Exhibit 10.23
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ASSET PURCHASE AGREEMENT
by and among
ICONIXX CORPORATION
("Iconixx")
ICONIXX WEB DEVELOPMENT, INC.
("Buyer")
INTERNET INFORMATION SERVICES, INC.
(the "Company")
and
THE MAJORITY SHAREHOLDERS OF INTERNET
INFORMATION SERVICES, INC.
(the "Majority Shareholders")
Dated March 23, 2000
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TABLE OF CONTENTS
Page
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RECITALS......................................................................1
ARTICLE I DEFINITIONS.........................................................2
1.1. Definitions....................................................2
ARTICLE II ASSET PURCHASE.....................................................7
2.1. Asset Purchase.................................................7
(a) Cash, Cash Equivalents and Investments....................7
(b) Customer Deposits and Accounts Receivable.................7
(c) Real Property.............................................7
(d) Business, Equipment and Supplies..........................8
(e) Contracts and Other Agreements Relating to the Business...8
(f) Books, Records, Lists and Other Data......................8
(g) Employment Agreements and Employee Relationships..........8
(h) Licenses, Permits.........................................8
(i) Prepayments...............................................8
(j) Intellectual Property.....................................8
(k) General Intangibles.......................................8
(l) Insurance.................................................9
(m) Other Assets..............................................9
2.2 Excluded Assets................................................9
2.3 Assumed Liabilities............................................9
2.4 Excluded Liabilities...........................................9
2.5 Title to the Purchased Assets: Documents of Conveyance........11
2.6 Purchase Price; Allocation of Purchase Price...................11
2.7 Payment of Purchase Price......................................11
2.8 Funded Indebtedness Adjustment.................................12
2.9 Adjustment in Cash Purchase Price..............................12
2.10 Closing........................................................12
2.11 Escrow Arrangements............................................12
2.12 Closing Audit..................................................13
2.13 Post-Closing Net Working Capital Adjustment....................13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND THE MAJORITY SHAREHOLDERS........................................14
3.1. Capitalization.................................................14
3.2. No Liens on Purchased Assets...................................14
3.3. Subsidiaries...................................................14
3.4. Brokers........................................................15
3.5. Due Organization...............................................15
3.6. Due Authorization..............................................15
3.7. Financial Statements...........................................15
3.8. Certain Actions................................................16
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3.9. Properties.....................................................17
3.10. Licenses and Permits...........................................18
3.11. Intellectual Property..........................................18
3.12. Compliance with Laws...........................................19
3.13. Insurance......................................................19
3.14. Employee Benefit Plans.........................................19
3.15. Contracts and Agreements.......................................21
3.16. Claims and Proceedings.........................................21
3.17. Taxes..........................................................21
3.18. Personnel......................................................23
3.19. Business Relations.............................................23
3.20. Accounts Receivable; Accounts Payable; Customer Deposits;
Customer Revenues and Deferred Revenues........................24
3.21. Bank Accounts; Investments.....................................24
3.22. Customer Claims................................................24
3.23. Affiliated Transactions........................................25
3.24. Funded Indebtedness; Letters of Credit; Undisclosed
Liabilities...................................................25
3.25. Year 2000......................................................25
3.26. Information Furnished..........................................26
ARTICLE IV BUYER'S AND ICONIXX'S REPRESENTATIONS AND WARRANTIES...............26
4.1. Due Organization of Iconixx and Buyer..........................26
4.2. Due Authorization..............................................26
4.3. No Brokers.....................................................27
4.4. Iconixx Financial Statements...................................27
4.5. Capital Stock and Related Matters..............................27
4.6. Authorization of the Stock.....................................27
4.7. Stock Option Plan..............................................27
4.8. Claims and Proceedings.........................................28
4.9. Taxes..........................................................28
ARTICLE V PRE-CLOSING COVENANTS OF THE COMPANY, ICONIXX,
BUYER AND THE MAJORITY SHAREHOLDERS..........................................29
5.1. Consents of Others.............................................29
5.2. Stockholders' Efforts..........................................29
5.3. Powers of Attorney.............................................29
5.4. Conduct of Business Pending Closing............................30
5.5. Access Before Closing..........................................30
ARTICLE VI POST-CLOSING COVENANTS.............................................31
6.1. General........................................................31
6.2. Transition.....................................................31
6.3. Confidentiality................................................31
6.4. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Not to Compete...............................31
6.5 ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Employment and Covenant Not to Compete.......32
6.6 Access to Records After Closing................................32
6.7 Assignment of Contracts........................................33
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6.8 Change of Name.................................................33
6.9. Litigation Support.............................................33
6.10. Audits.........................................................34
6.11. Minimum Cash as of the Closing.................................34
6.12. Iconixx's Stock Options........................................34
6.13. Disposition of Company Benefit Plans...........................34
ARTICLE VII CONDITIONS TO OBLIGATIONS OF PARTIES TO CONSUMMATE CLOSING........35
7.1. Conditions to Iconixx's and Buyer's Obligations................35
7.2. Conditions to the Stockholders' and the Company's Obligations..37
ARTICLE VIII INDEMNIFICATION..................................................38
8.1. Indemnification by the Stockholders............................38
8.2. Defense of Claims..............................................38
8.3. Escrow Claim...................................................39
8.4. Tax Audits, Etc................................................39
8.5. Indemnification of Stockholders................................39
8.6. Limits on Indemnification......................................40
ARTICLE IX TERMINATION........................................................41
9.1. Termination....................................................41
9.2. Effect of Termination..........................................41
ARTICLE X MISCELLANEOUS.......................................................42
10.1. Modifications..................................................42
10.2. Notices........................................................42
10.3. Counterparts; Facsimile Transmission...........................44
10.4. Expenses.......................................................44
10.5. Binding Effect; Assignment.....................................44
10.6. Entire and Sole Agreement......................................44
10.7. Governing Law..................................................44
10.8. Survival of Representations, Warranties and Covenants..........45
10.9. Invalid Provisions.............................................45
10.10. Public Announcements...........................................45
10.11. Remedies Cumulative............................................45
10.12. Third Parties..................................................45
10.13. No Strict Construction.........................................45
10.14. Disclosure Schedules...........................................46
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LIST OF EXHIBITS
Exhibit A Form of Escrow Agreement
Exhibit B Form of ▇▇▇▇ of Sale, Assignment and Assumption Agreement
Exhibit C Company's Account and Wire Transfer Instructions (ss.2.4)
Exhibit D-1 Articles of Incorporation of the Company
Exhibit D-2 Bylaws of the Company
Exhibit D-3 Qualified Jurisdictions
Exhibit E Certificate of Incorporation of Iconixx
Exhibit F-1 Form of ▇▇▇▇▇ Employment Agreement
Exhibit F-2 Form of Noncompete/Nonsolicitation Agreement
Exhibit G Opinion of Shareholders' Counsel
Exhibit H Opinion of Counsel for Iconixx and Buyer
Exhibit I Form of Side Letter Agreement between Buyer and the Company
DISCLOSURE SCHEDULES
LEASES SCHEDULE
ICONIXX CAPITALIZATION SCHEDULE
EMPLOYEE SCHEDULE
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
March 23, 2000, by and among ICONIXX CORPORATION, a Delaware corporation
("Iconixx"), ICONIXX WEB DEVELOPMENT, INC., a Maryland corporation ("Buyer"),
INTERNET INFORMATION SERVICES, INC., a Maryland corporation (the "Company" or
"Seller"); and ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (collectively, the
"Majority Shareholders").
Recitals
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A. Pursuant to this Agreement, the Company, which is engaged in the
business of providing information technology and enterprise resource consulting,
web-site design and software services in the United States to third parties (the
"Business"), will be acquired by Buyer pursuant to an acquisition of
substantially all of the assets of the Company (the "Acquisition"), which assets
do not include those used in and owned by the Company's former subsidiary IIS
Systems, Inc. (the "Hardware/Software Business"), certain domain names, and the
Office Lease (as defined herein and which is the subject of the Side Letter
Agreement in substantially the form attached hereto as Exhibit I).
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B. On the date of this Agreement, the Company's capitalization consists of
4,000,000 shares of common stock, $.01 par value, 3,200,000 of which are
outstanding (the "Company Shares"), 2,850,000 of which are owned by the Majority
Shareholders.
C. Buyer, a wholly-owned subsidiary of Iconixx, desires to purchase from
the Company and the Company desires to sell to Buyer, substantially all of the
Company's assets used in the operation of the Business on the terms and subject
to the conditions set forth in this Agreement.
D. In connection with its purchase of assets from the Company, Buyer
desires to assume certain of the liabilities and obligations of the Company
relating to the Business (and no others), all as more specifically set forth
herein.
Agreement
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NOW, THEREFORE, in consideration of the mutual premises and covenants
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto covenant and agree
as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. In this Agreement, the following terms have the meanings
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specified or referred to in this Section 1.1 and shall be equally applicable to
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both the singular and plural forms. Any agreement referred to below shall mean
such agreement as amended, supplemented and modified from time to time to the
extent permitted by the applicable provisions thereof and by this Agreement.
"Acquisition" has the meaning specified in Recital A of this Agreement.
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"Affiliate" means, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by or is under common control
with such first Person.
"Assumed Liabilities" has the meaning specified in Section 2.3.
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"Audited Closing Financial Statements" has the meaning specified in Section
2.12.
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"Business" has the meaning specified in Recital A of the Agreement.
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"Buyer" has the meaning specified in the first paragraph of this Agreement.
"Cash Purchase Price" shall have the meaning assigned to such term in
Section 2.2(a).
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"Closing" means the closing of the Acquisition.
"Closing Date" has the meaning specified in Section 2.10.
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"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended, Section 4980B of the Code, Title I, Part 6 of ERISA, and any
regulations and proposed regulations thereunder.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock, par value $.01 per share, of
Iconixx.
"Company" has the meaning specified in the first paragraph of this
Agreement.
"Company Office Lease" has the meaning specified in Section 2.2.
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"Company Shares" has the meaning specified in Recital B of the Agreement.
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"Confidential Information" means (i) the terms and provisions of this
Agreement and the Acquisition and (ii) all confidential information (for
purposes of this Agreement, confidential information shall refer to all
information which is the subject of reasonable efforts by
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the Company to maintain its non-public character or to otherwise prevent such
information from becoming widely known) and trade secrets of the Company or its
Affiliates including, without limitation, any of the same comprising the
identity, lists or descriptions of any customers, referral sources or
organizations; financial statements, cost reports or other financial
information; contract proposals, or bidding information; business plans and
training and operations methods and manuals; personnel records; fee structure;
and management systems, policies or procedures, including related forms and
manuals. Confidential Information shall not include any information (a) which is
disclosed pursuant to subpoena or other legal process, (b) which has been
publicly disclosed, or (c) which is subsequently disclosed to any third party
not in breach of a confidentiality agreement.
"Contracts" has the meaning specified in Section 3.15.
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"Court Order" means any judgment, order, award or decree of any foreign,
federal, state, local or other court or tribunal and any award in any
arbitration proceeding.
"Disclosure Schedules" shall mean the Disclosure Schedules attached to this
Agreement pursuant to which exceptions to the Majority Shareholders' and the
Company's specific representations and warranties set forth in Article III (and
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listed on a Section-by-Section basis) are disclosed to Buyer and Iconixx
pursuant to said Article III, and pursuant to which exceptions to Buyer's and
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Iconixx's specific representations and warranties set forth in Article IV (and
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listed on a Section-by-Section basis) are disclosed to the Majority Shareholders
and the Company pursuant to Article IV.
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"Effective Date" means the close of business on March 31, 2000.
"Employee" has the meaning specified in Section 5.3.
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"Encumbrance" means any lien, claim, charge, security interest, mortgage,
pledge, easement, conditional sale or other title retention agreement, defect in
title or restrictive covenant.
"Environmental and OSHA Obligations" has the meaning specified in
Section 3.12.
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"Equipment" has the meaning specified in Section 2.1(d).
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"Equitable Exceptions" shall have the meaning specified in Section 3.6.
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"Equity Agreements" means (i) the Stockholders Agreement dated August 12,
1999 between Iconixx and its Stockholders and (ii) the Registration Rights
Agreement dated August 12, 1999 between Iconixx and its Stockholders.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means First Union National Bank, N.A.
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"Escrow Agreement" means the Escrow Agreement to be executed by and among
the Majority Shareholders, Buyer, Iconixx and the Escrow Agent in the form of
Exhibit A.
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"Escrow Period" has the meaning specified in Section 2.11.
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"Escrow Sum" has the meaning specified in Section 2.11.
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"Excluded Assets" has the meaning specified in Section 2.2.
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"Excluded Liabilities" has the meaning specified in Section 2.4.
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"Financial Statements" has the meaning specified in Section 3.7.
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"Force Majeure" shall mean any failure or delay caused by acts of god,
flood, fire, war or terrorism or any failure or delay caused by a governmental
blockage of all currency transactions between a foreign Governmental Body and
the United States of America.
"Funded Indebtedness" means all (i) indebtedness of the Company for
borrowed money or other interest-bearing indebtedness; (ii) capital lease
obligations of the Company; (iii) obligations of the Company to pay the deferred
purchase or acquisition price for goods or services, other than trade accounts
payable in the ordinary course of business; (iv) indebtedness of others
guaranteed by the Company or secured by an Encumbrance on the Company's
property; (v) letters of credit or similar obligations; and (vi) indebtedness of
the Company under extended credit terms of more than 60 days from vendors
provided to the Company.
"GAAP" shall mean generally accepted accounting principles, consistently
applied.
"Governmental Body" means any foreign, federal, state, local or other
governmental authority or regulatory body having jurisdiction over the Company
and/or the Majority Shareholders.
"Governmental Permits" has the meaning specified in Section 3.10.
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"Iconixx" has the meaning specified in the first paragraph of this
Agreement.
"Iconixx Material Adverse Change" has the meaning specified in Section 4.4.
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"Iconixx Material Adverse Effect" has the meaning specified in Section 4.8.
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"IRS" means the Internal Revenue Service.
"Indemnifiable Costs" has the meaning specified in Section 8.1.
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"Indemnified Parties" has the meaning specified in Section 8.1.
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"Intellectual Property" shall mean all of the following as they are related
primarily to the Business: (i) patents, patent applications, patent disclosures
and inventions
(whether or not patentable and whether or not reduced to practice); (ii)
trademarks, service marks, trade dress, trade names, corporate or company names,
logos, slogans and Internet domain names, together with all goodwill associated
with each of the foregoing; (iii) copyrights and copyrightable works; (iv)
registrations, applications and renewals for any of the foregoing; (v) trade
secrets, confidential information and know-how (including but not limited to
ideas, formulae, compositions, manufacturing and production processes and
techniques, research and development information, drawings, specifications,
designs, business and marketing plans, and customer and supplier lists and
related information); and (vi) computer software (including but not limited to
data, data bases and documentation).
"Investments" means short-term investments in any funds, accounts,
securities, certificates of deposit or instruments of any Person which are (i)
included as short-term investments on a balance sheet in accordance with GAAP,
and (ii) marked to market as of any date of determination.
"Knowledge of the Company" (whether or not capitalized) shall mean actual
knowledge, after reasonable inquiry within the Company to employees with
responsibility for the subject matter in question, of the Majority Shareholders
and the officers and key employees of the Company. "Knowledge of the Majority
Shareholders" (whether or not capitalized) shall mean actual knowledge of the
Majority Shareholders.
"Leases" shall mean the leases set forth on the Schedule 3.9.
"Material" (whether or not capitalized) shall, where appropriate in context
of its use in making the representations and warranties set forth in Article
III, be deemed to mean an amount of money greater than $35,000 individually or
$75,000 in the aggregate.
"Material Adverse Change" or "Material Adverse Effect" means a material
adverse change or effect on the assets, properties, Business, operations,
liabilities or financial condition of the Company and its subsidiaries, taken as
a whole. In determining whether a "Material Adverse Change" or "Material Adverse
Effect" has occurred in the context of the use of such terms in the Company's
and the Majority Shareholders' representations and warranties set forth in
Article III, such terms shall refer to the occurrence of any single event, or
any series of related events, or set of related circumstances, which results or
likely will result in a loss to the Company or Buyer, in excess of $35,000 per
occurrence or $75,000 in the aggregate.
"Majority Shareholders" has the meaning set forth in the first paragraph of
this Agreement.
"Minimum Cash Deficit" has the meaning specified in Section 6.8.
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"Most Recent Financial Statements" has the meaning specified in
Section 3.7.
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"Net Working Capital" shall equal the Company's total current assets
(including cash and cash equivalents, including customer deposits and accounts
receivable as defined in Section 2.1(b)), to the extent included in the
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Purchased Assets minus its total current liabilities to
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the extent included in the Purchased Assets (including, without limitation, (i)
any cash to accrual liability borne by the Company or Buyer, (ii) any change in
control payments due to employees, subcontractors, vendors or customers as a
result of the Acquisition contemplated hereby, each as calculated in accordance
with GAAP, and (iii) any Permitted Distributions made prior to or at Closing)).
"Net Working Capital Adjustment" has the meaning specified in Section 2.13.
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"OSHA" means the Occupational Safety and Health Act, 29 U.S.C. (S)(S)651 et
--
seq., any amendment thereto, and any regulations promulgated thereunder.
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"Other Arrangement" means a benefit program or practice providing for
bonuses, incentive compensation, vacation pay, severance pay, insurance,
restricted stock, stock options, employee discounts, company cars, tuition
reimbursement or any other perquisite or benefit (including, without limitation,
any fringe benefit under Section 132 of the Code) to employees, officers or
independent contractors that is not an Employee Benefit Plan within the meaning
of Section 3(3) of ERISA.
"Permitted Distributions" has the meaning specified in Section 3.8.
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"Permitted Exception" means (a) liens for Taxes and other governmental
charges and assessments which are not yet due and payable, (b) liens of
landlords and liens of carriers, warehousemen, mechanics and materialmen and
other like liens arising in the ordinary course of business for sums not yet due
and payable, (c) purchase money security interest liens solely on the property
acquired pursuant to such credit purchase, or (d) other liens or imperfections
on property which are not material in amount or do not materially detract from
the value or the existing use of the property affected by such lien or
imperfection.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or Governmental Body.
"Preferred Stock" means the Convertible Class A Preferred Stock, par value
$.01 per share of Iconixx.
"Preliminary Closing Balance Sheet" has the meaning specified in
Section 2.9.
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"Projected Net Working Capital" means the amount of Net Working Capital of
the Company reflected on the Preliminary Closing Balance Sheet.
"Purchase Price" has the meaning specified in Section 2.6.
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"Purchased Assets" means the assets of the Business specified in
Section 2.1.
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"Real Property" has the meaning specified in Section 2.1(c).
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"Requirements of Laws" means any foreign, federal, state and local laws,
statutes, regulations, rules, codes or ordinances enacted, adopted, issued or
promulgated by any Governmental Body (including, without limitation, those
pertaining to electrical, building, zoning, environmental and occupational
safety and health requirements).
"Seller" has the meaning specified in the first paragraph hereof.
"Tax" or "Taxes" means any federal, state, local or foreign income,
alternative or add-on minimum, gross income, gross receipts, windfall profits,
severance, property, production, sales, use, transfer, gains, license, excise,
employment, payroll, withholding or minimum tax, transfer, goods and services,
or any other tax, custom, duty, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or any penalty,
addition to tax or additional amounts imposed thereon by any Governmental Body.
"Tax Return" means any return, report or similar statement required to be
filed with respect to any Taxes (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return and
declaration of estimated Tax.
ARTICLE II
ASSET PURCHASE
2.1. Asset Purchase. On the Closing Date and subject to the terms and
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conditions set forth in this Agreement, the Company shall sell and deliver to
Buyer and Buyer agrees to purchase from the Company at the Closing and on the
Closing Date (each as hereinafter defined), free and clear of all liens, claims
and Encumbrances except for those permitted under Section 2.3 hereof, all of the
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Company's right, title and interest in and to all assets of the Business
properly included in the Company's December 31, 1999 balance sheet for the
Business, subject to changes in the ordinary course of business (and consistent
with the Company's covenants in Section 5.4) from such date through the Closing
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Date, together with all other assets owned by the Company and used in the
Business, other than the Excluded Assets (collectively, the "Purchased Assets").
The Purchased Assets include, without limitation, the following as they exist on
the Effective Date (as hereinafter defined):
(a) Cash, Cash Equivalents and Investments. Cash, cash equivalents and
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Investments as of the Closing Date.
(b) Customer Deposits and Accounts Receivable. All accounts
-----------------------------------------
receivable, customer deposits and other deposits, advances and suppliers' or
vendors' rebates and all other receivables of the Business and existing on the
Closing Date (as hereinafter defined), in the ordinary course of the operation
of the Business.
(c) [Intentionally Left Blank]
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(d) Business, Equipment and Supplies. All tangible personal property,
--------------------------------
equipment, supplies, furniture, leasehold improvements, including but not
limited to,
leases and subleases of personal property or equipment, all automobiles and
other vehicles, computers, software and peripherals and all maintenance and
other operating supplies and other miscellaneous tangible personal property of
Seller used in the Business, whether or not located at or on the Real Property
at the Closing Date and whether or not reflected on the Most Recent Financial
Statements (collectively, the "Equipment").
(e) Contracts and Other Agreements Relating to the Business. All
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rights of Seller as of the Closing Date under all (written or oral) customer
contracts or vendor contracts with software or other companies, marketing
agreements, consortia agreements, web-design or other agreements relating to the
Business, interface or similar agreements pertaining to licenses, leases,
purchase orders and all other contracts, agreements or arrangements relating to
the Business.
(f) Books, Records, Lists and Other Data. All files, books, records,
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invoices, accounts, surveys, customer lists and records, vendor and supplier
lists, catalogs, price lists, marketing and advertising information, purchasing
histories, profiles and materials, technical bulletins, books and records of
account and other financial, vendor, customer and credit data, and all computer
programs, software, hardware, firmware, tapes and other materials used to store,
record or produce such data, owned or leased by the Company and used in the
Business (exclusive of the Company's corporate or stock records).
(g) Noncompete Agreements and Employee Relationships. All rights of
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Seller as of the Closing Date under all non-compete agreements with any of the
Company's employees to the extent any of the foregoing are used in the Business.
(h) Licenses, Permits. All federal, state, local and other
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governmental licenses, permits, approvals and authorizations that relate to the
operation of the Business.
(i) Prepayments. All security, utility, lease or similar deposits or
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prepaid expenses of the Company used in the Business.
(j) Intellectual Property. All Intellectual Property of the Company
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excepting rights in the Excluded Assets referenced in Section 2.2 below.
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(k) General Intangibles. All general intangibles used by the Business
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including, without limitation, all goodwill as a going concern and any and all
causes of action or claims of Seller against any third party that arose or will
arise in connection with the Business prior to the Closing Date.
(l) Insurance. All insurance policies insuring the Purchased Assets.
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(m) Other Assets. All other assets of Seller used in the conduct of
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the Business, whether or not reflected on the books or records of Seller or the
Business, other than the Excluded Assets.
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2.2. Excluded Assets. Notwithstanding anything to the contrary in this
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Agreement, the Purchased Assets do not include, and Buyer is not purchasing or
assuming any liability therefore, the following: (i) company charter and stock
records of the Company; (ii) tax records of the Company; (iii) the Company's
401(k) plan and other employee benefit plans, provided, however, that Buyer
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agrees to pay the fees and expenses incurred in connection with the termination
of the Company's 401(k) plan and health plan; (iv) all assets utilized
exclusively in the Hardware/Software Business; (v) the Company's internet domain
names "▇▇▇.▇▇▇" and "▇▇▇.▇▇▇"; (vi) all of the Company's leases or other
interests in real property (collectively, the "Real Property") (including,
without limitation, that certain office lease concerning the premises located at
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Company Office
Lease")); and (vii) this Agreement and the other contracts entered into by the
Company in connection herewith (the "Excluded Assets"), ownership of which is
retained by Seller.
2.3. Assumed Liabilities. On the terms and subject to the conditions and
-------------------
exceptions contained herein, at Closing, Seller shall assign and delegate to
Buyer, and Buyer shall assume and undertake to pay, defend, discharge and
perform in full when due the liabilities of Seller (insofar as such liabilities
relate to the Business and the Purchased Assets) properly included in the
Seller's December 31, 1999 balance sheet for the Business, subject to changes in
the ordinary course of business from such date through the Closing Date and
other than any Excluded Liabilities (as defined in Section 2.4) (the "Assumed
-----------
Liabilities"), and no others, pursuant to this Agreement and the General
Assignment, ▇▇▇▇ of Sale and Assumption Agreement referred to in Section 2.5.
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2.4. Excluded Liabilities. Notwithstanding anything to the contrary
--------------------
contained in this Agreement, Buyer will not assume or be liable for and Seller
will retain and remain responsible for all of Seller's debts, liabilities and
obligations of any nature whatsoever, other than the Assumed Liabilities,
whether accrued, absolute or contingent, whether known or unknown, whether due
or to become due and whether related to the Business and the Purchased Assets or
otherwise, and regardless of when asserted (the "Excluded Liabilities"),
including, without limitation, the following liabilities or obligations of
Seller (none of which will constitute Assumed Liabilities):
(a) All of Seller's liabilities or obligations under this Agreement or
under any other agreement between Seller on the one hand and Buyer on the other
hand entered into on or after the date of this Agreement.
(b) All liabilities and obligations of Seller for Taxes which are
imposed on or measured by income, for any period, and all of Seller's
liabilities or obligations with respect to any non-income Taxes not specifically
accrued on the balance sheet for the Business included in the Most Recent
Financial Statements.
(c) All of Seller's liabilities or obligations arising out of or in
connection with the breach of any contract or agreement included in the
Purchased Assets, other than for such amounts as are adequately and properly
reserved for in the balance sheet included as part of the Most Recent Financial
Statements.
-9-
(d) All of Seller's liabilities or obligations for expenses, Taxes or
fees incident to or arising out of the negotiation, preparation, approval, or
authorization of this Agreement or the consummation (or preparation for the
consummation) of the transactions contemplated hereby, including all attorneys'
and accountants' fees, brokerage fees, consultants' fees and finders' fees, and
sales, bulk sales and transfer taxes which are Seller's responsibility
hereunder.
(e) Seller's obligations and liabilities for the period up to and
including the Closing Date and thereafter which relate to any employee plans (as
described in Section 3.14) (including unfunded pension plan liabilities and
------------
retiree health benefits);
(f) All of Seller's liabilities or obligations against which Seller is
insured or otherwise contractually indemnified by a Person other than Buyer.
(g) Any liability or obligation under COBRA to any person covered by
Seller's health plans or any Employee who ceases to be employed by Seller on or
before the Closing Date, or who is not employed by Buyer on the Closing Date,
and any liability or obligation under COBRA to any family member of such person
or Employee.
(h) Any liability or obligation for Funded Indebtedness or any other
liability or obligation of Seller that does not relate to, or arise from, the
Business and the Purchased Assets.
(i) Any liability or obligation pertaining to any discontinued
operation owned or operated by the Seller and related to the Business as it was
operated by the Seller prior to the Business.
(j) Any liability or obligation that relates to, or arises from, the
Excluded Assets, including, without limitation, the Hardware/Software Business.
(k) All leases and interests, options or rights with respect to the
Real Property. All Real Property is identified as leased and described on the
Leases Schedule attached hereto. A separate Side Letter Agreement between the
---------------
Company and Buyer, in substantially the form attached hereto as Exhibit I, sets
---------
forth the disposition of rights to the Company Office Lease.
(l) Any liability or obligation for any litigation, claims or
proceedings pending or threatened in writing against the Seller or the Business
arising from the Seller's actions or conduct of the Business on or prior to the
Closing Date.
2.5. Title to the Purchased Assets: Documents of Conveyance. At Closing,
------------------------------------------------------
Seller shall convey all of its right, title and interest in and to the Business
and the Purchased Assets to Buyer free and clear of all liabilities,
obligations, liens and Encumbrances, excepting only the Assumed Liabilities (as
defined in Section 2.3). Title to the Purchased Assets shall be conveyed
-----------
pursuant to a General Assignment, ▇▇▇▇ of Sale and Assumption Agreement
substantially in the form attached hereto as Exhibit B, and by such other
---------
documents as are reasonably acceptable to counsel for Seller and counsel for
Buyer in accordance with the terms hereof. Each of the parties
-10-
hereto agrees to use its reasonable commercial efforts to take or cause to be
taken all action, and to do, or cause to be done, all things reasonably
necessary, proper or advisable, whether before or after Closing, to ensure
transfer of title to the Purchased Assets to Buyer occurs as contemplated
hereunder.
2.6. Purchase Price; Allocation of Purchase Price The total purchase price
--------------------------------------------
for the Purchased Assets (the "Purchase Price") shall be equal to
$16,000,000.00, subject to any adjustment required to be made pursuant to
Sections 2.8, 2.9 and 2.13 below. Other than as expressly set forth in Sections
------------ --- ---- --------
6.4 and 6.5 below, the Purchase Price shall be allocated among the Purchased
--- ---
Assets as determined by Buyer and approved by Seller which approval shall not be
unreasonably withheld, subject to any adjustment required to be consistent with
the Audited Closing Financial Statements.
2.7. Payment of Purchase Price. On the Closing Date and subject to the
-------------------------
terms and conditions set forth in this Agreement, Buyer shall pay the Purchase
Price for the Purchased Assets to the Company. The Purchase Price shall be
payable as follows:
(a) subject to adjustment in accordance with Section 2.9, an aggregate
-----------
of $12,000,000 shall be paid at Closing by wire transfer of immediately
available funds to the Company's account as specified in Exhibit C hereto,
---------
including the cost of any payments to holders of phantom shares, warrants or
stock options in the Company (the "Cash Purchase Price");
(b) $1,000,000 shall be paid in cash to the Escrow Agent at Closing
pursuant to Section 2.7 below to serve as the initial portion (before interest
-----------
accrues) of the Escrow Sum (as defined below); and
(c) $3,000,000 shall be paid in the form of (i) 600,000 shares of
Common Stock (valued at $1.30 per share) and (ii) 2,220 shares of Preferred
Stock (valued at $1,000 per share) to the Company, which shares shall be
immediately transferable to the Company's shareholders.
2.8. Funded Indebtedness Adjustment. The Cash Purchase Price will be
------------------------------
adjusted downward by the amount, if any, by which the Company's Funded
Indebtedness exceeds $0 as of the Closing Date, unless the balance of the Funded
Indebtedness is being paid and released simultaneously with Closing. Should
there be any downward adjustment of the Purchase Price under this Section 2.8,
-----------
Buyer, with the assistance of the Company, will be responsible for paying the
balance of the Funded Indebtedness in an amount equal to the amount of such
downward adjustment, including any interest accruing thereon.
2.9. Adjustment in Cash Purchase Price. The Cash Purchase Price will be:
---------------------------------
(i) if the Company's Net Working Capital as of the Effective Date is less than
$825,000, adjusted downward on a dollar-for-dollar basis at Closing by the
amount that the Company's Net Working Capital as of the Effective Date is less
than $900,000, or (ii) if the Company's Net Working Capital as of the Effective
Date is more than $975,000, adjusted upward on a dollar-
for-dollar basis at Closing by the amount that the Company's Net Working Capital
as of the Effective Date is more than $900,000 (in each case, as determined
based on the Company's preliminary closing balance sheet prepared not more than
five days prior to the Effective Date (the "Preliminary Closing Balance
Sheet")). The Company shall continue to have at least $50,000 in cash and cash
equivalents on hand at the Closing or the Cash Purchase Price payable at Closing
will, in addition to any adjustments made pursuant to the preceding sentence, be
reduced by the amount of such deficit(s).
2.10. Closing. The Closing of the Acquisition shall take place at 10:00
-------
a.m., Eastern Time, at the offices of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇.▇. in Washington, D.C. on March 23, 2000, or on a date mutually agreed to by
the parties (which date shall be as soon as practicable following the date on
which all of the conditions to Closing set forth in Sections 7.1 and 7.2 have
------------ ---
been satisfied) (the "Closing Date"), with an Effective Date as of March 31,
2000.
2.11. Escrow Arrangements. Pursuant to the Escrow Agreement to be entered
-------------------
into among the Company, Buyer, Iconixx and the Escrow Agent, $1,000,000 of the
Purchase Price shall be delivered to the Escrow Agent at Closing (such monies
paid, together with all interest accrued thereon, is hereinafter referred to as
the "Escrow Sum"). The Escrow Sum shall be held pursuant to the terms of the
Escrow Agreement for payment from such Escrow Sum of the amounts, if any, owing
by the Company to Iconixx or the Buyer pursuant to the provisions of the Net
Working Capital Adjustment or for indemnification claims pursuant to Article
-------
VIII hereof. To the extent claims against the Escrow Sum are determined in favor
----
of the Company, then all amounts reserved against the Escrow Sum in connection
with such claims shall be remitted to the Company as soon as practicable
following any such determination, along with all accrued interest earned on the
Escrow Sum from the date of the original claim against the Escrow Sum until
paid. On the six month anniversary of the Closing Date, the Escrow Sum shall be
reduced to an amount equal to the sum of $500,000 plus the amount of claims then
pending against the Escrow Sum, with such reduction amount to be remitted to the
Company. On the first anniversary of the Closing Date (such 12 month period
being referred to herein as the "Escrow Period"), such remaining portion of the
Escrow Sum not theretofore claimed by or paid to Iconixx or Buyer in accordance
with the terms of the Escrow Agreement and this Agreement (together with any
interest on such remaining portion of the Escrow Sum) shall be disbursed to the
Company. All disbursements at the expiration of the Escrow Period shall be paid
in cash to the Company at its account set forth in Exhibit C as updated from
---------
time to time. The Company and Iconixx and Buyer agree that each will execute and
deliver such reasonable instruments and documents as are furnished by any other
party to enable such furnishing party to receive those portions of the Escrow
Sum to which the furnishing party is entitled under the provisions of the Escrow
Agreement and this Agreement.
2.12. Closing Audit. Within 180 days following the Closing Date, there
-------------
shall be delivered to Iconixx, Buyer and to the Majority Shareholders an audit
of the Company's balance sheet as of the Effective Date (the "Audited Closing
Financial Statements"). The Audited Closing Financial Statements shall be
audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, L.L.P. in accordance with GAAP. The cost of
preparing the Audited Closing Financial Statements shall be paid by
-12-
Iconixx. The Majority Shareholders shall be afforded a reasonable opportunity to
review the audit results (including any work papers prepared in connection
therewith). In the event that Majority Shareholders provide written notice
within 20 days after receipt of the Audited Closing Financial Statements that
they dispute any item(s) contained in the Audited Closing Financial Statements,
then Majority Shareholders and Iconixx shall jointly select and retain an
independent accounting firm (the "Independent Accountants") reasonably
acceptable to all parties hereto to review the disputed item(s) in the Audited
Closing Financial Statements. In conducting such review, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, L.L.P.
shall provide the Independent Accountants with customary access to the work
papers of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, L.L.P. utilized in preparing the Audited Closing
Financial Statements. The final determination of such disputed item(s) by the
Independent Accountants shall be utilized to determine all adjustments described
in Section 2.9 above and shall be final and binding on the parties solely for
-----------
such purposes. If the determination of disputed items by the Independent
Accountants results in either (i) an adjustment, described in Section 2.9, in
-----------
favor of Buyer; or (ii) an adjustment, described in Section 2.9, of less than
-----------
$15,000 in favor of the Majority Shareholders, then the cost of retaining the
Independent Accountants shall be borne solely by the Majority Shareholders.
However, if the determination of disputed items by the Independent Accountants
results in an adjustment, described in Section 2.9, of $15,000 or more in favor
-----------
of the Majority Shareholders, then the cost of retaining the Independent
Accountants shall be borne solely by Buyer.
2.13. Post-Closing Net Working Capital Adjustment. The Purchase Price will
-------------------------------------------
be adjusted upward or downward, on a dollar-for-dollar basis, to reflect the
increase or decrease, if any, in Net Working Capital as reflected on the Audited
Closing Financial Statements from the Projected Net Working Capital (the "Net
Working Capital Adjustment"). The Net Working Capital Adjustment shall be
determined by referring to the Audited Closing Financial Statements. In the
event that the Net Working Capital Adjustment results in an increase in the
Purchase Price, then Buyer shall pay such amount to the Company in immediately
available funds within 15 days of delivery of the Audited Closing Financial
Statements as finally determined in accordance with Section 2.12 above. In the
------------
event that the Net Working Capital Adjustment results in a decrease in the
Purchase Price, then the amount of any such decrease shall be payable to Buyer
(i) first, from the Escrow Sum in immediately available funds within 15 days of
the final determination of the Net Working Capital Adjustment up to a maximum of
$500,000 and (ii) second, the balance, if any, by the Majority Shareholders or
the Company in immediately available funds within 15 days of the final
determination of the Net Working Capital Adjustment. All payments required to be
paid by Majority Shareholders and the Company or the Escrow Agent pursuant to
this Section 2.13 shall be deemed to be a downward adjustment to the Purchase
------------
Price and shall not be controlled or limited by any provision contained in
Article VIII hereof.
------------
-13-
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE MAJORITY SHAREHOLDERS
Except as set forth on the Disclosure Schedules attached hereto (which
Disclosure Schedules identify the exception and reference the applicable
representation so qualified), the Company and the Majority Shareholders jointly
and severally represent and warrant to Buyer and Iconixx that:
3.1. Capitalization. The authorized capital stock of the Company
--------------
consists of 4,000,000 shares of common stock, $.01 par value, 3,200,000 of
which, being the Company Shares, are issued and outstanding and are owned in the
amounts set forth on Schedule 3.1. All of the Company Shares are duly
authorized, validly issued, fully paid, and nonassessable. 2,850,000 of the
Company Shares are owned of record and beneficially by the Majority
Shareholders. None of the Company Shares was issued in violation of any
preemptive, right of first offer or refusal or preferential rights of any
Person.
3.2. No Liens on Purchased Assets. The Company owns all of the
----------------------------
Purchased Assets, free and clear of any Encumbrances other than the rights and
obligations arising under this Agreement, Permitted Exceptions or Encumbrances
that will be released on or prior to the Closing Date. None of the Purchased
Assets is subject to any outstanding option, warrant, call, or similar right of
any other Person to acquire the same, and none of the Purchased Assets is
subject to any restriction on transfer thereof except for restrictions imposed
by applicable federal and state securities laws. At Closing pursuant to the
Acquisition, the Company will have full power and authority to convey good and
marketable title to the Purchased Assets to Buyer, free and clear of any
Encumbrances other than the restrictions imposed by federal and state securities
laws and Permitted Exceptions.
3.3. Subsidiaries. The Company does not own, directly or indirectly,
------------
any capital stock or ownership interests in any Person. The Majority
Shareholders do not own any capital stock or ownership interests in any other
Person engaged in the Business other than the Company Shares and shares in the
Hardware/Software Business (other than less than five percent of any class of
outstanding securities of a publicly-held corporation of which the Majority
Shareholders; or any of them own, or has real or contingent rights to own such
securities).
3.4. Brokers. Except for Updata Capital, Inc., neither the Company nor
-------
the Majority Shareholders have engaged, or caused to be incurred any liability
to any finder, broker, or sales agent in connection with the origin,
negotiation, execution, delivery, or performance of this Agreement or the
Acquisition.
3.5. Due Organization. The Company is a corporation duly organized,
----------------
validly existing, and in good standing under the laws of the State of Maryland
and has full company power and authority to own and lease its properties and
assets and to carry on the Business as now conducted. Complete and correct
copies of the Articles of Incorporation and Bylaws of the Company, and all
amendments thereto, have been delivered to Iconixx and are
-14-
attached hereto as Exhibits D-1 and D-2, respectively. The Company is qualified
------------ ---
to be business in all jurisdictions in which the nature of the Business or the
ownership of the Company's properties requires such qualification, except where
the failure to so qualify would not have a Material Adverse Effect on the Buyer.
The jurisdictions in which the Company is qualified to do business are listed on
Exhibit D-3 attached hereto.
-----------
3.6. Due Authorization. The Company and the Majority Shareholders each
-----------------
have full power and authority to execute, deliver and perform this Agreement and
to carry out and complete the Acquisition. The execution, delivery, and
performance of this Agreement and the Acquisition have been duly and validly
authorized by all necessary corporate actions of the Company. This Agreement has
been duly and validly executed and delivered by the Company and the Majority
Shareholders and constitutes the valid and binding obligations of the Company
and the Majority Shareholders, enforceable in accordance with its terms, except
to the extent that enforceability may be limited by laws affecting creditors'
rights and debtors' obligations generally, and legal limitations relating to
remedies of specific performance and injunctive and other forms of equitable
relief (the "Equitable Exceptions"). The execution, delivery, and performance of
this Agreement and the Acquisition (as well as all other instruments,
agreements, certificates, or other documents contemplated hereby) by the Company
and the Majority Shareholders, do not (a) violate any Requirements of Laws or
any Court Order of any Governmental Body applicable to the Company or the
Majority Shareholders, or their respective property, (b) violate or conflict
with, or permit the cancellation of, or constitute a default under, any Material
agreement to which the Company or the Majority Shareholders are a party, or by
which any of them or any of their respective property is bound, (c) violate or
conflict with any provision of the articles of incorporation or bylaws of the
Company, or (d) except for such consents, approvals, or registrations as may be
required under applicable state securities laws, require any material consent,
approval or authorization of, or notice to, or declaration, filing or
registration with, any Governmental Body or other third party that would, if not
obtained, have a Material Adverse Effect on Buyer.
3.7. Financial Statements. The following financial statements of the
--------------------
Company have been delivered to Iconixx by the Company: unaudited balance sheet
for the year ended December 31, 1997 and audited balance sheets for the years
ended December 31, 1998 and December 31, 1999; unaudited statements of operation
and cash flows for year ended December 31, 1997 and audited statements of
operation and cash flows for the years ended December 31, 1998 and December 31,
1999; (collectively, the "Financial Statements"). Copies of the Financial
Statements are included in Schedule 3.7. Other than the Financial Statements as
------------
of and for the year ended December 31, 1999 (the "Most Recent Financial
Statements"), the Financial Statements have, to the Company's knowledge, been
prepared in accordance with GAAP, except as set forth in Schedule 3.7. The
------------
Financial Statements (including the notes thereto) have been prepared on a
consistent basis throughout the periods indicated and fairly present the
financial position, results of operations and changes in financial position of
the Company as of the indicated dates and for the indicated periods; and are
consistent with the books and records of the Company (which books and records
are correct and complete in all material respects). Since the date of the last
of such Financial Statements, the Company has incurred no Material liabilities
-15-
required by GAAP to be reflected on the Company's balance sheet or notes thereto
nor any other obligations (whether absolute, contingent, or otherwise) which are
(individually or in the aggregate) Material (in amount or to the conduct of the
Business); and neither the Company nor Majority Shareholders have Knowledge of
any basis for the assertion of any such Material liability or obligation. Since
December 31, 1999, the Company has not experienced any Material Adverse Change.
3.8. Certain Actions. Since December 31, 1999, the Company has not,
---------------
except as disclosed on any of the Financial Statements or notes thereto: (a)
paid or declared any dividends or distributions, or purchased, redeemed,
acquired, or retired any stock or indebtedness of any Majority Shareholder
(other than distributions (i) for any amounts owed by the Company to the
Majority Shareholders for repayment of loans and for payment of performance
bonuses to employees of the Company in accordance with the past practices of the
Company and as set forth on Schedule 3.8 hereto, and (ii) for income taxes and
------------
expenses incurred in connection with the transactions contemplated hereby, in
each case so long as such payments and expenses are included in the calculation
of the Net Working Capital of the Company and so long as the Company retains at
least the Minimum Cash as of the Closing Date (collectively, the "Permitted
Distributions")); (b) made or agreed to make any loans or advances or guaranteed
or agreed to guarantee any loans or advances to any party whatsoever; (c)
suffered or permitted any Encumbrance to arise or be granted or created against
or upon any of its assets, real or personal, tangible or intangible; (d)
canceled, waived, or released or agreed to cancel, waive, or release any of its
debts, rights, or claims against third parties in excess of $15,000 individually
or $50,000 in the aggregate; (e) sold, assigned, pledged, mortgaged, or
otherwise transferred, or suffered any Material damage, destruction, or loss
(whether or not covered by insurance) to, any assets (except in the ordinary
course of the Business); (f) outside the ordinary course of business, paid or
made a commitment to pay any severance or termination payment to any employee or
consultant for which Buyer could be liable; (g) made any Material change in its
method of management operation, accounting or reporting of income or deductions
for tax purposes; (h) made any Material change outside the ordinary course of
the Business in the Company's working capital other than Permitted
Distributions; (i) made any Material acquisitions, made any Material capital
expenditures, including, without limitation, replacements of equipment in the
ordinary course of the Business, or entered into commitments therefor, except
for capital expenditures or commitments therefor which do not, in the aggregate,
exceed $50,000; (j) made any investment or commitment therefor in any Person;
(k) made any payment or contracted for the payment of any bonus or other
compensation or personal expenses for which Buyer could be liable, other than
(A) wages and salaries and business expenses paid in the ordinary course of the
Business, and (B) wage and salary adjustments made in the ordinary course of the
Business for employees who are not officers, directors, or Majority Shareholders
of the Company; (l) made, amended or entered into any written employment
contract with any officers or key employees of the Company listed on Schedule
--------
3.8 hereto for which Buyer could be liable or created or made any Material
---
change in any bonus, stock option, pension, retirement, profit sharing or other
employee benefit plan or arrangement; (m) except as set forth on Schedule 3.8
------------
hereto, made or entered into any Contract greater than the smallest of the
Contracts scheduled in accordance with Schedule 3.15; (n) made or entered into
-------------
any agreement granting any Person any offer rights in respect of
-16-
the Company's shares; (o) entered into any non-competition agreement restricting
the Company from engaging in the Business; (p) except as set forth on Schedule
--------
3.8 hereto, made or entered into any employment agreement or other material
---
agreement or other arrangement with any officer, director, shareholder or
Affiliate of the Company; or (q) amended, experienced a termination or received
notice of actual or threatened termination or non-renewal of any Material
contract, agreement, lease, franchise or license to which the Company is a party
that would or could reasonably be expected to have a Material Adverse Effect.
3.9. Properties. The Leases Schedule lists and briefly describes each
---------- ---------------
interest in real property (including, without limitation, leasehold interests)
and each item of personal property utilized by the Company in the conduct of the
Business having a book or fair market value in excess of $15,000 as of the date
hereof. Except for Permitted Exceptions, such real and personal properties are
free and clear of Encumbrances. The Company has delivered to Iconixx copies of
all real property leases to which the Company is a party. All of the properties
and assets necessary for continued operation of the Business as currently
conducted (including, without limitation, all books, records, computers and
computer software and data processing systems) are owned, leased or licensed by
the Company and are reasonably suitable for the purposes for which they are
currently being used. With the exception of used equipment and inventory valued
at no more than $25,000 in the aggregate on the Company's Financial Statements,
the physical properties of the Company, including the real properties leased by
the Company, are in good operating condition. Except for Permitted Exceptions,
the Company has title to all such properties and assets. The operation of the
properties and Business of the Company in the manner in which they are now and
have been operated does not violate any zoning ordinances, municipal
regulations, or other Requirements of Laws, except for any such violations which
would not, individually or in the aggregate, have a Material Adverse Effect.
Except for Permitted Exceptions, no restrictive covenants, easements,
rights-of-way, or regulations of record impair the uses of the properties of the
Company for the purposes for which they are now operated. All leases of real or
personal property by the Company are legal, valid, binding, enforceable and in
full force and effect and will not be terminated on or after the Closing Date as
a result of the failure to obtain any consents to the Acquisition contemplated
hereby, except for the Equitable Exceptions. All facilities leased by the
Company have received all material approvals from any Governmental Body
(including Governmental Permits) required to be obtained by the Company in
connection with the operation of the Business and have been operated and
maintained in accordance with all material Requirements of Laws applicable to
the Company as a lessee thereof. The Company owns no real property.
3.10. Licenses and Permits. Schedule 3.10 lists all material licenses,
-------------------- -------------
certificates, privileges, immunities, approvals, franchises, authorizations and
permits held or applied for by the Company from any Governmental Body (herein
collectively called "Governmental Permits"). The Company has complied in all
material respects with the terms and conditions of all such Governmental
-17-
Permits, and the Company has not received notification from any Governmental
Body of violation of any such Governmental Permit or the Requirements of Laws
governing the issuance or continued validity thereof. All of such Governmental
Permits are valid and in full force and effect. No additional Governmental
Permits are required from any Governmental Body thereof in connection with the
conduct of the Business which Governmental Permits, if not obtained, would
individually or in the aggregate have a Material Adverse Effect.
3.11. Intellectual Property. Schedule 3.11 lists and briefly describes all
--------------------- -------------
material Intellectual Property owned or utilized by the Company that is being
conveyed to Buyer. The Company has furnished Iconixx with copies of all material
license agreements (including software licensing agreements) to which the
Company is a party, either as licensor or licensee, with respect to any
Intellectual Property. Subject to the terms of such license agreements, the
Company has legal title to or the right to use all the Intellectual Property and
all inventions, processes, designs, formulae, trade secrets and know-how
utilized in the conduct of the Business as presently conducted and as currently
planned by the Company without material impediment, without the payment of any
royalty or similar payment. The Company is not infringing on any Intellectual
Property right of others and neither the Company nor the Majority Shareholders
have Knowledge of any infringement by others of any such rights owned by the
Company. The Company has not received notice of any charge, claim, demand,
complaint, action, suit, hearing, proceeding or investigation which challenges
the Company's ownership or licensing of any Intellectual Property, the Company's
current uses of its Intellectual Property or the Company's compliance with the
terms and conditions of any contracts, licenses, agreements or Court Orders
involving the Intellectual Property. Schedule 3.11 contains a complete list of
-------------
filings made with any Governmental Bodies with regard to the Intellectual
Property. All licenses set forth on Schedule 3.11 are valid and binding
-------------
obligations of the Company, and to the Knowledge of the Company the other
parties thereto, enforceable against the Company, and to the Knowledge of the
Company the other parties thereto in accordance with their respective terms,
except for the Equitable Exceptions. The Company owns and possesses all right,
title and interest in and to, or has the right to use pursuant to a valid
license, all Intellectual Property necessary for the operation of the Business
of the Company as presently conducted. Except as set forth on Schedule 3.11, the
-------------
Company's use of each item of the Intellectual Property owned or licensed by
Company (i) will not be terminated as a result of the Acquisition contemplated
hereby; (ii) does not infringe upon the rights of any other Person based on the
Company's current use of such items or the Company's currently proposed use of
such items without material impediment; (iii) is in compliance with the material
terms and conditions of all license or other agreements relating to such items;
and (iv) does not violate any material Requirements of Laws or Courts Orders
applicable to the Company or, to the Company's Knowledge, any other party to any
material license or other agreement relating to such Intellectual Property. The
Company is not in default (whether or not after the giving of notice or the
lapse of time or both) under any material license, contract or other agreement
relating to any Intellectual Property.
3.12. Compliance with Laws. The Company has (i) complied in all material
--------------------
respects with all Requirements of Laws, Governmental Permits and Court Orders
applicable to the Business and has filed with the proper Governmental Bodies all
material statements and reports required by all Requirements of Laws,
Governmental Permits and Court Orders to which the Company or any of its
employees (because of their activities on behalf of the Company) are subject and
(ii) conducted the Business and is in compliance in all material respects with
all
-18-
federal, state and local energy, public utility, health, safety and
environmental Requirements of Laws, Governmental Permits and Court Orders
including the Clean Air Act, the Clean Water Act, the Solid Waste Act, the
Comprehensive Environmental Response Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Safe Drinking Water Act, OSHA, the
Toxic Substances Control Act and any similar state, local or foreign laws
(collectively "Environmental and OSHA Obligations") and all other Governmental
Body requirements, except where any such failure to comply or file would not, in
the aggregate, have a Material Adverse Effect. No claim has been made by any
Governmental Body (and, to the Knowledge of the Company and the Majority
Shareholders, no such claim is reasonably anticipated) to the effect that the
Business fails to comply, in any respect, with any Requirements of Laws,
Governmental Permit or Environmental and OSHA Obligation or that a Governmental
Permit or Court Order is necessary in respect thereto, other than as
specifically disclosed herein.
3.13. Insurance. Schedule 3.13 lists all coverages for fire, liability, or
--------- -------------
other forms of insurance insuring the Purchased Assets and all fidelity bonds
held by or applicable to the Company. Copies of the binder for all such
insurance policies have been delivered to Iconixx. The insurance maintained by
the Company is customary and reasonably adequate for companies engaged in the
Business. No event relating to the Company has occurred which will result in (i)
cancellation of any such insurance coverages; (ii) a retroactive upward
adjustment of premiums under any such insurance coverages; or (iii) any
prospective upward adjustment in such premiums. All of such insurance coverages
will not be terminated on or after the Closing Date as a result of the failure
to obtain any consents to the Acquisition contemplated hereby. The Company is
not in default under any such insurance policies.
3.14. Employee Benefit Plans.
----------------------
(a) Employee Welfare Benefit Plans and Other Arrangements. Except as
-----------------------------------------------------
disclosed on Schedule 3.14(a), the Company does not maintain or contribute to
----------------
any "employee welfare benefit plan" as such term is defined in Section 3(1) of
ERISA or Other Arrangement (each a "plan"). With respect to each such plan: (i)
the plan is in compliance with, and, except as set forth on Schedule 3.14(a),
----------------
the Company does not have any liability under ERISA, the Code or any
Requirements of Law; (ii) the plan has been administered in accordance with its
governing documents; (iii) neither the plan, nor any fiduciary with respect to
the plan, has engaged in any "prohibited transaction" as defined in Section 406
of ERISA other than any transaction subject to a statutory or administrative
exemption; (iv) except for the processing of routine claims in the ordinary
course of administration, there is no litigation, arbitration or disputed claim
outstanding; and (v) all premiums due on any insurance contract through which
the plan is funded have been paid. All employee welfare benefit plans and the
related trusts that are subject to Section 4980B(f) of the Code and Sections 601
through 607 of ERISA comply with and have been administered in compliance with
the health care continuation-coverage requirements for tax-favored status under
Section 4980B(f) of the Code (formerly Section 162(k) of the Code), Sections 601
through 607 of ERISA. All employee welfare benefit plans comply with and have
been administered in compliance with the requirements of the (i) Health
Insurance Portability and Accountability Act of 1996, to the extent applicable,
and applicable proposed or final regulations, and (ii) Mental Health Parity Act
of 1996, to the extent applicable.
-19-
(b) Employee Pension Benefit Plans. Except as set forth in Schedule
------------------------------ --------
3.14(b), the Company does not maintain or contribute to any arrangement that is
-------
or may be an "employee pension benefit plan" relating to employees, as such term
is defined in Section 3(2) of ERISA. With respect to each such plan: (i) the
plan is qualified under Section 401(a) of the Code, and any trust through which
the plan is funded meets the requirements to be exempt from federal income tax
under Section 501(a) of the Code; (ii) the plan is in compliance with ERISA and
all other applicable Requirements of Laws; (iii) the plan has been administered
in accordance with its governing documents as modified by applicable law; (iv)
the plan has not suffered an "accumulated funding deficiency" as defined in
Section 412(a) of the Code; (v) the plan has not engaged in, nor has any
fiduciary with respect to the plan engaged in, any "prohibited transaction" as
defined in Section 406 of ERISA or Section 4975 of the Code other than a
transaction subject to statutory or administrative exemption; (vi) the plan has
not been subject to a "reportable event" (as defined in Section 4043(b) of
ERISA), the reporting of which has not been waived by regulation of the Pension
Benefit Guaranty Corporation; (vii) no termination or partial termination of the
plan has occurred within the meaning of Section 411(d)(3) of the Code; (viii)
all contributions required to be made to the plan have been made to or on behalf
of the plan or accrued in accordance with GAAP; (ix) there is no litigation,
arbitration or disputed claim outstanding; (x) all applicable premiums due to
the Pension Benefit Guaranty Corporation for plan termination insurance have
been paid in full on a timely basis; and (xi) a favorable determination letter
from the IRS has been received by the Company with respect to such plan stating
that such plan is so qualified; and there are no circumstances which would cause
such plan to lose such qualified status.
(c) Employment and Non-Tax Qualified Deferred Compensation
------------------------------------------------------
Arrangements. Except as set forth on Schedule 3.14(c), the Company does not
------------ ----------------
maintain or contribute to any retirement or deferred or incentive compensation
or stock purchase, stock grant or stock option arrangement entered into between
the Company and any current or former officer, consultant, director or employee
of the Company that is not intended to be and that is not a tax qualified
arrangement under Section 401(a) of the Code.
3.15. Contracts and Agreements. Schedule 3.15 hereto contains a list of all
------------------------ -------------
customer contracts, all employment contracts involving annual salaries greater
than $60,000 and all employment contracts with directors, general managers or
officers of the Company. Schedule 3.15 also contains a list of the 9 largest
-------------
contracts (in terms of annual payments made or received with respect thereto) to
which the Company is a party or by which the Company or its properties are bound
and a list of any contract or agreements, if any, prohibiting the Company from
freely engaging in the Business anywhere in the world (collectively, the
"Contracts"). The Company is not and, to the Knowledge of the Majority
Shareholders and the Company, no other party thereto is in default (and no event
has occurred which, with the passage of time or the giving of notice, or both,
would constitute a default by the Company) under any of the Contracts, and the
Company has not waived any right under any of the Contracts. All of the
Contracts to which the Company is a party are legal, valid, binding, enforceable
and in full force and effect and will not be terminated on or after the Closing
Date as a result of the failure to obtain any consents to the Acquisition
contemplated hereby, except for the Equitable Exceptions and will be
-20-
assignable to the Buyer. The Company has not guaranteed any obligations of any
other Person. The Company has no present expectation or intention of not fully
performing all of its obligations under any Contract, the Company has no
Knowledge of any breach or anticipated breach by the other parties to any
Contract and the Company has not received notice of actual or threatened
termination or non renewal of any Contract.[B
3.16. Claims and Proceedings. Except as set forth on Schedule 3.16, there
---------------------- -------------
are no claims, actions, suits, proceedings, or investigations pending or, to the
Knowledge of the Majority Shareholders or the Company, threatened against or
affecting the Company or any of its properties or assets, at law or in equity,
before or by any court, municipality or other Governmental Body. To the extent
any are disclosed on Schedule 3.16, the Company does not believe that any of
-------------
such claims, actions, suits, proceedings, or investigations, if adversely
determined, will individually or in the aggregate result in any Material Adverse
Effect to the Company. The Company has not been and the Company is not now,
subject to any Court Order, stipulation, or consent of or with any court or
Governmental Body. No inquiry, action or proceeding has been instituted or, to
the Knowledge of the Majority Shareholders or the Company, threatened or
asserted against the Majority Shareholders or the Company to restrain or
prohibit the carrying out of the Acquisition or to challenge the validity of the
Acquisition or any part thereof or seeking damages on account thereof. To the
Knowledge of the Company and the Majority Shareholders there is no basis for any
such valid claim or action.
3.17. Taxes.
-----
(a) All Federal, foreign, state, county and local and other Taxes due
from the Company on or before the Closing have been paid and all Tax Returns
which are required to be filed by the Company on or before the date hereof have
been filed within the time and in the manner provided by all Requirements of
Laws or extensions were timely filed, and all such Tax Returns are true and
correct and accurately reflect the Tax liabilities of the Company in all
respects. No Tax Returns of the Company are presently subject to an extension of
the time to file. All Taxes, assessments, penalties, and interest of the Company
which have become due pursuant to such Tax Returns or any assessments received
have been paid or adequately accrued on the Financial Statements. The provisions
for Taxes reflected on the balance sheets contained in the Financial Statements
are adequate to cover all of the Company's Tax liabilities for the respective
periods then ended and all prior periods. The Company has not executed any
presently effective waiver or extension of any statute of limitations against
assessments and collection of Taxes, and there are no pending or threatened
claims, assessments, notices, proposals to assess, deficiencies, or audits with
respect to any such Taxes of which any of the Majority Shareholders or the
Company are aware. For Governmental Bodies with respect to which the Company
files Tax Returns, no such Governmental Body has given the Company written
notification that such corporation is or may be subject to taxation by that
Governmental Body. The Company has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
shareholder, creditor, independent contractor or other party. The Company has
each properly reflected for tax purposes in accordance with all Requirements of
Laws the status of all independent contractors, consultants and subcontractors.
There are no Tax liens on any of the property or assets of the Company. The
-21-
Company (and any predecessor of the Company) has been a validly electing S
corporation within the meanings of Sections 1361 and 1362 of the Code since
making an S corporation election on December 31, 1998, and the Company will be
an S corporation until and including the Closing Date.
(b) The Company has not made any payments, is not obligated to make
any payments, and is not a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be deductible
under Code Sec. 280G. The Company has not been a United States real property
holding corporation within the meaning of Code Sec. 897(c)(2) during the
applicable period specified in Code Sec. 897(c)(1)(A)(ii). The Company is not a
party to any Tax allocation or sharing agreement. The Company has not and has
never been (nor does the Company have any liability for unpaid Taxes because it
once was) a member of an affiliated group. No Stockholder (A) has been a member
of an affiliated group, as defined in Section 1504(a) of the Code, filing a
consolidated federal income Tax Return (other than a group the common parent of
which was any Stockholder) and (B) has any liability for the Taxes of any Person
under Treas. Reg. Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract or otherwise.
(c) The Company has not (i) acquired assets from another corporation
in a transaction in which the Company's Tax basis for the acquired assets was
determined in whole or in part by reference to the Tax basis of the acquired
assets (or any other property) in the hands of the transferor or (ii) acquired
the stock of any other corporation that is a qualified subchapter S subsidiary.
(d) The Company has not had at any time during the Company's
existence owned any subsidiaries (including any "qualified subchapter S
subsidiaries" within the meaning of Section 1361(b)(3)(13) of the Code excepting
only for IIS Systems, Inc. which was, but not longer is, a subsidiary of the
Company.
(e) No transaction contemplated by this Agreement is subject to
withholding under Section 1445 of the Code and no transfer taxes, real estate
transfer taxes or similar taxes will be imposed upon the sale of the Company
Shares pursuant to this Agreement.
3.18. Personnel. Schedule 3.15 sets forth a list of the names and annual
--------- -------------
rates of compensation of the directors and executive officers of the Company,
and of the employees of the Company whose annual rates of compensation during
the calendar year ended December 31, 1999 (including base salary, bonus and
incentive pay) exceeded (or by December 31, 2000 are expected to exceed) $60,000
and the employment agreements, if any, pertaining to such employees. Schedule
--------
3.18 summarizes the bonus, profit sharing, percentage compensation, company
----
automobile, club membership, and other like benefits, if any, paid or payable to
such directors, officers, and employees during the Company's calendar year ended
December 31, 1999 and to the date hereof. The employee relations of the Company
are generally good, there has been no unusual level of employee departures and
there is no pending or, to the Knowledge of Majority Shareholders or the
Company, threatened labor dispute or union organization campaign. None of the
employees of the Company is covered by a collective bargaining agreement. The
-22-
Company is in compliance in all material respects with all Requirements of Laws
respecting employment and employment practices, including, without limitation,
the Fair Labor Standards Act of 1938, immigration hiring, terms and conditions
of employment, and wages and hours, and is not engaged in any unfair labor
practices. Except as specifically set forth on Schedule 3.18, neither the
-------------
Company nor the Majority Shareholders have Knowledge that any Person listed on
Schedule 3.15 hereto will not agree to be employed by Buyer after the
-------------
consummation of the Acquisition. There is no unfair labor practice claim against
the Company before the National Labor Relations Board, or any strike, dispute,
slowdown, or stoppage pending or, to the Knowledge of the Company and the
Majority Shareholders, threatened against or involving the Company, and none has
previously occurred.
3.19. Business Relations. Neither the Company nor the Majority Shareholders
------------------
have Knowledge that any customer, supplier or licensor engaged in doing business
with the Company will cease to do business with the Company after the
consummation of the Acquisition as previously conducted with the Company except
for any terminations which will not, in the aggregate, result in a Material
Adverse Change. Neither the Majority Shareholders nor the Company has received
any notice of cancellation of any Material business arrangement between any
Person and the Company, and neither the Company nor the Majority Shareholders
have Knowledge that the Business will be subject to cancellation of any such
business arrangement.
3.20. Accounts Receivable; Accounts Payable; Customer Deposits; Customer
------------------------------------------------------------------
Revenues and Deferred Revenues.
------------------------------
(a) Accounts Receivable. All of the accounts, notes, and loans
-------------------
receivable that have been recorded on the books of the Company in the Financial
Statements are bona fide and represent amounts validly due for goods sold or
services rendered and, except for amounts reserved for as doubtful accounts in
the Financial Statements, all such amounts as of the Closing Date will be
collected in full prior to September 30, 2000. With respect to such accounts,
notes, and loans receivable: (i) all are free and clear of any Encumbrances;
(ii) no claims of offset have been asserted in writing against any of such
accounts, notes, or loans receivable; and (iii) none of the obligors thereto has
given written notice that it will or may refuse to pay the full amount or any
portion thereof. Lists of the Company's accounts receivable as of December 31,
1999 (including any reconciliation to the accounts receivable entry on the
balance sheet included in the Most Recent Financial Statements) have been
attached to Schedule 3.20(a).
----------------
(b) Accounts Payable. The aggregate amount of accounts payable
----------------
reflected on the Most Recent Financial Statements are prepared in accordance
with GAAP and reflect the accounts payable of the Company as of December 31,
1999.
(c) Customer Deposits; Customer Revenues and Deferred Revenues.
----------------------------------------------------------
Schedule 3.20(c) sets forth, as of the date specified therein all deferred
----------------
revenues as of such date on an aggregate basis. For the year ending December 31,
1999, the Company's actual deposits and revenues from customer contracts are not
less than the Company's deposits and revenues from customer contracts for the
year ending December 31, 1998.
-23-
3.21. Bank Accounts; Investments. Schedule 3.21 lists all banks or other
-------------------------- -------------
financial institutions with which the Company has an account or maintains a safe
deposit box, showing the type and account number of each such account and safe
deposit box and the names of the persons authorized as signatories thereon or to
act or deal in connection therewith. Schedule 3.21 also lists all Material
-------------
investments by the Company in any funds, accounts, securities, certificates of
deposit or instruments of any Person. All of such investments are customary in
form and amount for reasonably prudent treasury investments of comparable
businesses, none of which involve any type of derivative, option, hedging or
other speculative instrument.
3.22. Customer Claims. No written or oral claims for breach of contract or
---------------
otherwise by any customers (a "Customer Claim") has been made against the
Company since June 30, 1999 which could, individually or in the aggregate,
result in any Material Adverse Effect. The level of Customer Claims for the
period since December 31, 1998 through the date hereof is consistent (plus or
minus 5%) with past practices of the Company for the comparable period in 1998.
3.23. Affiliated Transactions. No officer, director, shareholder or
-----------------------
Affiliate of the Company or any individual related by blood or marriage to any
such Person, or any entity in which any such Person owns any beneficial
interest, is a party to any agreement, contract, arrangement or commitment with
the Company or is engaged in any transaction with the Company or has any
interest in any property used by the Company, except for the Majority
Shareholders in their capacity as officers, directors, employees and
shareholders of the Company. No officer, director or shareholder of the Company
has any ownership interest in any competitor, supplier, or customer of the
Company (other than (i) ownership of securities of a publicly-held corporation
or mutual fund of which such Person owns, or has real or contingent rights to
own, less than five percent of any class of outstanding securities and (ii)
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇'▇ controlling membership interest in ▇▇▇▇▇.▇▇▇, L.L.C.) or any
property used in the operation of the Business except for the Majority
Shareholders' ownership of and services as directors of IIS Systems, Inc. and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇'▇ anticipated continued employment with that company.
3.24. Funded Indebtedness; Letters of Credit; Undisclosed Liabilities.
---------------------------------------------------------------
(a) Funded Indebtedness. Other than any Funded Indebtedness which is
-------------------
to be repaid and discharged by the Company prior to or at the Closing in
accordance with Section 7.1(d), the Company does not have any Funded
--------------
Indebtedness, other than outstanding loans from the Majority Shareholders that
will remain the obligations of the Company after Closing.
(b) Letters of Credit. Other than those listed on Schedule 3.25, the
----------------- -------------
Company has no letters of credit, performance bonds or similar instruments
issued on or for its account for the benefit of any of its vendors or otherwise.
(c) Undisclosed Liabilities. The Company does not have any Material
-----------------------
liabilities in the aggregate (whether absolute, accrued, contingent or
otherwise) of a
-24-
nature required by GAAP to be reflected on a company balance sheet or in the
notes thereto, except for such liabilities which are accrued or reserved against
in the Financial Statements or disclosed in the notes thereto, including without
limitation any accounts payable or service liabilities of the Company incurred
prior to the Closing Date.
3.25. Year 2000. All of the Material computer software, computer
---------
firmware, computer hardware (whether general or special purpose), and other
similar or related items of automated, computerized, and/or software system(s)
that are used or relied on by the Company in the conduct of its business will
not malfunction, will not cease to function, will not generate incorrect data,
and will not produce incorrect results when processing, providing, and/or
receiving (i) date-related data into and between the twentieth and twenty-first
centuries and (ii) date-related data in connection with any valid date in the
twentieth and twenty-first centuries, except for any malfunctions or generations
of incorrect data or results that would not individually or in the aggregate
have a Material Adverse Effect. The Company has not been engaged in any year
2000 correction consulting work for its customers for which Buyer could have any
future liability.
3.26. Information Furnished. The Company and the Majority
---------------------
Shareholders have made available to Iconixx true and correct copies of all
material corporate or stock records of the Company and all material agreements,
documents, and other items listed on the Disclosure Schedules to this Agreement
or referred to in Article III of this Agreement, and neither this Agreement, the
-----------
Disclosure Schedules hereto, nor any written information, instrument, or
document delivered to Buyer or Iconixx pursuant to this Agreement contains any
untrue statement of a Material fact or omits any Material fact necessary to make
the statements herein or therein, as the case may be, not misleading.
ARTICLE IV
BUYER'S AND ICONIXX'S REPRESENTATIONS AND WARRANTIES
Except as set forth on the Disclosure Schedules attached hereto (which
Disclosure Schedules identify the exception and references the applicable
representation so qualified), Buyer and Iconixx jointly and severally represent
and warrant to the Majority Shareholders and the Company as follows:
4.1. Due Organization of Iconixx and Buyer. Iconixx and Buyer are
-------------------------------------
each a corporation duly organized, validly existing, and in good standing under
the laws of the State of Delaware and each has full corporate power and
authority to execute, deliver and perform this Agreement and to carry out the
Acquisition.
4.2. Due Authorization. Iconixx and Buyer have full power and
-----------------
authority to execute, deliver and perform this Agreement and to carry out and
complete the Acquisition. The execution, delivery and performance of this
Agreement has been duly authorized by all necessary corporate action by Iconixx
-25-
and Buyer and the Agreement has been duly and validly executed and delivered by
Iconixx and Buyer and constitutes the valid and binding obligation of each of
Iconixx and Buyer, enforceable in accordance with its terms, except for the
Equitable Exceptions. The execution, delivery, and performance of this Agreement
and the Escrow Agreement (as well as all other instruments, agreements,
certificates or other documents contemplated hereby) by Iconixx and Buyer shall
not (a) violate any Requirements of Laws or Court Order of any Governmental Body
applicable to Iconixx or Buyer their property, (b) violate or conflict with, or
permit the cancellation of, or constitute a default under any agreement to which
Iconixx or Buyer is a party or by which Iconixx or Buyer or their property is
bound, (c) permit the acceleration of the maturity of any indebtedness of, or
any indebtedness secured by the property of, Iconixx or Buyer, (d) violate or
conflict with any provision of the Certificate of Incorporation or Bylaws of
Iconixx or Buyer, or (e) except for such consents, approvals, or registrations
as may be required under applicable state securities laws, require any consent,
approval or authorization of, or notice to, or declaration, filing or
registration with, any Governmental Body or other third party.
4.3. No Brokers. Iconixx has engaged at its expense the services of
----------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ in connection with the Acquisition. Iconixx has not engaged, or
caused to be incurred any liability for which the Company or the Majority
Shareholders may be liable to any finder, broker or sales agent in connection
with the origin, negotiation, execution, delivery, or performance of this
Agreement or the Acquisition.
4.4. Iconixx Financial Statements. The following financial statements
----------------------------
of Iconixx have been delivered to the Company: an unaudited consolidating
balance sheet of Iconixx as of December 31, 1999 and unaudited consolidating
statement of operations of Iconixx for the three months ended December 31, 1999
(collectively, the "Iconixx Financial Statements"). Copies of the Iconixx
Financial Statements are included in Schedule 4.4. To the Knowledge of Iconixx,
------------
the Iconixx Financial Statements have been prepared in accordance with GAAP
except for normal year-end adjustments and the absence of footnotes. The Iconixx
Financial Statements fairly present the financial position and results of
operations of Iconixx as of the indicated dates and for the indicated periods
and are consistent with the books and records of Iconixx (which books and
records are correct and complete in all material respects). Since December 31,
1999, Iconixx has not experienced any material adverse change to its assets,
properties, Business, operations, liabilities or financial condition (an
"Iconixx Material Adverse Change").
4.5. Capital Stock and Related Matters. As of the Closing and
---------------------------------
immediately thereafter, the authorized capital stock of Iconixx shall consist of
100,000,000 shares of stock, of which (i) 150,000 shares shall be designated as
Preferred and (ii) 99,850,000 shares shall be designated as Common Stock. The
ownership of the issued and outstanding Preferred Stock and the Common Stock are
as set forth on the Iconixx Capitalization Schedule provided herewith. As of the
-------------------------------
Closing, all of the outstanding shares of Iconixx's capital stock shall be
validly issued, fully paid and nonassessable. The Stockholders Agreement,
Registration Rights Agreement, Contribution Agreement, Stock Purchase Agreement
and similar agreements listed in Schedule 4.5 constitute all the material
------------
agreements, contracts, understandings or arrangements, other than the Iconixx
Stock Option Plan, which govern the ownership, transfer or voting rights of the
capital stock of Iconixx.
-26-
4.6. Authorization of the Stock. Iconixx has authorized the issuance and
--------------------------
sale to the Company of an aggregate of 600,000 shares of Common Stock and 2,220
shares of Preferred Stock, each having the rights and preferences set forth in
Iconixx's Certificate of Incorporation attached hereto as Exhibit E.
---------
4.7. Stock Option Plan. Iconixx maintains a stock option plan ("plan"), by
-----------------
or through which the Majority Shareholders and the Company's employees may
become eligible to the extent they become employees of the Buyer to acquire,
obtain or receive options to receive, acquire, or obtain shares of Iconixx
Common Stock pursuant to this Agreement. Copies of the plan documents have been
provided to the Company. With respect to such plan: (i) the plan provides for
options which qualify as incentive stock options, as defined by Section 422 of
the Code, as well as options that do not so qualify; (ii) the plan is in
compliance with all material Requirements of Law; (iii) the plan has been
administered in accordance with its governing documents; (iv) neither the plan,
nor any fiduciary with respect to the plan, has engaged in any "prohibited
transaction" as defined by ERISA other than any transaction subject to a
statutory or administrative exemption and (v) there is no litigation,
arbitration or disputed claim outstanding with respect to the plan.
4.8. Claims and Proceedings. There are no claims, actions, suits,
----------------------
proceedings, or investigations pending, or, to the Knowledge of Iconixx or
Buyer, threatened against or affecting Iconixx or Buyer or any of their
properties or assets, at law or in equity, before or by any court, municipality
or other Governmental Body that would result in a material adverse effect on
Iconixx (an "Iconixx Material Adverse Effect"), other than as disclosed on
Schedule 4.8. To the extent any are disclosed on Schedule 4.8, none of such
------------ ------------
claims, actions, suits, proceedings, or investigations will individually or in
the aggregate result in an Iconixx Material Adverse Effect. Iconixx or Buyer
have not been and are not now, subject to any Court Order, stipulation, or
consent of or with any court or Governmental Body that could affect the
Acquisition. No inquiry, action or proceeding has been instituted or, to the
Knowledge of Iconixx or Buyer, threatened or asserted against Iconixx or Buyer
to restrain or prohibit the carrying out of the Acquisition or to challenge the
validity of the Acquisition or any part thereof or seeking damages on account
thereof. To the Knowledge of Iconixx and Buyer there is no basis for any such
valid claim or action.
4.9. Taxes.
-----
(a) All Federal, foreign, state, county and local and other Taxes due
from Iconixx or Buyer (or any subsidiary with which Iconixx or Buyer may, if
they elect, file a consolidated return) on or before the Closing have been paid
and all Tax Returns which are required to be filed by Iconixx or Buyer on or
before the date hereof have been filed within the time and in the manner
provided by all Requirements of Laws or extensions were timely filed, and all
such Tax Returns are true and correct and accurately reflect the Tax liabilities
of Iconixx and Buyer in all material respects. For Governmental Bodies with
respect to which Iconixx or Buyer file Tax Returns, no such Governmental Body
has given Iconixx or Buyer written notification that either such corporation is
may be subject to taxation by that Governmental Body
-27-
that could result in an Iconixx Material Adverse Effect. There are no material
Tax liens on any of the property or assets of Iconixx or Buyer.
(b) Iconixx or Buyer have not made any payments, are not obligated to
make any payments, and are each not a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be deductible
under Code Sec. 280G. Iconixx or Buyer have each not been a United States real
property holding corporation within the meaning of Code Sec. 897(c)(2) during
the applicable period specified in Code Sec. 897(c)(1)(A)(ii). Iconixx or Buyer
are each not a party to any Tax allocation or sharing agreement.
(c) No transaction contemplated by this Agreement is subject to
withholding under Code Section 1445 and no transfer taxes, real estate transfer
taxes or similar taxes will be imposed upon the sale of Iconixx Stock pursuant
to this Agreement.
ARTICLE V
PRE-CLOSING COVENANTS OF THE COMPANY, ICONIXX, BUYER AND THE
MAJORITY SHAREHOLDERS
5.1. Consents of Others. Prior to the Closing, the Company and the Majority
------------------
Shareholders shall use their commercially reasonable best efforts to obtain and
to cause the Company to obtain all material authorizations, consents and permits
required of the Company and the Majority Shareholders to permit them to
consummate the Acquisition. To the extent required to consummate the Acquisition
or to ensure that the Contracts shall not be terminated as a result of the
Closing, Majority Shareholders shall have obtained the written consent or waiver
of any "assignment" type termination rights of any third party to any Contract.
5.2. Majority Shareholders' Efforts. The Company and the Majority
------------------------------
Shareholders shall use all commercially reasonable best efforts to cause all
conditions for the Closing to be met.
5.3. Employees. The Company and the Majority Shareholders shall cause the
---------
Company to terminate at or prior to Closing all employees of the Company (the
"Employees") and the Buyer (or an Affiliate thereof) shall offer employment to
all the Employees, which Employees shall be identified on an "Employee Schedule"
-----------------
to be delivered by the Company to Buyer immediately upon execution of this
Agreement, on terms and conditions substantially similar to their employment by
the Company and assume all accrued obligations to such employees to the extent
disclosed to Iconixx and reserved for on the Preliminary Closing Balance Sheet;
provided that the terms of this Section 5.3 shall not entitle any Employee to
-----------
remain in the employment of the Company or the Buyer or affect the right of the
Buyer to terminate any Employee at any time, or to establish, modify or
terminate any employee benefit plan as defined in Section (3)(3) of ERISA or any
benefit under any such plan at any time. The Company shall assume all
obligations and liability under Section 4980B of the Code with respect to the
Company's current and former employees and their qualified beneficiaries where
such
-28-
employees' or qualified beneficiaries' initial qualifying event occurs on
or prior to the Closing Date. The Company shall be responsible for any notices
or other obligations required in connection with the termination of any
employees' employment hereunder.
-29-
5.4. Conduct of Business Pending Closing. From the date of this Agreement
-----------------------------------
to the Closing Date:
(a) Except as otherwise contemplated by this Agreement, or as Iconixx
may otherwise consent to in writing, the Company and the Majority Shareholders
shall conduct the Business only in the ordinary course and shall not engage in
any Material transactions or enter into any Material transaction which would
cause a breach of the representations and warranties contained in Article III.
-----------
(b) The Majority Shareholders and the Company shall use their
commercially reasonable best efforts to cause the Business to preserve
substantially intact its current business organization and present relationships
with its customers, vendors, suppliers and employees and to maintain all of its
insurance currently in effect.
(c) The Majority Shareholders and the Company shall give prompt notice
to Iconixx of any notice of any Material default received by the Company or the
Business subsequent to the date of this Agreement under any Contract or any
Material Adverse Change occurring prior to the Closing Date in the operation of
the Company or the Business.
(d) Neither the Company nor the Majority Shareholders, nor any of
their representatives, shall solicit, encourage or discuss any Acquisition
Proposal (as hereinafter defined) or supply any non-public information
concerning the Company or the Business or the Company's assets to any party
other than Iconixx or its representatives. As used herein, "Acquisition
Proposal" means any proposal other than the Acquisition, for (i) any merger or
other business combination involving the Company or the Business, (ii) the
acquisition of the Company, a material equity interest in the Company or a
material portion of its assets, or (iii) the dissolution or liquidation of the
Company.
5.5. Access Before Closing. Prior to the Closing Date, the Majority
---------------------
Shareholders and the Company agree that it will give, or cause to be given, to
Iconixx and its representatives, during normal business hours and at Iconixx's
expense, reasonable access to the Company's personnel, independent accountants,
officers, agents, employees, assets, properties, titles, contracts, corporate or
stock minute and other books, records, files and documents of the Company with
respect to the Business (including financial, tax basis, budget projections,
accountants' work papers and other information as Iconixx may reasonably
request) upon 24 hours prior notice. The Majority Shareholders and Iconixx shall
mutually agree on the timing and manner of contact with all third parties,
including, but not limited to, customers, vendors or suppliers, which contact
shall not be unreasonably withheld. Iconixx shall not be given access to any
information where the provision of such information would violate a law or
regulation applicable to the Company.
-30-
ARTICLE VI
POST-CLOSING COVENANTS
6.1. General. In case at any time after the Closing any further action is
-------
legally necessary or reasonably desirable (as determined by Iconixx and the
Majority Shareholders) to carry out the purposes of this Agreement, each of the
parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other party reasonably may
request, all at the sole cost and expense of the requesting party (unless the
requesting party is entitled to indemnification therefor under Article VIII
------------
below). The Majority Shareholders acknowledge and agree that from and after the
Closing, the Buyer will be entitled to possession of all documents, books,
records, agreements, and financial data of any sort relating to the Company
(other than tax or general corporate or stock records or other Excluded Assets),
which shall be maintained at the chief executive office of the Buyer; provided,
however, that the Majority Shareholders shall be entitled to reasonable access
to and to make copies of such books and records at their sole cost and expense
and the Buyer will maintain all of the same for a period of at least three (3)
years after Closing. Thereafter, the Buyer will offer such documentation to the
Majority Shareholders before disposal thereof. The Sellers further agree to
convey all rights to any Intellectual Property reasonably related to the
Business to the Buyer.
6.2. Transition. For a period of three (3) years following Closing, the
----------
Majority Shareholders will not take any action (or cause any such action to be
taken by another Person) that primarily has the effect of discouraging any
vendor, lessor, licensor, customer, contractor, subcontractor, supplier, or
other business associate of the Company from maintaining the same business
relations with the Buyer after the Closing as it maintained with the Company
prior to the Closing. For a period of three (3) years following Closing, the
Majority Shareholders will refer all customer inquiries relating to the Business
to the Buyer.
6.3. Confidentiality. The Majority Shareholders will treat and hold in
---------------
confidence and not disclose all Confidential Information and refrain from using
any of the Confidential Information except in connection with this Agreement or
otherwise for the benefit of the Company, Buyer or Iconixx for a period of four
(4) years from the date of this Agreement, and deliver promptly to Iconixx or
destroy, at the written request and option of Iconixx, all tangible embodiments
(and all copies) of the Confidential Information which are in their possession
except as otherwise permitted herein. In the event that any Majority Shareholder
is requested or required (by oral question or written request for information or
documents in any legal proceeding, interrogatory, subpoena, civil investigative
demand, or similar legal proceeding) to disclose any Confidential Information,
such Majority Shareholder will notify the Buyer and Iconixx promptly of the
request or requirement.
6.4. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Covenant Not to Compete. For and in consideration of
-----------------------------------------
the allocation of $25,000 of the Purchase Price paid to the Company, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ covenants and agrees, for a period of 18 months from and after the
Closing Date, that he will not, directly or indirectly without the prior written
consent of the Buyer, for or on behalf of any entity, engage in any of the
activities prohibited by the Consulting and Non-Compete
-31-
Agreement in the form of Exhibit F-2 hereto; provided, however, that ▇▇▇▇▇▇▇
-----------
▇▇▇▇▇▇▇▇▇ may (i) own less than five percent (5%) of the outstanding stock of
any publicly-traded corporation and same shall not be deemed to be in a
violation of this Section 6.4 solely by reason thereof, or (ii) engage in those
-----------
activities permitted by his Consulting and Non-Compete Agreement.
6.5. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Employment and Covenant Not to Compete. For and in
--------------------------------------------------------
consideration of the allocation of $25,000 of the Purchase Price paid to Seller
by Buyer, Seller and ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ each covenants and agrees, for a period
of three (3) years from and after the Closing Date, that he will not, directly
or indirectly without the prior written consent of Buyer, for or on behalf of
any entity or Affiliate:
(a) become interested or engaged, directly or indirectly, as a
shareholder, bondholder, creditor, officer, director, partner, agent, contractor
with, employer or representative of, or in any manner associated with, or give
financial, technical or other assistance to, any Person, firm or corporation for
the purpose of engaging in the Business in competition with Buyer or any of its
Affiliates, in respect of customers in the United States;
(b) enter into any agreement with, service, assist or solicit the
business of any customers of Buyer or any of its Affiliates for the purpose of
providing any services in the Business to such customers in competition with the
Business or similar businesses conducted by Buyer or such Affiliates in respect
of customers in the United States or to cause them to reduce or end their
business with Buyer;
(c) hire, retain, or solicit the employment or services of employees,
consultants or representatives of Buyer or any of its Affiliates for the purpose
of causing them to leave the employment of Buyer or such Affiliates; or
(d) take any action (or cause any such action to be taken by another
Person) that primarily is designed or intended to have the effect of
discouraging any vendor (including without limitation any software company),
lessor, licensor, customer, supplier, or other business associate of the
Business from maintaining the same business relations with Buyer after the
Closing as it maintained with Seller prior to the Closing;
provided, however, that ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ may own less than five percent
(5%) of the outstanding stock of any publicly-traded corporation and same shall
not be deemed to be in a violation of this Section 6.5 solely by reason thereof,
-----------
further provided that ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ may (i) own stock in, and serve as a
director of IIS Systems, Inc., and (ii) own a controlling membership interest in
▇▇▇▇▇.▇▇▇, L.L.C., without breaching any obligation hereunder.
6.6. Access to Records After Closing. After the Closing Date, Buyer on the
-------------------------------
one hand and Seller and the Majority Shareholders on the other agree that they
will give, or cause to be given, to the other party, its successors and its
representatives, during normal business hours and at the requesting party's
expense, such reasonable access to the properties, titles, contracts, books,
records, files and documents (but excluding attorney work product or other
privileged
-32-
communications) of Buyer (to the extent Buyer's records are the records,
materials and data transferred to Buyer from Seller pursuant to this Agreement)
or Seller, as the case may be, as is reasonably necessary to allow the
requesting party to obtain information in the other party's possession with
respect to any claims, demands, audits, suits or matters of a similar nature
made by or against the requesting party as the previous or new owner and
operator of the Business, as the case may be, and to make copies of such
information to the extent reasonably necessary. Buyer agrees that it will not
dispose of or destroy any of such records for five (5) years after the Closing
Date without first offering to turn over possession thereof to Seller and
Majority Shareholder by written notice to Seller and Majority Shareholder at
least 30 days prior to the proposed date of any such disposition or destruction.
6.7. Assignment of Contracts. Anything in this Agreement to the contrary
-----------------------
notwithstanding, this Agreement shall not constitute an agreement to assign or
otherwise transfer any Contract or any rights thereunder, if an attempted
assignment or transfer thereof would constitute a breach thereof, would be
ineffective or would violate any applicable law without the consent of a third
party to such assignment or transfer. Until such consent or waiver has been
obtained, Buyer shall make all reasonable efforts to perform in Seller's name
all of Seller's obligations under any such Contract for which any such consent
has not been obtained. Seller shall cooperate with Buyer in any reasonable
arrangement designed to provide for Buyer all of the benefits, and to have Buyer
assume the burdens, liabilities, obligations and expenses under all such
Contracts. At Buyer's request, Seller shall, at Buyer's sole cost and expense,
take all reasonable efforts requested by Buyer to enforce, for the benefit of
Buyer, any and all rights of Seller under any such Contract not otherwise
transferred pursuant to the provisions of this Agreement. Seller hereby
authorizes Buyer to perform and Buyer hereby agrees to perform all of Seller's
obligations after the Closing under all such contracts. Seller agrees to remit
promptly to Buyer all collections or payments received by Seller in respect of
all such Contracts, and shall hold all such collections or payments for the
benefit of, and promptly pay the same over to, Buyer; provided, however, that
nothing herein shall create or provide any rights or benefits in or to third
parties.
6.8. Change of Name. Seller agrees to promptly change its name following
--------------
the Closing to a name which does not contain the words "Internet Information
Services" or any variations thereof.
6.9. Litigation Support. In the event and for so long as any party is
------------------
actively contesting or defending against any claim, suit, action or charge,
complaint, or demand in connection with (i) any transaction contemplated under
this Agreement or (ii) any fact, circumstance, status, condition, activity,
practice, occurrence, event, action, failure to act, or transaction on or prior
to the Closing Date involving the Company, Buyer or the Business, each of the
other parties will cooperate and make reasonably available themselves or their
personnel, as applicable, and provide such reasonable testimony and access to
their books and records as shall be necessary in connection with the contest or
defense.
6.10. Audits. Following the Closing, the Majority Shareholders shall use
------
their best efforts to cause the Company, at the Buyer's expense, to deliver, or
cause to be delivered, to
-33-
Iconixx an unqualified and unmodified audit report of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, L.L.P. or
other reputable independent accounting firm on the balance sheet of the Company
as of the Closing Date in connection with the preparation of the Audited Closing
Financial Statements and audited statements of operations and cash flows of the
Company with respect to the periods January 1, 2000 through the Closing Date and
for any prior fiscal years in 1999, 1998 and 1997, which reports shall be
without limitation as to the scope of the audit. The Majority Shareholders, in
their capacities as officers and directors of the Company during such periods,
shall provide all management letters, reports or representations reasonably
requested by such auditors in connection with such audits.
6.11. Minimum Cash as of the Closing. At the Closing, the Company shall
------------------------------
maintain a level of cash and cash equivalents equal to at least $50,000. The
Purchase Price payable at Closing will be reduced by the amount by which the
Company's cash and cash equivalents are less than $50,000 at Closing (the
"Minimum Cash Deficit"). The above adjustment is in addition to, and not
included in, any downward adjustment made at Closing pursuant to Section 2.9.
-----------
The parties agree that in no event will a Minimum Cash Deficit result in any
upward adjustment pursuant to Section 2.9.
-----------
6.12. Iconixx's Stock Options. At or shortly following the Closing, Iconixx
-----------------------
will grant stock options for the purchase of Common Stock under its stock option
plan in the aggregate amount of 300,000 shares to certain employees of the
Company who accept employment with the Buyer at Closing. The Iconixx stock
options shall be exercisable at the fair market value per share of the Common
Stock on the date of grant as reasonably determined by Iconixx. The terms of
such stock options shall generally be for ten years from the date of grant,
subject to Iconixx's customary four year annual vesting requirements, and shall
otherwise be on the same terms and conditions applicable to all stock options
granted to key executives and employees of Iconixx and its subsidiaries.
6.13. Disposition of Company Benefit Plans.
------------------------------------
(a) The Company's 401(k) plan shall be an Excluded Asset hereunder and
not assumed by Buyer.
(b) The Company's cafeteria plan that permits employees to pay health
insurance premiums and to pay medical expenses on a pre-tax basis shall be an
Excluded Asset hereunder and not assumed by Buyer.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF PARTIES TO CONSUMMATE CLOSING
7.1. Conditions to Iconixx's and Buyer's Obligations. The obligation of
-----------------------------------------------
Iconixx and Buyer under this Agreement to consummate the Closing is subject to
the conditions that:
-34-
(a) Covenants, Representations and Warranties. The Company and the
-----------------------------------------
Majority Shareholders shall have performed in all material respects all
obligations and agreements and complied in all material respects with all
covenants contained in this Agreement to be performed and complied with by each
of them prior to or at the Closing Date. The representations and warranties of
the Company and the Majority Shareholders set forth in this Agreement shall be
accurate in all material respects at and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date.
(b) Consents. All statutory requirements for the valid consummation by
--------
the Company and the Majority Shareholders of the Acquisition shall have been
fulfilled and all required authorizations, consents and approvals, including
those of all federal, state, local and foreign governmental agencies and
regulatory authorities required to be obtained in order to permit the
consummation of the Acquisition shall have been obtained in form and substance
reasonably satisfactory to Iconixx unless such failure could not reasonably be
expected to have a Material Adverse Effect. All approvals of the Board of
Directors and the Majority Shareholders of the Company necessary for the
consummation of this Agreement and the Acquisition shall have been obtained.
(c) Leases. Each of the material Leases shall provide that the Company
------
is the lessee and if required under the terms of a given lease, any consent
required in connection with the Acquisition contemplated by this Agreement shall
have been obtained, and copies of such Leases (and any assignments pursuant to
which any of such Leases have been assigned to the Buyer prior to the Closing
Date) shall have been provided to Iconixx.
(d) Discharge of Indebtedness and Liens; Majority Shareholder Loans.
---------------------------------------------------------------
The Majority Shareholders and the Company shall have provided for the payment in
full by the Company of all Funded Indebtedness of the Company at the Closing or
the Purchase Price will be reduced proportionately by the amount that such
Funded Indebtedness exceeds $0 as of the Closing Date. Such Funded Indebtedness,
if any, as of December 31, 1999, is listed on Schedule 7.1(d) hereto. The
---------------
Company shall have also provided for the termination of all Encumbrances of
record on the properties of the Company or the Business, except for Permitted
Exceptions. All liens or UCC filings against the Company or Affiliates of the
Company which are engaged in the Business, shall have been terminated as of the
Closing.
(e) Transfer Taxes. The Company and Majority Shareholders shall be
--------------
responsible for all transfer or gains taxes imposed on the shareholders incurred
in connection with this Agreement.
(f) Documents to be Delivered by the Majority Shareholders and the
--------------------------------------------------------------
Company. The following documents shall be delivered at the Closing by the
-------
Majority Shareholders and the Company:
(i) Escrow Agreement. The Majority Shareholders and the Company
----------------
shall have delivered to Iconixx and Buyer at the Closing the duly
-35-
executed Escrow Agreement in substantially the form attached hereto as
Exhibit A.
---------
(ii) Opinion of the Company's and the Majority Shareholders'
-------------------------------------------------------
Counsel. Iconixx and Buyer shall have received an opinion of counsel
-------
to the Company and the Majority Shareholders, dated the Closing Date,
in substantially the same form as the form of opinion that is Exhibit
-------
G hereto.
-
(iii) Certificates. Iconixx and Buyer shall have received an
------------
officer's certificate and a secretary's certificate of the Company
executed by officers of the Company, dated the Closing Date, in a form
mutually agreed upon by Iconixx and the Majority Shareholders.
(iv) Conveyance Documents. Such instruments of sale, transfer,
--------------------
assignment, conveyance and delivery (including all vehicle titles), in
form and substance reasonably satisfactory to counsel for Buyer
(including, without limitation, the General Assignment, ▇▇▇▇ of Sale
and Assumption Agreement in substantially the form attached hereto as
Exhibit B (the "▇▇▇▇ of Sale, Assignment and Assumption Agreement"),
---------
as are required in order to transfer to Buyer good and marketable
title to the Purchased Assets, free and clear of all liens, charges,
security interests and other encumbrances except as provided herein.
(v) Resolutions. A certified copy of resolutions of Seller's
-----------
Board of Directors authorizing the execution, delivery and
consummation of this Agreement and the transactions contemplated
hereby.
(vi) UCC Matters. UCC termination statements and other applicable
-----------
documentation necessary to release any interest of any third party in
the Purchased Assets.
(vii) ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ Agreements. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have
------------------------------
duly executed and delivered the Employment Agreement in substantially
the same form attached as Exhibit F-1 hereto, pursuant to which he
-----------
will be employed by the Buyer following the Closing. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
shall have duly executed and delivered the Noncompete Agreement in
substantially the form attached as Exhibit F-2 hereto.
-----------
(g) Iconixx Equity Arrangements. Joinders to the Equity Agreements
---------------------------
shall have been executed and delivered by the Company.
(h) Financing. Iconixx shall have obtained the approval of its senior
---------
lenders to the Acquisition.
7.2. Conditions to the Majority Shareholders' and the Company's
----------------------------------------------------------
Obligations. The obligation of the Majority Shareholders and the Company under
-----------
this Agreement to consummate the Closing is subject to the conditions that:
-36-
(a) Covenants, Representations and Warranties. Iconixx and Buyer shall
-----------------------------------------
have performed in all material respects all obligations and agreements and
complied in all material respects with all covenants contained in this Agreement
to be performed and complied with by Iconixx and/or Buyer prior to or at the
Closing and the representations and warranties of Iconixx and Buyer set forth in
Article IV hereof shall be accurate in all material respects, at and as of the
----------
Closing Date, with the same force and effect as though made on and as of the
Closing Date.
(b) Consents. All statutory requirements for the valid consummation by
--------
Iconixx and Buyer of the Acquisition shall have been fulfilled and all required
authorizations, consents and approvals, including those of all federal, state,
local and foreign governmental agencies and regulatory authorities required to
be obtained in order to permit the consummation by Iconixx or Buyer of the
Acquisition shall have been obtained unless such failure shall not have a
Material Adverse Effect on the Business.
(c) Documents to be Delivered by Iconixx and Buyer. The following
----------------------------------------------
documents shall be delivered at the Closing by Iconixx and Buyer:
(i) Escrow Agreement. Iconixx and Buyer shall have delivered to
----------------
the Majority Shareholders at the Closing the duly executed Escrow
Agreement.
(ii) Employment Agreements. Iconixx shall have caused the Buyer
---------------------
to duly execute and deliver an Employment Agreement with ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
in substantially the same form attached as Exhibit F-1 hereto, pursuant to
-----------
which ▇▇. ▇▇▇▇▇ will be employed by the Buyer following the Closing.
(iii) Certificates. Iconixx and Buyer shall have delivered an
------------
officer's certificate and a secretary's certificate of Iconixx and Buyer
executed by officers of Iconixx and Buyer, dated the Closing Date, in a
form mutually agreed upon by Iconixx and the Majority Shareholders.
(d) Company Equity Arrangements. The Equity Agreements shall have been
---------------------------
executed and delivered by the respective parties thereto.
(e) Payments to the Seller. The Seller shall have received the
----------------------
Purchase Price payable at Closing for the Purchased Assets.
(f) Opinion of Counsel for Iconixx and Buyer. The Company and the
----------------------------------------
Majority Shareholders shall have received an opinion of counsel for Iconixx and
Buyer dated as of the Closing Date in substantially the same form as Exhibit H
hereto.
-37-
ARTICLE VIII
INDEMNIFICATION
8.1. Indemnification by the Majority Shareholders. Except as provided in
--------------------------------------------
Section 8.6, the Company and the Majority Shareholders agree to jointly and
-----------
severally indemnify and hold harmless Iconixx and the Buyer and each officer,
director, and Affiliate of Iconixx and the Buyer, including, without limitation,
First Union Bank, N.A. and Bank of America, N.A. and their successors and
assigns, and any successor of the Buyer or Iconixx as provided in Section 10.5
------------
hereof (collectively, the "Indemnified Parties") from and against any and all
damages, losses, claims, liabilities, demands, charges, suits, penalties, costs
and expenses (including court costs and reasonable attorneys' fees and expenses
incurred in investigating and preparing for any litigation or proceeding)
(collectively, the "Indemnifiable Costs"), which any of the Indemnified Parties
may sustain, or to which any of the Indemnified Parties may be subjected,
arising out of (A) any misrepresentation, breach or default by the Majority
Shareholders or the Company of or under any of the representations, covenants,
agreements or other provisions of this Agreement or any agreement or document
executed in connection herewith; (B) any downward Net Working Capital Adjustment
not paid to the Buyer pursuant to a reduction of the Escrow Sum; (C) cost of any
brokerage or other transaction fees liability, if any, owed to the Updata
Capital, Inc.; (D) any customer claims involving pre-Closing services or
products of the Company for breach of warranty, product liability or customer
service remediation, including claims for consequential damages, to the extent
not reserved for in the Company's Financial Statements; (E) any Excluded
Liabilities (including, without limitation, any liability arising out of any
matter disclosed in Schedule 3.16 hereto); and (F) any failure of the Company to
-------------
obtain any landlord or customer or supplier consents to the Acquisition
contemplated hereby required under the terms of any leases of the Company's real
property or any Contracts.
8.2. Defense of Claims. If any legal proceeding shall be instituted, or any
-----------------
claim or demand made by a third Person, against any Indemnified Party in respect
of which the Majority Shareholders or the Company may be liable hereunder, such
Indemnified Party shall give prompt written notice thereof to the Company and
the Majority Shareholders and, except as otherwise provided in Section 8.4
-----------
below, the Majority Shareholders shall have the right to defend at their expense
any litigation, action, suit, demand, or claim for which an Indemnified Party
may seek indemnifications, and such Indemnified Party shall extend reasonable
cooperation in connection with such defense, and the Majority Shareholders shall
incur any actual out-of-pocket expenses of the Indemnified Party reasonably
incurred in connection with such cooperation. In the event the Majority
Shareholders fail or refuse to defend the same within a reasonable length of
time, the Indemnified Parties shall be entitled to assume the defense thereof,
and the Majority Shareholders shall be jointly and severally liable to repay the
Indemnified Parties for all reasonably incurred Indemnifiable Costs. If the
Majority Shareholders shall not have the right to assume the defense of any
litigation, action, suit, demand, or claim in accordance with the preceding
sentence, the Indemnified Parties shall, at the Majority Shareholders' expense,
have the absolute right to control the defense of such litigation,
action, suit, demand, or claim, but the Majority Shareholders shall be entitled,
at their own expense, to participate in such litigation,
-38-
action, suit, demand, or claim. The party controlling any defense pursuant to
this Section 8.2 shall deliver, or cause to be delivered to the other party,
-----------
copies of all correspondence, pleadings, motions, briefs, appeals or other
written statements relating to or submitted in connection with the defense of
any such litigation, action, suit, demand or claim, and timely notice of any
hearing or other court proceeding relating to such litigation, action, suit,
demand or claim. Notwithstanding the forgoing, in no event will the party
controlling any defense pursuant to this Section 8.2 settle any litigation,
-----------
action, suit, demand or claim without the prior written consent of the non-
controlling party, such consent not to be unreasonably withheld, conditioned, or
delayed unless such settlement provides for the unqualified, absolute and
complete release of all claims against the non-controlling party and results in
no monetary or equitable liability to the non-controlling party.
8.3. Escrow Claim. If any claim for indemnification is made by an
------------
Indemnified Party pursuant to this Article VIII prior to the expiration of the
------------
Escrow Period, such Indemnified Party shall first apply to the Escrow Agent
provided in Section 2.7 of this Agreement for reimbursement of such claim in
-----------
accordance with the provisions of the Escrow Agreement provided, however, the
Escrow Sum is not intended to be an exclusive remedy in the event Iconixx or the
Buyer has indemnification claims hereunder which exceed such amount. In the
event that the Iconixx claims against the Escrow Sum exceed the amount of any
Indemnifiable Costs (as finally determined), Iconixx shall be responsible to the
Majority Shareholders for such sums which should not have been subject to such
claim, together with interest earned on the Escrow Sum, if any.
8.4. Tax Audits, Etc. In the event of an audit of a Tax Return of the
---------------
Company with respect to which an Indemnified Party might be entitled to
indemnification pursuant to this Article VIII, the Majority Shareholders and the
------------
Company shall jointly control any and all such audits which may result in the
assessment of additional Taxes against the Company or Buyer and any and all
subsequent proceedings in connection therewith, including appeals. The Majority
Shareholders and Iconixx shall cooperate fully in all matters relating to any
such audit or other Tax proceeding (including according access to all records
pertaining thereto), and will execute and file any and all consents, powers of
attorney, and other documents as shall be reasonably necessary in connection
therewith. If additional Taxes are payable by Buyer for which it is entitled to
indemnification hereunder, as a result of any such audit or other proceeding,
the Majority Shareholders shall be severally responsible for and shall promptly
pay all Taxes, interest, and penalties for which any of the Indemnified Parties
shall be entitled to indemnification.
8.5. Indemnification of Majority Shareholders. Iconixx and Buyer agree to
----------------------------------------
jointly and severally indemnify and hold harmless the Majority Shareholders and
the Company and each officer, director, shareholder or Affiliate of the Company,
from and against any Indemnifiable Costs arising out of any misrepresentation,
breach or default by Iconixx or Buyer of or under any of the representations,
covenants, agreements or other provisions of this Agreement or any agreement or
document executed in connection herewith.
-39-
8.6. Limits on Indemnification. All Indemnifiable Costs sought by any party
-------------------------
hereunder shall be net of any insurance proceeds received by such Person with
respect to such claim (less the present value of any premium increases occurring
as a result of such claim). Except for any claims for breach of the
representations, warranties and covenants of the Company and the Majority
Shareholders under Sections 3.1, 3.2, 3.3, 3.4, 3.6, 3.14, 3.17 or Article VI
-------- --- --- --- --- --- ---- ---- ----------
hereof (the indemnification for which shall expire on the expiration of the
applicable statute of limitations or, in the case of covenants in Article VI
----------
which have a specific expiration date, as of such date, and if so made, such
claims, and all Indemnifiable Costs incurred thereafter, shall continue after
such date until finally resolved), the right to make claims for indemnification
provided under this Article VIII (other than claims for Excluded Liabilities or
------------
for claims for breaches of covenants) shall expire on the second anniversary of
the Closing Date (except for any claims for Indemnifiable Costs made prior to
such date which claims shall continue after such date until finally resolved).
The Majority Shareholders shall not be obligated to pay any amounts for
indemnification under this Article VIII until the aggregate indemnification
------------
obligation sought by Iconixx or Buyer hereunder exceeds $60,000, whereupon the
Majority Shareholders shall be liable for all amounts for which indemnification
may be sought. The Company and the Majority Shareholders shall be jointly and
severally liable for all indemnification claims of Iconixx or Buyer, provided,
however, that in the absence of fraud by a Majority Shareholder, such Majority
Shareholder's aggregate indemnification of Iconixx or Buyer shall be limited to
his, her or its proportionate share of the Purchase Price. Neither Iconixx nor
the Buyer shall be obligated to pay any amounts for indemnification under this
Article VIII until the aggregate indemnification obligation sought by the
------------
Majority Shareholders and the Company hereunder exceeds $60,000, whereupon
Iconixx and the Buyer shall be liable for all amounts for which indemnification
may be sought. Notwithstanding the foregoing, in no event shall the aggregate
liability of (A) Iconixx or Buyer to the Majority Shareholders and the Company
for breach of representations and warranties under Article IV exceed $3,000,000;
----------
and (B) the Majority Shareholders and the Company to Iconixx or Buyer for breach
of representations and warranties exceed $13,000,000; provided, however, that
such amount under this clause (B) shall be reduced to $6,500,000 for all claims
made on or after 60 days after the final completion of the audit of the Buyer's
financial statements for the fiscal year ending December 31, 2000.
Notwithstanding the foregoing, the indemnity limitations contained in the
preceding sentence shall not include and shall not limit any claims for the
breaching of the representations and warranties of the Company and Majority
Shareholders under Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.12 (to the extent
------------ --- --- --- --- --- ----
such claims relate to OSHA violations), 3.14 and 3.17 or any breach of Sections
---- ---- --------
8.1(B) or (E), all of which claims together shall not exceed the Purchase Price.
------ ---
However nothing in this Article VIII shall limit Iconixx, Buyer, the Company or
------------
the Majority Shareholders in exercising or securing any remedies provided by
applicable statutory or common law with respect to the fraudulent conduct of the
Company, Majority Shareholders, Buyer or Iconixx in connection with this
Agreement or in the amount of damages that it can recover from the other in the
event that Iconixx or the Majority Shareholders successfully prove intentional
fraud or intentional fraudulent conduct in connection with this Agreement. Other
than as set forth in the preceding sentence, the indemnification provided for in
this Section VIII is intended to be the exclusive monetary remedy of Iconixx,
------------
Buyer, the Company or the Majority Shareholders with regard to the Acquisition
contemplated by this Agreement.
-40-
ARTICLE IX
TERMINATION
9.1. Termination. This Agreement may be terminated at any time prior to the
-----------
Closing:
(a) by the mutual written consent of all parties hereto;
(b) in writing by Iconixx and the Buyer, if the Company or any of the
Majority Shareholders has breached in any material respect any representation,
warranty or covenant contained in this Agreement, and in each case such breach
has not been remedied within fifteen (15) business days after receipt of written
notice specifying such breach and demanding such breach to be remedied; or
(c) in writing by the Majority Shareholders and the Company, if
Iconixx or the buyer has breached in any material respect any representation,
warranty or covenant contained in this Agreement, and in each case such breach
has not been remedied within fifteen (15) business days after receipt of written
notice specifying such breach and demanding such breach to be remedied; or
(d) in writing by the Majority Shareholders and the Company, on the
one hand, or Iconixx and the Buyer, on the other hand, in the event the Closing
has not occurred on or before March 31, 2000, unless the failure of such
consummation or the failure to satisfy such condition, as applicable, shall be
due to a breach of any representation or warranty made by the party or parties
seeking to terminate this Agreement or the failure of such party or parties to
comply in all material respects with the agreements and covenants contained
herein to be performed by such party or parties.
9.2. Effect of Termination. If the Acquisition is terminated pursuant to
---------------------
Section 9.1 by notice in writing to the non-terminating party or parties, this
-----------
Agreement shall become void and of no further force and effect, except that (a)
such termination shall not relieve (i) any party from its covenants in respect
of confidentiality contained in Section 6.3 and (ii) any party then in breach of
-----------
any representation, warranty, covenant or agreement contained in this Agreement
from liability in respect of such breach and (b) Sections 10.4 and 10.7 shall
------------- ----
survive termination of this Agreement.
ARTICLE X
MISCELLANEOUS
10.1. Modifications. Any amendment, change or modification of this
-------------
Agreement shall be void unless in writing and signed by all parties hereto. No
failure or delay by any party hereto in exercising any right, power or privilege
hereunder (and no course of dealing between or among any of the parties) shall
operate as a waiver of any such right, power or privilege. No waiver of any
default on any one occasion shall constitute a waiver of any
-41-
subsequent or other default. No single or partial exercise of any such right,
power or privilege shall preclude the further or full exercise thereof.
10.2. Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed to have been duly given when personally delivered,
or 48 hours after deposited in the United States mail, first-class, postage
prepaid, or by facsimile addressed to the respective parties hereto as follows:
Iconixx or Buyer:
----------------
Iconixx Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Tel No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
--------------
▇▇▇▇▇▇ Equity Investors IV, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Tel No.: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
------
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
Columbia Square
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Tel No.: (▇▇▇) ▇▇▇-▇▇▇▇
-42-
The Company or the Majority Shareholders:
----------------------------------------
c/o Internet Information Services, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Tel No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
--------------
Simon, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Tel No.: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
------
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇
Suite 1100 East Tower
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Tel No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as to any party hereto as such party shall designate by
like notice to the other parties hereto.
10.3. Counterparts; Facsimile Transmission. This Agreement may be executed
------------------------------------
in several counterparts, each of which shall be deemed an original but all of
which counterparts collectively shall constitute one instrument, and in making
proof of this Agreement, it shall never be necessary to produce or account for
more than one such counterpart. Signatures of a party to this Agreement or other
documents executed in connection herewith which are sent to the other parties by
facsimile transmission shall be binding as evidence of acceptance of the terms
hereof or thereof by such signatory party, with originals to be circulated to
the other parties in due course.
10.4. Expenses. Each of the parties hereto will bear all costs, charges and
--------
expenses incurred by such party in connection with this Agreement and the
consummation of the
-43-
Acquisition, provided, however, that the Majority Shareholders shall bear
all costs and expenses of (i) any broker involved in this transaction on behalf
of the Majority Shareholders or the Company and (ii) all legal and other
expenses of the Majority Shareholders or the Company with respect to this
Agreement and the Acquisition; provided, however, that the Company may bear such
costs so long as no Net Working Capital Adjustment or Minimum Cash deficit would
occur.
10.5. Binding Effect; Assignment. This Agreement shall be binding upon and
--------------------------
inure to the benefit of the Company, Iconixx, Buyer and the Majority
Shareholders, their heirs, representatives, successors, and permitted assigns,
in accordance with the terms hereof. This Agreement shall not be assignable by
the Company or the Majority Shareholders without the prior written consent of
Iconixx. This Agreement shall be assignable by Iconixx and/or the Buyer to
either (a) any lender providing financing to Iconixx or the Buyer (but only with
respect to Iconixx's or Buyer's rights under Article II and Article VIII hereof)
---------- ------------
or (b) any Affiliate of Iconixx, provided Iconixx remains liable, in each case
without the prior written consent of the Majority Shareholders. In addition,
following the Closing, Iconixx or the Buyer may assign any or all of its rights
hereunder, without the consent of the Majority Shareholders, in connection with
any sale of all or substantially all of the assets, capital stock, partnership
interests or business of the Buyer or Iconixx (whether effected by sale,
exchange, merger, consolidation or other transaction) and provided the acquiring
party shall assume all of Iconixx's or the Buyer's obligations hereunder.
10.6. Entire and Sole Agreement. This Agreement and the other schedules and
-------------------------
agreements referred to herein, constitute the entire agreement between the
parties hereto and supersede all prior agreements, representations, warranties,
statements, promises, information, arrangements and understandings, whether oral
or written, express or implied, with respect to the subject matter hereof.
10.7. Governing Law. This Agreement and its validity, construction,
-------------
enforcement, and interpretation shall be governed by the substantive laws of the
State of Maryland, without giving effect to the principles of conflicts of laws
thereof.
10.8. Survival of Representations, Warranties and Covenants. Regardless of
-----------------------------------------------------
any investigation at any time made by or on behalf of any party hereto or of any
information any party may have in respect thereof, all covenants, agreements,
representations, and warranties and the related indemnities made hereunder or
pursuant hereto or in connection with the Acquisition shall survive the Closing
for a period ending on the second anniversary of the Closing Date, provided that
(a) the representations and warranties contained in Section 3.14 and Section
------------ -------
3.17 of this Agreement, and the related indemnities, shall survive the Closing
----
until the expiration of the applicable statutes of limitations for determining
or contesting Tax liabilities including any extension of such periods plus sixty
(60) days, (b) the representations, warranties and covenants contained in
Sections 3.1, 3.2, 3.3, 3.4, 3.5, and 3.6 and Sections 4.1, 4.2, 4.5 and 4.6 and
------------ --- --- --- --- --- -------- --- --- --- ---
the indemnities contained in Sections 8.1(C) and 8.1(E), and 8.5 of this
--------------- ------ ---
Agreement, and the related indemnities, shall survive the Closing indefinitely
and not expire, (c) all covenants in this Agreement which have an expiration
date contained therein shall expire as of such date and
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(d) all other covenants in this Agreement which do not have an expiration date
shall expire upon the expiration of the applicable statutes of limitation.
10.9. Invalid Provisions. If any provision of this Agreement is deemed or
------------------
held to be illegal, invalid or unenforceable, this Agreement shall be considered
divisible and inoperative as to such provision to the extent it is deemed to be
illegal, invalid or unenforceable, and in all other respects this Agreement
shall remain in full force and effect; provided, however, that if any provision
of this Agreement is deemed or held to be illegal, invalid or unenforceable
there shall be added hereto automatically a provision as similar as possible to
such illegal, invalid or unenforceable provision and be legal, valid and
enforceable. Further, should any provision contained in this Agreement ever be
reformed or rewritten by any judicial body of competent jurisdiction, such
provision as so reformed or rewritten shall be binding upon all parties hereto.
10.10. Public Announcements. Neither the Majority Shareholders nor the
--------------------
Company (pre-Closing) shall make any public announcement of the Acquisition
without the prior written consent of Iconixx, which consent shall not be
unreasonably withheld.
10.11. Remedies Cumulative. The remedies of the parties under this
-------------------
Agreement are cumulative and shall not exclude any other remedies to which any
party may be lawfully entitled.
10.12. Third Parties. Except as specifically set forth or referred to
-------------
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or give to any Person, other than the parties hereto and their
permitted successors or assigns, any rights or remedies under or by reason of
this Agreement.
10.13. No Strict Construction. The parties hereto have participated jointly
----------------------
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement.
10.14. Disclosure Schedules. An item disclosed in any part of the
--------------------
Disclosure Schedules attached hereto shall be deemed disclosed in response to
other applicable Disclosure Schedules sections to the extent such disclosure is
either expressly cross-referenced therein or such disclosure is clearly evident
and, in the mind of a reasonable buyer, such disclosure would, based on the
description of such disclosure, clearly relate to such other section of the
Disclosure Schedule.
-45-
[THIS SPACE INTENTIONALLY LEFT BLANK]
-46-
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be duly executed as of the date and year first above written.
THE COMPANY:
-----------
INTERNET INFORMATION SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
President and Chief Executive Officer
MAJORITY SHAREHOLDERS:
---------------------
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
BUYER:
-----
ICONIXX WEB DEVELOPMENT, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Assistant Secretary
ICONIXX:
-------
ICONIXX CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Secretary
-47-