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EXHIBIT 10.24
ASSET PURCHASE AGREEMENT
▇▇▇▇▇.▇▇▇ NETWORKS,
WILD WILD WEB, INCORPORATED
AND
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D. AND ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
APRIL 2, 1998
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into as of April 2, 1998, by
and among: WILD WILD WEB, INCORPORATED, a California corporation ("SELLER");
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D., and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (each a "SHAREHOLDER" and
collectively, the "SHAREHOLDERS"); and ▇▇▇▇▇.▇▇▇ NETWORKS, a California
corporation ("PURCHASER"). Certain capitalized terms used in this Agreement are
defined on Exhibit A.
RECITALS
A. Shareholders own shares of capital stock of Seller and are members of
the Board of Directors of the Seller.
B. Shareholders and Seller wish to provide for the sale of substantially
all of the assets of Seller to Purchaser on the terms set forth in this
Agreement (the "Acquisition"), with the expectation that Purchaser will use such
assets to carry on a business substantially similar to the business currently
being conducted by Seller.
C. The Acquisition is intended to qualify as a tax-free reorganization
within the provisions of Section 368 of the Internal Revenue Code of 1986, as it
may be amended from time to time.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
SECTION 1. SALE OF ASSETS; RELATED TRANSACTIONS.
1.1 SALE OF ASSETS.
(a) Contemporaneously with the execution and delivery of this
Agreement, Shareholders and Seller shall cause to be sold, assigned,
transferred, conveyed and delivered to Purchaser, and Seller hereby sells,
assigns, transfers, conveys and delivers to Purchaser, good, valid and
marketable title to the Purchased Assets (as defined below), free and clear of
all Encumbrances, on the terms set forth in this Agreement.
(b) As used in this Agreement, "PURCHASED ASSETS" shall mean and
include: (a) all of the properties, rights, interests and other tangible and
intangible assets of Seller; and (b) any other assets that are owned by
Shareholders that are needed for the conduct of, or have been used in connection
with, the business of Seller, excluding the trademark "ask Tori, RN".
1.2 PURCHASE PRICE. As consideration for the sale of the Purchased
Assets to Purchaser, contemporaneously with the execution and delivery of this
Agreement, Purchaser shall: (a) issue to Seller an aggregate of five hundred
seventy-three thousand seven hundred fifty (573,750) shares of the Purchaser's
Common Stock (the "COMMON SHARES"); (b) retain one
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hundred one thousand two hundred fifty (101,250) Common Shares in escrow; and
(c) assume the assumed liabilities set forth on Exhibit B (the "ASSUMED
LIABILITIES").
1.3 ESCROW. Contemporaneously with the execution and delivery of this
Agreement, Purchaser will maintain one hundred one thousand two hundred fifty
(101,250) Common Shares (the "ESCROW ACCOUNT") pursuant to the terms of the
Escrow Agreement of even date herewith. The Escrow Account will be released on
the terms and conditions as more fully described in the Escrow Agreement.
1.4 INSTRUMENTS OF ASSIGNMENT. The sale, assignment, conveyance and
transfer of the Purchased Assets to Purchaser shall be effected by Seller's
execution and delivery of all such bills of sale, deeds, endorsements,
assignments and other good and sufficient instruments of transfer and conveyance
as shall be necessary to vest in Purchaser all right, title and interest of
Seller in and to the Purchased Assets, free and clear of all Encumbrances.
1.5 ASSUMPTION OF LIABILITIES. The parties agree that Purchaser shall be
obligated to assume and to pay, perform and otherwise discharge only the Assumed
Liabilities set forth on Exhibit B and that no other liabilities of Seller are
assumed by Purchaser hereunder. Purchaser is not assuming and shall not take any
Purchased Assets subject to, and Seller shall retain and be solely responsible
and liable for, any and all Encumbrances, claims, damages, demands, obligations,
debts and liabilities of Seller or any other person of any nature whatsoever,
whenever arising, whether absolute, accrued or contingent, and whether known or
unknown, except that Purchaser shall assume and agree to perform and discharge
only those liabilities and obligations of Seller set forth on Exhibit B.
1.6 EXECUTORY CONTRACTS. Seller shall assign the Seller Contracts
identified on Exhibit C to Purchaser. Purchaser shall assume no liability under
any Seller Contract not identified on Exhibit C. Seller shall deliver all
necessary consents to permit the assumption and assignment by Seller to
Purchaser of each Seller Contract identified on Exhibit C.
1.7 SALES TAXES. Seller shall bear and pay all sales taxes, use taxes,
transfer taxes, documentary charges, recording fees or similar taxes, charges,
fees or expenses that may become payable in connection with the purchase of the
Purchased Assets from Seller or in connection with any of the Transactions.
1.8 CLOSING.
(a) The closing of the Acquisition (the "CLOSING") is taking
place contemporaneously with the execution and delivery of this Agreement at the
offices of ▇▇▇▇▇▇ Godward LLP at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ on April 2, 1998 (the "CLOSING DATE").
(b) At the Closing, Purchaser shall deliver to Seller a stock
certificate representing five hundred seventy-three thousand seven hundred fifty
(573,750) Common Shares.
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1.9 OTHER AGREEMENTS AND TRANSACTIONS. Contemporaneously with the
execution and delivery of this Agreement:
(a) ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and Purchaser are entering into an
Employment Agreement of even date herewith;
(b) ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D. are each
executing and delivering to Purchaser a Noncompetition Agreement of even date
herewith;
(c) ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and Purchaser are entering into a Trademark
License Agreement of even date herewith;
(d) Seller and Purchaser are entering into an Escrow Agreement of
even date herewith;
(e) Each holder of capital stock of the Seller is executing and
delivering to Purchaser an Investment Representation Certificate; and
(f) Shareholders and Seller are causing to be executed and
delivered to Purchaser estoppel certificates with respect to various contractual
obligations of Seller and evidence that any notices or filings required to have
been given to or made with Governmental Bodies in connection with the
Transactions have been given and made and that all Consents required to have
been obtained in connection with the Transactions have been obtained.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS AND SELLER.
Seller and the Shareholders jointly and severally represent and warrant,
to and for the benefit of the Indemnitees, except as set forth in the Seller
Disclosure Schedule, as follows:
2.1 DUE ORGANIZATION. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of California. Seller
is not required to be qualified, authorized, registered or licensed to do
business as a foreign corporation in any jurisdiction.
2.2 CAPITALIZATION. The authorized capital stock of the Company
immediately prior to the Closing will consist of ten million (10,000,000) shares
of Common Stock, no par value per share, eight hundred seventy six thousand
forty one (876,041) shares of which are issued and outstanding. Except as set
forth in Part 2.2 of the Seller Disclosure Schedule, there is no: (a)
outstanding option, warrant or other right to acquire any shares of the capital
stock or other securities of Seller; (b) outstanding security, instrument or
obligation that is or may become convertible into or exchangeable for any shares
of the capital stock or other securities of Seller; or (c) contract under which
Seller is or may become obligated to sell or otherwise issue any shares of its
capital stock or any other securities.
2.3 FINANCIAL STATEMENTS. The Shareholders and Seller have delivered to
Purchaser the following financial statements and notes (collectively, the
"SELLER FINANCIAL STATEMENTS"): the balance sheets of Seller as of December 31,
1997, January 31, 1998 and February 28, 1998, and the related statements of
income and retained earnings and cash flows for the year, one (1)
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month and two (2) months then ended, together with the notes thereto. The Seller
Financial Statements are accurate and complete in all material respects and
present fairly the financial position of Seller as of the dates thereof and the
results of operations and cash flows of Seller for the periods covered thereby.
The Seller Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods covered.
2.4 ABSENCE OF CHANGES. Except as set forth in Part 2.4 of the Seller
Disclosure Schedule, since February 28, 1998: (a) there has not been any
material adverse change in, and no event has occurred that might have a material
adverse effect on, the business, condition, assets, liabilities, operations,
financial performance, net income or prospects of Seller; (b) there has not been
any loss, damage or destruction to, or any interruption in the use of, any of
the assets of Seller; (c) Seller has not made any capital expenditure, purchased
or otherwise acquired, sold or otherwise transferred, or leased or licensed, any
asset to any other Person; (d) Seller has not entered into any transaction or
taken any other action outside the Ordinary Course of Business; and (e) Seller
has not agreed, committed or offered (in writing or otherwise) to take any of
the actions referred to in clauses "(c)" and "(d)" above.
2.5 TITLE TO ASSETS. Seller owns, and has good, valid and marketable
title to, all assets purported to be owned by it, including: (a) all assets
reflected on the balance sheet dated February 28, 1998; (b) all assets acquired
by Seller since February 28, 1998; (c) all rights of Seller under Seller
Contracts; and (d) all other assets reflected in the books and records of Seller
as being owned by Seller. Except as set forth in Part 2.5 of the Seller
Disclosure Schedule, all of said assets are owned by Seller free and clear of
any Encumbrances. The Purchased Assets collectively constitute all of the
properties, rights, interests and other tangible and intangible assets necessary
to enable Seller to conduct its business in the manner in which such business is
currently being conducted.
2.6 PROPRIETARY ASSETS. Except as set forth in Part 2.6 of the Seller
Disclosure Schedule, there is no Proprietary Asset that is owned by or licensed
to Seller or that is otherwise used or useful in connection with the business of
Seller. The Proprietary Assets identified in Part 2.6 of the Seller Disclosure
Schedule constitute all of the Proprietary Assets necessary to enable Seller to
conduct its business in the manner in which such business is currently being
conducted and in the manner in which such business is proposed to be conducted.
Seller is not infringing or making any unlawful use of, and Seller has not at
any time infringed or made any unlawful use of, or received any notice or other
communication (in writing or otherwise) of any actual, alleged, possible or
potential infringement or unlawful use of, any Proprietary Asset owned or used
by any other Person.
2.7 CONTRACTS. Exhibit C identifies each Seller Contract, each of which
is valid and in full force and effect. To Seller's knowledge, no Person has
violated or breached, or declared or committed any default under, any Seller
Contract, and Seller has not received any notice or other communication
regarding any actual, alleged, possible or potential violation or breach of,
default under, or proposed termination of, any Seller Contract. The Seller
Contracts identified in Exhibit C collectively constitute all of the Seller
Contracts necessary to enable Seller to conduct its business in the manner in
which such business is currently being conducted.
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2.8 LIABILITIES. Except as set forth in Part 2.8 of the Seller
Disclosure Schedule, Seller has no Liabilities, except for: (a) liabilities
identified as such in the "liabilities" columns of the February 28, 1998 balance
sheet; (b) accounts payable (of the type required to be reflected as current
liabilities in the "liabilities" column of a balance sheet prepared in
accordance with GAAP) incurred by Seller in bona fide transactions entered into
in the Ordinary Course of Business since February 28, 1998; and (c) obligations
under the Seller Contracts listed in Exhibit C.
2.9 COMPLIANCE WITH LEGAL REQUIREMENTS. Seller is, and has at all times
been, in full compliance with each Legal Requirement that is applicable to it or
to the conduct of its business or the ownership or use of any of its assets. No
event has occurred, and no condition or circumstance exists, that might (with or
without notice or lapse of time) constitute or result directly or indirectly in
a violation by Seller of, or a failure on the part of Seller to comply with, any
Legal Requirement, and Seller has not received, at any time, any notice or other
communication (in writing or otherwise) from any Governmental Body or any other
Person regarding any actual, alleged, possible or potential violation of, or
failure to comply with, any Legal Requirement.
2.10 GOVERNMENTAL AUTHORIZATIONS. The Governmental Authorizations held
by Seller, if any, are identified in Part 2.10 of the Seller Disclosure Schedule
are valid, in full force and effect and constitute all of the Governmental
Authorizations necessary to enable Seller to conduct its business in the manner
in which such business is currently being conducted and in the manner in which
such business is proposed to be conducted by Purchaser. Seller is and has at all
times been in full compliance with all of the terms and requirements of each
such Governmental Authorization, and no event has occurred that might (with or
without notice or lapse of time) result in a violation of any requirement of any
such Governmental Authorization, or result in the termination or modification of
any such Governmental Authorization.
2.11 TAX MATTERS. Each Tax required to have been paid, or claimed by any
Governmental Body to be payable, by Seller has been duly paid in full on a
timely basis. Any Tax required to have been withheld or collected by Seller has
been duly withheld and collected; and (to the extent required) each such Tax has
been paid to the appropriate Governmental Body. Except as set forth in Part 2.11
of the Seller Disclosure Schedule, no claim or other Proceeding is pending or
has been threatened against or with respect to Seller in respect of any Tax.
2.12 EMPLOYEE MATTERS. Part 2.12 of the Seller Disclosure Schedule lists
the name, title and annual compensation of each current employee of Seller. Part
2.12 of the Seller Disclosure Schedule accurately identifies each former
employee of Seller receiving or scheduled to receive (or whose dependent is
receiving or is scheduled to receive) any benefits from Seller, and accurately
describes such benefits. Seller is not a party to or bound by any employment
agreement, union contract, collective bargaining agreement or similar Contract,
and the employment of each employee of Seller is terminable by Seller at will.
2.13 BENEFIT PLANS. Part 2.13 of the Seller Disclosure Schedule
identifies and provides an accurate and complete description of each Seller
Plan. Seller has caused to be delivered to Purchaser accurate and complete
copies of all documents relating to each Seller Plan. Each Seller Plan is being
and has at all times been operated and administered in full compliance with
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the provisions thereof. Each contribution or other payment that is required to
have been accrued or made under or with respect to any Seller Plan has been duly
accrued and made on a timely basis. Each Seller Plan has at all times complied
and been operated and administered in full compliance with all applicable Legal
Requirements.
2.14 INSURANCE. Seller has delivered to Purchaser accurate and complete
copies of all of the insurance policies maintained by or at the expense of, or
for the direct or indirect benefit of, (including all renewals thereof and
endorsements thereto) of Seller. Each of such policies is valid, enforceable and
in full force and effect. All of the information contained in the applications
submitted in connection with said policies was (at the times said applications
were submitted) accurate and complete, and all premiums and other amounts owing
with respect to said policies have been paid in full on a timely basis.
2.15 RELATED PARTY TRANSACTIONS. Except as set forth in Part 2.15 of the
Seller Disclosure Schedule: (a) no Related Party has any direct or indirect
interest of any nature in any of the assets of Seller; (b) no Related Party is
indebted to Seller; (c) no Related Party has entered into, or has had any
financial interest in, any Contract, transaction or business dealing involving
Seller; (d) no Related Party has any claim or right against Seller; and (e) no
event has occurred that might (with or without notice or lapse of time) give
rise to or serve as a basis for any claim or right in favor of any Related Party
against Seller.
2.16 PROCEEDINGS; ORDERS. There is no pending Proceeding and no Person
has threatened to commence any Proceeding that involves Seller or that otherwise
relates to or might affect the business of Seller or any of the Purchased Assets
(whether or not Seller is named as a party thereto), and no event has occurred
that could reasonably be expected to give rise to or serve as a basis for the
commencement of any such Proceeding. There is no Order to which Seller, or any
of the assets owned or used by Seller, is subject; and no Shareholder nor any
other Related Party is subject to any Order that relates to Seller's business or
to any of the assets of Seller. There is no proposed Order that, if issued or
otherwise put into effect, may have an adverse effect on the business,
condition, assets, liabilities, operations, financial performance, net income or
prospects of Seller or on the ability of the Shareholders or Seller to effect
the Transactions.
2.17 AUTHORITY; BINDING NATURE OF AGREEMENTS. Seller has the absolute
and unrestricted right, power and authority to enter into and to perform its
obligations under the Transactional Agreements it is a party thereto; and the
execution, delivery and performance by Seller of the Transactional Agreements it
is a party thereto has been duly authorized by all necessary action on the part
of Seller and its shareholders, board of directors and officers. The
Transactional Agreements that the Seller is a party thereto constitute the
legal, valid and binding obligations of Seller, enforceable against Seller in
accordance with their terms. Each Shareholder has the absolute and unrestricted
right, power and capacity to enter into and to perform his or her obligations
under the Transactional Agreements he or she is a party thereto. The
Transactional Agreements that each Shareholder is a party thereto constitute the
legal, valid and binding obligations of each such Shareholder, enforceable
against him or her in accordance with their terms.
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2.18 NON-CONTRAVENTION; CONSENTS. Neither the execution and delivery of
any of the Transactional Agreements, nor the consummation or performance of any
of the Transactions, will directly or indirectly (with or without notice or
lapse of time): (a) give any Governmental Body the right to revoke, withdraw,
suspend, cancel, terminate or modify, any Governmental Authorization that is to
be included in the Purchased Assets; (b) give any Person the right to (i)
declare a default or exercise any remedy under any Seller Contract, (ii)
accelerate the maturity or performance of any Seller Contract, or (iii) cancel,
terminate or modify any Seller Contract; (c) give any Person the right to
declare a default under any Contract to which any Shareholder is a party or by
which any Shareholder is bound; or (d) result in the imposition or creation of
any Encumbrance upon any of the Purchased Assets. Except as set forth in Part
2.18 of the Disclosure Schedule, neither the Seller nor any Shareholder was, is
or will be required to make any filing with or give any notice to, or to obtain
any Consent from, any Person in connection with the execution and delivery of
any of the Transactional Agreements or the consummation or performance of any of
the Transactions.
2.19 BROKERS. Neither Seller nor either Shareholder has agreed or become
obligated to pay, or has taken any action that might result in any Person
claiming to be entitled to receive, any brokerage commission, finder's fee or
similar commission or fee in connection with any of the Transactions. Seller has
retained the consulting services of ▇▇▇▇▇ ▇▇▇▇▇▇▇ in connection with the
Transactions and has agreed to pay a fee for such services.
2.20 SHAREHOLDERS. Neither Shareholder has ever (i) made a general
assignment for the benefit of creditors, (ii) filed, or had filed against such
Shareholder, any bankruptcy petition or similar filing or (iii) suffered the
attachment or other judicial seizure of such Shareholder's assets. Neither
Shareholder is subject to any Order nor bound by any Contract that may have an
adverse effect on such Shareholder's ability to comply with any of the
Transactional Agreements, and there is no Proceeding pending, and no Person has
threatened to commence any Proceeding, that may have such effect. To the best of
such Shareholder's knowledge, no event has occurred, and no claim, dispute or
other condition or circumstance exists, that might directly or indirectly give
rise to or serve as a basis for the commencement of any such Proceeding against
such Shareholder.
2.21 FULL DISCLOSURE. None of the Transactional Agreements contains or
will contain any untrue statement of fact; and none of the Transactional
Agreements omits to state any fact necessary to make any of the representations,
warranties or other statements or information contained therein not misleading.
There is no fact within the knowledge of the Seller or any Shareholder (other
than publicly known facts relating exclusively to political or economic matters
of general applicability) that may have an adverse effect on Seller or may have
the effect of interfering with any of the Transactions. All of the information
regarding Seller and its business, condition, assets, liabilities, operations
(including the number of page views and visitors), financial performance, net
income and prospects that has been furnished to Purchaser by or on behalf of the
Seller or each Shareholder, is accurate and complete in all material respects.
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants, to and for the benefit of Seller and
the Shareholders, except as set forth in the Purchaser Disclosure Schedule, as
follows:
3.1 AUTHORITY; BINDING NATURE OF AGREEMENTS. Purchaser has the absolute
and unrestricted right, power and authority to enter into and perform its
obligations under the Transactional Agreements, and the execution and delivery
of the Transactional Agreements by Purchaser has been duly authorized by all
necessary action on the part of Purchaser and its boards of directors. The
Transactional Agreements constitute the legal, valid and binding obligations of
Purchaser, enforceable against it in accordance with their terms.
3.2 BROKERS. Purchaser has not become obligated to pay, and has not
taken any action that might result in any Person claiming to be entitled to
receive, any brokerage commission, finder's fee or similar commission or fee in
connection with any of the Transactions.
3.3 DUE ORGANIZATION. Purchaser is a corporation duly organized,
existing and in good standing under the laws of the State of California and has
all necessary power and authority under applicable corporate law and its
organizational documents to own or lease its properties, to perform the
obligations set forth in the Transaction Agreements to which it is a party, and
to carry on its business as presently conducted.
3.4 CAPITALIZATION. The authorized capital stock of the Company,
immediately prior to Closing, will consist of fifteen million (15,000,000)
shares of Common Stock, seven hundred seventy eight thousand one hundred
thirty-three (778,133) shares of which are issued and outstanding and eleven
million (11,000,000) shares of Preferred Stock, of which two million seven
hundred seven thousand four hundred three (2,707,403) shares are designated
Series A Preferred Stock, of which two million six hundred eighty-five thousand
one hundred eighty-one (2,685,181) shares are issued and outstanding, of which
five hundred seventy-nine thousand four hundred seven (579,407) shares are
designated Series B Preferred Stock, all of which are issued and outstanding, of
which five million (5,000,000) shares are designated Series C Preferred Stock,
three million six hundred twenty-six thousand nine hundred twenty-two
(3,626,922) shares of which are issued and outstanding. Except as set forth in
Part 3.4 of the Purchaser Disclosure Schedule, there is no: (a) outstanding
option, warrant or other right to acquire any shares of the capital stock or
other securities of Purchaser; (b) outstanding security, instrument or
obligation that is or may become convertible into or exchangeable for any shares
of the capital stock or other securities of Purchaser; or (c) contract under
which Purchaser is or may become obligated to sell or otherwise issue any shares
of its capital stock or any other securities.
3.5 FINANCIAL STATEMENTS. The Purchaser has delivered to Seller and
Shareholders the balance sheet of Purchaser as of December 31, 1997 and the
related statement of income for the year then ended (the "PURCHASER FINANCIAL
STATEMENTS"). The Purchaser Financial Statements are accurate and complete in
all material respects and present fairly the financial position of Purchaser as
of the date thereof and the results of operations and cash flows of Purchaser
for the period covered thereby. The Purchaser Financial Statements have been
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prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods covered.
3.6 ABSENCE OF CHANGES. Except as set forth in Part 3.6 of the Purchaser
Disclosure Schedule, since December 31, 1997: (a) there has not been any
material adverse change in, and no event has occurred that might have a material
adverse effect on, the business, condition, assets, liabilities, operations,
financial performance, net income or prospects of Purchaser; and (b) there has
not been any loss, damage or destruction to, or any interruption in the use of,
any of the assets of Purchaser.
3.7 FULL DISCLOSURE. None of the Transactional Agreements contains or
will contain any untrue statement of fact; and none of the Transactional
Agreements omits to state any fact necessary to make any of the representations,
warranties or other statements or information contained therein not misleading.
There is no fact within the knowledge of the Purchaser (other than publicly
known facts relating exclusively to political or economic matters of general
applicability) that may have an adverse effect on Purchaser or may have the
effect of interfering with any of the Transactions. All of the information
regarding Purchaser and its business, condition, assets, liabilities, operations
(including the number of pageviews and visitors), financial performance, net
income and prospects that has been furnished to Seller by or on behalf of the
Purchaser is accurate and complete in all material respects.
3.8 OFFERING VALID.
(a) Assuming the accuracy of the representations and warranties
of the shareholders of the Seller contained in the Investment Representation
Certificates, the offer, sale and issuance of the Common Shares will be exempt
from the registration requirements of the Securities Act of 1933, as amended
(the "Securities Act") and will have been registered or qualified (or are exempt
from registration and qualification) under the registration, permit or
qualification requirements of all applicable state securities laws. Neither the
Purchaser nor any agent on its behalf has solicited or will solicit any offers
to sell or has offered to sell or will offer to sell all or any part of the
Common Shares to any person or persons so as to bring the sale of such Common
Shares by the Purchaser within the registration provisions of the Securities Act
or any state securities laws.
(b) Each certificate representing Common Shares shall be stamped
or otherwise imprinted with a legend substantially similar to the following (in
addition to any legend required under applicable state securities laws):
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
(THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED."
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SECTION 4. COVENANTS.
4.1 TAX RETURNS. At least ten days prior to the filing with any
Governmental Body (by either Seller or any Shareholder) of any Tax Return
relating to or reflecting any of the Transactions, Seller and such Shareholder
shall cause a copy of such Tax Return (in the form proposed to be filed) to be
delivered to Purchaser for its review. Seller and each Shareholder shall ensure
that each such Tax Return is materially accurate and complete and is filed on a
timely basis with the appropriate Governmental Body.
4.2 FURTHER ACTIONS. From and after the Closing Date, Seller and each
Shareholder shall cooperate with Purchaser and Purchaser's affiliates and
representatives, and shall execute and deliver such documents and take such
other actions as Purchaser may reasonably request for the purpose of evidencing
the Transactions and putting Purchaser in possession and control of all of the
Purchased Assets. Without limiting the generality of the foregoing, from and
after the Closing Date, Seller shall promptly remit to Purchaser any funds that
are received by Seller under the Seller Contracts identified on Exhibit C.
Seller hereby irrevocably authorizes Purchaser to endorse in the name of Seller
any check that is made payable to Seller and that represents the payment of any
amount due under any such Seller Contract. Seller hereby irrevocably nominates,
constitutes and appoints Purchaser as the true and lawful attorney-in-fact of
Seller (with full power of substitution) and authorizes Purchaser, in the name
of and on behalf of Seller, to execute, deliver, acknowledge, certify, file and
record any document, to institute and prosecute any Proceeding and to take any
other action that Purchaser may deem appropriate for the purpose of (i)
collecting, asserting, enforcing or perfecting any claim, right or interest of
any kind that is included in or relates to any of the Purchased Assets, (ii)
defending or compromising any claim or Proceeding relating to any of the
Purchased Assets, or (iii) otherwise carrying out or facilitating any of the
Transactions. The power of attorney referred to in the preceding sentence is
coupled with an interest and shall be irrevocable, and shall survive any
liquidation and dissolution of Seller.
4.3 PUBLICITY. Except with respect to Seller's obligations to its
shareholders as contemplated by Section 4.5 hereto, Seller and each Shareholder
shall keep strictly confidential, and the Seller and any Shareholder shall not
use or disclose to any other Person, any non-public document or other
information that relates directly or indirectly to the business of Seller,
Purchaser or any affiliate of Purchaser.
4.4 FIRPTA MATTERS. At the Closing (a) Seller shall deliver to Purchaser
a statement (in such form as may be reasonably requested by counsel to
Purchaser) conforming to the requirements of Section 1.897-2(h)(1)(i) of the
United States Treasury Regulations, and (b) Seller shall deliver to the Internal
Revenue Service the notification required under Section 1.897-2(h)(2) of the
United States Treasury Regulations.
4.5 DISSOLUTION. Seller and the Shareholders agree that, (a) as soon as
possible after the Closing Date, Seller shall be liquidated and dissolved, (b)
Seller shall not transact any business following the Closing Date except as
necessary to wind up its affairs and to be liquidated and dissolved, and (c)
Shareholders shall not transfer, encumber or dispose of any stock or other
securities of Seller at any time after the Closing Date. Prior to the
liquidation and dissolution of Seller, Seller shall pay and fully discharge all
of its Liabilities (other than the
10.
12
Assumed Liabilities), including (i) all Liabilities to its current and former
employees, and (ii) all accounts payable and all short-term and long-term
indebtedness relating to its business. Following the liquidation and dissolution
of Seller, the Shareholders shall remain jointly and severally liable and
responsible for all obligations of Seller under this Agreement.
4.6 FINANCIAL INFORMATION.
(a) As soon as practicable after the end of each fiscal year of
the Purchaser, but no later than ninety (90) days thereafter, prior to (i) the
date the Purchaser is acquired or (ii) the effective date of a registration
statement filed in connection with the Purchaser's first underwritten public
offering of its Common Stock registered under the Securities Act, the Purchaser
will furnish each shareholder of the Seller, as determined immediately prior to
the Closing Date, a balance sheet of the Purchaser, as at the end of such fiscal
year, and a statement of income of the Purchaser, for such year, prepared in
accordance with generally accepted accounting principles consistently applied
and setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail.
(b) The Purchaser will furnish each shareholder of the Seller, as
determined immediately prior to the Closing Date, as soon as practicable after
the end of the first, second and third full quarterly accounting periods
immediately following the Closing Date, a balance sheet of the Purchaser as of
the end of each such quarterly period, and a statement of income of the
Purchaser for such period and for the current fiscal year to date, prepared in
accordance with generally accepted accounting principles, with the exception
that no notes need be attached to such statements and year-end audit adjustments
may not have been made.
SECTION 5. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER.
The obligations of Purchaser to effect the Closing and otherwise
consummate the Acquisition are subject to the satisfaction, at or prior to the
Closing, of each of the following conditions:
5.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by Seller and the Shareholders in this Agreement and in each of
the other agreements and instruments delivered to Purchaser in connection with
the transactions contemplated by this Agreement shall have been accurate in all
material respects as of the date of this Agreement (without giving effect to any
"MATERIAL ADVERSE EFFECT" or other materiality qualifications, or any similar
qualifications, contained or incorporated directly or indirectly in such
representations and warranties).
5.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that
Seller and the Shareholders are required to comply with or to perform at or
prior to the Closing shall have been complied with and performed in all
respects.
5.3 CONSENTS. All Consents required to be obtained in connection with
the Agreement and the other Transactions contemplated by this Agreement shall
have been obtained and shall be in full force and effect.
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5.4 SATISFACTORY COMPLETION OF PRE-ACQUISITION REVIEW. The Purchaser
shall have satisfactorily completed its pre-acquisition investigation and review
of Seller's business, condition, assets, liabilities, operations, financial
performance, net income and prospects and shall be satisfied with the results of
that investigation and review.
5.5 AGREEMENTS AND DOCUMENTS. Purchaser and Seller shall have received
the following agreements and documents, each of which shall be in full force and
effect:
(a) An Employment Agreement executed by Purchaser and ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇;
(b) Noncompetition Agreements executed by the Shareholders;
(e) Trademark License Agreement executed by Purchaser and
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇;
(d) Escrow Agreement executed by Seller and Purchaser;
(e) an estoppel certificate, dated as of a date not more than
five days prior to the Closing Date and satisfactory in form and content to
Purchaser, executed by [required PARTIES];
(f) a legal opinion of ▇▇▇▇ ▇▇▇▇▇▇, dated as of the Closing Date,
in the form of Exhibit D;
(g) an Investment Representation Certificate executed by each
holder of capital stock of the Seller satisfactory in form and content to
Purchaser; and
(h) a Market Stand-Off Letter Agreement executed by each holder
of capital stock of the Seller satisfactory in form and content to Purchaser.
5.6 FIRPTA COMPLIANCE. Seller shall have filed with the Internal Revenue
Service the notification referred to in Section 4.4.
5.7 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Agreement
shall have been issued by any court of competent jurisdiction and which remains
in effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Agreement that makes consummation of the Agreement illegal.
5.8 NO PROCEEDINGS. No Person shall have commenced or threatened to
commence any Proceeding challenging or seeking the recovery of a material amount
of damages in connection with the Agreement or seeking to prohibit or limit the
exercise by Purchaser of any material right pertaining to its ownership of the
Purchased Assets.
12.
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SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER.
The obligations of Seller to effect the Closing and otherwise consummate
the transactions contemplated by this Agreement are subject to the satisfaction,
at or prior to the Closing of the following conditions:
6.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by Purchaser in this Agreement shall have been accurate in all
material respects as of the date of this Agreement (without giving effect to any
"MATERIAL ADVERSE EFFECT" or other materiality qualifications, or any similar
qualifications contained or incorporated directly or indirectly in such
representations and warranties), and shall be accurate in all material respects
as of the Closing.
6.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that
Purchaser is required to comply with or to perform at or prior to the Closing
shall have been complied with and performed in all respects.
6.3 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Agreement
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Agreement that makes consummation of the Agreement illegal.
SECTION 7. INDEMNIFICATION, ETC.
7.1 SURVIVAL OF REPRESENTATIONS AND COVENANTS.
(a) The representations, warranties, covenants and obligations of
each party to this Agreement shall survive (without limitation): (i) the
execution and delivery of this Agreement and the sale of the Purchased Assets to
Purchaser; (ii) any subsequent sale or other disposition of any or all of the
Purchased Assets by Purchaser; (iii) the liquidation and dissolution of the
Seller; and (iv) the death of any Shareholder. All of said representations,
warranties, covenants and obligations shall remain in full force and effect and
shall survive until October 2, 1999; provided, however, that if a Claim Notice
relating to any representation or warranty is given to the Agent (as defined in
Section 7.4) on or prior to October 2, 1999; then, notwithstanding anything to
the contrary contained in this Section 7.1(a), such representation or warranty
shall not so expire, but rather shall remain in full force and effect until such
time as each and every claim (including any indemnification claim asserted by
any Indemnitee under Section 7.2) that is based directly or indirectly upon, or
that relates directly or indirectly to, any Breach or alleged Breach of such
representation or warranty has been fully and finally resolved, either by means
of a written settlement agreement executed on behalf of the Agent and Purchaser
or by means of a final, non-appealable judgement issued by a court of competent
jurisdiction.
(b) For purposes of this Agreement, a "CLAIM NOTICE" relating to
a particular representation, warranty, covenant or obligation shall be deemed to
have been given if any Indemnitee, acting in good faith, delivers to Agent or
Seller a written notice stating that such Indemnitee believes that there is or
has been a possible Breach of such representation, warranty, covenant or
obligation and containing (i) a brief description of the circumstances
supporting such
13.
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Indemnitee's belief that there is or has been such a possible Breach, and (ii) a
non-binding, preliminary estimate of the aggregate dollar amount of the actual
and potential Damages that have arisen and may arise as a direct or indirect
result of such possible Breach.
(d) For purposes of this Agreement, each statement or other item
of information set forth in the Seller Disclosure Schedule shall be deemed to be
a representation and warranty made by Seller and each Shareholder in this
Agreement pursuant to Section 2 hereof.
7.2 INDEMNIFICATION BY SHAREHOLDERS AND SELLER.
(a) Seller and the Shareholders, jointly and severally, shall
hold harmless and indemnify each of the Indemnitees from and against, and shall
compensate and reimburse each of the Indemnitees for, any Damages that are
directly or indirectly suffered or incurred by any of the Indemnitees or to
which any of the Indemnitees may otherwise become subject at any time
(regardless of whether or not such Damages relate to any third party claim) and
that arise directly or indirectly from or as a direct or indirect result of, or
are directly or indirectly connected with:
(i) any Breach of any of the representations or warranties
made by Seller or any Shareholder in this Agreement or any of the other
Transactional Agreements;
(ii) any Breach of any representation, warranty,
statement, information or provision contained in the Seller Disclosure Schedule
or in any other document delivered or otherwise made available to Purchaser or
any of its Representatives by or on behalf of Seller or any Shareholder, or any
Representative of Seller or any Shareholder;
(iii) any Breach of any covenant or obligation of Seller
or any Shareholder contained in any of the Transactional Agreements;
(iv) any Liability of Seller or of any Related Party
(including, but not limited to, any Liability of Seller under that certain
Consultant-Client Contract dated as of April 11, 1997, as amended February 14,
1998, between Seller and ▇▇▇▇▇ ▇▇▇▇▇▇▇), other than the Assumed Liabilities;
(v) any Liability (other than the Assumed Liabilities) to
which Purchaser or any of the other Indemnitees may become subject and that
arises directly or indirectly from or relates directly or indirectly to any
services performed by or on behalf of Seller, or the operation by Seller of its
business; or
(vi) any Proceeding relating directly or indirectly to any
Breach, alleged Breach, Liability or matter of the type referred to in clause
"(i)," "(ii)," "(iii)," "(iv)," or "(v)" above (including any Proceeding
commenced by any Indemnitee for the purpose of enforcing any of its rights under
this Section 7).
7.3 NON-EXCLUSIVITY OF INDEMNIFICATION REMEDIES. The indemnification
remedies and other remedies provided in this Section 7 shall not be deemed to be
exclusive. Accordingly, the exercise by any Person of any of its rights under
this Section 7 shall not be deemed to be an election of remedies and shall not
be deemed to prejudice, or to constitute or operate as a waiver
14.
16
of, any other right or remedy that such Person may be entitled to exercise
(whether under this Agreement, under any other Contract, under any statute, rule
or other Legal Requirement, at common law, in equity or otherwise).
7.4 DESIGNATION OF AGENT. Seller hereby designates ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as
the representative of the Seller's shareholders (the "AGENT") to act on behalf
of Seller's shareholders in all matters pertaining to this Agreement. Following
the dissolution of Seller as contemplated by Section 4.5, to the extent that any
action would be taken or would be required to be taken by Seller pursuant to
this Agreement but for said dissolution, the Purchaser or the Seller agree that
such action may be taken by the Agent with the same effect as if Seller had
taken such action, provided that shareholders holding a majority of the
outstanding Capital Stock of Seller shall have approved of the Agent acting in
such capacity.
SECTION 8. MISCELLANEOUS PROVISIONS.
8.1 JOINT AND SEVERAL LIABILITY.
(a) Each Shareholder agrees that such Shareholder shall be
jointly and severally liable with Seller for the due and timely compliance with
and performance of each of the covenants and obligations of Seller set forth in
the Transactional Agreements. Each Shareholder's obligations and liability under
this Agreement and the other Transactional Agreements shall survive such
Shareholder's death (and shall be binding upon Shareholder's personal
representatives, executors, administrators, estate, heirs and successors) and
shall not be limited in any way, except as provided herein.
(b) Seller agrees that it shall be jointly and severally liable
with each Shareholder for the due and timely compliance with and performance of
each Shareholder's covenants and obligations set forth in the Transactional
Agreements. The obligations and liability of Seller under this Agreement and the
other Transactional Agreements shall not be limited in any way, except as
provided herein.
8.2 FEES AND EXPENSES.
(a) Each party shall bear and pay all fees, costs and expenses
(including all legal fees and expenses) that have been incurred or that are in
the future incurred by, on behalf of, such party in connection with the
negotiation, preparation and review of this Agreement (including the Disclosure
Schedule), the other Transactional Agreements and all bills of sale,
assignments, certificates, opinions and other instruments and documents
delivered or to be delivered in connection with the Transactions, and the
consummation and performance of the Transactions. The Purchaser shall reimburse
on the Closing Date, the reasonable fees of and expenses of counsel for the
Seller, not to exceed $7,500, incurred in connection with the negotiation,
preparation and review of this Agreement and the other Transactional Agreements.
(b) Subject to the provisions of Section 7 (including the indemnification and
other obligations of Seller thereunder), Purchaser shall bear and pay all fees,
costs and expenses that have been incurred or that are in the future incurred by
or on behalf of Purchaser in connection with the negotiation, preparation and
review of this Agreement, the other Transactional Agreements and all bills of
sale, assignments, certificates, opinions and other
15.
17
instruments and documents delivered or to be delivered in connection with the
Transactions, and the consummation and performance of the Transactions.
8.3 DISPUTE RESOLUTION. Any claim, controversy or dispute arising out of
or in connection with or relating to this Agreement or the breach or alleged
breach thereof will be submitted by the parties to arbitration by the American
Arbitration Association ("AAA") in the County of San Mateo in the State of
California under the commercial rules then in effect for AAA. The parties will
agree on one (1) arbitrator within thirty (30) days of receipt of the notice of
intent to arbitrate. If no arbitrator is appointed within the time herein
provided, or any extension of time which is mutually agreed upon, AAA will make
such appointment within thirty (30) days of such failure. The award rendered by
the arbitrator will include costs of arbitration, reasonable costs for expert
and other witnesses, and judgment on the arbitration award may be entered in any
court having jurisdiction thereof. Nothing in this Agreement will be deemed as
preventing either party from seeking injunctive relief (or any other provisional
remedy) from any court having jurisdiction over the parties and the subject
matter of the dispute as necessary to protect either party's name, proprietary
information, trade secrets, know-how, or any other proprietary rights. Because
both parties to this Agreement have been represented by legal counsel, and the
parties have had the opportunity to negotiate individual provisions of this
Agreement, the arbitrator will not construe any ambiguity that may exist in this
Agreement in favor or against either party.
8.4 NOTICES. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
on the signature page (or to such other address or facsimile telephone number as
such party shall have specified in a written notice given to the other parties
hereto).
8.5 HEADINGS. The underlined headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
8.6 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
8.7 GOVERNING LAW. This Agreement shall be construed in accordance with,
and governed in all respects by, the internal laws of the State of California
(without giving effect to principles of conflicts of laws). Seller and each
Shareholder irrevocably constitutes and appoints ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as its agent
to receive service of process in connection with any legal proceeding relating
to this Agreement or the enforcement of any provision of this Agreement.
8.8 SUCCESSORS AND ASSIGNS; PARTIES IN INTEREST. This Agreement shall be
binding upon Seller and its successors and assigns, the Shareholders and the
Shareholders' personal representatives, executors, administrators, estate,
heirs, successors and assigns, and Purchaser and its successors and assigns.
Neither Seller nor any Shareholder shall be permitted to assign any rights or
delegate any obligations under this Agreement without Purchaser's prior written
16.
18
consent, which will not be unreasonably withheld. Purchaser may freely assign
its indemnification rights under Section 7. Except for the provisions of Section
7, none of the provisions of this Agreement is intended to provide any rights or
remedies to any Person other than the parties to this Agreement and their
respective successors and assigns.
8.9 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and remedies
of the parties hereto shall be cumulative (and not alternative). Seller and each
Shareholder agree that: (a) in the event of any Breach or threatened Breach by
Seller or any Shareholder of any covenant, obligation or other provision set
forth in this Agreement, Purchaser shall be entitled (in addition to any other
remedy that may be available to it) to (i) a decree or order of specific
performance or mandamus to enforce the observance and performance of such
covenant, obligation or other provision, and (ii) an injunction restraining such
Breach or threatened Breach; and (b) neither Purchaser nor any other Indemnitee
shall be required to provide any bond or other security in connection with any
such decree, order or injunction or in connection with any related action or
Proceeding.
8.10 WAIVER. No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
8.11 AMENDMENTS. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of Purchaser, Seller and each Shareholder.
8.12 SEVERABILITY. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
8.13 ENTIRE AGREEMENT. The Transactional Agreements set forth the entire
understanding of the parties relating to the subject matter thereof and
supersede all prior agreements and understandings among or between any of the
parties relating to the subject matter thereof.
8.14 NO INTERPRETATION AGAINST DRAFTER. Because the parties hereto have
participated in drafting this Agreement, there shall be no presumption against
any party on the ground that such party was responsible for preparing this
Agreement or any part of it.
8.15 KNOWLEDGE. For purposes of this Agreement, Seller shall be deemed
to have "KNOWLEDGE" of a particular fact or other matter if any Representative
of Seller has knowledge of such fact or other matter.
17.
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The parties hereto have caused this ASSET PURCHASE AGREEMENT to be
executed and delivered as of the date set forth above.
SHAREHOLDERS: SELLER:
WILD WILD WEB, INCORPORATED
A CALIFORNIA CORPORATION
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Address: ▇▇▇▇ ▇▇' ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Address: ▇▇▇▇ ▇▇' ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D. PURCHASER:
▇▇▇▇▇.▇▇▇ NETWORKS,
Address: ▇▇▇▇ ▇▇' ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ A CALIFORNIA CORPORATION
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
ASSET PURCHASE AGREEMENT
SIGNATURE PAGE
20
EXHIBITS INDEX
Exhibit A............Certain Definitions
Exhibit B............Assumed Liabilities
Exhibit C............Assumed Seller Contracts
Exhibit D............Form of Legal Opinion
i.
21
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
BREACH. There shall be deemed to be a "BREACH" of a representation,
warranty, covenant, obligation or other provision if there is or has been (a)
any inaccuracy in or breach (including any inadvertent or innocent breach) of,
or any failure (including any inadvertent failure) to comply with or perform,
such representation, warranty, covenant, obligation or other provision, or (b)
any claim (by any Person) or other circumstance that is inconsistent with such
representation, warranty, covenant, obligation or other provision; and the term
"Breach" shall be deemed to refer to any such inaccuracy, breach, failure, claim
or circumstance.
CONSENT. "CONSENT" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "CONTRACT" shall mean any written, oral, implied or other
agreement, contract, understanding, arrangement, instrument, note, guaranty,
indemnity, representation, warranty, deed, assignment, power of attorney,
certificate, purchase order, work order, insurance policy, benefit plan,
commitment, covenant, assurance or undertaking of any nature.
DAMAGES. "DAMAGES" shall include any loss, damage, injury, decline in
value, lost opportunity, Liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee (including any legal fee incurred by counsel reasonably
acceptable to indemnifying party, expert fee, accounting fee or advisory fee),
charge, cost (including any cost of investigation) or expense of any nature.
EMPLOYEE BENEFIT PLAN. "EMPLOYEE BENEFIT PLAN" shall have the meaning
specified in Section 3(3) of ERISA.
ENCUMBRANCE. "ENCUMBRANCE" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, equity, trust, equitable
interest, claim, preference, right of possession, lease, tenancy, license,
encroachment, covenant, infringement, interference, Order, proxy, option, right
of first refusal, preemptive right, community property interest, legend, defect,
impediment, exception, reservation, limitation, impairment, imperfection of
title, condition or restriction of any nature (including any restriction on the
transfer of any asset, any restriction on the receipt of any income derived from
any asset, any restriction on the use of any asset and any restriction on the
possession, exercise or transfer of any other attribute of ownership of any
asset).
ENTITY. "ENTITY" shall mean any corporation (including any non profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, cooperative, foundation, society,
political party, union, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization or
entity.
ERISA. "ERISA" shall mean the Employee Retirement Income Security Act of
1974.
ASSET PURCHASE AGREEMENT
A-1
22
GAAP. "GAAP" shall mean generally accepted accounting principles,
applied on a basis consistent with the basis on which the Financial Statements
were prepared.
GOVERNMENTAL AUTHORIZATION. "GOVERNMENTAL AUTHORIZATION" shall mean any
permit, license, certificate, franchise, concession, approval, consent,
ratification, permission, clearance, confirmation, endorsement, waiver,
certification, designation, rating, registration, qualification or authorization
issued, granted, given or otherwise made available by or under the authority of
any Governmental Body or pursuant to any Legal Requirement, or right under any
Contract with any Governmental Body.
GOVERNMENTAL BODY. "GOVERNMENTAL BODY" shall mean any (a) nation,
principality, state, commonwealth, province, territory, county, municipality,
district or other jurisdiction of any nature; (b) federal, state, local,
municipal, foreign or other government; (c) governmental or quasi-governmental
authority of any nature (including any governmental division, subdivision,
department, agency, bureau, branch, office, commission, council, board,
instrumentality, officer, official, representative, organization, unit, body or
Entity and any court or other tribunal); (d) multi-national organization or
body; or (e) individual, Entity or body exercising, or entitled to exercise, any
executive, legislative, judicial, administrative, regulatory, police, military
or taxing authority or power of any nature.
INDEMNITEES. "Indemnitees" shall mean Purchaser, Purchaser's current and
future affiliates, the respective Representatives of Purchaser, and the
respective successors and assigns of any of the foregoing Persons.
LEGAL REQUIREMENT. "LEGAL REQUIREMENT" shall mean any federal, state,
local, municipal, foreign or other law, statute, legislation, constitution,
principle of common law, resolution, ordinance, code, edict, decree,
proclamation, treaty, convention, rule, regulation, ruling, directive,
pronouncement, requirement, specification, determination, decision, opinion or
interpretation issued, enacted, adopted, passed, approved, promulgated, made,
implemented or otherwise put into effect by or under the authority of any
Governmental Body.
LIABILITY. "LIABILITY" shall mean any debt, obligation, duty or
liability of any nature (including any unknown, undisclosed, unmatured,
unaccrued, unasserted, contingent, indirect, conditional, implied, vicarious,
derivative, joint, several or secondary liability), regardless of whether such
debt, obligation, duty or liability would be required to be disclosed on a
balance sheet prepared in accordance with generally accepted accounting
principles and regardless of whether such debt, obligation, duty or liability is
immediately due and payable.
MATERIAL ADVERSE EFFECT. "MATERIAL ADVERSE EFFECT" as it applies to
Seller or Purchaser means an adverse effect on the business, operations,
condition (financial or otherwise), assets or prospects of Seller or Purchaser,
respectively, which is material.
ORDER. "ORDER" shall mean any (a) order, judgment, injunction, edict,
decree, ruling, pronouncement, determination, decision, opinion, verdict,
sentence, subpoena, writ or award issued, made, entered, rendered or otherwise
put into effect by or under the authority of any court, administrative agency or
other Governmental Body or any arbitrator or arbitration panel; or (b) Contract
with any Governmental Body entered into in connection with any Proceeding.
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ORDINARY COURSE OF BUSINESS. "ORDINARY COURSE OF BUSINESS" shall mean an
action taken by or on behalf of a Seller so long as: (a) such action is
recurring in nature, is consistent with the past practices of such Seller and is
taken in the ordinary course of the normal day-to-day operations of such Seller;
(b) such action is taken in accordance with sound and prudent business
practices; (c) such action is not required to be authorized by the stockholders
of such Seller, the board of directors of such Seller and does not require any
other separate or special authorization of any nature; and (d) such action is
similar in nature and magnitude to actions customarily taken, without any
separate or special authorization, in the ordinary course of the normal
day-to-day operations of similarly situated businesses.
PERSON. "PERSON" shall mean any individual, Entity or Governmental Body.
PROCEEDING. "PROCEEDING" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding and any informal proceeding), prosecution,
contest, hearing, inquiry, inquest, audit, examination or investigation
commenced, brought, conducted or heard by or before, or otherwise involving, any
Governmental Body or any arbitrator or arbitration panel.
PROPRIETARY ASSET. "PROPRIETARY ASSET" shall mean any patent, patent
application, trademark (whether registered or unregistered and whether or not
relating to a published work), trademark application, trade name, fictitious
business name, service ▇▇▇▇ (whether registered or unregistered), service ▇▇▇▇
application, copyright (whether registered or unregistered), copyright
application, maskwork, maskwork application, trade secret, know how, customer
list, franchise, system, computer software, invention, design, blueprint,
engineering drawing, proprietary product, technology, proprietary right or other
intellectual property right or intangible asset.
PURCHASER DISCLOSURE SCHEDULE. "PURCHASER DISCLOSURE SCHEDULE" shall
mean the schedule (dated as of the date of the Agreement) delivered to Seller
and Shareholders on behalf of Purchaser, a copy of which is attached to the
Agreement and incorporated in the Agreement by reference.
RELATED PARTY. Each of the following shall be deemed to be a "RELATED
PARTY": (a) each individual (including Shareholder) who is, or who has at any
time been, an officer of Seller; (b) each member of the family of each of the
individuals referred to in clause "(a)" above; and (c) any Entity (other than
Seller) in which any one of the individuals referred to in clauses "(a)" and
"(b)" above holds or held (or in which more than one of such individuals
collectively hold or held), beneficially or otherwise, a controlling interest or
a material voting, proprietary or equity interest.
REPRESENTATIVES. "REPRESENTATIVES" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SELLER CONTRACT. "SELLER CONTRACT" shall mean any Contract: (a) to which
Seller is a party; (b) by which Seller or any of its assets is or may become
bound or under which Seller has, or may become subject to, any obligation; or
(c) under which Seller has or may acquire any right or interest.
ASSET PURCHASE AGREEMENT
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SELLER DISCLOSURE SCHEDULE. "SELLER DISCLOSURE SCHEDULE" shall mean the
schedule (dated as of the date of the Agreement) delivered to Purchaser on
behalf of each Shareholder and Seller, a copy of which is attached to the
Agreement and incorporated in the Agreement by reference.
SELLER PLAN. "SELLER PLAN" shall mean any Employee Benefit Plan: (a)
that is or was established, adopted, maintained or sponsored by Seller or any
ERISA Affiliate; (b) in which Seller participates or has participated; (c) with
respect to which Seller or any ERISA Affiliate is, has been or may be required
or permitted to make any contribution; or (d) with respect to which Seller or
any ERISA Affiliate is or may become subject to any Liability.
TAX. "TAX" shall mean any tax (including any income tax, franchise tax,
capital gains tax, estimated tax, gross receipts tax, value added tax, surtax,
excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax,
property tax, business tax, occupation tax, inventory tax, occupancy tax,
withholding tax or payroll tax), levy, assessment, tariff, impost, imposition,
toll, duty (including any customs duty), deficiency or fee, and any related
charge or amount (including any fine, penalty or interest), that is, has been or
may in the future be (a) imposed, assessed or collected by or under the
authority of any Governmental Body, or (b) payable pursuant to any tax sharing
agreement or similar Contract.
TAX RETURN. "TAX RETURN" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information that
is, has been or may in the future be filed with or submitted to, or required to
be filed with or submitted to, any Governmental Body in connection with the
determination, assessment, collection or payment of any Tax or in connection
with the administration, implementation or enforcement of or compliance with any
Legal Requirement relating to any Tax.
TRANSACTIONAL AGREEMENTS. "TRANSACTIONAL AGREEMENTS" shall mean: (a) the
Agreement; (b) the Employment Agreement; (c) the Noncompetition Agreements; (d)
the Trademark License Agreement; and (e) the Escrow Agreement.
TRANSACTIONS. "TRANSACTIONS" shall mean (i) the execution and delivery
of the respective Transactional Agreements, and (ii) all of the transactions
contemplated by the respective Transactional Agreements, including: (a) the sale
of the Purchased Assets by Seller to Purchaser in accordance with the Agreement;
(b) the assumption of the Assumed Liabilities by Purchaser; and (c) the
performance by Seller, each Shareholder and Purchaser of their respective
obligations under the Transactional Agreements, and the exercise by Seller, each
Shareholder and Purchaser of their respective rights under the Transactional
Agreements.
ASSET PURCHASE AGREEMENT
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TABLE OF CONTENTS
PAGE
SECTION 1. SALE OF ASSETS; RELATED TRANSACTIONS..........................................1
1.1 Sale of Assets................................................................1
1.2 Purchase Price................................................................1
1.3 Escrow........................................................................2
1.4 Instruments of Assignment.....................................................2
1.5 Assumption of Liabilities.....................................................2
1.6 Executory Contracts...........................................................2
1.7 Sales Taxes...................................................................2
1.8 Closing.......................................................................2
1.9 Other Agreements and Transactions.............................................3
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS AND SELLER.....................3
2.1 Due Organization..............................................................3
2.2 Capitalization................................................................3
2.3 Financial Statements..........................................................3
2.4 Absence of Changes............................................................4
2.5 Title to Assets...............................................................4
2.6 Proprietary Assets............................................................4
2.7 Contracts.....................................................................4
2.8 Liabilities...................................................................5
2.9 Compliance with Legal Requirements............................................5
2.10 Governmental Authorizations...................................................5
2.11 Tax Matters...................................................................5
2.12 Employee Matters..............................................................5
2.13 Benefit Plans.................................................................6
2.14 Insurance.....................................................................6
2.15 Related Party Transactions....................................................6
2.16 Proceedings; Orders...........................................................6
2.17 Authority; Binding Nature of Agreements.......................................6
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TABLE OF CONTENTS
(CONTINUED)
PAGE
2.18 Non-Contravention; Consents...................................................7
2.19 Brokers.......................................................................7
2.20 Shareholders..................................................................7
2.21 Full Disclosure...............................................................7
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PURCHASER...................................8
3.1 Authority; Binding Nature of Agreements.......................................8
3.2 Brokers.......................................................................8
3.3 Due Organization..............................................................8
3.4 Capitalization................................................................8
3.5 Financial Statements..........................................................9
3.6 Absence of Changes............................................................9
3.7 Full Disclosure...............................................................9
3.8 Offering Valid................................................................9
SECTION 4. COVENANTS....................................................................10
4.1 Tax Returns..................................................................10
4.2 Further Actions..............................................................10
4.3 Publicity....................................................................10
4.4 FIRPTA Matters...............................................................10
4.5 Dissolution..................................................................11
4.6 Financial Information........................................................11
SECTION 5. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER.............................11
5.1 Accuracy of Representations..................................................11
5.2 Performance of Covenants.....................................................12
5.3 Consents.....................................................................12
5.4 Satisfactory Completion of Pre-Acquisition Review............................12
5.5 Agreements and Documents.....................................................12
5.6 FIRPTA Compliance............................................................12
5.7 No Restraints................................................................13
5.8 No Proceedings...............................................................13
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TABLE OF CONTENTS
(CONTINUED)
PAGE
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER...................................13
6.1 Accuracy of Representations..................................................13
6.2 Performance of Covenants.....................................................13
6.3 No Restraints................................................................13
SECTION 7. INDEMNIFICATION, ETC.........................................................13
7.1 Survival of Representations And Covenants....................................13
7.2 Indemnification By Shareholders And Seller...................................14
7.3 Non-exclusivity of Indemnification Remedies..................................15
7.4 Designation of Agent.........................................................15
SECTION 8. MISCELLANEOUS PROVISIONS.....................................................15
8.1 Joint and Several Liability..................................................15
8.2 Fees And Expenses............................................................15
8.3 Dispute Resolution...........................................................16
8.4 Notices......................................................................16
8.5 Headings.....................................................................16
8.6 Counterparts.................................................................17
8.7 Governing Law................................................................17
8.8 Successors and Assigns; Parties In Interest..................................17
8.9 Remedies Cumulative; Specific Performance....................................17
8.10 Waiver.......................................................................17
8.11 Amendments...................................................................17
8.12 Severability.................................................................18
8.13 Entire Agreement.............................................................18
8.14 No Interpretation Against Drafter............................................18
8.15 Knowledge....................................................................18
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