconditionally guarantee
to Buyer the full, complete and timely performance by Seller following the
Closing of any and all obligations of Seller under this Section 7 (the
"OBLIGATIONS"). This guaranty shall remain in full force and effect so long as
Seller shall have any obligations or liabilities under this Section 7. This
guaranty shall be deemed a continuing guaranty and the waivers of Guarantor
herein shall remain in full force and effect until the satisfaction in full of
the Obligations. If any default shall occur by Seller in its performance or
satisfaction of any of the Obligations, then Guarantor will perform or satisfy,
or cause to be performed or satisfied, such obligations immediately upon notice
from Buyer describing such default. This guaranty is an absolute, unconditional
and continuing guaranty of payment and performance which shall remain in full
force and effect without respect to future changes in conditions (including any
change of law) and without regard to any amendment to this Agreement or any
circumstance which might otherwise constitute a legal or equitable discharge of
a guarantor or surety. Guarantor agrees that its obligations hereunder shall not
be contingent upon the exercise or enforcement by Buyer of whatever remedies it
may have against Seller or any other guarantor.
(b) WAIVERS. To the maximum extent permitted by law,
Guarantor hereby waives: (i) notice of acceptance hereof; (ii) notice of any
adverse change in the financial condition of Seller or of any other fact that
might increase Guarantor's risk hereunder; and (iii) presentment, protest,
demand, action or delinquency in respect of any of the Obligations.
(c) REPRESENTATIONS AND WARRANTIES. Guarantor represents
and warrants to Seller that, to their knowledge, (i) this Agreement has been
duly and validly executed and delivered by Guarantor and this Section 7.6
constitutes its legal, valid, and binding agreement, enforceable in accordance
with its terms, except as the enforceability of this Agreement may be affected
by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally, and by judicial discretion in the enforcement of equitable remedies,
and (ii) the execution, delivery, and performance by Guarantor of this Agreement
(A) do not require the consent of any third party (including any governmental or
regulatory authority); (B) will not violate or result in a breach of, or
contravene any law, judgment, order, ordinance, injunction, decree, rule,
regulation, or ruling of any court or governmental instrumentality applicable to
Guarantor; and (C) will not violate, conflict with, or result in a material
breach of any terms of, constitute grounds for termination of, constitute a
default under, or result in the acceleration of any performance required by the
terms of, any mortgage, indenture, lease, contract, agreement, instrument,
license, or permit to which Guarantor is a party or by which Guarantor or its
properties may be bound legally.
SECTION 8: MISCELLANEOUS
8.1 FEES AND EXPENSES. Any transfer Taxes, recordation Taxes,
sales Taxes, use Taxes, document stamps, Taxes and fees, filing fees, or other
charges levied by any governmental entity on account of the transfer of the
Purchased Assets from Seller to Buyer up to an aggregate amount of $20,000 shall
be paid by Seller and Buyer equally, and all other such charges shall be paid by
Seller alone. Except as otherwise provided in this Agreement, each party shall
pay its own expenses incurred in connection with the authorization, preparation,
execution, and performance of this Agreement, including all fees and expenses of
counsel, accountants, agents and representatives, and each party shall be
responsible for all fees or commissions payable to any finder, broker, advisor,
or similar person retained by or on behalf of such party.
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8.2 NOTICES. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be in
writing, may be sent by telecopy (with automatic machine confirmation),
delivered by personal delivery, or sent by commercial delivery service or
certified mail, return receipt requested, shall be deemed to have been given on
the date of actual receipt, which may be conclusively evidenced by the date set
forth in the records of any commercial delivery service or on the return
receipt, and shall be addressed to the recipient at the address specified below,
or with respect to any party, to any other address that such party may from time
to time designate in a writing delivered in accordance with this Section 8.2:
If to Seller: Intellisoft Development Corporation
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Suite 3C
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, President
Telecopy: 630/953-8403
Telephone: 630/▇▇▇-▇▇▇▇
with a copy Winston & ▇▇▇▇▇▇
(which shall ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
not constitute ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
notice) to: Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telecopy: 312/558-5700
Telephone: 312/▇▇▇-▇▇▇▇
If to Buyer: ▇▇▇▇▇▇▇▇▇▇.▇▇▇, LLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
Telecopy: 404/843-7412
Telephone: 404/▇▇▇-▇▇▇▇
with a copy Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, PLLC
(which shall ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
not constitute ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
notice) to: Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: 202/776-2222
Telephone: 202/▇▇▇-▇▇▇▇
or to any such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
8.2.
8.3 BENEFIT AND BINDING EFFECT. Neither party hereto may assign
this Agreement without the prior written consent of the other party hereto,
which consent shall not be unreasonably withheld. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
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8.4 LAWS OF THE STATE OF ILLINOIS. THIS AGREEMENT SHALL BE
GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS (WITHOUT REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF).
8.5 ENTIRE AGREEMENT. This Agreement, all schedules hereto and all
documents and certificates to be delivered by the parties pursuant hereto
collectively represent the entire understanding and agreement between Buyer and
Seller with respect to the subject matter hereof. All schedules attached to this
Agreement shall be deemed part of this Agreement and are incorporated herein,
where applicable, as if fully set forth herein. This Agreement supersedes all
prior negotiations, letters of intent or other writings between Buyer and Seller
and their respective representatives with respect to the subject matter hereof,
and cannot be amended, supplemented or modified except by a written agreement
which makes specific reference to this Agreement or an agreement delivered
pursuant hereto, as the case may be, and which is signed by the party against
which enforcement of any such amendment, supplement or modification is sought.
8.6 WAIVER OF COMPLIANCE; CONSENTS. Except as otherwise provided
in this Agreement, any failure of any of the parties to comply with any
obligation, representation, warranty, covenant, agreement or condition herein
may be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, representation, warranty,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. Whenever this Agreement
requires or permits consent by or on behalf of any party hereto, such consent
shall be given in writing in a manner consistent with the requirements for a
waiver of compliance as set forth in this Section 8.6.
8.7 BULK SALES LAW. The parties hereto waive compliance with the
provisions of any bulk sales or fraudulent conveyance law applicable to the
transaction contemplated hereby.
8.8 SEVERABILITY. If any provision hereof or the application
thereof to any person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provision to
other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
8.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when so executed and delivered, shall be an
original, and all of which counterparts together shall constitute one and the
same fully executed instrument.
8.10 ARBITRATION PROCEDURE.
(a) The Seller and Buyer agree that the arbitration
procedure set forth below shall be the sole and exclusive method for resolving
and remedying claims for money damages arising out of the provisions of this
Agreement (the "Dispute"). The parties hereby agree and acknowledge that, except
as otherwise provided in this Section 8.10 or in the Commercial Arbitration
Rules of the American Arbitration Association as in effect from time to time,
the arbitration procedures and any Final Determination hereunder shall be
governed by, and shall be enforced pursuant to, the Uniform Arbitration Act.
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(b) In the event that either the Seller or Buyer asserts
that there exists a Dispute, such party shall deliver a written notice to each
other party or parties involved therein specifying the nature of the asserted
Dispute and requesting a meeting to attempt to resolve the same. If no such
resolution is reached within thirty (30) calendar business days after such
delivery of such notice, the party delivering such notice of Dispute (the
"Disputing Person") may, within sixty (60) business days after delivery of such
notice, commence arbitration hereunder by delivering to each other party
involved therein a notice of arbitration (a "Notice of Arbitration"). Such
Notice of Arbitration shall specify the matters as to which arbitration is
sought, the nature of any Dispute, the claims of each party to the arbitration
and shall specify the amount and nature of any damages, if any, sought to be
recovered as a result of any alleged claim, and any other matters required to be
included therein, if any, by the Commercial Arbitration Rules of the American
Arbitration Association as in effect from time to time.
(c) The Seller and Buyer each shall select one
independent arbitrator expert in the subject matter of the Dispute (the
arbitrators so selected shall be referred to herein as the "Seller's Arbitrator"
and the "Buyer's Arbitrator," respectively). In the event that either party
fails to select an independent arbitrator as set forth herein within twenty (20)
days from delivery of a Notice of Arbitration, then the matter shall be resolved
by the arbitrator selected by the other party. The Seller's Arbitrator and the
Buyer's Arbitrator shall select a third independent arbitrator expert in the
subject matter of the dispute, and the three arbitrators so selected shall
resolve the matter according to the procedures set forth in this Section 8.10.
If the Seller's Arbitrator and the Buyer's Arbitrator are unable to agree on a
third arbitrator within twenty (20) days after their selection, the Seller's
Arbitrator and the Buyer's Arbitrator shall each prepare a list of three
independent arbitrators. The Seller's Arbitrator and the Buyer's Arbitrator
shall each have the opportunity to designate as objectionable and eliminate one
arbitrator from the other arbitrator's list within seven (7) days after
submission thereof, and the third arbitrator shall then be selected by lot from
the arbitrators remaining on the lists submitted by the Seller's Arbitrator and
the Buyer's Arbitrator.
(d) The arbitrator(s) selected pursuant to paragraph (c)
above will determine the allocation of the costs and expenses of arbitration
based upon the percentage which the portion of the contested amount awarded to
each party bears to the amount actually contested by such party. For example, if
Seller submits a claim for $1,000, and if Buyer contests only $500 of any amount
claimed by Seller, and if the arbitrator(s) ultimately resolves the dispute by
awarding Seller $300 of the $500 contested, then the costs and expenses of
arbitration will be allocated 60% (i.e. 300/500) to Buyer and 40% (i.e. 200/500)
to Seller.
(e) The arbitration shall be conducted in Chicago,
Illinois and under the Commercial Arbitration Rules of the American Arbitration
Association as in effect from time to time, except as modified by the agreement
of Seller and Buyer. The arbitrator(s) shall so conduct the arbitration that a
final result, determination, finding, judgment and/or award (the "Final
Determination") is made or rendered as soon as practicable, but in no event
later than ninety (90) business days after the delivery of the Notice of
Arbitration nor later than ten (10) days following completion of the
arbitration. The Final Determination must be agreed upon and signed by the sole
arbitrator or by at least two of the three arbitrators (as the case may be). The
Final Determination shall be final and binding on all parties and there shall be
no appeal from or reexamination of the Final Determination, except for fraud,
perjury, evident partiality or
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misconduct by an arbitrator prejudicing the rights of any party, and to correct
manifest clerical errors.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURES APPEAR ON FOLLOWING
PAGE]
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IN WITNESS WHEREOF, this Asset Purchase Agreement has been executed by
Buyer and Seller as of the date first above written.
BUYER: SELLER:
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▇▇▇▇▇▇▇▇▇▇.▇▇▇, LLC INTELLISOFT DEVELOPMENT
CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------- -------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------- -----------------------------
Title: President / CEO Title President
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SOLELY WITH RESPECT TO SECTION 7.6
GUARANTOR:
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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