EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
DATED AS OF APRIL 7, 2006
BY AND AMONG
FUN TECHNOLOGIES CORPORATION,
FUN TECHNOLOGIES INC.,
FANTASY SPORTS, INC.
AND
SILVERSTAR HOLDINGS, LTD.
TABLE OF CONTENTS
Page
ARTICLE I CERTAIN DEFINITIONS.....................................................................................1
1.1 Defined Terms...................................................................................1
1.2 Construction....................................................................................5
ARTICLE II PURCHASE AND SALE OF ASSETS............................................................................5
2.1 Transferred Assets..............................................................................5
2.2 Excluded Assets.................................................................................7
2.3 Assumed Liabilities.............................................................................8
2.4 Excluded Liabilities............................................................................8
2.5 Allocation......................................................................................8
ARTICLE III PURCHASE PRICE AND CLOSING............................................................................9
3.1 Purchase and Sale...............................................................................9
3.2 Purchase Price..................................................................................9
3.3 Closing.........................................................................................9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT....................................................9
4.1 Authority......................................................................................10
4.2 Corporate Existence of Seller..................................................................10
4.3 Valid Transfer.................................................................................10
4.4 No Conflicts...................................................................................10
4.5 Governmental Approvals and Filings and Third Party Consents....................................10
4.6 Financial Statements and Condition; Absence of Changes.........................................11
4.7 Taxes..........................................................................................13
4.8 Legal Proceedings..............................................................................14
4.9 Compliance With Laws and Orders................................................................14
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TABLE OF CONTENTS
Page
4.10 Restrictions on Business Activities............................................................14
4.11 Employees......................................................................................14
4.12 Seller Employee Benefit Plans..................................................................15
4.13 Real Property..................................................................................15
4.14 Title to Property and Assets...................................................................15
4.15 Subsidiaries; Shareholders.....................................................................16
4.16 Intellectual Property Rights...................................................................16
4.17 Privacy Policies...............................................................................19
4.18 Contracts......................................................................................19
4.19 Permits and/or Approvals.......................................................................21
4.20 Affiliate Transactions.........................................................................21
4.21 Complete Copies of Materials...................................................................21
4.22 Accounts Receivable; Inventory.................................................................21
4.23 Customers and Suppliers........................................................................22
4.24 Insurance......................................................................................22
4.25 Brokers; Finders...............................................................................22
4.26 Questionable Payments..........................................................................22
4.27 Diligent Inquiry...............................................................................23
4.28 Accounts Payable...............................................................................23
4.29 Disclosure.....................................................................................23
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER...........................................................23
5.1 Corporate Existence of Purchaser...............................................................23
5.2 Authority......................................................................................23
5.3 No Conflicts...................................................................................23
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Page
5.4 Governmental Approvals and Filings and Third Party Consents....................................24
5.5 Legal Proceedings..............................................................................24
5.6 Purchaser Shares...............................................................................24
5.7 Financing......................................................................................24
5.8 No Business Activities.........................................................................24
5.9 Disclosure.....................................................................................24
ARTICLE VI COVENANTS 25
6.1 Proper Liquidation.............................................................................25
6.2 Confidentiality................................................................................25
6.3 Employees......................................................................................25
6.4 Publicity......................................................................................26
6.5 Power of Attorney..............................................................................26
6.6 Further Assurances; Post-Closing Cooperation...................................................26
6.7 Non-Competition and Non-Solicitation...........................................................26
6.8 Tax Covenants..................................................................................27
6.9 Bulk Sales Laws................................................................................27
6.10 Fantasy Cup Auto Racing Lien...................................................................27
ARTICLE VII CONDITIONS TO OBLIGATIONS OF THE PARTIES.............................................................28
7.1 Obligations of the Parties.....................................................................28
7.2 Obligations of Purchaser.......................................................................28
7.3 Obligations of Seller..........................................................................29
ARTICLE VIII INDEMNIFICATION.....................................................................................30
8.1 Survival of Representations and Warranties; Indemnification Period.............................30
8.2 Indemnification................................................................................31
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8.3 Limitation of Liability........................................................................31
8.4 Indemnification Procedures.....................................................................31
8.5 Purchase Price Adjustment for Tax Purposes.....................................................32
ARTICLE IX TAX MATTERS...........................................................................................32
9.1 Transfer Taxes.................................................................................32
ARTICLE X MISCELLANEOUS..........................................................................................32
10.1 Notices........................................................................................32
10.2 Arbitration....................................................................................34
10.3 Entire Agreement...............................................................................34
10.4 Expenses.......................................................................................34
10.5 Waiver.........................................................................................34
10.6 Amendment......................................................................................34
10.7 No Third Party Beneficiary.....................................................................35
10.8 No Assignment; Binding Effect..................................................................35
10.9 Invalid Provisions.............................................................................35
10.10 Governing Law..................................................................................35
10.11 Counterparts; Facsimile........................................................................35
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SCHEDULES AND EXHIBITS:
Schedule A Schedule of Assets and Liabilities
Exhibit A Disclosure Schedule
Exhibit B Assignment and ▇▇▇▇ of Sale
Exhibit C Intellectual Property Assignment
Exhibit D Employment Agreements
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, dated as of April 7, 2006 (the
"EFFECTIVE DATE"), is made and entered into by and among FUN Technologies
Corporation, a Delaware corporation ("PURCHASER"), FUN Technologies Inc., a
company organized under the laws of Canada and the ultimate parent of Purchaser
("FUN"), Fantasy Sports, Inc., a Delaware corporation ("SELLER"), and Silverstar
Holdings, Ltd., a company organized under the laws of Bermuda and the parent
company of Seller ("PARENT").
RECITALS
WHEREAS, Seller desires to sell, assign and transfer to Purchaser, and
Purchaser desires to acquire from Seller, substantially all of Seller's assets,
properties and rights on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following defined
terms have the meanings indicated below:
"ACTION" or "PROCEEDING" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation.
"AFFILIATE" means any Person that, directly or indirectly, through one
or more intermediaries, controls or is controlled by or is under common control
with the Person specified.
"AGREEMENT" means this Asset Purchase Agreement, as amended in
accordance with the terms hereof.
"ALLOCATION SCHEDULE" has the meaning assigned in Section 2.5.
"ASSUMED LIABILITIES" has the meaning assigned in Section 2.3.
"BALANCE SHEET" has the meaning assigned in Section 4.6(a).
"BUSINESS" shall mean the sale of those fantasy sports games and gaming
services currently offered or being developed by Seller for use over the
internet and playable on multiple devices, such as mobile phones, PDAs,
computers and laptop computers.
"BUSINESS DAY" means a day that is not a Saturday, a Sunday or a
statutory or civic holiday in the State of Delaware.
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"CHARTER DOCUMENTS" has the meaning assigned in Section 4.2.
"CLAIM" means any Third Party Claim or any claim not involving a Third
Party.
"CLOSING" has the meaning assigned in Section 3.3.
"CLOSING DATE" has the meaning assigned in Section 3.3.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"COMPANY GROUP EMPLOYEES" has the meaning assigned in Section 6.7(b).
"COMPETES" has the meaning assigned in Section 6.7(a).
"COMBINED SOFTWARE" has the meaning assigned in Section 4.16(a)(xxi).
"CONTRACT" means any written or oral contract, agreement or
understanding between two or more parties, including, but not limited to, any
right, title and interest in all instruments, leases, licenses, purchase orders,
sales orders, commitments and other agreements.
"DISCLOSURE SCHEDULE" has the meaning assigned in the forepart of
ARTICLE IV.
"DOLLAR" or "DOLLAR" or "$" shall each refer to a United States dollar.
"EFFECTIVE DATE" has the meaning assigned in the first paragraph of
this Agreement.
"ENCUMBRANCE" means any mortgage, pledge, encumbrance, assessment,
security interest, lease, lien, adverse claim, levy, charge, option, right of
first refusal, restriction of any kind, or any conditional sale contract, title
retention contract or other Contract to give any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"EXCLUDED ASSETS" has the meaning assigned in Section 2.2.
"EXCLUDED LIABILITIES" has the meaning assigned in Section 2.4.
"FINANCIAL STATEMENT DATE" means March 31, 2006.
"FINANCIAL STATEMENTS" has the meaning assigned in Section 4.6(a).
"FUN" has the meaning assigned in the first paragraph of this
Agreement.
"GAAP" means United States generally accepted accounting principles,
consistently applied throughout the specified period and in the immediately
prior comparable period.
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"GOVERNMENTAL OR REGULATORY AUTHORITY" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
"INDEBTEDNESS" of any Person means all obligations of such Person (i)
for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases and (v) in the nature of guarantees of the obligations
described in clauses (i) through (iv) above of any other Person.
"INTELLECTUAL PROPERTY" has the meaning assigned in Section 2.1(a).
"IRS" means the United States Internal Revenue Service.
"KNOWLEDGE OF SELLER" means the actual knowledge of Parent, any
officer, manager, employee or agent of Seller as well as such knowledge as any
such Person could have had if they had made diligent inquiry into the matter.
"LIABILITIES" means all Indebtedness, obligations and other liabilities
of a Person (whether absolute, accrued, contingent, asserted, unasserted, fixed
or otherwise, or whether due or that may become due). Liabilities shall include,
among other things, accounts payable, accrued liabilities, long-term debt, other
liabilities, revolving credit line loan and deferred revenue.
"LOSS" or "LOSSES" means any and all damages, diminution in value,
fines, penalties, deficiencies, losses, judgments, costs and expenses (including
interest, court costs, fees of attorneys, accountants and other experts) with
respect to any breach, Claim, default or assessment.
"MATERIAL" means having a value or economic impact totaling greater
than $5,000 in the aggregate.
"MATERIAL ADVERSE EFFECT" with respect to (i) Seller and Purchaser
means a material adverse effect on the Transferred Assets, financial condition,
operations or results of operations of such Person and any subsidiaries of such
Person taken as a whole and (ii) any Person, other than Seller and Purchaser,
means a material adverse effect on the business, financial condition, assets,
properties, operations or results of operations of such Person and any
subsidiaries of such Person taken as a whole.
"ORDER" means any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"PARENT" has the meaning assigned in the first paragraph of this
Agreement.
"PERMITS AND/OR APPROVALS" means all permits, licenses, certificates of
authority, authorizations, approvals, registrations, franchises and similar
consents granted or issued by any Governmental or Regulatory Authority.
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"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, any
foreign, federal, state, local or other Governmental or Regulatory Authority or
other entity.
"PUBLIC SOFTWARE" has the meaning assigned in Section 4.16(a)(xxi).
"PURCHASE PRICE" has the meaning assigned in Section 3.2.
"PURCHASER" has the meaning assigned in the first paragraph of this
Agreement.
"PURCHASER INDEMNIFIED PARTIES" has the meaning assigned in Section
8.2.
"PURCHASER LOSSES" has the meaning assigned in Section 8.2.
"RESTRICTED TRANSFERRED CONTRACT" has the meaning assigned in Section
2.3(a).
"SEC" means the U. S. Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"SELLER" has the meaning assigned in the first paragraph of this
Agreement.
"SELLER EMPLOYEE PLAN" means any bonus, incentive compensation,
deferred compensation, pension, profit sharing, retirement, acquisition, option,
membership interest ownership, appreciation rights, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workmen's compensation or other insurance, severance,
separation or other employee benefit plan, practice, policy or arrangement of
any kind, whether written or oral, funded or unfunded, including any "employee
benefit plan" within the meaning of Section 3(3) of ERISA established by Seller
or any predecessor or ERISA affiliate of any of the foregoing which Seller
maintains, or to which Seller contributes or has contributed or under which any
employee, officer, former employee or manager of Seller or any beneficiary
thereof is covered, is eligible for coverage or has benefit rights.
"SELLER INTELLECTUAL PROPERTY" means any and all Intellectual Property,
both registered and unregistered, in any jurisdiction worldwide, that is owned
in whole or in part by or is subject to any agreement or other obligation to
assign or transfer ownership in whole or in part to or exclusively licensed to
Seller, and expressly includes the Intellectual Property identified by Section
4.16 of the Disclosure Schedule, and also includes all other tangible and
intangible information or material that is used or currently proposed to be used
in the business of Seller as currently conducted or as currently proposed to be
conducted.
"TAX RETURNS" means any returns, declarations, reports, and claims for
refund, or information returns or statements relating to Taxes, including any
schedules or attachments thereto, and including any amendments thereof.
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"TAXES" means any federal, state, county, local or foreign taxes,
charges, fees, levies, or other assessments, including all net income, gross
income, sales and use, ad valorem, transfer, gains, profits, excise, franchise,
real and personal property, gross receipt, production, business and occupation,
disability, employment, payroll, license, estimated, stamp, custom duties,
severance or withholding taxes or charges imposed by a governmental entity, and
includes any interest and penalties (civil or criminal) on or additions to any
such taxes and any expenses incurred in connection with the determination,
settlement or litigation of any tax liability.
"THIRD PARTY" means any Person not an Affiliate of the other referenced
Person or Persons.
"THIRD-PARTY CLAIM" has the meaning assigned in Section 8.4(a).
"THRESHOLD" has the meaning assigned in Section 8.3.
"TRANSFER TAXES" has the meaning assigned in Section 9.1.
"TRANSFERRED ASSETS" has the meaning assigned in Section 2.1.
"TRANSFERRED CONTRACTS" has the meaning assigned in Section 2.1(b).
1.2 Construction. Unless the context of this Agreement otherwise
requires: (i) words of any gender include each other gender; (ii) words using
the singular or plural number also include the plural or singular number,
respectively; (iii) the terms "hereof," "herein," "hereby" and derivative or
similar words refer to this entire Agreement; (iv) the terms "Article" or
"Section" refer to the specified Article or Section of this Agreement; (v) the
phrase "ordinary course of business" refers to the business of Seller; (vi)
whenever the words "include," "includes" or "including" are used in this
Agreement they shall be deemed to be followed by the words "without limitation;"
(vii) whenever this Agreement refers to a number of days, such number shall
refer to calendar days unless Business Days are specified; (viii) all accounting
terms used herein and not expressly defined herein shall have the meanings given
to them under GAAP; and (ix) the table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. The parties hereby acknowledge
and agree that the drafting of this Agreement has been a collaborative effort
and that no party shall be deemed to be the sole or primary drafter. Any rule or
provision of law which provides that a contract or agreement is to be construed
against the author of the contract or agreement shall not apply to this
Agreement or the documents attached hereto as exhibits or schedules hereto or
thereto.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 Transferred Assets. Upon the terms and subject to the conditions
set forth in this Agreement, at the Closing, Seller shall sell, transfer,
assign, convey and deliver to Purchaser, and Purchaser shall acquire from
Seller, all assets, properties and rights of Seller of every kind, nature and
description, real, personal or mixed, tangible or intangible, known or unknown,
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wherever located, other than the Excluded Assets, as the same shall exist at the
Closing (collectively, the "TRANSFERRED ASSETS"), free and clear of any
Encumbrance. The Transferred Assets include, without limitation, all of Seller's
rights, title and interest to the following:
(a) patents, trademarks, trade names, service marks, copyrights
(including moral rights), and any applications therefor, know-how, show-how,
trade secrets, works of authorship, ideas, procedures, processes, systems,
methods, concepts, principles, discoveries, inventions, art, machines,
manufactures, compositions of matter, materials, improvements, formulas,
patterns, devices, compilations, information, lists (including customer and
supplier lists), articles, codes, matters, programs, techniques, apparatus,
algorithms, designs, circuitry, hardware, firmware, software (computer software
programs and applications, in both source code and object code form), net lists,
schematics, diagrams, technology, inventory, products, networks, data, plans
(including financial, business, marketing, technical and product plans),
libraries, media, pictorial works, graphic works, audiovisual works, computer
interfaces (including programming interfaces), computer languages, computer
protocols, development tools, and tangible or intangible proprietary rights or
information or material associated with or used in connection with the Business,
irrespective of whether patentable, including those set forth in Section 2.1(a)
of Schedule A (collectively, the "INTELLECTUAL PROPERTY"). Without limiting the
generality of the foregoing, Intellectual Property shall include all of the
foregoing with respect to (a) the name and variations thereof and all other
trade names of Seller; and (b) all rights to the Intellectual Property produced
or developed by employees and/or consultants of Seller that are owned by Seller
on the Closing Date;
(b) all Contracts of Seller entered into by Seller in the operation
of the Business that are listed in Section 2.1(b) of Schedule A (collectively,
the "TRANSFERRED CONTRACTS");
(c) all personal property used in the operation of the Business,
including those items listed in Section 2.1(c) of Schedule A;
(d) all franchises, consents, marketing rights, permits,
authorizations, approvals and other licenses issued by governmental or
regulatory bodies held by Seller in the operation of the Business;
(e) all of the Business's rights to income, royalties, damages and
payments due at or after Closing and all other rights with respect thereto
(including rights to damages and payments for past, present or future
infringements or misappropriations of any Intellectual Property);
(f) all causes of action, demands, judgments, claims (including
insurance claims), indemnity rights or other rights in which, in connection with
or with respect to the Business, Seller is a claimant;
(g) all books and records of Seller used in the operation of the
Business relating to the Transferred Assets, including correspondence,
production records, accounting records, property records, mailing lists,
customer and vendor lists, Intellectual Property prosecution files and
regulatory files (including master files);
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(h) all of the Seller's cash and cash equivalents (including
marketable securities and short-term investments);
(i) all prepayments made by Seller in the operation of the Business;
(j) all of the Business's accounts receivable and any other debts
owing to Seller on the Closing Date, all of the Business's prepaid expenses in
Seller's possession, all of the Business's advances and deposits (including
security deposits) in Seller's possession, all of the Business's payments in
transit to Seller, including accounts receivable for which checks have been
received by Seller for deposit prior to the Closing Date and credit card
payments made prior to the Closing Date but not credited to Seller's account
prior to the Closing Date;
(k) all interest in and to all telephone, telex and telephone
facsimile numbers, domain names and other directory listings used in the
operation of the Business; and
(l) the items listed in Section 2.1(l) of Schedule A (although this
does not constitute an exhaustive list of the Transferred Assets of the type
described therein).
2.2 Excluded Assets. Notwithstanding the provisions of Section 2.1
above, the Transferred Assets do not include, and Seller does not hereby
transfer to Purchaser any of the following assets (hereinafter the "EXCLUDED
ASSETS"):
(a) Contracts set forth on Section 2.2(a) of Schedule A;
(b) the consideration delivered by Purchaser to Seller pursuant to
this Agreement and all rights of Seller under this Agreement;
(c) Seller's employee benefit agreements, plans (including option
plans) or arrangements and any assets thereof, except as set forth in Section
2.1(l);
(d) Seller's income tax and franchise tax returns and tax records;
(e) any books, records or other information related solely and
exclusively to the Excluded Assets;
(f) all policies of insurance and fidelity, surety or similar bonds
and the coverages afforded thereby of Seller and any and all claims or rights
thereunder, other than those that would be included in Section 2.1(f) hereof;
(g) any refunds or credits of Taxes (including any interest thereon)
attributable to periods or portions of periods ending prior to the Closing Date,
or arising from, relating to or involving any Excluded Liability;
(h) the minute books, stock books, corporate seals and other
corporate records of Seller relating to its organization and existence;
(i) the other assets, property or rights set forth in Section 2.2(i)
of Schedule A; and
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(j) due from Strategy First (intercompany loan).
2.3 Assumed Liabilities. Upon the terms and subject to the conditions
set forth in this Agreement, at the Closing, Purchaser shall assume the
following limited and specified liabilities and obligations of Seller
(collectively, the "ASSUMED LIABILITIES"):
(a) any liability or obligation of any nature of Seller or Claims of
such liability or obligation, matured or unmatured, liquidated or unliquidated,
direct or indirect, fixed or contingent, known or unknown, arising out of acts
or occurrences after the date hereof under the Transferred Contracts to the
extent (but only to the extent) each of such liabilities or obligations arise
after the time of Closing provided that if any Transferred Contract requires the
consent of a Third Party in order to be assigned (a "RESTRICTED TRANSFERRED
CONTRACT"), such Restricted Transferred Contract shall not be deemed assigned
and it shall not constitute an Assumed Liability unless and until such time as
the Third Party consents in writing to the assignment hereunder and Purchaser
agrees in writing to assume such Restricted Transferred Contract; and
(b) to pay only the amounts set forth in Section 2.3(b) of Schedule
A to the parties listed thereon, but no other obligations with respect to the
parties set forth thereon unless otherwise expressly set forth in Section 2.3(a)
above, provided that Purchaser does not assume the obligations to pay the
amounts set forth in Section 2.3(b) of Schedule A with respect to any Restricted
Transferred Contract until such time as the Third Party consents in writing to
the assignment hereunder and Purchaser agrees in writing to assume such
Restricted Transferred Contract.
2.4 Excluded Liabilities. Except as specified in Section 2.3, Purchaser
shall not, by the execution, delivery and performance of this Agreement or
otherwise, assume or otherwise be responsible for any liability or obligation of
any nature of Seller, or Claims of such liability or obligation, matured or
unmatured, liquidated or unliquidated, direct or indirect, fixed or contingent,
known or unknown, whether arising out of acts or occurrences prior to or on the
date hereof (the "EXCLUDED LIABILITIES"). Without limiting the generality of the
foregoing, Seller shall remain liable for all liabilities and obligations with
respect to (i) the Transferred Contracts except as set forth in Section 2.3(a)
and Section 2.3(b) and (ii) the Contracts listed in Section 2.2(a) to Schedule
A. To the extent a Contract is not listed in Section 2.1(b) or Section 2.2(a) of
Schedule A, such Contract shall not be an Assumed Liability unless Purchaser
executes a separate assumption agreement specifically assuming such Contract by
name, in which case such Contract shall become a Transferred Contract hereunder.
2.5 Allocation. The allocation of the Purchase Price (the "ALLOCATION
SCHEDULE") among the Transferred Assets in accordance with Code Section 1060 and
the regulations thereunder, which allocation shall be binding upon Seller, is
set out on Section 2.5 of Schedule A. Purchaser and Seller and their respective
Affiliates shall report, act and file Tax Returns (including, but not limited
to, IRS Form 8594) in all respects and for all purposes consistent with such
Allocation Schedule. Seller shall timely and properly prepare, execute, file and
deliver all such documents, forms and other information as Purchaser may
reasonably request to prepare such allocation. Neither Purchaser nor Seller
shall take any position (whether
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in audits, Tax Returns or otherwise) that is inconsistent with such Allocation
Schedule unless required to do so by applicable law.
ARTICLE III
PURCHASE PRICE AND CLOSING
3.1 Purchase and Sale. Seller agrees to sell to Purchaser, and
Purchaser agrees to purchase from Seller, all of the right, title and interest
of Seller in and to the Transferred Assets at the Closing on the terms and
subject to the conditions set forth in this Agreement.
3.2 Purchase Price. Subject to the terms and conditions of this
Agreement (including any adjustment pursuant to ARTICLE VIII), Purchaser shall
pay Seller $3,850,000 ("PURCHASE PRICE") at Closing.
3.3 Closing. The closing of the purchase and sale described herein (the
"CLOSING") will take place at the offices of Goodmans LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇, or at such other place as
Purchaser and Seller mutually agree in writing, at 10 a.m. local time on the
Effective Date or such other date as Purchaser and Seller mutually agree upon in
writing (the "CLOSING DATE"). Simultaneously with the Closing, the following
will occur: (a) Purchaser, and if Purchaser is unable to do so, FUN, will pay
the Purchase Price by wire transfer of immediately available funds to such
account as Seller may reasonably direct by written notice delivered to Purchaser
and FUN by Seller not less than two Business Days prior to the Closing Date and
(b) Seller will assign and transfer or will cause to be assigned and transferred
to Purchaser good and valid title in and to the Transferred Assets, free and
clear of all Encumbrances. At the Closing, there shall also be delivered to
Seller, Parent, Purchaser and FUN the certificates and other documents and
instruments to be delivered pursuant to ARTICLE VII.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT
Seller and Parent represent and warrant to Purchaser that the
statements contained in this ARTICLE IV are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing (as though
made as of the Closing and as though the Closing Date were substituted for the
date of this Agreement throughout this ARTICLE IV), except as disclosed in the
document entitled Disclosure Schedule of even date herewith delivered by Seller
and Parent to Purchaser on the date hereof (the "DISCLOSURE SCHEDULE"). The
Disclosure Schedule will be arranged in paragraphs corresponding to the numbered
and lettered paragraphs contained in this ARTICLE IV. Each exception set forth
in the Disclosure Schedule and each other response to this Agreement set forth
in the Disclosure Schedule is identified by reference to, or has been grouped
under a heading referring to, a specific individual section of this Agreement
and, except as otherwise specifically stated with respect to such exception,
relates only to such section, provided, however, that any matter disclosed in
one section shall be deemed to have been disclosed with respect to another
section of the Disclosure Schedule, if such
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disclosure is made in a manner so as to make its application to such other
section reasonably apparent.
4.1 Authority. Seller and Parent each has all requisite power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of each of Parent and Seller. This
Agreement has been duly and validly executed and delivered by Seller and Parent
and constitutes legal, valid and binding obligations of Seller and Parent,
enforceable against each party in accordance with their terms.
4.2 Corporate Existence of Seller. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Seller has full power and authority to conduct its business as now
conducted and as proposed to be conducted, and to own, use and lease its assets
and properties. Seller is duly qualified, licensed or admitted to do business
and is in good standing in those jurisdictions in which the ownership, use or
leasing of its assets and properties or the conduct of its business makes such
qualification, licensing or admission necessary. Seller is not in violation of
any provision of its certificate of incorporation, by-laws or other charter
documents, as applicable and as amended to date (collectively, the "CHARTER
DOCUMENTS").
4.3 Valid Transfer. This Agreement and transactions contemplated hereby
were not entered into with any intent to hinder, delay or defraud any entity to
which Parent is, was or will be indebted. At the Closing, upon payment of the
Purchase Price, Parent will have received at least reasonably equivalent value
in consideration for the Transferred Assets.
4.4 No Conflicts. Except as set forth in Section 4.4 of the Disclosure
Schedule, the execution and delivery by Parent and Seller of this Agreement does
not, and the performance by Parent of Parent's obligations under this Agreement,
the performance by Seller of Seller's obligations under this Agreement and the
consummation of the transactions contemplated hereby will not: (a) violate any
of the Charter Documents of Parent or Seller, (b) conflict with or result in a
violation or breach of any law or Order applicable to Parent, Seller, or any of
their respective assets and properties; or (c) (i) conflict with or result in a
violation or breach of, (ii) constitute (with or without notice or lapse of time
or both) a default under, (iii) require Parent or Seller to obtain any consent,
approval or action of, make any filing with or give any notice to any Person as
a result or under the terms of, (iv) result in or give to any Person any right
of termination, cancellation, acceleration or modification in or with respect
to, or (v) result in the creation or imposition of any Encumbrance upon Parent,
Seller or any of their respective assets and properties under, any agreement to
which Parent or Seller is a party or by which any of their respective assets or
properties is bound, except in the case of clause (c)(i), for such conflicts
which would not individually or in the aggregate have a Material Adverse Effect
on Seller.
4.5 Governmental Approvals and Filings and Third Party Consents.
(a) No consent, approval or action of, filing with or notice to any
Governmental or Regulatory Authority on the part of Parent or Seller is required
in connection with the due execution, delivery or performance of this Agreement
or the consummation of the
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transactions contemplated hereby or the continuation by Seller of its business
as presently conducted as a consequence of the Closing.
(b) Except as set forth in Section 4.5(b) of the Disclosure
Schedule, there are no consents, waivers or approvals required to be obtained by
Seller with respect to the Transferred Assets or the consummation of the
transactions contemplated by this Agreement, other than the consents of Sports
Team Analysis and Tracking Systems of Missouri, Inc., Speed Channel, Inc. and
▇▇▇▇▇▇▇▇▇ Family Limited Partnership.
4.6 Financial Statements and Condition; Absence of Changes.
(a) Section 4.6(a) of the Disclosure Schedule sets forth copies of
Seller's consolidated unaudited balance sheet as of the Financial Statement Date
(the "BALANCE SHEET"), consolidated unaudited balance sheet of Seller as of
December 31, 2004 and 2005, and consolidated unaudited income and cash flow
statements for the twelve month periods ended December 31, 2004 and 2005
(collectively, the "FINANCIAL STATEMENTS"). Except as set forth in the notes
thereto, the Financial Statements were prepared in accordance with GAAP and
fairly present in all material respects the financial condition and results of
operations of Seller as of the dates thereof and for the periods covered
thereby.
(b) Seller has no Liabilities, except for (i) Liabilities set forth
on the face of the Balance Sheet (or which are disclosed in the footnotes
thereto), (ii) Liabilities which have arisen after the Financial Statement Date
in the ordinary course of business and which are not required to be disclosed
pursuant to the terms of Section 4.6(d) hereof, (iii) payment or performance
obligations arising out of contracts and agreements to which Seller is a party
and which are disclosed pursuant to Section 4.18 hereof or are not required to
be disclosed pursuant to the terms of Section 4.18 hereof and (iv) Liabilities,
totaling in the aggregate, not more than $10,000.
(c) Seller maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) material transactions are
executed with management's general or specific authorizations; (ii) material
transactions are recorded as necessary to permit preparation of financial
statements of Seller and to maintain accountability for assets; (iii) access to
Seller's assets is permitted only in accordance with management's authorization;
and (iv) the recorded accountability for material assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Seller is not party to or otherwise involved in any
"off-balance sheet arrangements" (as defined in Item 303 of Regulation S-K under
the Securities Exchange Act).
(d) Since the Financial Statement Date:
(i) Seller has not (i) amended, or agreed to amend, any of its
Charter Documents, (ii) merged with or into or consolidated with, or agreed to
merge with or into or consolidate with, any other Person, or (iii) except as
reasonably required in connection with the transactions contemplated by this
Agreement or as described elsewhere in this Agreement, changed, or agreed to
change, in any material manner the character of its business;
11
(ii) Seller has conducted its business only in the usual and
ordinary course and in accordance with past practices;
(iii) there has been no material change (or series of material
changes, casualty or otherwise) in the business, condition (financial or
otherwise), results of operations, assets, Liabilities or earnings of Seller,
other than changes arising in the ordinary course of business consistent with
past practice and experience, none of which changes, individually or in the
aggregate, has had or reasonably could be expected to have a Material Adverse
Effect on Seller;
(iv) Seller has not made or promised to make any increase in any
salaries, rates of pay or other compensation or benefits of any business of its
employees, nor has Seller made any accrual for or commitment or agreement to
make or pay the same, nor any payment or commitment to pay any severance or
termination pay to any of its employees;
(v) Seller has not suffered any strike or other labor trouble,
and Seller has not entered into any agreement or negotiation with any labor
union or other collective bargaining representative of its employees;
(vi) there has been no change or, to the Knowledge of Seller, any
threat of any change, in any of Seller's relations with, Sports Teams Analysis
and Tracking Systems of Missouri, Inc., Speed Channel Inc., ▇▇▇▇▇▇▇▇▇ Family
Limited Partnership, or any of the suppliers or distributors of its business, or
any decrease or limitation, of any such supplier's provision of services,
supplies or materials to Seller or any usage or purchase of services or products
of Seller by Sports Teams Analysis and Tracking Systems of Missouri, Inc. and
Speed Channel Inc., or a loss of any customers or decrease in any customer's
usage that in the aggregate are greater than $25,000;
(vii) there has been no change in the method of accounting or
keeping of books of account or accounting practices with respect to Seller;
(viii) Seller has not waived, or agreed to waive, any right of
material value with respect to Seller, or any of its assets or properties;
(ix) Seller has not changed, or agreed to change, any of its
business policies or practices, including advertising, marketing, pricing,
purchasing, personnel, sales, returns or budget policies or practices;
(x) except in the ordinary course of business or as otherwise
permitted or required by this Agreement, Seller has not (i) entered into, or
agreed to enter into, any lease (as lessor or lessee) or any license (as
licensee or licensor) on behalf of Seller, (ii) sold, abandoned or made, or
agreed to sell, abandon or make, any other disposition of any of the assets or
properties of Seller; or (iii) waived or relinquished any other right of value;
(xi) except in the ordinary course of business, Seller has not
declared or paid any dividends or other distributions to Parent or made any
loans or other transfers to Parent.
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(xii) neither Parent nor Seller has granted or suffered, or
agreed to grant or suffer, any Encumbrance on any assets of Seller;
(xiii) except as provided herein or as set forth in Section
4.6(d)(xiii) of the Disclosure Schedule, Seller has not entered into or amended,
or agreed to enter into or amend, any material contract or other material
agreement by or to which Seller is bound or subject, pursuant to which it agrees
to indemnify any party on behalf of Seller or pursuant to which it agrees to
refrain from competing with any party;
(xiv) Seller has not, except in the ordinary course of business,
incurred or assumed, or agreed to incur or assume, any material Liability
(whether or not currently due and payable);
(xv) to the Knowledge of Seller, Seller has not disposed of or
permitted to lapse any rights to the use of any patent, trademark, trade name or
copyright material to the Business or the operation of the Business, or disposed
of or disclosed to any person other than representatives of the Purchaser any
material trade secret, formula, process or know-how not theretofore a matter of
public knowledge;
(xvi) Seller has not terminated, or agreed to terminate, or
failed to renew or received any written threat to terminate or fail to renew,
any material Contract, license or Permit and/or Approval, except where such
termination or failure to renew would not have, individually or in the
aggregate, a Material Adverse Effect on Seller; and
(xvii) Seller has not entered into, or agreed to enter into, any
transaction out of the ordinary course of business or where the same could
reasonably be expected to have a Material Adverse Effect on Seller.
4.7 Taxes. Seller has filed or caused to be filed all material Tax
Returns required to be filed by it under applicable law, and such Tax Returns
are true and correct in all material respects. Seller has, within the time and
in the manner prescribed by law, paid directly or indirectly (and until the
Closing will pay directly or indirectly within the time and in the manner
prescribed by law) all Taxes that are due and payable by it. To the Knowledge of
Seller and Parent, except as set forth on Section 4.7 of the Disclosure
Schedule, no examination of any Tax Return is underway as of the date of this
Agreement and there is no action, suit, claim, assessment, or audit pending or
proposed in writing with respect to Taxes relating to the Transferred Assets.
There are no outstanding (a) powers of attorney granted by Seller concerning any
matter relating to Taxes, (b) agreements or waivers extending the statutory
period of limitation applicable to any Tax Return of Seller, or (c) Encumbrances
(and immediately following the Closing Date there will be no Encumbrances) on
the assets of Seller relating to or attributable to Taxes other than
Encumbrances for Taxes not yet due and payable or those being contested in good
faith and for which adequate reserves have been made. Neither Seller nor Parent
has knowledge of any basis for the assertion of any Claim relating or
attributable to Taxes which, if adversely determined, would result in any
Encumbrance on the assets of Seller. None of Seller's assets are treated as
"tax-exempt use property", within the meaning of Section 168(h) of the Code.
Seller is not a person other than a United States person within the meaning of
the Code. Seller has withheld and paid over all material Taxes that it was
13
required to withhold from amounts owing to any employee, creditor or Third Party
and has complied with all material applicable laws, rules and regulations
relating to the withholding and payment of Taxes, including receiving the
appropriate documentation necessary with respect to the withholding of Taxes
(e.g. Forms W-8 and W-9) relating to any payments made to any person.
4.8 Legal Proceedings. Except as set forth on Section 4.8 of the
Disclosure Schedule, there are no Orders outstanding and no Actions or
Proceedings pending against Seller, its business, assets and properties, or any
of its officers and managers, in their capacities as such. To the Knowledge of
Seller, there are no Claims, Actions or Proceedings threatened against Seller or
its business, assets or properties, or that questions or challenging the
validity of this Agreement or the transactions contemplated hereby. To the
Knowledge of Seller, no employee has filed a complaint with any Governmental or
Regulatory Authority pertaining to labor or employment matters.
4.9 Compliance With Laws and Orders. Seller is in compliance in all
material respects with all applicable laws, rules, regulations, ordinances,
decrees, Orders, judgments or Permits and/or Approvals, and has not received any
notices of violation with respect to any federal, state, local or foreign
statute, law or regulation regarding the conduct of its business or the
ownership or operation of its business.
4.10 Restrictions on Business Activities. To the Knowledge of Seller,
there is no agreement, judgment, injunction, order or decree binding upon Seller
that has or could reasonably be expected to have the effect of prohibiting or
impairing any current or future business practice of Seller, any acquisition of
property by Seller or the conduct of business by Seller as currently conducted
or as proposed to be conducted by Seller.
4.11 Employees. Section 4.11 of the Disclosure Schedule lists all
Contracts providing for a commitment of employment or consulting services (and
provides a description of all such oral agreements) to which Seller is a party
which either (i) contain severance, bonus or other provisions triggered by the
Closing or the termination of such Contract or (ii) contain obligations
continuing beyond the Closing Date, and true, correct and complete copies of all
such written agreements have been delivered to Purchaser. In addition, Section
4.11 of the Disclosure Schedule identifies all current employees and consultants
of Seller, including all officers of Seller, and describes the job title of and
compensation (including salary, bonuses and perks) payable to, each such
individual. To the Knowledge of Seller, none of such employees has indicated to
Seller a present intention to resign or retire, and Seller does not have a
present intention to terminate the employment of any of them without their
consent. No employee of Seller is in violation of any term of any employment
contract or other contract or agreement relating to the relationship of any such
employee with Seller or any other party (including prior employers) because of
the nature of the business now conducted by Seller. There is no strike, labor
dispute or union organization activities pending or, to the Knowledge of Seller,
threatened, involving Seller, or its employees. With respect to all of Seller's
employees in the United States, Seller has obtained documentation within the
initial three days of employment of each employee's identity and eligibility to
work in the United States, and no such employees will lose their eligibility to
work in the United States for the period of one year following the Closing
14
Date. Section 4.11 of the Disclosure Schedule identifies each of Seller's
employees in the United States whose eligibility to work in the United States
exists pursuant to an issued work permit or visa, and describes the current
status of each such individual's immigration status. Seller has taken, and will
have taken at all times prior to the Closing Date, all steps to perfect each
such employee's immigration status. Seller is in compliance with all applicable
United States and foreign immigration laws with respect to its employees.
4.12 Seller Employee Benefit Plans. Except as set forth in Section 4.12
of the Disclosure Schedule, Seller does not have any Employee Benefit Plan as
defined in ERISA. Seller has not entered into any severance or similar
arrangement in respect of any present or former personnel that will result in
any obligation (absolute or contingent) of Purchaser to make any payment to any
present or former personnel following termination by Purchaser of employment by
Purchaser.
4.13 Real Property.
(a) Seller does not own any real property.
(b) Section 4.13(b) of the Disclosure Schedule contains a list of
each parcel of real property leased by Seller (as lessor or lessee). Each lease
set forth in Section 4.13(b) of the Disclosure Schedule is a legal, valid and
binding agreement, enforceable in accordance with its terms, and no material
default has occurred, nor has there occurred any event which with notice, the
passage of time, or both, would constitute a material default under such lease.
(c) (i) There are no structural, electrical, mechanical, plumbing,
roof, paving or other defects in any improvements located on any such real
property as could, either individually or in the aggregate, have a material
effect on the use, development, occupancy or operation thereof as presently
contemplated, (ii) there are no natural or artificial conditions upon any such
real property or any other facts or conditions which could, in the aggregate,
have a material effect on the transferability, financeability, ownership,
leasing, use, development, occupancy or operation of any such real property,
(iii) there are no parties in possession of any portion of any such real
property, whether as tenants, trespassers or otherwise, except Seller, (iv)
there are no pending or, to the Knowledge of Seller, threatened assessments,
improvements or activities of any public or quasi-public body either planned, in
the process of construction or completed which may give rise to any material
assessment against any such real property, and (v) all utilities required for
the conduct of the business as presently conducted are installed and legally
available for use at such real property upon payment at market rate consumption
charges.
4.14 Title to Property and Assets. Except as set forth in Section 4.14
of the Disclosure Schedule, Seller is the lawful owner of the Transferred
Assets, pursuant to good and marketable title, and has the complete and
unrestricted power and the unqualified right to sell, transfer, assign and
deliver the Transferred Assets to Purchaser. The Transferred Assets will be
transferred to Purchaser on the Closing Date free and clear of all Encumbrances
and, upon the Closing, Purchaser will be vested with good and marketable title
to the Transferred Assets. Section 2.1(c) of Schedule A contains a list of all
machinery, equipment and other personal property owned by Seller. Except for the
Excluded Assets, the Transferred Assets constitute all assets necessary to
operate the Business.
15
4.15 Subsidiaries; Shareholders. Seller does not own, directly or
indirectly, any interest in any other corporation, partnership, limited
liability company, joint venture or other legal entity. Other than Parent, no
other Person owns or has rights to acquire any shares of Seller.
4.16 Intellectual Property Rights.
(a) Section 4.16 of the Disclosure Schedule contains an accurate and
complete description of all Seller Intellectual Property.
(i) except as set forth in Section 4.16(a)(i) of the Disclosure
Schedule, each item of Seller Intellectual Property is free and clear of any
Encumbrances;
(ii) Seller is the sole and exclusive owner of all right, title
and interest in Seller Intellectual Property, subject to those nonexclusive
licenses to use such Seller Intellectual Property, except for those items
included in Seller Intellectual Property that is identified in Section 4.16 of
the Disclosure Schedule that is exclusively licensed by Seller;
(iii) Seller is the owner of all right, title and interest in,
and has good title to, (a) all trademarks, service marks and trade names used in
connection with the operation or conduct of the business of Seller, including
the sale of any products or technology or the provision of any services by
Seller, (b) all copyrighted works that are or are part of Seller products, (c)
all patents and patent applications of Seller Intellectual Property, and (d)
other works of authorship and inventions that Seller otherwise purports to own;
(iv) Seller has not transferred ownership of any right, title or
interest in, or granted any license under or right to use or authorized the
retention of any rights to use, any Intellectual Property that is or was Seller
Intellectual Property, to any other Person;
(v) except as set forth in Section 4.16(a)(v) of the Disclosure
Schedule, there are no Persons to whom Seller has delivered copies of the source
code to any Seller Intellectual Property, whether under an escrow arrangement or
otherwise, or Persons who have the right to receive such source code;
(vi) except as set forth in Section 4.16(a)(vi) of the Disclosure
Schedule, all Seller Intellectual Property, including any item thereof, is and
will be fully transferable, assignable and licensable by or between Seller or
Purchaser without restriction and without payment of any kind to any Third
Party;
(vii) the consummation of the transactions contemplated by this
Agreement will not result in the loss of, or otherwise adversely affect, any
ownership rights of Seller in any Seller Intellectual Property;
(viii) the consummation of the transactions contemplated by this
Agreement will not result in the breach or termination of any license, contract
or agreement to which Seller is a party respecting any Intellectual Property;
16
(ix) the operation of the Business by Seller: (a) does not, and
(b) to the Knowledge of Seller, will not, when conducted in substantially the
same manner following the Closing, infringe or misappropriate any Intellectual
Property of any Person, violate the rights of any Person, or constitute unfair
competition or trade practices under the laws of any jurisdiction, and Seller
has not received notice from any Person claiming that such operation or any act,
product, process, technology or service (including products, processes,
technology or services currently under development) of Seller infringes or
misappropriates any Intellectual Property of any Person or constitutes unfair
competition or trade practices under the laws of any jurisdiction or any Claim
challenging the ownership, validity or effectiveness of any of Seller
Intellectual Property (nor is Parent or Seller aware of any basis therefor);
(x) to the Knowledge of Seller, there are no contracts, licenses
or agreements between Seller and any other Person with respect to Seller
Intellectual Property under which there is any dispute regarding the scope of
such agreement or performance under such agreement, including with respect to
any payments to be made or received by Seller thereunder;
(xi) to the Knowledge of Seller, no Person (including any
employee or former employee of Seller) is infringing, misusing or
misappropriating any Seller Intellectual Property, and neither Parent nor Seller
has received any communication alleging that they have violated, or by
conducting their businesses as proposed, would violate, any patent, trademark,
service ▇▇▇▇, copyright, trade secret or other proprietary right of any Third
Party;
(xii) except as set forth in Section 4.8 of the Disclosure
Schedule, no Seller Intellectual Property or product, process, technology or
service of Seller is subject to any proceeding, lawsuit or action or outstanding
decree, order, judgment, agreement or stipulation that restricts in any manner
the manufacture, use, sale, transfer or licensing by Seller of Seller
Intellectual Property or any product, process, technology or service of Seller
or may affect the validity, use or enforceability of such Seller Intellectual
Property, and there are no Claims challenging or questioning the validity or
effectiveness of any license or agreement relating to any Seller Intellectual
Property;
(xiii) except as set forth in Section 4.16(a)(xiii) of the
Disclosure Schedule, Seller has not entered into any agreement or offered to
indemnify any other Person against any charge of infringement with respect to
any Seller Intellectual Property;
(xiv) Seller has not entered into any agreement granting any
Third Party the right to bring infringement actions with respect to, or
otherwise enforce rights with respect to, any Seller Intellectual Property;
(xv) Seller has the exclusive right to file, prosecute and
maintain all existing applications and registrations with respect to Seller
Intellectual Property;
(xvi) the transfer of Seller Intellectual Property by Seller to
Purchaser upon the Closing will not result in the granting of any rights in or
to the Seller Intellectual Property to any Person other than to Purchaser except
those nonexclusive rights to use such Seller Intellectual Property set out in
Section 4.16 of the Disclosure Schedule;
17
(xvii) Seller has filed applications for registration or issuance
of Seller Intellectual Property listed in Section 4.16(a)(xvii) of the
Disclosure Schedule in the jurisdictions set forth thereon and those
applications are currently pending and have not been abandoned or withdrawn. To
the Knowledge of Seller, Seller has not failed to file in a timely manner any
application to register or issue any Seller Intellectual Property in any
jurisdiction where such failure to timely file could have an adverse impact on
Purchaser's ability to or priority in doing so in such jurisdiction;
(xviii) to the Knowledge of Seller, no Third Party has a reason
to object to or oppose any application filed by Parent or Seller prior to
Closing to register any Seller Intellectual Property;
(xix) except as set forth in Section 4.16(a)(xix) of the
Disclosure Schedule, to the Knowledge of Seller, all Seller Intellectual
Property has been registered, filed, certified or otherwise perfected by
recordation with the proper Governmental or Regulatory Authority, and all
registrations and patents associated with Seller Intellectual Property, whether
owned by Seller or licensed, are valid and subsisting;
(xx) With respect to all software included in Seller Intellectual
Property, Seller maintains documentation and adequately-commented source code
reasonably sufficient to allow such software to be maintained and modified
without undue burden by reasonably competent programmers or engineers skilled in
the art who have access to such documentation and source code. Such software
operates in accordance with the current product specifications and other
published materials regarding the functionality and performance characteristics
of the software. Section 4.16(a)(xx) of the Disclosure Schedule sets forth a
summary description of any problems experienced by Seller in the past 12 months
with respect to such software and the provision of related services to Seller's
clients;
(xxi) The Seller does not and has not used any Public Software,
including maintenance agreements, in connection with the development of its
products or services or incorporated any Public Software into its products or
services. Notwithstanding the foregoing, (a) the Seller is in full compliance
with all Public Software license agreements to which the Seller is a party, and
(b) the Seller's use or incorporation of Public Software has not and does not
(i) grant to any Third Party any rights in the Seller's products, services or
intellectual property, (ii) require the licensing, disclosure, or distribution
of any source code developed by or for the Seller, (iii) require the Seller to
license the use of its products or services to third parties without charge, or
(iv) create restrictions on or immunities to the Seller's enforcement of its
intellectual property rights. "PUBLIC SOFTWARE" means any software that
contains, includes, incorporates, or has instantiated therein, or is derived in
any manner (in whole or in part) from, any software that is distributed pursuant
to a license that (1) requires the licensee to distribute or provide access to
the source code of such software or any portion thereof when the object code is
distributed, (2) requires the licensee to distribute the software or any portion
thereof for free or at some reduced price, or (3) requires that other software
or any portion thereof combined with, linked to, or based upon such software
("COMBINED SOFTWARE") be licensed pursuant to the same license or requires the
distribution of all or any portion of such Combined Software for free or at some
reduced price or otherwise adversely affects the Seller's
18
exclusive ownership of such Combined Software. The term "Public Software"
includes, without limitation, software licensed or distributed under any of the
following licenses or distribution models, or licenses or distribution models
similar to any of the following: (i) GNU's General Public License (GPL) or
Lesser/Library GPL (LGPL); (ii) the Artistic License (e.g., PERL); (iii) the
Mozilla Public License; (iv) the Netscape Public License; (iv) the Sun Community
Source License (SCSL); (vi) the Sun Industry Standards License (SISL); (vii) the
BSD License; and (viii) the Apache License; and
(xxii) Upon transfer of the Seller Intellectual Property at the
Closing, Purchaser will have the requisite rights, titles and interests in the
Seller Intellectual Property to continue to operate the business of Seller as
conducted by Seller prior to the Closing.
(b) To the Knowledge of Seller, there are no actions that must be
taken within ninety (90) days of the date of this Agreement, including the
payment of any registration, maintenance or renewal fees or the filing of any
documents, applications or certificates for the purposes of maintaining,
perfecting or preserving or renewing any registered Seller Intellectual
Property.
(c) In each case in which Seller has acquired any Seller
Intellectual Property rights from any Person, it has obtained a valid and
enforceable assignment sufficient to irrevocably transfer all rights in such
Seller Intellectual Property (including the right to seek past and future
damages with respect thereto) to it and, to the maximum extent provided for by,
and in accordance with, applicable laws and regulations, Seller has recorded
each such assignment with the relevant governmental authorities, including the
U.S. Patent and Trademark Office, the U.S. Copyright Office, or their respective
equivalents in any relevant foreign jurisdiction, as the case may be.
4.17 Privacy Policies. Seller, and its employees, have (i) complied at
all times with all applicable privacy laws and regulations and contractual
obligations regarding the collection, processing, disclosure and use of all data
consisting of personally identifiable information that is, or is capable of
being, associated with specific individuals; (ii) complied with Seller's privacy
policy substantially in the form provided to Purchaser or its counsel with
respect to personally identifiable information; and (iii) taken all appropriate
and industry standard measures to protect and maintain the confidential nature
of any personally identifiable information that Seller has collected or
otherwise acquired.
4.18 Contracts.
(a) Section 4.18(a) of the Disclosure Schedule (with paragraph
references corresponding to those set forth below) contains a list of each of
the following Contracts to which Seller is a party or by which any of its assets
and properties is bound as of the date of this Agreement:
(i) all material Contracts (excluding Seller Employee Plans)
providing for a commitment of employment or consulting services;
19
(ii) all material Contracts with any Person containing any
provision or covenant prohibiting or limiting the ability of Seller to engage in
any business activity or compete with any Person or prohibiting or limiting the
ability of any Person to compete with Seller;
(iii) all material partnership or joint venture agreements;
(iv) all Contracts relating to Indebtedness which individually or
in the aggregate total $25,000;
(v) all material Contracts providing for (A) the future
disposition or acquisition of any material assets and properties, other than
dispositions or acquisitions in the ordinary course of business, or (B) any
merger or other business combination;
(vi) all material Contracts between or among Seller, on the one
hand, and Parent or any Affiliate of Parent;
(vii) all Contracts that (A) limit or contain restrictions on the
ability of Seller to declare or pay dividends on, to make any other distribution
in respect of, or to issue or purchase, redeem or otherwise acquire its
membership interests, to incur Indebtedness, to incur or suffer to exist any
Encumbrance, to purchase or sell any assets and properties, to change the lines
of business in which it participates or engages, or to engage in any merger or
other business combination, or (B) require Seller to maintain specified
financial ratios or levels of net worth or other indicia of financial condition;
(viii) all collective bargaining agreements;
(ix) all licensing agreements providing for the payment to or
from the Seller of $25,000 or which are necessary in order to carry on the
Business; and
(x) all other material Contracts binding upon or that relate to
the Transferred Assets except the Transferred Contracts set forth in Section
2.1(b) and the Contracts listed in Section 2.2(a) of Schedule A.
(b) Parent has previously delivered to Purchaser a true, correct and
complete copy of each written Contract listed in Section 4.18(a) of the
Disclosure Schedule, (as amended to date) and a written summary setting forth
the terms and conditions of each oral agreement referred to in Section 4.18(a)
of the Disclosure Schedule; each such Contract constitutes the entire agreement
between Seller, on the one hand, and the other party(ies) to such Contract, on
the other hand; no such Contract has been modified or amended in any respect;
and no party has repudiated any provision of any Contract. Except as set forth
in Section 4.18(b) of the Disclosure Schedule, each Contract disclosed in
Section 4.18(a) of the Disclosure Schedule is in full force and effect and may
be transferred to Purchaser pursuant to this Agreement and will continue in full
force and effect thereafter, in each case without breaching the terms thereof or
resulting in the forfeiture or impairment of any rights thereunder and without
the consent, approval or act of, or the making of any filing with, any other
party. Seller has fulfilled and performed its obligations under each of the
Transferred Contracts, and Seller is not in, or
20
received notice that it is in, breach or default under, nor has the other party
alleged there to be any basis for termination of, any of the Transferred
Contracts and to Seller's knowledge no other party to any of the Transferred
Contracts has breached or defaulted thereunder, and no event has occurred and no
condition or state of facts exists which, with the passage of time or the giving
of notice or both, would constitute such a default or breach by Seller or by any
such other party.
(c) No party to any Transferred Contract has communicated to Parent
or Seller any intention to cancel, withdraw, modify or amend such contract,
agreement or arrangement whether by reason of the transactions contemplated by
this Agreement or otherwise.
4.19 Permits and/or Approvals. Seller has or will have applied for all
Permits and/or Approvals required for the conduct of the Business as presently
conducted and for the ownership, leasing, use, development, occupancy and
operation of its assets and properties. Each such Permit and/or Approval is
valid, binding and in full force and effect, and the status of such Permit
and/or Approval may be transferred to Purchaser pursuant to this Agreement and
will continue in full force and effect thereafter. To the Knowledge of Seller,
Seller is not in default (or with the giving of notice or lapse of time or both,
would be in default) under any such Permit and/or Approval.
4.20 Affiliate Transactions. Except as disclosed on the Financial
Statements, there is no Indebtedness or other amounts owing under Contracts
between Seller, on the one hand, and Parent, any officer, manager, or Affiliate
(other than Seller) of Parent, on the other hand.
4.21 Complete Copies of Materials. Seller has delivered true and
complete copies of each document that has been requested by Purchaser or its
counsel in connection with their due diligence review of Seller.
4.22 Accounts Receivable; Inventory. Subject to any allowances set
forth in Seller's Balance Sheet, the accounts receivable shown in the Balance
Sheet, (i) arose in the ordinary course of business; (ii) were not, as of the
Financial Statement Date, subject to any discount, contingency, Claim of offset
or recoupment or counterclaim; and (iii) represented, as of the Financial
Statement Date, bona fide Claims against debtors for sales, leases, licenses and
other charges. All accounts receivable of Seller arising after the Financial
Statement Date through the date of this Agreement arose in the ordinary course
of business and, as of the date of this Agreement, are not subject to any
discount, contingency, Claim of offset or recoupment or counterclaim, except for
normal allowances consistent with past practice. The amount carried for doubtful
accounts and allowances disclosed in the Balance Sheet is believed sufficient to
provide for any losses which may be sustained on realization of the accounts
receivable shown in the Balance Sheet. As of the Financial Statement Date, the
inventories shown on the Balance Sheet consisted of items of a merchantable
condition and of a quantity and quality suitable, usable and salable in the
ordinary course of business for the purpose for which they are intended. All
such inventories are valued on the Balance Sheet in accordance with GAAP and
sufficient allowances have been established on the Balance Sheet, in each case
in an adequate amount for slow moving, obsolete or unusable inventories. The
inventories shown on the Balance Sheet do not consist of any items manufactured
to a particular customer's specifications effectively rendering the inventories
saleable only to that customer.
21
4.23 Customers and Suppliers. As of the date hereof, no customer that
individually accounted for more than 5% of Seller's gross revenues during the
12-month period preceding the date hereof and no supplier of Seller that
individually accounted for more than 5% of Seller's purchases during the
12-month period preceding the date hereof has canceled or otherwise terminated,
or made any written threat to Seller to cancel or otherwise terminate its
relationship with Seller or has at any time on or after the Financial Statement
Date, decreased materially its services or supplies to Seller in the case of any
such supplier, or its usage of the services or products of Seller in the case of
such customer, and no such supplier or customer has indicated either orally or
in writing that it intends to cancel or otherwise terminate its relationship
with Seller or to decrease materially its services or supplies to Seller or its
usage of the services or products of Seller, as the case may be. Seller has not
knowingly breached any agreement, or engaged in any fraudulent conduct with
respect to, any customer or supplier of Seller.
4.24 Insurance. Seller has delivered to Purchaser copies of each
insurance policy (including policies providing property, casualty, liability,
and workers' compensation coverage and bond and surety arrangements) with
respect to which Seller is a party, a named insured, or otherwise the
beneficiary of coverage as of the date of this Agreement and such policies are
sufficient to meet Seller's existing legal and contractual obligations. With
respect to each such insurance policy: (i) the policy is legal, valid, binding,
enforceable and in full force and effect in all respects and there has been no
notice of cancellation or nonrenewal of the policy received; (ii) Seller is not
in breach or default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice or the lapse of
time, would constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; and (iii) no party to the
policy has repudiated any provision thereof. Section 4.24 of the Disclosure
Schedule summarizes all insurance policies and any self-insurance arrangements
presently maintained by, or for the benefit of, Seller as of the date of this
Agreement.
4.25 Brokers; Finders. No broker, investment bank, financial advisor or
other Person, is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon the arrangements made by or on behalf of Parent or
Seller.
4.26 Questionable Payments. Neither Seller nor any manager, officer or
other employee, agent or representative of Seller: (i) has made any payments or
provided services or other favors in the United States or in any foreign country
in order to obtain preferential treatment or consideration by any Governmental
or Regulatory Authority with respect to any aspect of the business of Seller; or
(ii) has made any political contributions which would not be lawful under the
laws of the United States or the foreign country in which such payments were
made. To the Knowledge of Seller, neither Seller, nor any manager, officer or
other employee, agent or representative of Seller or any customer or supplier of
any of them has been the subject of any inquiry or investigation by any
Governmental or Regulatory Authority in connection with payments or benefits or
other favors to or for the benefit of any governmental or armed services
official, agent, representative or employee with respect to any aspect of the
business of Seller or with respect to any political contribution.
22
4.27 Diligent Inquiry. With respect to any matter qualified by the
Knowledge of Seller, Parent has made diligent inquiry into such matter.
4.28 Accounts Payable. Except as set forth in Section 4.28 of the
Disclosure Schedule, Seller has no Liabilities with respect to third parties
except for (i) Liabilities reflected in the Balance Sheet and (ii) Liabilities
which have arisen after the Financial Statement Date in the ordinary course of
business and which are not required to be disclosed pursuant to the terms of
Section 4.6(d) hereof. In particular, Seller has no Liabilities for amounts
previously accrued as accounts payable and then subsequently written off,
regardless of whether such write-off occurred because Seller failed to receive a
timely invoice from the Third Party or for other reasons.
4.29 Disclosure. No representation or warranty made by Parent or Seller
in this Agreement or the exhibits or schedules hereto or certificates delivered
hereunder, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements or
facts contained herein or therein not misleading in light of the circumstances
under which they were furnished.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser and FUN hereby represent and warrant to Seller that the
statements contained in this ARTICLE V are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing (as though
made as of the Closing and as though the Closing Date were substituted for the
date of this Agreement throughout this ARTICLE V).
5.1 Corporate Existence of Purchaser. Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of Delaware.
Purchaser and FUN have full corporate power and authority to execute and deliver
this Agreement, to perform their respective obligations hereunder and thereunder
and to consummate the transactions contemplated hereby. Purchaser has delivered
true and correct copies of its Charter Documents to Seller.
5.2 Authority. The execution and delivery by Purchaser and FUN of this
Agreement and the performance by Purchaser and FUN of their respective
obligations hereunder and thereunder has been duly and validly authorized by the
respective Board of Directors of Purchaser and FUN, no other corporate action on
the part of Purchaser or FUN or their respective stockholders being necessary.
This Agreement has been duly and validly executed and delivered by Purchaser and
FUN, and constitutes, and upon the execution and delivery by Purchaser and FUN
will constitute, legal, valid and binding obligations of Purchaser and FUN
enforceable against Purchaser and FUN in accordance with its terms.
5.3 No Conflicts. The execution and delivery by Purchaser and FUN of
this Agreement does not, and the performance by Purchaser and FUN of their
respective obligations under this Agreement and the consummation of the
transactions contemplated hereby will not: (a) conflict with or result in a
violation or breach of any of the terms, conditions or provisions of the
respective Certificate of Incorporation, Bylaws or any other Charter Documents
of Purchaser
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or FUN; or (b) subject to obtaining the consents, approvals and actions, making
the filings and giving the notices described in Section 5.4, conflict with or
result in a violation or breach of any law or Order applicable to Purchaser or
FUN, or any of their respective assets and properties; except as could not
reasonably be expected to have a Material Adverse Effect on the validity or
enforceability of this Agreement or on the ability of Purchaser or FUN to
consummate the transactions contemplated hereby or to perform any of their
respective obligations hereunder.
5.4 Governmental Approvals and Filings and Third Party Consents.
(a) No consent, approval or action of, filing with or notice to any
Governmental or Regulatory Authority on the part of Purchaser or FUN is required
in connection with the due execution, delivery or performance of this Agreement
or the consummation of the transactions contemplated hereby.
(b) There are no consents, waivers or approvals required to be
obtained by Purchaser or FUN in connection with the due execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated hereby, other than the consent of Liberty Media Corporation.
5.5 Legal Proceedings. There are no Orders outstanding and no Actions
or Proceedings pending or, to Purchaser's and FUN's knowledge, threatened
against, relating to or affecting Purchaser or FUN which could reasonably be
expected to delay or to result in the issuance of an Order restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the transactions contemplated by this Agreement or otherwise to impair the
ability of Purchaser or FUN to perform their respective obligations under this
Agreement and to consummate the transactions contemplated hereby.
5.6 Purchaser Shares. All of Purchaser's issued and outstanding
authorized capital stock is indirectly owned by FUN.
5.7 Financing. Purchaser and FUN currently have, or at Closing will
have available to it all of the funds necessary to complete all of the
transactions contemplated by this Agreement.
5.8 No Business Activities. Purchaser has not conducted any activities,
other than in connection with the organization of Purchaser, the negotiation and
execution of this Agreement and the consummation of the transactions
contemplated hereby. Purchaser has no subsidiaries.
5.9 Disclosure. No representation or warranty made by Purchaser or FUN
in this Agreement or the exhibits or schedules hereto or certificates delivered
hereunder, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements or
facts contained herein or therein not misleading in light of the circumstances
under which they were furnished.
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ARTICLE VI
COVENANTS
6.1 Proper Liquidation. In the course of Seller's liquidation following
the Closing, Seller shall comply with all applicable laws, including without
limitation, all laws with respect to creditor's rights.
6.2 Confidentiality. Each party hereto will hold, and will cause its
Affiliates, and their respective representatives, to hold in strict confidence
from any Person (other than any such Affiliate), unless (i) compelled to
disclose by judicial or administrative process (including in connection with
obtaining the necessary approvals of this Agreement and the transactions
contemplated hereby of Governmental or Regulatory Authorities) or by other
requirements of law, including the Securities Exchange Act, or (ii) disclosed in
an Action or Proceeding brought by a party hereto in pursuit of its rights or in
the exercise of its remedies hereunder (but only to the extent such party uses
reasonable efforts to seek judicial protection from the public disclosure of
such information), all documents and information concerning the other party or
any of its Affiliates furnished to it by the other party or such other party's
representatives in connection with this Agreement or the transactions
contemplated hereby, including any information obtained by Seller or Parent in
connection with access provided by Purchaser to its books and records pursuant
to Section 6.8(c) hereof, except to the extent that such documents or
information can be shown to have been (a) previously known by the party
receiving such documents or information; (b) in the public domain (either prior
to or after the furnishing of such documents or information hereunder) through
no fault of such receiving party, or (c) later acquired by the receiving party
from another source if such source is under no obligation to another party
hereto to keep such documents and information confidential; provided that
following the Closing the foregoing restrictions will not apply to Purchaser's
use of documents and information concerning Seller furnished by Parent
hereunder.
6.3 Employees. Purchaser (i) shall make an offer of employment to
▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ on terms and with job responsibilities
materially similar to those currently in place with Seller, provided, however,
that the employment agreements offered to ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall
provide that neither employee can be terminated by Purchaser for any reason
other than cause prior to December 31, 2006 and, with respect to the employment
agreement offered to ▇▇▇▇▇▇▇ ▇▇▇▇▇, he shall be permitted to provide financial
reporting services to Parent as he currently does as long as Parent agrees to
reimburse Purchaser for one third of the salary and benefits paid to ▇▇. ▇▇▇▇▇,
and (ii) will assume any and all obligations for severance benefits, whole or
partial vacation days that have been earned but unused, incentive benefits,
retention benefits, employee benefit plans (as such term is defined under
Section 3(3) of ERISA) and any other obligations, with respect to each of
Seller's employees. With respect to each of Seller's employees that subsequently
accept employment with Purchaser, Seller hereby waives Seller's rights with
respect to any provision prohibiting such employee(s) from competing with
Seller.
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6.4 Publicity. Seller or Parent shall not make any press release or
other public disclosure concerning this Agreement or the transactions
contemplated hereby, without advance approval thereof by Purchaser.
Notwithstanding the foregoing, Parent and FUN shall each be permitted to make
public disclosures concerning this Agreement or the transactions contemplated
hereby in connection with its compliance with its reporting obligations under
the Securities Exchange Act and any other applicable laws.
6.5 Power of Attorney. Seller hereby irrevocably constitutes and
appoints Purchaser as its true and lawful attorney-in-fact, with full power of
substitution, in the name of Seller, on behalf of and for the benefit of
Purchaser, to endorse, without recourse, checks, notes and other instruments
relating to the Transferred Assets in the name of Seller. Seller agrees that the
foregoing powers are coupled with an interest and shall be irrevocable by
Seller. Seller further agrees that Purchaser shall retain for its own account
any amounts collected pursuant to the foregoing powers and Seller shall promptly
transfer and deliver to Purchaser any cash or other property received by Seller,
directly or indirectly, at any time after the Closing Date in respect of any
accounts receivable or otherwise relating to the Transferred Assets.
6.6 Further Assurances; Post-Closing Cooperation.
(a) Subject to the terms and conditions of this Agreement, at any
time or from time to time after the Closing, Parent and Seller shall execute and
deliver such other documents and instruments, provide such materials and
information and take such other actions as may reasonably be necessary to
fulfill its obligations under this Agreement to which it is a party and to vest
to Purchaser full title to the Transferred Assets.
(b) If, in order properly to prepare its Tax Returns, other
documents or reports required to be filed with Governmental or Regulatory
Authorities or its financial statements or to fulfill its obligations hereunder,
it is necessary that a party be furnished with additional information, documents
or records relating to the business or condition of Seller and such information,
documents or records are in the possession or control of another party, such
other party agrees to use commercially reasonable efforts to furnish or make
available such information, documents or records (or copies thereof) at the
recipient's request, cost and expense. Any information obtained by Parent in
accordance with this paragraph shall be held confidential by Parent in
accordance with Section 6.2.
(c) Notwithstanding anything to the contrary contained in this
section, if the parties are in an adversarial relationship in litigation or
arbitration, the furnishing of information, documents or records in accordance
with any provision of this section shall be subject to applicable rules relating
to discovery.
6.7 Non-Competition and Non-Solicitation.
Other than with the express written consent of Purchaser:
(a) For a period of two (2) years following the Closing, Parent and
Seller shall not engage, directly or indirectly, through any Person or
contractual arrangement, in any business anywhere in North America that
develops, manufactures, produces, supplies or sells any
26
products of the kind developed, manufactured, produced, supplied or sold by
Seller as of the Closing Date ("COMPETES"), or directly or indirectly through
any Person or contractual arrangement, perform management, executive or
supervisory functions with respect to, operate, join, control, render financial
assistance to, receive any economic benefit from, exert any influence upon, or
participate in or allow any of its officers or employees to be connected as an
officer, employee, partner, member, stockholder of greater than ten percent
(10%) of the outstanding equity of, consultant or otherwise with, any business
or Person that directly Competes in whole with the business of Seller in North
America.
(b) For a period of two (2) years following the Closing, Seller and
Parent shall not, directly or indirectly, through any person or contractual
arrangement, solicit or recruit any person who at the time of such solicitation
or recruitment is a Company Group Employee. The foregoing shall not prohibit a
general solicitation to the public of general advertising or similar methods of
solicitation by search firms not specifically directed at Company Group
Employees. For purposes of this Section 6.7, "COMPANY GROUP EMPLOYEES" means,
collectively, officers and employees of the Purchaser.
6.8 Tax Covenants.
(a) Preparation of W-2's, etc. Purchaser may employ individuals who
immediately before the Closing Date were employed in the Business of Seller.
Pursuant to Rev. Proc. 2004-53, 2004-34 I.R.B. 320, provided that Seller or
Parent provide Purchaser with all necessary payroll records for the calendar
year which includes the Closing Date, Purchaser shall furnish a Form W-2 to each
employee employed by Purchaser who had been employed by Seller disclosing all
wages and other compensation paid for such calendar year, and taxes withheld
therefrom, and Seller shall be relieved of the responsibility to do so.
(b) Backup Withholding. Seller or Parent shall provide Purchaser
with copies of the appropriate documentation (e.g. Forms W-8 and W-9) in its
possession relating to backup withholding taxes with respect to any payments
made to any person.
6.9 Bulk Sales Laws. Seller shall comply with all applicable bulk sales
laws, including giving the Department of Revenue notice of the sale as required
and delivering a certificate from the Department of Revenue as required by
Pennsylvania bulk sales laws.
6.10 Fantasy Cup Auto Racing Lien. Within 60 days following the Closing
Date, Seller shall provide Purchaser and FUN with written evidence that the lien
against the trademark "FANTASY CUP AUTO RACING" as described in Section 4.14 of
the Disclosure Schedule has been discharged.
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ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PARTIES
7.1 Obligations of the Parties. The obligations of the parties to
consummate the purchase and sale hereunder are subject to the fulfillment, at or
before the Closing, of each of the following conditions:
(a) Orders and Laws. There shall not be in effect on the Closing
Date any Order or law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement.
(b) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the transactions contemplated hereby
shall be and remain in effect, nor shall any proceeding brought by an
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, seeking any of the foregoing be pending,
which could reasonably be expected to have a Material Adverse Effect on
Purchaser after the Closing, nor shall there be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the transactions contemplated hereby, which makes the consummation
of the transactions contemplated hereby illegal.
(c) Regulatory Consents and Approvals. All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit Parent, Seller and Purchaser to perform their obligations
under this Agreement and to consummate the transactions contemplated hereby
shall have been duly obtained, made or given and shall be in full force and
effect, and all waiting periods imposed by any Governmental or Regulatory
Authority necessary for the consummation of the transactions contemplated by
this Agreement shall have expired or been terminated.
7.2 Obligations of Purchaser. The obligations of Purchaser hereunder
are subject to the fulfillment, at or before the Closing, of each of the
following conditions (all or any of which may be waived in whole or in part by
Purchaser in its sole discretion):
(a) Representations and Warranties. The representations and
warranties made by Seller and Parent in this Agreement shall be true and correct
on and as of the Closing Date or, in the case of representations and warranties
made as of a specified date earlier than the Closing Date, on and as of such
earlier date.
(b) Performance. Parent and Seller in all material respects shall
have performed and complied with, the agreements, covenants and obligations
required by this Agreement to be so performed or complied with by Parent and
Seller at or before the Closing.
(c) Third Party Consents and Releases. All consents, waivers or
approvals required to be obtained by Seller with respect to the Transferred
Assets or the consummation of the transactions contemplated by this Agreement
shall have been obtained and shall be in full
28
force and effect and in forms satisfactory to Purchaser, including, without
limitation, consents from Sports Team Analysis and Tracking Systems of Missouri,
Inc., Speed Channel Inc. and ▇▇▇▇▇▇▇▇▇ Family Limited Partnership.
(d) Assignment and ▇▇▇▇ of Sale. Purchaser shall have received an
original general assignment and ▇▇▇▇ of sale, substantially in the form attached
hereto as Exhibit B;
(e) Intellectual Property Assignment Purchaser shall have received
an original assignment of Seller Intellectual Property (including applications
for such patents and trademarks), substantially in the form attached hereto as
Exhibit C;
(f) No Other Litigation. There shall not be pending any legal
proceeding: (i) challenging or seeking to restrain or prohibit the consummation
of any of the other transactions contemplated by this Agreement; (ii) relating
to the transactions contemplated hereby and seeking to obtain from Purchaser or
Seller, any damages or other relief that would be material to Purchaser; or
(iii) which would affect adversely the right of Purchaser or Seller to own the
Transferred Assets.
(g) Employees. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have entered
into employment contracts with Purchaser in the form attached hereto as Exhibit
D.
(h) FIRPTA Certificate. Seller and Parent shall deliver to Purchaser
at or prior to Closing a certificate of non-foreign status, in form and
substance consistent with Treasury Regulation Section 1.1445-2, provided
however, if such certificate is not provided, Purchaser may withhold any
applicable Taxes.
(i) Discharge of Security Interests. Seller shall provide evidence,
satisfactory to Purchaser, that there shall be no lien or Encumbrances on any of
the Transferred Assets.
7.3 Obligations of Seller. The obligations of Seller and Parent
hereunder are subject to the fulfillment, at or before the Closing, of each of
the following conditions (all or any of which may be waived in whole or in part
by Seller in Seller's sole discretion):
(a) Representations and Warranties. The representations and
warranties made by Purchaser and FUN in this Agreement, disregarding (solely for
purposes of this Section 7.3(a)) any additional materiality or Material Adverse
Effect limitations therein, shall be true and correct on and as of the Closing
Date or, in the case of representations and warranties made as of a specified
date earlier than the Closing Date, on and as of such earlier date, except where
the failure of such representations and warranties to be true and correct could
not reasonably be expected to have a Material Adverse Effect on Seller.
(b) Performance. Purchaser and FUN, in all material respects, shall
have performed and complied with, the agreements, covenants and obligations
required by this Agreement to be so performed or complied with by Purchaser and
FUN at or before the Closing.
(c) Third Party Consents and Releases. All consents, waivers or
approvals required to be obtained by Purchaser with respect to the consummation
of the transactions
29
contemplated by this Agreement shall have been obtained and shall be in full
force and effect and in forms satisfactory to Seller, including, without
limitation the consent of LIBERTY MEDIA.
ARTICLE VIII
INDEMNIFICATION
8.1 Survival of Representations and Warranties; Indemnification Period.
(a) Notwithstanding any right of Purchaser to investigate the
business of Seller and notwithstanding any facts determined or determinable by
Purchaser pursuant to such investigation or right of investigation, the
representations and warranties of Parent and Seller contained in this Agreement
and in any certificates delivered by Parent and Seller pursuant to this
Agreement shall survive the Closing and continue in full force and effect for a
period of two years after the Closing Date, except that representations and
warranties of Parent and Seller contained in this Agreement and in any
certificates delivered by Parent and Seller pursuant to this Agreement that
relate to the matters set forth in Section 4.1 (Authority), Section 4.7 (Taxes)
and Section 4.16 (Intellectual Property Rights), shall survive the Closing and
continue in full force and effect until the later of one year after the Closing
Date or the expiration of any applicable statutes of limitations (after giving
effect to any extensions or waivers). Notwithstanding anything to the contrary
herein, Purchaser shall not be limited in any manner from exercising any remedy
at law or in equity to which Purchaser may be entitled (and the liabilities of
Parent and Seller shall not be limited) arising out of or relating to (i) any
breach by Parent or Seller of the covenants set forth in ARTICLE VI (Covenants)
and ARTICLE IX (Tax Matters), (ii) any misrepresentation or breach by Parent or
Seller related to the matters set forth in Section 4.1, 4.7 and 4.16, or (iii)
fraud, intentional misrepresentation or breach by Parent, Seller or any of their
Affiliates of the representations, warranties, covenants or agreements contained
herein or in any certificates delivered by Parent or Seller pursuant to this
Agreement.
(b) Notwithstanding any right of Seller to investigate Purchaser and
notwithstanding any facts determined or determinable by Seller pursuant to such
investigation or right of investigation, the representations and warranties of
FUN and Purchaser contained in this Agreement and in any certificates delivered
by FUN and Purchaser pursuant to this Agreement shall survive the Closing and
continue in full force and effect for a period of one year after the Closing
Date, except that representations and warranties of FUN and Purchaser contained
in this Agreement and in any certificates delivered by FUN and Purchaser
pursuant to this Agreement that relate to the matters set forth in Section 5.2
(Authority), shall survive the Closing and continue in full force and effect
until the later of one year after the Closing Date or the expiration of any
applicable statutes of limitations (after giving effect to any extensions or
waivers). Notwithstanding anything to the contrary herein, Seller shall not be
limited in any manner from exercising any remedy at law or in equity to which
Seller may be entitled (and the liabilities of FUN and Purchaser shall not be
limited) arising out of or relating to (i) any breach by FUN or Purchaser of the
covenants set forth in ARTICLE VI (Covenants) and ARTICLE IX (Tax Matters), (ii)
any misrepresentation or breach by FUN or Purchaser related to the matters set
forth in Section 5.2, or (iii) fraud, intentional misrepresentation or breach by
FUN, Purchaser or
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any of their Affiliates of the representations, warranties, covenants or
agreements contained herein or in any certificates delivered by FUN or Purchaser
pursuant to this Agreement.
8.2 Indemnification.
Subject to the provisions and limitations contained in this
ARTICLE VIII, Parent and Seller hereby agree, severally and jointly, to
indemnify, defend and hold harmless Purchaser and its Affiliates (collectively,
the "PURCHASER INDEMNIFIED PARTIES") up to an aggregate amount of $3.85 million
from and against any and all Losses, Actions, Proceedings, Claims and
Liabilities, including expenses of investigation and attorneys' fees and
expenses in connection with any action, suit or proceeding, including any
proceeding between the parties hereto (collectively "PURCHASER LOSSES") which
the Purchaser Indemnified Parties may at any time sustain or incur, which are
occasioned by, caused by or arise out of:
(i) any inaccuracy in or breach of any of the representations and
warranties of Parent and/or Seller in this Agreement;
(ii) arise from any Excluded Liabilities or Excluded Assets or
that relate to the operation of the Business prior to the Closing;
(iii) any breach of any covenants or other agreements made by
Parent and/or Seller in this Agreement; and
(iv) the Dolphin Publications, L.L.C. Litigation.
For the purposes of this ARTICLE VIII, references to the terms "material" and
"materially" and Material Adverse Effect limitations in the representations and
warranties shall be ignored for the purposes of determining Losses related to
any breach or inaccuracy of the representations and warranties. Losses as used
herein is not limited to matters asserted by a Third Party, but includes Losses
incurred or sustained by an indemnified party in the absence of Claims by a
Third Party.
8.3 Limitation of Liability. The liability of any party under Section
8.2 shall be limited as follows: no indemnification shall be owed to an
indemnified party unless and until the aggregate amount of applicable Losses
under this Agreement exceeds $30,000 (the "THRESHOLD"), at which point all
applicable Losses shall be recoverable by an indemnified party from an
indemnifying party.
8.4 Indemnification Procedures.
(a) The indemnified party seeking indemnification under this
Agreement shall promptly notify the indemnifying party of the assertion of any
Claim, Actions and/or Proceedings, or the commencement of any Action and/or
Proceeding by any Third Party, in respect of which indemnity may be sought
hereunder and will give the indemnifying party such information with respect
thereto as the indemnifying party may reasonably request, but failure to give
such notice shall not relieve the indemnifying party of any liability hereunder
(except to the extent that the indemnifying party has suffered actual prejudice
by such failure).
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(b) With respect to indemnification for any matter not involving a
Third Party, if the indemnifying party and indemnified party agree in writing to
the validity and amount of a Claim at or prior to the 30th day (or any mutually
agreed upon written extension thereof) following the indemnified party's
delivery of notice to the indemnifying party of such Claim, such Claim shall be
paid by an indemnifying party. If the indemnifying party and indemnified party
do not agree within such 30 day period (or any mutually agreed upon written
extension thereof), the indemnified party may seek an appropriate remedy at law
or in equity.
(c) The indemnified party shall have the right to control the
defense of any Claim, Action, and/or Proceeding by a Third Party in respect of
which indemnity may be sought hereunder (a "THIRD-PARTY CLAIM"). The indemnified
party shall have the sole and exclusive right to settle any Third-Party Claim on
such terms and conditions as it deems appropriate.
8.5 Purchase Price Adjustment for Tax Purposes. Purchaser, Seller and
Parent agree to treat, to the maximum extent permitted by applicable law, any
payments under this Article VIII as an adjustment to the Purchase Price for all
Tax purposes.
ARTICLE IX
TAX MATTERS
9.1 Transfer Taxes. Seller and Parent shall be responsible for the
timely payment of, and shall indemnify and hold harmless Purchaser and FUN from
and against, all excise, sales (including, without limitation, bulk sales), use,
transfer (including real property transfer or gains), stamp, documentary,
filing, recordation and other similar taxes, if any, together with any interest,
additions or penalties with respect thereto and any interest in respect of such
additions or penalties, arising out of, in connection with, or attributable to
the transactions effected pursuant to this Agreement (the "TRANSFER TAXES").
Seller or Parent and, to the extent required, with the assistance of Purchaser
shall prepare and file all necessary documentation and Tax Returns with respect
to such Transfer Taxes.
ARTICLE X
MISCELLANEOUS
10.1 Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or mailed (first class postage prepaid)
to the parties at the following addresses or facsimile numbers:
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If to Purchaser or FUN, to:
FUN Technologies Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, Mailbox #41
Toronto, Ontario M4W 3R8
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: General Counsel
with a copy to:
Goodmans LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Avi ▇▇▇▇▇▇▇▇▇▇
If to Seller, to:
Fantasy Sports, Inc.
c/o Silverstar Holdings, Ltd.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
If to Parent, to:
Silverstar Holdings, Ltd.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
The Chrysler Building
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
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All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section 10.1, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section 10.1, be deemed given upon receipt, and (iii) if
delivered by mail in the manner described above to the address as provided in
this Section 10.1, be deemed given upon receipt (in each case regardless of
whether such notice, request or other communication is received by any other
Person to whom a copy of such notice, request or other communication is to be
delivered pursuant to this Section 10.1). Any party from time to time may change
its address, facsimile number or other information for the purpose of notices to
that party by giving notice specifying such change to the other party hereto.
10.2 Arbitration. Except as set forth in Section 3.4, any controversy
or Claim arising out of or relating to this Agreement or any of the transactions
contemplated by this Agreement shall be determined by arbitration under the
Rules of the American Arbitration Association to be held in the Borough of
Manhattan, City of New York, New York. The arbitrator shall be jointly selected
by Seller, Parent and Purchaser and shall be a person reasonably experienced in
matters involving commercial transactions. Purchaser shall give Parent written
notice of any arbitration no later than 30 days prior to the commencement of
such arbitration, and Parent shall have the right to be present during any such
arbitration. Judgment upon the award rendered by the arbitrator may be entered
in any court having jurisdiction. All statutes of limitation which would
otherwise be applicable shall apply to any arbitration proceeding. Unless
otherwise agreed to by Seller, Parent and Purchaser, a final decision of the
arbitrator may not be appealed to any court of competent jurisdiction.
Notwithstanding the foregoing, if a final decision has not been rendered by the
arbitrator within six (6) months following the commencement of the arbitration,
Seller, Parent and Purchaser shall be free to abandon the arbitration and
proceed with other available methods of dispute resolution in accordance with
the terms of this Agreement.
10.3 Entire Agreement. This Agreement and the other documents delivered
in connection herewith supersede all prior discussions and agreements between
the parties with respect to the subject matter hereof, and contain the sole and
entire agreement between the parties hereto with respect to the subject matter
hereof.
10.4 Expenses. Seller and Purchaser shall each pay their own respective
costs and expenses incurred in connection with this Agreement, and the
transactions contemplated hereby.
10.5 Waiver. Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party against whom such waiver is asserted. No waiver by
any party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion. All remedies,
either under this Agreement or by law or otherwise afforded, shall be cumulative
and not alternative.
10.6 Amendment. This Agreement may be amended, supplemented or modified
only by a written instrument duly executed by or on behalf of Purchaser, FUN,
Seller and Parent.
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10.7 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other Person other
than any Person entitled to indemnity under ARTICLE VIII.
10.8 No Assignment; Binding Effect. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party hereto and any attempt to
do so will be void. Subject to the preceding sentence, this Agreement is binding
upon, inures to the benefit of and is enforceable by the parties hereto and
their respective successors and assigns.
10.9 Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially affected thereby, (a) such provision will be fully severable, (b)
this Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (c) the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom, and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in economic and legal effect
to such illegal, invalid or unenforceable provision as may be possible.
10.10 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware applicable to a contract
executed and performed in such state, without giving effect to the conflicts of
laws principles thereof. Each of the parties hereto irrevocably consents to the
exclusive jurisdiction of any court located within the State of Delaware in
connection with any matter based upon or arising out of this Agreement or the
matters contemplated hereby and it agrees that process may be served upon it in
any manner authorized by the laws of the State of Delaware for such Persons and
waives and covenants not to assert or plead any objection which it might
otherwise have to such jurisdiction and such process.
10.11 Counterparts; Facsimile. This Agreement may be executed in
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. This Agreement, and any
amendment, waiver or consent pursuant hereto, may be executed by facsimile
signature, which signature will have the same force and effect as an original
signature.
[SIGNATURE PAGE FOLLOWS.]
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[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
IN WITNESS WHEREOF, this Acquisition Agreement has been duly executed and
delivered as of the date first above written.
PURCHASER:
FUN TECHNOLOGIES CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its: Treasurer
FUN:
FUN TECHNOLOGIES INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its: Chief Executive Officer
[Signature Page to Asset Purchase Agreement]
SELLER:
FANTASY SPORTS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President and Chief Executive Officer
PARENT:
SILVERSTAR HOLDINGS, LTD.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President and Chief Executive Officer
2