EXHIBIT 2
-V-
ASSET PURCHASE AGREEMENT
BY AND AMONG
ACTION PERFORMANCE COMPANIES, INC.
("PARENT"),
GORACING INTERACTIVE SERVICES, INC.
("COMPANY"),
LEISUREPLANET HOLDINGS, LTD.
("LEISUREPLANET"),
AND
FANTASY SPORTS, INC.,
("BUYER")
DATED AS OF NOVEMBER 16, 2000
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TABLE OF CONTENTS
PAGE
Article I. Definitions. 12
Article II. Sale and Purchase of Assets.........................................15
2.1 Sale of Transferred Assets.....................................15
(a) Personal Property.....................................15
(b) Cash and Cash Equivalents.............................15
(c) Receivables...........................................15
(d) Lease.................................................16
(e) Contracts.............................................16
(f) Licenses and Permits..................................16
(g) Intellectual Property.................................16
(h) Intangible Assets.....................................16
(i) Records and Documents.................................17
(j) Telephone Numbers; Advertising Material...............17
(k) Name..................................................17
(l) Prepaid Expenses......................................17
(m) Rights of Recovery....................................17
2.2 Method of Conveyance...........................................17
2.3 Assumed Obligations............................................17
2.4 Excluded Obligations...........................................18
2.5 Closing Date...................................................18
2.6 Purchase Price.................................................18
2.7 Payment Terms..................................................18
2.8 Allocation of Consideration....................................18
Article III. Representations and Warranties.....................................19
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3.1 Company and Parent.............................................19
(a) Organization and Qualification........................19
(b) Authorization; No Restrictions, Consents or Approvals.19
(c) Absence of Certain Changes............................20
(d) Taxes.................................................20
(e) Title to Transferred Assets...........................21
(f) Leases................................................21
(g) Contracts and Other Documents.........................22
(h) Labor Difficulties....................................22
(i) ERISA; Employee Benefit Plans.........................23
(j) Employees.............................................24
(k) Licenses and Permits..................................25
(l) Receivables...........................................25
(m) Absence of Undisclosed Liabilities....................26
(n) Compliance With Law...................................26
(o) Intellectual Property and Intangible Assets...........26
(p) Pending Litigation....................................26
(q) Transferred Assets; Ownership of Assets and Rights....27
(r) Financial Statements..................................27
(s) Related Party Transactions............................28
(t) Delivery of Documents.................................28
(u) No Misstatements or Omissions.........................28
3.2 Buyer..........................................................28
(a) Organization and Qualification........................28
(b) Authorization; No Restrictions, Consents or Approvals.29
-viii-
(c) Financial Statements..................................29
(d) Pending Litigation....................................30
(e) Compliance With Law...................................30
(f) Capitalization of Leisureplanet.......................30
(g) No Misstatements or Omissions.........................30
Article IV. Environmental Matters. 31
Article V. Additional Covenants. 31
5.1 Covenant Not to Compete........................................31
5.2 Purchase of Products from Parent...............................31
5.3 Providing of Web-Hosting Services..............................32
5.4 Employees and Employee Benefit Matters.........................32
(a) Employees.............................................32
(b) Employees' Employment.................................32
(c) Worker's Compensation.................................32
(d) Annual Bonuses and Outstanding Commissions............32
(e) Administration........................................33
5.5 Use of Name....................................................33
5.6 Further Assurances.............................................33
Article VI. The Closing. 33
Article VII. Survival of Representations and Warranties; Indemnification........34
7.1 Survival of Representations and Warranties and Covenants.......34
7.2 Indemnification by Company and Parent..........................34
7.3 Escrow Fund; Non-Exclusive Remedy..............................34
7.4 Escrow Period..................................................35
7.5 Claims upon Escrow.............................................35
7.6 Objections to Claims...........................................35
7.7 Indemnification by Leisureplanet and Buyer.....................36
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7.8 Enforcement of Agreement--Indemnification......................36
7.9 Indemnification Payments.......................................36
7.10 Defense of Claims..............................................36
7.11 Remedies Exclusive; Duty to Mitigate...........................38
7.12 Subrogation....................................................38
Article VIII. Brokerage. 38
8.1 Finders and Brokers Fees.......................................38
Article IX. General Provisions. 39
9.1 Sales and Transfer Taxes.......................................39
9.2 No Third Party Beneficiaries...................................39
9.3 Expenses of the Parties; Certain Litigation....................39
9.4 Amendment and Waiver...........................................39
9.5 Miscellaneous..................................................40
9.6 Binding Effect.................................................40
9.7 Publicity......................................................40
9.8 Complete Agreement.............................................40
9.9 Notices........................................................40
9.10 Assignment.....................................................41
9.11 Severability...................................................42
9.12 Choice of Law; Choice of Forum.................................42
(a) Applicable Law........................................42
(b) Dispute Resolution....................................42
9.13 Resolution of Conflicts; Arbitration...........................42
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EXHIBITS
Exhibit A: Knowledge of Parent; Knowledge of Company
Exhibit B: Form of Instrument of Transfer, Assignment and Assumption Agreement
(Transferred Assets and Assumed Obligations)
Exhibit C: Form of Trademark Assignment
Exhibit D: Form of Landlord Estoppel and Consent, and
Form of Lease Assignment
Exhibit E: Form of Consent and Assignment (Contracts)
Exhibit F: Escrow Agreement
Schedules
Schedule 2.1: Transferred Assets
Schedule 2.3: Assumed Obligations
Schedule 3.1: Delivery of Documents
Schedule 5.4: Employment Agreements
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "AGREEMENT") made and entered into
as of November 16, 2000 at 5:00 p.m. EST ("Effective Date"), is by and among
Action Performance Companies, Inc., an Arizona corporation ("PARENT"); goracing
Interactive Services, Inc., an Arizona corporation ("COMPANY"); Leisureplanet
Holdings, Ltd., a company organized and operating under the laws of Bermuda
("LEISUREPLANET"); and Fantasy Sports, Inc., a Delaware corporation ("BUYER").
WHEREAS, Company owns and operates the Business;
WHEREAS, Parent is the record and beneficial owner of one hundred
percent (100%) of the issued and outstanding capital stock of Company;
WHEREAS, Leisureplanet is the record and beneficial owner of one
hundred percent (100%) of the issued and outstanding capital stock of Buyer; and
WHEREAS, subject to the foregoing, Company desires to sell and Buyer
desires to purchase the Transferred Assets and assume the Assumed Obligations,
in accordance with the terms hereinafter contained.
NOW THEREFORE, in consideration of the mutual covenants and promises
hereinafter contained, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto intending
to be legally bound hereby agree as follows:
I DEFINITIONS.
When used in this Agreement and the above Recitals, the following
capitalized terms shall have the meanings specified in this Article I. Other
terms are defined in the text of this Agreement, and throughout this Agreement,
those terms shall have the meanings respectively ascribed to them:
"Additional Agreements" means the Assignment and Assumption Agreement, the
Trademark Assignment, Domain Name Assignment and Assignment and Assumption of
Lease and any other documents, certificates and agreements necessary to
facilitate the transfer of the Transferred Assets as contemplated by this
Agreement.
"Affiliate" or "Affiliates" means, with respect to any Person, any
other Person, directly or indirectly, through one or more intermediaries,
controlling, controlled by, or under common control with, such first mentioned
Person. As used in this definition of Affiliate, the term "control" (including
"controlled by" or "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through ownership of voting securities, as
trustee, by contract, or otherwise.
"Agreement" shall have the meaning given to such term in the Preamble.
"Assignment and Assumption Agreement" means the Instrument of Transfer,
Assignment and Assumption Agreement (Transferred Assets and Assumed
Obligations), in the form attached hereto as Exhibit B and incorporated herein
by reference.
"Assumed Obligations" shall have the meaning given to such term in Section 2.4.
"Business" means the enterprise commonly referred to as Fantasy Sports
Enterprises that: (i) was acquired by the Company in the Asset Purchase
Agreement dated October 15, 1999 by and between ▇▇▇▇▇▇▇▇.▇▇▇, inc., goracing
Interactive Services, Inc., Fantasy Sports Enterprises, Inc., ▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, plus further development, marketing and maintenance performed
by Company to date relating specifically to Fantasy Sports Enterprises; and (ii)
specifically includes the Fantasy Cup Auto Racing and Fantasy Cup College
Football games; but (iii) does not include the manufacture, sale, marketing or
distribution of motorsports-related merchandise utilizing the intellectual
property rights owned or controlled, now or in the future, by Parent or any of
Parent's Affiliates and (iv) does not include any other enterprises or
operations of goracing Interactive Services, Inc. (e.g. ▇▇▇▇▇▇▇▇.▇▇▇).
"Buyer" shall have the meaning given to such term in the Preamble.
"Claim" or "Claims" means any claim, demand, action, cause of action, suit,
enforcement action or proceeding, whether in law or in equity. "Closing" shall
have the meaning given to such term in Section 2.6 of this Agreement. "Closing
Agenda" means the closing agenda dated as of the Closing, a copy of which is
attached to this Agreement as Exhibit H.
"Closing Date" shall have the meaning given to such term in Section 2.6 of this
Agreement. "Company" shall have the meaning given to such term in the Preamble.
"Contracts" shall have the meaning given to such term in Section 2.1(e).
"Employee Benefit Plan(s)" shall have the meaning given to such term in Section
3.1(i). "Employees" shall have the meaning given to such term in Section 5.2(a).
"Environmental Law" shall mean any Law and any enforceable judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to pollution or protection of the
environment or natural resources, including, without limitation, those relating
to the use, handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Material, as in effect as of the date hereof.
"Environmental Permit" shall mean any permit, approval, identification number,
license or other authorization required under or issued pursuant to any
applicable Environmental Law. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended. "Escrow Agent" shall have the meaning assigned
to it in the Escrow Agreement. "Escrow Agreement" means the Escrow Agreement, in
the form attached hereto as Exhibit J and incorporated herein by reference.
"Escrow Fund" means the $250,000 of the Purchase Price to be held in Escrow for
the Escrow Period. "Excluded Assets" means those assets of Company with respect
to the Business which are not part of the Transferred Assets.
"Excluded Obligations" means those obligations of Company with respect to the
Business which are not part of the Assumed Obligations. "Financial Statements"
means the financial statements of Company with respect to the Business described
in Section 3.1(t).
"Governmental Authority" or "Governmental Authorities" means any government, any
governmental entity, department, authority, commission, board, agency or
instrumentality, and
any judicial or administrative court, tribunal or judicial or arbitral body,
whether foreign, supra-national, federal, state or local.
"Hazardous Material" shall mean (i) any petroleum, petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (ii) any chemical, material or
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any applicable Environmental Law.
"Indemnified Losses" means losses, damages, costs, Claims, expenses,
liabilities, Taxes, interest, penalties, suits, judgments, orders, Liens,
obligations and claims of any kind, whether administrative, judicial or
otherwise, including, without limitation, the costs and expenses of assessments,
settlements, investigations and compromises and also including, without
limitation, reasonable attorneys', consultants', accountants' and expert witness
fees and expenses, but excluding any special, indirect or consequential damages
and any damages for lost profits related to Claims.
"Intangible Assets" shall have the meaning given to such term in Section 2.1(h).
"Intellectual Property" shall have the meaning given to such term in Section
2.1(g). "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended. "IRS" shall mean the Internal Revenue Service.
"Knowledge" means with respect to Company, the actual Knowledge of the
individuals listed on Exhibit A, and with respect to Parent, the actual
Knowledge of the individual listed on Exhibit A.
"Laws" means applicable federal, state, local, foreign or other laws, rules,
regulations, guidelines, orders, injunctions, building and other codes,
ordinances, permits, licenses, authorizations, judgments, decrees of federal,
state, local, foreign or other authorities, and all orders, writs, decrees and
consents of any governmental or political subdivision or agency thereof, or any
court or similar Person established by any such governmental or political
subdivision or agency thereof, including but not limited to Laws relating to
zoning, building codes, antitrust, occupational safety and health, consumer
product safety, product liability, hiring, wages, hours, employee benefit plans
and programs, collective bargaining and the payment of withholding and social
security taxes.
"Lease(s)" shall have the meaning given to such term in Section 2.1(d).
"Leased Premises" shall have the meaning given to such term in Section 3.1(f).
"Leisureplanet" shall have the meaning given to such term in the Preamble.
"Leisureplanet Financial Statements" means the financial statements of
Leisureplanet described in Section 3.2(c).
"Leisureplanet Indemnitees(s)" shall have the meaning given to such term in
Section 7.2.
"Liability" means any liability or obligation whether known or unknown, asserted
or unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated and whether due or to become due.
"Licenses and Permits" means licenses, franchises, registrations, permits,
approvals, certificates, certifications and other authorizations from all
applicable Governmental Authorities which are necessary for the conduct of the
Business by Company and the conduct, ownership, use, occupancy or operation of
the Transferred Assets on the Closing Date.
"Liens" means liens, encumbrances, claims, charges, security interests, rights
of the Business
and any third party, rights of redemption, equities, and any other restrictions
or limitations of any kind or nature whatsoever.
"Material Adverse Effect" (including all derivations thereof) means a material
adverse effect to the operations, financial condition, assets or properties of
Company with respect to the Business, each taken as a whole.
"Notice" shall have the meaning given to such term in Section 9.9.
"Parent" shall have the meaning given to such term in the Preamble.
"Person" means any individual, corporation, limited liability company,
partnership, trust, estate, unincorporated association or other entity.
"Personal Property" shall have the meaning given to such term in Section 2.1(a).
"Purchase Price" shall have the meaning given to such term in Section 2.7.
"Receivables" shall have the meaning given to such term in Section 2.1(b).
"Return" means any report, return, statement or other information required to be
supplied to a Governmental Authority in connection with Taxes.
"Seller Indemnitee(s)" shall have the meaning given to such term in Section 7.3.
"Shares" shall have the meaning given to such term in Section 2.7.
"Taxes" shall have the meaning given to such term in Section 3.1(d).
"Transaction Documents" means this Agreement and the Additional Agreements.
"Transferred Assets" shall have the meaning given to such term in Section 2.1.
II SALE AND PURCHASE OF ASSETS.
-------------------------------
1 SALE OF TRANSFERRED ASSETS.
---------------------------
On the terms and subject to the conditions set forth in this Agreement,
Company will sell, convey, transfer and assign to Buyer, and Buyer will purchase
and accept from Company, all right, title and interest of Company in and to
those assets and rights of Company that are used in the Business at the Closing,
and are described in subsections (a) through (o) hereof and are set forth on
Schedule 2.1, and excluding the Excluded Assets, (collectively, the "TRANSFERRED
ASSETS"), free and clear of all Liens, except as otherwise disclosed in the
Company Disclosure Memorandum:
(1) PERSONAL PROPERTY.
-----------------
The machinery, equipment, tools, furniture, office equipment, computer
hardware, supplies, materials, spare parts, vehicles and other items of tangible
personal property owned or leased by Company that are located at its York,
Pennsylvania facility and are used in the Business and listed on Schedule 2.1(a)
(the "PERSONAL PROPERTY").
(A) CASH AND CASH EQUIVALENTS.
--------------------------
The cash and cash equivalents of Company at the Closing Date with
respect to the Business (collectively, the "CASH"), which shall be in a minimum
amount of $750,000.
(2) RECEIVABLES.
-----------
The notes receivable and accounts receivable of Company with respect to
the Business in existence at the Closing and listed on Sechedule 2.1(c)
(collectively, the "RECEIVABLES").
(3) LEASE.
-----
The leasehold interest in the York, Pennsylvania real property located
at 2007 rear, 2009 and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ leased from a
third party (subject to lessor approval), and all of Company's right, title and
interest in and to all improvements thereon, together with all easements, rights
of way, licenses and other interest therein.
(4) CONTRACTS.
---------
The rights and benefits of Company under the contracts, agreements,
personal property leases, the ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ agreements, vendor
agreements, consulting agreements, guaranties, purchase orders and commitments,
leases, non-compete agreements, licenses, indemnities, commitments,
arrangements, purchase and sale orders, and all contracts which were entered
into by Company with an officer, director or significant employee of Company, as
set forth on Schedule 2.1(e); in each case to the extent such rights and
benefits relate solely to the Business and are in existence on the Closing and
may be transferred according to their terms, but specifically excluding
therefrom this Agreement and the Additional Agreements (the "CONTRACTS").
(5) LICENSES AND PERMITS.
--------------------
The Licenses and Permits listed on Schedule 2.1(f), to the extent such
assignment or transfer is permitted by applicable law.
(6) INTELLECTUAL PROPERTY.
---------------------
The patents, copyrights, trademarks, trade names, domain name
registrations, service marks (including the trademark and name "Fantasy Sports
Enterprises" or any derivation thereof), logos and slogans, trade secrets,
know-how, ideas, designs, processes, procedures, algorithms, discoveries or
inventions listed on Schedule 2.1(g), including all rights and benefits thereto,
owned or controlled by Company and used exclusively in the Business, as to which
Company has rights as a licensee or otherwise that may be transferred, and all
of the goodwill associated therewith (collectively, the "INTELLECTUAL
PROPERTY").
(7) INTANGIBLE ASSETS.
-----------------
The confidential information, customer lists, supplier lists, mailing
lists, sales records and order information, restrictive covenants or indemnity
rights of Company with respect to Business, all computer software (including
documentation and related object and source codes) used exclusively in the
Business, all confidentiality obligations and similar obligations of present and
former officers and employees of Company with respect to the Business, and all
other information related exclusively to the Transferred Assets or the Business,
in each case whether owned outright by Company or as to which Company has rights
as a licensee or otherwise, and all of the goodwill associated therewith
(collectively, the "INTANGIBLE ASSETS").
(8) RECORDS AND DOCUMENTS.
---------------------
The books, files, papers, technical and research analyses, sales,
marketing and other studies, data and plans, records and other data of Company
related exclusively to the Business (excluding generally income tax records),
(collectively, the "RECORDS"), provided that Company and Parent shall have the
right, after the Closing, to access the Records and any other information
Company or Parent needs to access in order to comply with or respond to any
audit or other inquiry, discovery or investigation.
(9) TELEPHONE NUMBERS; ADVERTISING MATERIAL.
---------------------------------------
All rights and benefits of Company in and to telephone and facsimile
numbers, e-mail and website addresses and directory listings, supplies,
catalogs, brochures, art work, photographs and advertising and promotional
materials of Company relating exclusively to the Business to the extent set
forth on Schedule 2.1(j).
(10) NAME.
----
All right, title and interest of Company in and to the business name
"Fantasy Sports Enterprises, Inc.", and all similar names thereto, and all
goodwill associated therewith.
(11) PREPAID EXPENSES.
----------------
All right, title and interest of Company in and to all prepaid
expenses, advances, deposits, promotional discounts, rebates, refunds and all
similar rights and claims relating to the Business to the extent set forth on
Schedule 2.1(l).
(12) RIGHTS OF RECOVERY.
------------------
The causes of action, judgments, settlements, claims, indemnity or
other rights of Company that relate exclusively to the Business or the
Transferred Assets set forth on Schedule 2.1(m) and all claims, suits, rights,
awards, insurance proceeds, and similar assets or rights of Company with respect
to the Business or the Transferred Assets, except to the extent any of the
foregoing relate to Excluded Obligations or Excluded Assets.
2 METHOD OF CONVEYANCE.
---------------------
Upon payment of the Purchase Price described in Section 2.6, Company
shall sell, transfer, convey, assign and deliver to Buyer all of its right,
title and interest in all of the Transferred Assets free and clear of any and
all Liens, except as disclosed in the Company Disclosure Memorandum, by
Company's execution and delivery of an Assignment and Assumption Agreement,
Trade ▇▇▇▇ Assignment, Lease Assignment and other instruments of conveyance and
transfer listed in the Closing Agenda.
1.2 ASSUMED OBLIGATIONS.
--------------------
At the Closing, Buyer shall assume and agree to pay or perform, as
appropriate, the following obligations and liabilities of Company and the
Business (the "ASSUMED
OBLIGATIONS"): (a) any and all liabilities, obligations and commitments arising
out of, or resulting from, the operation of the Business or the ownership or use
of the Transferred Assets (including any Licenses and Permits, Contracts and
Leases) arising or to be performed after the Closing Date; (b) liabilities in
respect of employees of the Business arising after the Closing Date as provided
in Section 5.4; and (c) any and all liabilities listed on Schedule 2.4.
3 EXCLUDED OBLIGATIONS.
---------------------
Buyer is not assuming, and Company shall remain fully responsible for,
all indebtedness, liabilities, obligations, contracts and commitments of Company
and any predecessors in interest of the Business, known or unknown, fixed or
contingent, arising out of or resulting from the operation of the Business or
the ownership or use of the Transferred Assets on or before the Closing Date,
that are not Assumed Obligations (the "EXCLUDED Obligations").
4 CLOSING DATE.
-------------
The closing of the transactions contemplated by this Agreement (the
"CLOSING") shall take place at 10:00 am on the Closing Date, at the offices of
▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, The Chrysler Building, 405 Lexington Avenue, New York, New
York or at such other date, time and place as may be agreed upon by the parties.
5 PURCHASE PRICE.
--------------
The aggregate consideration for the Transferred Assets and the covenant
not to compete, as defined in Section 5.1, shall be the aggregate sum of Four
Million Two Hundred Thousand and 00/100 United States Dollars (US$4,200,000.00)
and the Assumed Obligations (the "PURCHASE PRICE").
6 PAYMENT TERMS.
-------------
The Purchase Price shall be payable by Leisureplanet and Buyer to
Company at the Closing by delivery to Company by wire transfer, in immediately
available funds, of Four Million Two Hundred Thousand and 00/100 United States
Dollars (US$4,200,000.00) and the assumption of the Assumed Obligations.
7 ALLOCATION OF CONSIDERATION.
----------------------------
For purposes of complying with Section 1060 of the Internal Revenue
Code of 1986, as amended (the "Code"), the Purchase Price shall be allocated
among each class of the assets being transferred by Company ("Consideration
Allocation Schedule"). The Consideration Allocation Schedule shall, no later
than four weeks from the date of this Agreement, be prepared by Buyer with
Company's assistance and provided to Company for Company's approval, which
approval shall not be unreasonably withheld. Company and Buyer shall prepare
their federal, state, local
and foreign income tax returns for all current and future tax reporting periods
and file Form 8594 (and corresponding state, local and foreign forms) with
respect to the transfer of the assets to Buyer in a manner consistent with the
Consideration Allocation Schedule. If any governmental entity challenges such
allocation, the party first receiving notice of such challenge shall give the
other party prompt notice of such challenge, and Company and Buyer shall
cooperate in good faith in responding to such challenge, in order to preserve
the effectiveness of the Consideration Allocation Schedule. Neither Company nor
Buyer shall report the allocation of the Purchase Price in a manner inconsistent
with the Consideration Allocation Schedule.
III REPRESENTATIONS AND WARRANTIES.
-------------------------------
1 COMPANY AND PARENT.
-------------------
Company has prepared and delivered to Leisureplanet and Buyer a
disclosure memorandum (the "COMPANY DISCLOSURE MEMORANDUM") setting forth any
and all exceptions to the representations and warranties of Company or Parent
contained in this Agreement.
Subject to the exceptions and qualifications set forth in Company
Disclosure Memorandum, Company and Parent, jointly and severally, hereby
represent and warrant to Leisureplanet and Buyer as follows:
(1) ORGANIZATION AND QUALIFICATION.
------------------------------
Company is a corporation organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Company is
qualified or licensed to do business in those jurisdictions (which are
identified in Company Disclosure Memorandum) where the conduct of the Business
requires it to be licensed or qualified, except where the failure to do so would
not have a Material Adverse Effect resulting from, related to or arising out of
the imposition of any Taxes other than income or income based Taxes. Company has
the corporate power and authority to own or lease those properties currently
owned or leased by it, and to conduct those businesses presently conducted by
it. Parent is record and beneficial owner of 100% of the issued and outstanding
capital stock of Company free and clear of all encumbrances.
(2) AUTHORIZATION; NO RESTRICTIONS, CONSENTS OR APPROVALS.
-----------------------------------------------------
Company and Parent each has the corporate power and authority to enter
into and perform the Transaction Documents to which it is a party to perform its
obligations thereunder, and to consummate the transactions contemplated thereby.
All corporate action necessary to authorize the execution and delivery by
Company and Parent, as applicable, of the Transaction Documents and the
performance by them of their respective obligations thereunder has been duly
taken. Each of the Transaction Documents to which Company or Parent is a party
has been duly executed by Company or Parent, as applicable, and constitutes its
legal, valid, binding obligation, enforceable against it, subject to general
equity principles, in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting the
rights of creditors generally. The execution and delivery of the Transaction
Documents, the
sale of the Transferred Assets and the consummation by Company of the
transactions contemplated thereby, do not (i) conflict with or violate any of
the terms of the Certificate of Incorporation and By-Laws of Company or Parent,
(ii) conflict with, or result in a breach of any of the terms of, or result in
the acceleration of any indebtedness or obligations under, any agreement,
obligation or instrument by which Company or Parent is bound or to which any
property of Company or Parent is subject, or constitute a default thereunder,
(iii) result in the creation or imposition of any Lien on any of the Transferred
Assets, or (iv) conflict with, or result in or constitute a default under or
breach or violation of or grounds for termination of, any license, permit or
other authorization from a Governmental Authority to which Company or Parent is
a party or by which Company or Parent may be bound, or result in the violation
by Company or Parent of any Laws to which Company or Parent or any assets of
Company or Parent may be subject, which would have a Material Adverse Effect on
the transactions contemplated herein. Other than the transfer of Licenses and
Permits, no Governmental Authority authorization, approval, order, consent, or
filing is required, including, without limitation, any filings which may be
required under the Laws, on the part of Company or Parent in connection with the
execution, delivery, and performance of the Transaction Documents.
(3) ABSENCE OF CERTAIN CHANGES.
--------------------------
Since September 30, 2000, (i) no event, condition or circumstance has
occurred that would have a Material Adverse Effect on Company relating to the
Business or Transferred Assets or Assumed Obligations, or on the condition
(financial or otherwise) or results of operations of Company relating to the
Business; and (ii) Company has conducted the Business in the ordinary course and
consistent with past practice. As amplification and not in limitation of the
foregoing, since September 30, 2000, Company has not (A) made any change in any
method of accounting or accounting practice, principle or policy used by Company
with respect to the Business, (B) incurred any indebtedness, obligation or
liability with respect to the Business or paid, satisfied or discharged any
indebtedness, obligation or liability with respect to the Business prior to the
due date or maturity thereof, except current indebtedness, obligations and
liabilities in the ordinary course of business, or (C) made any change or
modification in any manner of Company's (x) billing and collection policies,
procedures and practices with respect to the Business applicable to accounts
receivable or unbilled charges, (y) policies, procedures and practices of
Company with respect to the Business relating to the provision of discounts,
rebates or allowances, or (z) payment policies, procedures and practices of
Company relating to the Business relating to accounts payable.
(4) TAXES.
-----
Company has timely filed (timely being understood to include all
properly granted extensions) all returns required to be filed by it on or before
the Closing Date with respect to all federal, state, local and foreign income,
payroll, employment, unemployment, withholding, excise, sales, personal
property, use, business and occupation, franchise and occupancy, real estate, or
other taxes pertaining only and specifically to the Business or the Transferred
Assets (all of the foregoing taxes including interest and penalties thereon and
including estimated taxes,
being hereinafter collectively the "TAXES"). All such returns were correct and
complete in all material respects, and all Taxes which are due or which may be
claimed to be due have been paid. Company has withheld or collected and paid
over to the appropriate governmental authorities or is properly holding for such
payment all Taxes required by Law to be withheld or collected with respect to
the Business. Company is not a party to or has received any notice with respect
to any pending or, to Company's Knowledge, proposed, action by any Governmental
Authority for assessment or collection of Taxes, or is party to any dispute or,
to Company's Knowledge, threatened dispute and Company has not received a notice
of any such claim for assessment or collection of Taxes. There are no Liens for
Taxes upon any of the Transferred Assets other than those identified in Company
Disclosure Memorandum . Company has no liability for unpaid Taxes with respect
to the Business under Treasury Regulation section 1.1502-6 (or any similar
provision of state or foreign law), or under any other provision of law or tax
sharing, tax indemnity or similar contract.
(5) TITLE TO TRANSFERRED ASSETS.
---------------------------
Company has good and marketable title to all of the Transferred Assets,
free and clear of any Liens. The Transferred Assets do not include any real
property owned by Company.
(6) LEASES.
------
Company Disclosure Memorandum sets forth a complete and accurate
listing or description of all real property Leases to which Company is a party
with respect to the Business. Company Disclosure Memorandum lists the location
of all of the leased premises (the "LEASED PREMISES"), the dates of the Lease
and any and all amendments thereto. Each of the Leases is valid, binding and
enforceable against Company in accordance with its terms, and is in full force
and effect; there are no existing defaults on the part of Company or, to
Company's Knowledge, any other party, under any Lease; each such Lease will,
subject to obtaining any consent listed in Company Disclosure Memorandum,
continue to be in full force and effect on the same terms and conditions
immediately after the Closing without the need for any action on the part of
Leisureplanet or Buyer, except for Buyer's performance of the Assumed
Obligations. Company's interest in each of the Leases is free and clear of all
Liens. Company has not granted to any Person any right to the possession, use,
occupancy or enjoyment of the Leased Premises; and Company lawfully maintains
actual and exclusive possession of all portions of the Leased Premises. There is
not now pending or, to Company's Knowledge, contemplated any reassessment on
real estate taxes or otherwise of any parcel included in the Leased Premises
which would result in a Material Adverse Effect on the rent, additional rent or
other sums and charges payable by Company under any Lease or pertaining to any
Leased Premises. Company has not received notice of any breach or violation of
any covenant, condition, restriction, right of way or easement, or any
condemnation or eminent domain proceeding affecting the Leased Premises or part
thereof .
Those parts of the Leased Premises that the Company is required to
maintain pursuant to the Lease are in reasonable working order and the Leased
Premises are currently sufficient to
enable the Leased Premises to continue to be used and operated in the manner
currently being used and operated.
(7) CONTRACTS AND OTHER DOCUMENTS.
-----------------------------
Company Disclosure Memorandum sets forth a list of all Contracts to
which Company is a party with respect to the Business (other than real property
Leases and employee contracts) which involve payment or receipt of more than ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇/▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Dollars (US$10,000.00). Except for those
Contracts or Leases to which Company is a party with respect to the Business
which are listed on Company Disclosure Memorandum or which have been entered
into by Company in the ordinary course of business and do not involve payment or
receipt of more than ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇/▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Dollars
(US$10,000.00), Company is not a party to any Contract or similar document with
respect to the Business. No material default by Company or any other party
exists, or has been claimed or alleged by any Person with respect to any
Contract, and no event that with notice or lapse of time or both would
constitute a material default under any Contract or other instrument to which
Company is a party or by which it is bound with respect to the Business. Other
than as set forth on Company's Disclosure Memorandum, no consent, approval,
claim, authorization or waiver from, or notice to, any Governmental Authority or
other Person is required in order to maintain in full force and effect any of
the Contracts to which Company is a party with respect to the Business. Company
has listed on Company Disclosure Memorandum, those consents deemed by Company to
be material consents, and such material consents have been obtained by Company,
and copies thereof have been given to Buyer.
(8) LABOR DIFFICULTIES.
------------------
Company is not a party to any Contract with any labor organization or
other representative of its employees with respect to the Business; (ii) there
is no unfair labor practice charge or complaint pending or, to the Knowledge of
Company or Parent, threatened against Company with respect to the Business;
(iii) Company has not experienced any labor strike, slowdown, work stoppage or
similar labor controversy within the past five years with respect to the
Business and, to the Knowledge of Company or Parent, no such labor strike, slow
down, work stoppage or similar labor controversy is threatened with respect to
the Business; (iv) no representation question has been raised respecting any of
Company's employees with respect to the Business, nor, to the Knowledge of
Company or Parent, are there any organizing activities or campaigns being
conducted to solicit authorization from Company's employees to be represented by
any labor organization and no such activity or campaign is threatened with
respect to the Business; (v) no Claim before any Governmental Authority brought
by or on behalf of any employee, prospective employee, former employee, retiree,
labor organization or other representative of employees or any Governmental
Authority is pending or, to the Knowledge of Company or Parent, threatened
against Company or Parent with respect to the Business; (vi) Company with
respect to the Business is not a party to, or otherwise bound by, any judgment,
decree, injunction, rule or order relating to its employees or employment
practices; (vii) except with respect to ongoing disputes of a routine nature
involving immaterial amounts, Company
with respect to the Business has paid in full to all of its employees all wages,
salaries, commissions, bonuses, benefits and other compensation due and payable
to such employees; and (viii) Company is in compliance in all material respects
with all applicable Laws affecting employment and employment practices.
(9) ERISA; EMPLOYEE BENEFIT PLANS.
-----------------------------
(a) Except as set forth in Company Disclosure Memorandum, to the extent
applicable to the Business, neither Company nor any Affiliate of Company with
respect to the Business (all of the above hereinafter individually and
collectively called the "Entity"), nor any other company or entity which
together with the Entity constitutes a member of the Entity's "controlled group"
or "affiliated service group" (within the meaning of Sections 4001(a)(14) and/or
(b) of ERISA and/or Sections 414(b), (c), (m) or (o) of the Internal Revenue
Code (such group or groups and each member thereof hereinafter referred to
individually and collectively as the "Group")), has at any time adopted or
maintained, has any liability or is a fiduciary with respect to or has any
present or future obligation to contribute to or make payment under (i) any
employee benefit plan (as defined in Section 3(3) of ERISA), or (ii) any other
benefit plan, program, Contract or arrangement of any kind whatsoever (whether
for the benefit of present, former, retired or future employees, officers,
directors, consultants or independent contractors of the Entity or the Group, or
for the benefit of any other person or persons) including, without limitation,
arrangements providing for contributions, benefits or payments in the event of a
change of ownership or control in whole or in part of the Entity or the Group,
or with respect to disability, relocation, child care, educational assistance,
deferred compensation, pension, retirement, profit sharing, thrift, savings,
stock ownership, stock bonus, restricted stock, health, dental, medical, life,
hospitalization, stock purchase, stock option, incentive, bonus, sabbatical
leave, vacation, severance, cafeteria or other contribution, benefit or payment
of any kind, or (iii) any employment, consulting, service or other Contract or
agreement of any kind whatsoever (all such employee benefit plans and other
benefit plans, programs, Contracts or arrangements and such employment,
consulting, service or other Contracts or agreements whether written or oral
hereinafter individually and collectively called the "Employee Benefit
Plan(s)"). No Employee Benefit Plan is subject to Title IV of ERISA. No Entity
and no member of the Group has completely or partially withdrawn, within the
meaning of Title IV of ERISA, from any "multiemployer plan" within the meaning
of Section 3(37) of ERISA (hereinafter, individually and collectively a
"Multiemployer Plan") or any single employer plan (within the meaning of Section
4001(a)(15) of ERISA) which has two or more contributing sponsors at least two
of whom are not under common control (hereinafter, individually and
collectively, a "Single Employer Plan").
(b) In addition, (i) there have been no "prohibited transactions"
within the meaning of Section 406 of ERISA or Section 4975 of the Internal
Revenue Code with respect to any of the Employee Benefit Plans; (ii) no
liability has been or is expected to be incurred by the Entity or the Group
under Title IV of ERISA with respect to the Employee Benefit Plans; (iii) any
and all amounts which the Entity or the Group are required to pay as
contributions or
otherwise, or with respect to the Employee Benefit Plans have been timely paid;
(iv) no Employee Benefit Plan has incurred any "accumulated funding deficiency"
(as defined in Section 302 of ERISA and Section 412 of the Internal Revenue
Code), whether or not waived, and no Entity and no member of the Group has
provided, or is required to provide, security to any Employee Benefit Plan; (v)
the current value of all "benefit liabilities" within the meaning of Section
4001(a)(16) of ERISA under each Employee Benefit Plan which is subject to Title
IV of ERISA or otherwise, does not exceed the current value of the assets of
such Employee Benefit Plan allocable to such benefit liabilities; (vi) each of
the Employee Benefit Plans has been established, maintained, operated and
administered in accordance with its terms and all applicable Laws; (vii) each of
the Employee Benefit Plans which is intended to be "qualified" within the
meaning of Sections 401(a) and 501(a) of the Internal Revenue Code has been
determined by the IRS to be so qualified and continues to be so qualified;
(viii) there are no pending, threatened or anticipated Claims involving any of
the Employee Benefit Plans; (ix) the Entity and the Group have not incurred and
will not incur any withdrawal liability with respect to a Multiemployer Plan
under Title IV of ERISA or any liability with respect to a Single Employer Plan
under Section 4062, 4063 or 4064 of ERISA; (x) no notice of a "reportable event"
within the meaning of Section 4043 of ERISA has been or is required to be filed
with respect to any Employee Benefit Plan; (xi) neither the Entity nor the Group
is a party to, or participates in, or has any liability or contingent liability
with respect to any Multiemployer Plan or any Single Employer Plan; (xii)
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated by this Agreement will (either alone or upon the
occurrence of additional events or acts) accelerate vesting of any benefits or
any payments, increase the amount or value of any benefit or payment under any
Employee Benefit Plan or result in the payment of or obligation to pay any
"parachute payment" (within the meaning of Section 280G of the Internal Revenue
Code); and (xiii) neither the Entity nor the Group has any obligation or
commitment to establish, maintain, operate or administer any Employee Benefit
Plan not set forth in Company Disclosure Memorandum or to amend any Employee
Benefit Plan so as to increase benefits thereunder or otherwise.
(c) A true and complete copy of each of the Employee Benefit Plans (and
all amendments thereto, whether currently effective or to become effective at a
later date), all Contracts and agreements relating thereto, or to the funding
thereof, and the most recent summary plan description thereof (including
summaries of material modification) have been made available to Leisureplanet.
Each Employee Benefit Plan sponsored or maintained by Company, and all Contracts
and agreements relating thereto or to the funding thereof, can be unilaterally
terminated without penalty by Company on no more than thirty (30) days' notice,
and all obligations of Company with respect to all other Employee Benefit Plans
can be unilaterally terminated without penalty by Company on no more than thirty
(30) days' notice. In the case of any Employee Benefit Plan which is not in
written form, an accurate and complete description of such Employee Benefit Plan
has been provided to Leisureplanet.
(10) EMPLOYEES.
---------
Company has made available to Buyer a true and complete list, by
category, of all full-time employees, part-time employees, other employees and
consultants of Company with respect to the Business, including any Contracts or
agreements relating thereto, and a description of the rate and nature of all
compensation payable by Company to, and the amount of vacation, sick days,
personal days and other leave accrued by, each such person or entity. Buyer has
been provided with access to true and complete (i) copies of all manuals and
handbooks applicable to any current or former director, officer, employee or
consultant of Company with respect to the Business, (ii) copies of all standard
forms of employee trade secret, non-compete, non-disclosure and invention
assignment agreements, together with a list of all agreements that deviate
therefrom and a description of such deviation, and (iii) descriptions of all
existing severance, accrued vacation or other leave policies or retiree benefits
of any such employee or consultant. The employment or consulting arrangement of
all such persons is, subject to applicable Laws involving the wrongful
termination of employees, terminable at will (without the imposition of
penalties or damages) by Company, except as otherwise set forth on Schedule 5.4.
No current or former employee of Company is (i) absent on a military leave of
absence and/or eligible for rehire under the terms of the Uniformed Services
Employment and Reemployment Rights Act, or (ii) absent on a leave of absence
under the Family and Medical Leave Act. Except as set forth in Company
Disclosure Memorandum, as of the Closing there will be no bonuses, profit
sharing, incentives, commissions or other compensation of any kind, including,
without limitation, severance benefits, and accrued vacation time or pay, due to
or expected by present or former employees of Company with respect to the
Business which have not been fully paid prior to such date or will be paid by
Company after the Closing.
(11) LICENSES AND PERMITS.
--------------------
Company has obtained, has fully paid for, and has, in full force and
effect, all Licenses and Permits. Except as set forth in the Company Disclosure
Memorandum, the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
revocation, cancellation, suspension, modification, or limitation of any such
Licenses and Permits and will not give to any Person any right to revoke,
cancel, suspend, modify, or limit any such Licenses and Permits. Renewal of each
of such Licenses and Permits has been timely applied for to the extent required
under all Laws, and to the extent appropriate to protect renewal rights
thereunder. There is no fact or event which is likely to prevent the renewal of
any of the Licenses and Permits under existing Law or which, with the passage of
time or the giving of notice or both, is likely to constitute a violation of the
terms of any of the Licenses and Permits or of any applications or agreements
made in connection therewith. All such Licenses and Permits are fully paid up to
the Closing.
(12) RECEIVABLES.
-----------
All of the Receivables of Company with respect to the Business arose
from bona fide transactions in the ordinary course of business of Company, have
not been discounted, and no counterclaim or right of set-off has been asserted
with respect thereto. The Financial Statements accurately set forth the amounts
of such Receivables in existence as of the date of the Financial
Statements, and any applicable reserves with respect to such Receivables are
reflected in the Financial Statements.
(13) ABSENCE OF UNDISCLOSED LIABILITIES.
----------------------------------
Except as set forth in Company Disclosure Memorandum, as of September
30, 2000, Company has no material liability (individually or in the aggregate)
with respect to the Business that is not fully reflected or disclosed in the
Financial Statements which would be required to be disclosed or reflected in the
Financial Statements in accordance with U.S. GAAP, and since September 30, 2000,
Company has incurred no material liability (individually or in the aggregate)
with respect to the Business other than in the ordinary course of business, and
there is no material liability (individually or in the aggregate ) of Company
which would have a Material Adverse Effect on the business, operations or
financial condition of Company with respect to the Business.
The accounts payable set forth in the balance sheet as of September 30,
2000 contained in the Financial Statements or arising subsequent to the date of
such balance sheet are the result of bona fide transactions in the ordinary
course of business and have been paid or are not yet due and payable, in
accordance with the respective invoices relating thereto.
(14) COMPLIANCE WITH LAW.
-------------------
Since October 15, 1999, Company operated the Business in material
compliance in all respects with all applicable Laws and neither Company nor
Parent have received any written notice of any alleged violation by Company of
any Laws relating to the Business.
(15) INTELLECTUAL PROPERTY AND INTANGIBLE ASSETS.
-------------------------------------------
Except as disclosed in Company Disclosure Memorandum, Company owns or
possesses valid and binding licenses or other rights to use, whether or not
registered, all Intellectual Property and Intangible Assets constituting a
Transferred Asset. Company Disclosure Memorandum sets forth a complete and
accurate list of all such registered Intellectual Property and Intangible Assets
(identifying those owned and those licensed), including all United States, state
and foreign registrations or applications for registration thereof and all
agreements relating thereto. Except as disclosed in Company Disclosure
Memorandum, Company is not required to pay any royalty, license fee or similar
compensation with respect to such Intellectual Property or Intangible Assets in
connection with the current or prior conduct of its Business. The use by Company
of any of such Intellectual Property or Intangible Assets does not violate the
proprietary rights of any other Person. No Person is infringing upon such
Intellectual Property or Intangible Assets. Except as disclosed in Company
Disclosure Memorandum, no Person, other than Company, owns or has any
proprietary, financial or other interest, direct or indirect, in whole or in
part, in any Intellectual Property or Intangible Asset. Trademarks and Domain
Names are set forth on Schedules A, respectively, of the Trademark Assignment
and Internet Domain Name Assignment attached hereto.
(16) PENDING LITIGATION.
------------------
There are no actions, suits, claims, enforcement actions, or
proceedings relating to the Business (i) pending or, to Company's Knowledge or
Parent's Knowledge, threatened against Company or any Person by reason of it or
he being a director, Parent, or officer of Company and (ii) related to the
Business, whether at law or in equity or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality which, if adversely determined, would have a Material Adverse
Effect on the business, financial position, or results of operations of Company
relating to the Business or on Buyer's title to the Transferred Assets, in each
case taken as a whole; nor is there outstanding any writ, order, decree, or
injunction applicable to Company, the Business or Parent that (i) calls into
question Company's or Parent's authority or right to enter into this Agreement
and consummate the transactions contemplated hereby, or (ii) would otherwise
prevent or delay the transactions contemplated by this Agreement.
(17) TRANSFERRED ASSETS; OWNERSHIP OF ASSETS AND RIGHTS.
--------------------------------------------------
The assets, properties and rights included in the Transferred Assets
together with the Leased Premises comprise substantially all of the assets,
properties, and rights of every type and description, real, personal and mixed,
tangible and intangible, used by Company exclusively in the conduct of the
Business as conducted on the Closing Date.
All material Personal Property of Company with respect to the Business
is listed in the detailed fixed assets ledger of Company relating to the
Business included in the Confidential Disclosure Memorandum. The portion of the
Transferred Assets constituting fixed assets, taken as a whole, or individually,
as to any piece of equipment currently valued for more than $5,000, are in good
working order and repair for equipment of like type and age, reasonable wear and
tear excepted.
Except as set forth in Company Disclosure Memorandum, no material
capital expenditures are contemplated by Company for the Business for current
fiscal quarter ending December 31, 2000.
There are no assets, properties or rights which are used both by the
Business and the other activities of Company which are not being purchased by
Buyer which are necessary for the conduct of the Business as it is currently
being operated by the Company.
(18) FINANCIAL STATEMENTS.
--------------------
Company has delivered to Leisureplanet and Buyer or its advisors the
unaudited balance sheet of Company related to the Business together with the
related statement of operations for the fiscal year ended September 30, 2000(the
"Financial Statements"). The Financial Statements have been derived from the
books and records of Company and were (i) prepared in accordance with the
accrual method of accounting under U.S. GAAP as of the date involved and (ii)
consistently applied to, throughout the period presented and fairly present, in
all material respects, the assets, liabilities, and results of operations of
Company with respect to the Business as of the respective date thereof and for
the period indicated, subject, to normal fiscal year end
adjustments in the ordinary course of business (none of which, individually or
in the aggregate, are material). The Financial Statements as of September 30,
2000 reflect all Transferred Assets and Assumed Obligations, except for
Transferred Assets acquired or sold and Assumed Obligations discharged or
incurred after the date of such Financial Statements, in each case in the
ordinary course of business.
(A) RELATED PARTY TRANSACTIONS.
--------------------------
Except as disclosed in Company Disclosure Memorandum, no stockholder of
Company and, to the Knowledge of Company, no director or officer of Company (i)
owns, directly or indirectly, on an individual or joint basis, any material
interest in, or serves as an officer or director of, any customer, competitor or
supplier of Company or any organization which has a material contract or
arrangement with Company or (ii) has any contract or agreement with Company.
(19) DELIVERY OF DOCUMENTS.
---------------------
Company has heretofore delivered or made available to Leisureplanet
true, correct and complete copies of all documents, instruments, agreements and
records set forth on Schedule 3.1(t) which are referred to in this Article III,
or in Company Disclosure Memorandum.
(20) NO MISSTATEMENTS OR OMISSIONS.
-----------------------------
No representation or warranty by Company or Parent contained in this
Agreement and no statement contained in Company Disclosure Memorandum or other
document signed by Company or Parent, contains or will contain any untrue
statement of a material fact or omits or will omit any material fact necessary
to make the statements contained therein, in light of the circumstances under
which it was made, not misleading.
2 BUYER.
------
Buyer has prepared and delivered to Company and Parent a disclosure
memorandum (the "BUYER DISCLOSURE MEMORANDUM") setting forth any and all
exceptions or supplemental information to the representations, warranties and
covenants contained in Section 3.2 and Article V of this Agreement, and have
delivered to Parent and Company documents and materials pursuant to or in
connection with this Agreement, and any and all modifications or amendments to
the documents and material as of the Closing have been or will be delivered to
Parent and Company with Buyer Disclosure Memorandum. Subject to Buyer Disclosure
Memorandum, Buyer hereby represents and warrants to Company and Parent that on
the Closing Date:
(1) ORGANIZATION AND QUALIFICATION.
------------------------------
Buyer is a corporation duly formed, validly existing and in good
standing under the Laws of the State of Delaware. Buyer is qualified or licensed
to do business in those jurisdictions (which are identified in Buyer Disclosure
Memorandum) where the conduct of its business requires it to be
licensed or qualified, except where the failure to do so would not have a
material adverse effect resulting from, related to or arising out of the
imposition of any Taxes other than income or income based Taxes. Buyer has all
requisite power and authority to own or lease those properties currently owned
or leased by it, and to conduct those businesses presently conducted by it.
Buyer's issued and outstanding shares are wholly owned by Leisureplanet.
(2) AUTHORIZATION; NO RESTRICTIONS, CONSENTS OR APPROVALS.
-----------------------------------------------------
Each of Leisureplanet and Buyer have full power and authority to enter
into and perform the Transaction Documents, and has taken all necessary
corporate action to authorize the execution and delivery of the Transaction
Documents and the performance by Leisureplanet and Buyer of its respective
obligations hereunder and thereunder. The Transaction Documents have each been
duly executed by Leisureplanet and Buyer and constitute the legal, valid,
binding obligation of Leisureplanet and Buyer, enforceable, subject to general
equity principles, in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting the
rights of creditors generally. The execution and delivery of the Transaction
Documents and the consummation by Leisureplanet and Buyer of the transactions
contemplated herein, do not (i) conflict with or violate any of the terms of the
Certificate of Incorporation and By-Laws of Leisureplanet, the Certificate of
Formation, or the Certificate of Incorporation and By-Laws of Buyer or any
applicable Law, (ii) conflict with, or result in a breach of any of the terms
of, or result in the acceleration of any indebtedness or obligations under, any
agreement, obligation or instrument by which Leisureplanet or Buyer is bound or
to which any property of Leisureplanet or Buyer is subject, or constitute a
default thereunder, (iii) result in the creation or imposition of any Lien on
any of the Purchase Price, or (iv) conflict with, or result in or constitute a
default under or breach or violation of or grounds for termination of, any
license, permit or other authorization from a Governmental Authority to which
Leisureplanet or Buyer is a party or by which Leisureplanet or Buyer may be
bound, or result in the violation by Leisureplanet or Buyer of any Laws to which
Leisureplanet or Buyer or any assets of Leisureplanet or Buyer may be subject,
which would have a material adverse effect on the transactions contemplated
herein. No governmental or regulatory authorization, approval, order, consent,
or filing is required, including, without limitation, any filings which may be
required under the Laws, on the part of Leisureplanet or Buyer in connection
with the execution, delivery, and performance of the Transaction Documents.
(3) FINANCIAL STATEMENTS.
--------------------
Leisureplanet has delivered to Company the Leisureplanet Financial
Statements, which include the audited balance sheet of Leisureplanet as of June
30, 2000, together with the related statements of operations for the year ended
June 30, 2000. The Financial Statements have been derived from, and agree with,
the books and records of Leisureplanet and were (i) prepared in accordance with
generally accepted accounting principals in effect in the United States as of
the dates involved and (ii) consistently applied to, throughout the periods
presented and fairly present, in all material respects, the combined assets,
liabilities, financial position and results of operations of Leisureplanet as of
the respective dates thereof and for the periods indicated.
Since June 30, 2000, (i) no event, condition or circumstance has occurred that
would have a material adverse effect on the business of Leisureplanet, or on the
condition (financial or otherwise), results of operations or prospects of the
Leisureplanet; and (ii) Leisureplanet has been conducted in the ordinary course
and consistent with past practice.
(4) PENDING LITIGATION.
------------------
There no actions, suits, claims, enforcement actions, or proceedings
pending or, to Buyer's knowledge, threatened against Buyer, whether at law or in
equity or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality which, if
adversely determined, would have a material adverse effect on the business,
financial position, or results of operations of Buyer; nor is there outstanding
any writ, order, decree, or injunction applicable to Buyer that (i) calls into
question Buyer's authority or right to enter into the Transaction Documents and
consummate the transactions contemplated hereby or thereby, or (ii) would
otherwise prevent or delay the transactions contemplated by this Agreement or
the other Transaction Documents.
(5) COMPLIANCE WITH LAW.
-------------------
Leisureplanet's and Buyer's businesses have been operated, and on the
Closing Date are, in material compliance in all respects with all applicable
Laws, and to Leisureplanet's knowledge or Buyer's knowledge, neither
Leisureplanet nor Buyer have received any written notice of any alleged breach
of any Laws.
(B) CAPITALIZATION OF LEISUREPLANET.
-------------------------------
The entire authorized capital stock of Leisureplanet consists of
48,000,000 shares of Class A Common Stock, $0.01 par value, of which 8,391,899
shares are duly authorized and validly issued and outstanding, 2,000,000 shares
of Class B Common Stock, $0.01 par value, of which 946,589 shares are duly
authorized and validly issued and outstanding and 5,000,000 shares of Preferred
Stock, $0.01 par value, of which no shares are issued and outstanding, and
constitutes all of the issued and outstanding shares of capital stock of
Leisureplanet of whatever class, series or designation. The securities of
Leisureplanet are fully paid and nonassessable. There are no outstanding
warrants, options, subscriptions, convertible or exchangeable securities or
other agreements, instruments, documents or commitments pursuant to which
Leisureplanet is or may become obligated to issue, sell, purchase, retire or
redeem any shares of capital stock or other securities of Leisureplanet except
as set forth in Leisureplanet Disclosure Memorandum. The Shares will be issued
to Company at Closing free and clear of all Liens.
(C) NO MISSTATEMENTS OR OMISSIONS
-----------------------------
No representation or warranty by Leisureplanet or Buyer contained in
this Agreement and no statement contained in Buyer Disclosure Memorandum or
other document signed by Leisureplanet or Buyer, contains or will contain any
untrue statement of a material fact or omits or will omit any material fact
necessary to make the statements contained therein, in light of the
circumstances under which it was made, not misleading.
ENVIRONMENTAL MATTERS.
Company is in compliance in all material respects with all applicable
Environmental Laws and all Company Permits required by Environmental Laws. All
known past noncompliance, if any, of Company with Environmental Laws or
Environmental Permits has been resolved without any pending, ongoing or future
obligation, cost or liability. Company has not released a Hazardous Material at,
or transported a Hazardous Material to or from, any real property currently or
formerly owned, leased or occupied by Company, in violation of any Environmental
Law.
IV ADDITIONAL COVENANTS.
From and after the Closing, the parties hereto shall be bound by the
following covenants:
1 COVENANT NOT TO COMPETE.
------------------------
(A) In order to induce Leisureplanet and Buyer to enter into and
perform this Agreement, Company on behalf of itself, and Parent on behalf of
itself and each Affiliate of Parent, agrees that, for a period of two (2) years
beginning on the Closing Date (the "RESTRICTED PERIOD"), it shall not, without
the prior written consent of Leisureplanet and Buyer, for its own account or
jointly or in combination with another Person, directly or indirectly, for or on
behalf of any Person, as principal, agent or otherwise: (i) engage in a business
that is the same as, or similar to, or directly competes with the Business as
conducted by Company on the Closing Date; or (ii) solicit or induce, or in any
manner attempt to solicit or induce, any individual who is employed by Company
solely with respect to the Business at the Closing Date to leave such
employment, whether or not such employment is pursuant to a written contract or
otherwise.
(B) Notwithstanding anything herein to the contrary, and subject to the
further provisions of this Section 5.1(b) it shall not be a breach of the
covenants contained in Section 5.1 for Parent and Company to continue to operate
worldwide the business of Parent and its Affiliates as the same are currently
operated and to expand worldwide business of Parent and its Affiliates provided,
that neither Parent nor Company shall expand in violation of Section 5.1(a).
1.3 PURCHASE OF PRODUCTS FROM PARENT.
---------------------------------
In order to induce Leisureplanet and Buyer to enter into and perform
this Agreement, Company on behalf of itself, and Parent on behalf of itself and
each Affiliate of Parent, agrees that Parent shall continue to sell to Buyer, at
Parent's cost, any and all goods or products of the kind and nature the Parent
has, in the past, provided to Company in the following amounts: $150,000.00 in
2001, $225,000 in 2002 and $340,000 in 2003 .
1.4 PROVIDING OF WEB-HOSTING SERVICES.
----------------------------------
In order to induce Leisureplanet and Buyer to enter into and perform
this Agreement, Company on behalf of itself, and Parent on behalf of itself and
each United States Affiliate of Parent, agrees that Parent shall continue to
provide, through itself or third-party service providers and at no cost to
Buyer, any and all web-hosting services of the kind and nature the Parent has,
in the past, provided to Company through September 30, 2001.
2 EMPLOYEES AND EMPLOYEE BENEFIT MATTERS.
--------------------------------------
(1) EMPLOYEES.
---------
For purposes of this Section 5.4, "EMPLOYEES" are hereby defined as
follows: (i) all persons employed by Company with respect to the Business
immediately before the Closing Date; and (ii) all employees of Company who are
absent from work with the Business on account of sickness or leave of absence on
the Closing Date and who are reasonably expected to return to active employment
within ninety (90) days following the date such employee was first absent from
employment, or for whom an obligation to rehire exists under applicable laws.
(2) EMPLOYEES' EMPLOYMENT.
---------------------
Prior to and effective as of the Closing Date, Company has accepted the
voluntary resignation of ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Liegeys") and
released the Liegeys from their obligations not to compete with Company
following the termination of their employment with Company. With respect to all
Employees other than the Liegeys, prior to and effective as of the Closing Date,
Company shall terminate the employment of each of the Employees, except for the
individuals set forth on Schedule 5.4. Buyer shall offer employment, effective
on the Closing Date, to each of the Employees. As of the Closing Date, Company
shall not be responsible for wages, salaries and other employee benefits for
Employees for service of such Employees with Buyer that accrue or are incurred
or arise on or after the Closing Date, all of which shall be the responsibility
of Buyer. The active participation (other than continuation of group health plan
coverage under Section 4980B of the Internal Revenue Code or other applicable
Laws) of all Employees in each Employee Benefit Plan shall cease on the Closing
Date.
(3) WORKER'S COMPENSATION.
---------------------
On and after the Closing Date, Buyer shall assume liability under
workers' compensation laws for claims incurred on or after the Closing Date with
respect to Employees. Company shall remain liable for all workers' compensation
claims incurred prior to the Closing Date. A claim for worker's compensation
benefits shall be deemed to be incurred upon the occurrence of the event giving
rise to such claim.
(4) ANNUAL BONUSES AND OUTSTANDING COMMISSIONS.
------------------------------------------
No bonuses are due or owing for the current fiscal year to any Employee
or officer of Company with respect to the Business.
(5) ADMINISTRATION.
--------------
Buyer and Company shall each make its appropriate employees and data
regarding employee benefit coverage available to the other at such reasonable
times as may be necessary for the proper administration by the other of any and
all matters relating to employee benefits and worker's compensation claims
affecting, its employees.
3 USE OF NAME.
------------
At the Closing Company, Parent and its Affiliates shall cease using the
names "Fantasy Sports" and "Fantasy Nascar" or any derivatives or confusingly
similar names on any stationery or for any other on-going business purposes.
4 FURTHER ASSURANCES.
-------------------
At the Closing and from time to time after the Closing, at the
reasonable request of Buyer and without further consideration on reasonable
prior notice, Company will promptly execute and deliver to Buyer such
certificates, instruments of perfection and other instruments of sale,
conveyance, assignment, and transfer, and take such other perfection and other
instruments of sale, conveyance, assignment, and transfer, and take such other
action as may reasonably be requested by Buyer to more effectively sell, convey,
assign, and transfer to and vest in Buyer or to put Buyer in possession of, the
Transferred Assets (including permits, registrations, regulatory approvals,
licenses and certificates) free and clear of all Liens as provided for herein.
In addition, upon Buyer's consent and request, Company will also take such
actions as may be necessary (including, without limitation, refraining from
assigning to others or terminating or otherwise failing to perform under any
contract of Company relating to the Business for fifteen (15) calendar days
after Closing) to assign to Buyer any Contracts of the Company relating to the
Business that were not listed on Company Disclosure Memorandum. Buyer, at its
expense, agrees to maintain the books and records of the Business, and to
maintain the computer software licenses to access the computer records of the
Business, and agrees to provide Company and Parent with access (upon Company's
request) to such book, records, software and computer records for a period not
to exceed the applicable statute of limitations for any Tax inquiries or audits.
Buyer, at its expense, agrees to also provide Company with copies of all such
books and records upon Company's request, and with assistance of Buyer's
personnel to permit Company to timely respond to and comply with such inquiries
and audits.
V THE CLOSING.
------------
At the Closing, each party hereto will deliver to other parties hereto
the Transaction Documents to which it is a party, in accordance with the Closing
Agenda, which is attached hereto as Exhibit H.
VI SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
------------------------------------------------------------
1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS.
---------------------------------------------------------
The representations, warranties, covenants, agreements and indemnities
of the parties contained in this Agreement will survive any investigation prior,
on or subsequent to the date of this Agreement made by any party or its
representatives and the consummation of the transactions contemplated in this
Agreement and will continue in full force and effect until the date that is two
(2) years from the Closing Date (the "SURVIVAL Period"); PROVIDED, HOWEVER, that
the Survival Period will be extended automatically to include any time period
necessary to resolve a claim for indemnification which arises out of any written
notice to Buyer Indemnitor or Seller Indemnitor advising such Indemnitor of the
facts or circumstances that may give rise to a claim for indemnification,
provided notice was delivered before expiration of the Survival Period.
Liability for any item will continue until the Claim will have been finally
settled, decided or adjudicated.
2 INDEMNIFICATION BY COMPANY AND PARENT.
--------------------------------------
In accordance with and subject to the further provisions of this
Article VII, Parent and Company (each, a "BUYER INDEMNITOR") will, jointly and
severally, indemnify and hold harmless Leisureplanet, Buyer and its Affiliates,
and their respective officers, directors, agents and employees (collectively,
"BUYER INDEMNITEES"), up to an aggregate amount of $1,000,000, from and against
and in respect of any and all loss, damage, Liability, cost and expense,
including reasonable attorneys' fees and amounts paid in settlement (the
"INDEMNIFIED LOSSES") suffered or incurred by any one or more of Buyer
Indemnitees by reason of, or arising out of:
(1) any misrepresentation, breach of warranty or breach or
nonfulfillment of any agreement or covenant of Company or Parent contained in or
contemplated by this Agreement.
(2) all liabilities and obligations of, or claims, demands or
actions against, the Business, or the Transferred Assets, whether known or
unknown, accrued, absolute, contingent or otherwise, existing (i) as of the date
of this Agreement or (ii) at any time hereafter with respect to periods on or
prior to the Closing (however, to the extent such relate to periods prior to and
after the Closing, such indemnity shall be proporationate between Company and
Buyer), in any case under this Section 7.2(b) to the extent not an Assumed
Obligation; and
(A) the ownership, operation or conduct of the Excluded Assets.
1.5 ESCROW FUND; NON-EXCLUSIVE REMEDY.
----------------------------------
On the Closing Date, Buyer shall deliver to the Escrow Agent the Escrow
Fund. The Escrow Fund shall be held by the Escrow Agent under the Escrow
Agreement pursuant to the terms set forth therein and shall be available to
compensate Buyer Indemnitees pursuant to the indemnification obligations of
Parent and Company; provided, however, that the parties expressly agree that the
Escrow Fund is not intended to limit the remedies or recovery of such
parties in connection with any breach of any representation, warranty, covenant
or agreement made by Parent or Company under this Agreement, and recovery under
the Escrow Agreement shall neither be the sole nor exclusive remedy hereunder.
1.6 ESCROW PERIOD.
--------------
Buyer shall release to Company or Parent, upon notification by Parent,
on a pro rata basis any portion of the Escrow Fund remaining in escrow on the
first anniversary of the Closing Date (the "ESCROW PERIOD"); provided, however,
that a portion of the Escrow Fund that is necessary to satisfy any unsatisfied
claims on the Escrow Fund prior to termination of the Escrow Period with respect
to facts and circumstances existing prior to expiration of the Escrow Period,
shall remain in escrow until such claims have been resolved.
1.7 CLAIMS UPON ESCROW.
-------------------
(A) Upon delivery to Parent on or before (i) the last day of the Escrow
Period or (ii) thirty (30) days following the discovery of an event or events
giving rise to Damages in an aggregate amount greater than $50,000 (provided
however, that once the aggegate amount of claims exceeds $50,000, than the
Indemnified Person will have the right to recover the full amounts due without
regard to the threshold up to an aggregate amount of $250,000), whichever is
earlier, of a certificate signed by any officer of Buyer (an "CLAIM NOTICE")
specifying in reasonable detail the individual items of such Damages included in
the amount so stated, the date each such item was paid, or properly accrued or
arose, and the nature of the misrepresentation or breach of representation,
warranty, covenant or agreement made by Company or Parent under this Agreement,
the Escrow Agent (as defined in the Escrow Agreement) shall, subject to the
provisions of Sections 7.6 and 9.13 hereof, remove for the benefit of Buyer, or
the benefit of the other Indemnified Persons, a portion of the Escrow Fund equal
to such Damages in accordance with the Escrow Agreement. Notwithstanding any
other provision of this Agreement, any material delay in delivery to Parent of
an Claim Notice in the manner prescribed herein shall constitute full waiver and
release, with prejudice, by Buyer Indemnitees' to any and all remedies otherwise
arising from or relating to the matters for which relief is sought.
1.8 OBJECTIONS TO CLAIMS.
---------------------
(A) At the time of delivery of any Claim Notice to Parent and for a
period of thirty (30) days after delivery to Parent of such Claim Notice, the
Escrow Agent shall not remove for the benefit of Buyer any portion of the Escrow
Fund unless it shall have received written authorization from Parent to make
such delivery. After the expiration of such thirty (30) day period, the Escrow
Agent shall remove for the benefit of Buyer the appropriate portion of the
Escrow Fund in accordance with Section 7.3 hereof, provided that no such
delivery may be made if Parent shall object in a written statement to the claim
made in the Claim Notice, and such statement shall have been delivered to Buyer
prior to the expiration of such thirty (30) day period.
3 INDEMNIFICATION BY LEISUREPLANET AND BUYER.
-------------------------------------------
Leisureplanet and Buyer will jointly and severally indemnify and hold
harmless Parent and Company and their Affiliates, respective officers,
directors, agents and employees (the "SELLER INDEMNITEES"), for any Indemnified
Losses suffered or incurred by any of such Seller Indemnitees by reason of, or
arising out of:
(B) any misrepresentation, breach of warranty or breach or
nonfulfillment of any agreement of Leisureplanet or Buyer (including the
agreements of Leisureplanet and Buyer in Section 3.2) contained in or
contemplated by this Agreement; or
(C) the failure of Leisureplanet or Buyer to perform any Assumed
Obligation, or claims, demands or actions against, the Business, or the
Transferred Assets, whether known or unknown, accrued, absolute, contingent or
otherwise, existing at any time hereafter with respect to periods after the
Closing (however, to the extent such relate to periods prior to and after the
Closing, such indemnity shall be proporationate between Company and Buyer), in
any case under this Section 7.7(b) to the extent not an Excluded Obligation.
1.9 ENFORCEMENT OF AGREEMENT--INDEMNIFICATION
-----------------------------------------
In the event an Indemnitee seeks to enforce a provision of the
Agreement and the Indemnitor rejects liability under such provision, the party
enforcing such right shall be entitled to indemnity for any and all fees,
expenses and judgments incurred if it is successful, pursuant to the procedures
of Section 9.13, in proving the other party's liability.
4 INDEMNIFICATION PAYMENTS.
-------------------------
All indemnity payments, whether by Leisureplanet, Buyer, Company or
Parent, to be made under this Agreement shall be made in immediately available
funds.
5 DEFENSE OF CLAIMS.
------------------
(1) If any Claim by a third party arises after the Closing Date for
which Buyer Indemnitors may be liable under the terms of this Agreement, then
Seller Indemnitees will notify Buyer Indemnitors in accordance with the
provisions of this Section 7.10, and will give such Buyer Indemnitors a
reasonable opportunity: (i) to conduct any proceedings or negotiations in
connection with the Claim and necessary or appropriate to defend such Seller
Indemnitees; (ii) to take all other steps or proceedings required to settle or
defend any Claim; and (iii) to employ counsel reasonably acceptable to such
Seller Indemnitees to contest any Claim in the name of such Seller Indemnitees
or otherwise. Subject to Section 7.10(b), the expenses of all proceedings,
contests or lawsuits with respect to the Claims will be borne by Buyer
Indemnitors.
(2) If any Claim by a third party arises after the Closing Date for
which Seller Indemnitors may be liable under the terms of this Agreement, then
the Buyer Indemnitee will notify the Seller Indemnitors in accordance with the
provisions of this
Section 7.10, and will give such Seller Indemnitors a reasonable opportunity:
(i) to conduct any proceedings or negotiations in connection with the Claim and
necessary or appropriate to defend the such Buyer Indemnitees; (ii) to take all
other steps or proceedings required to settle or defend any Claim; and (iii) to
employ counsel reasonably acceptable to such Buyer Indemnitees to contest any
Claim in the name of such Seller Indemnitees or otherwise. Subject to Section
7.10(b), the expenses of all proceedings, contests or lawsuits with respect to
the Claims will be borne by Seller Indemnitors.
(3) Notwithstanding Section 7.10(a) or (b) if (i) a Buyer Indemnitee
or a Seller Indemnitee determines in good faith that there is a reasonable
probability that such a Claim may adversely affect it or its Affiliates other
than as a result of monetary damages for which it would be entitled to
indemnification hereunder, or (ii) the Claim seeks injunctive or similar relief,
or (iii) it is a Claim brought or initiated by a Governmental Authority, such
Indemnitee may, by notice to Buyer Indemnitor or the Seller Indemnitor, as
applicable, assume the exclusive right to defend, compromise or settle such
Claim, and such Indemnitor shall be obligated to reimburse the legal fees, costs
and expenses of that defense.
(4) If Buyer Indemnitor or Seller Indemnitor does not assume the
defense of, or if after so assuming such Indemnitor fails to defend, any such
Claims, then Buyer Indemnitees or Seller Indemnitees, as applicable, may defend
against any Claims in the manner they may deem appropriate and such Indemnitees
may settle any Claims on the terms they deem appropriate, and such Indemnitor
will promptly reimburse such Indemnitees for the amount of all expenses, legal
and otherwise, reasonably and necessarily incurred by such Indemnitees in
connection with the defense against and settlement of any Claims. If no
settlement of any Claims are made, such Indemnitor will satisfy any judgment
rendered with respect to any Claim, before such Indemnitees are required to do
so, and pay all expenses, legal or otherwise, reasonably and necessarily
incurred by such Indemnitees in the defense of any claim or action.
(5) If a judgment is rendered against any Buyer Indemnitees or
Seller Indemnitees in any Claim covered by the indemnification under this
Agreement, or any Lien in respect of any judgment attaches to any of the assets
of any such Indemnitees, Buyer Indemnitor or Seller Indemnitor, as applicable,
will immediately upon any entry or attachment pay the relevant judgment in full
or discharge the relevant Lien unless, at the expense and direction of such
Indemnitor, an appeal is taken under which the execution of the judgment or
satisfaction of the Lien is stayed. If and when a final judgment is rendered in
any action, such Indemnitor will forthwith pay any judgment or discharge any
Lien before any of such Indemnitees is compelled to do so.
(6) Any notice required to be given to a Buyer Indemnitor or a
Seller Indemnitor pursuant to Section 7.10(a) shall be given no later than the
latter of: (i) the end of the first half of the term within which an answer or
other response to the Claim is required to be made (the "ANSWER PERIOD") and
(ii) two (2) Business Days after receipt by a Buyer Indemnitee or a Seller
Indemnitee, as applicable, of notice of the action. Such Indemnitor shall assume
the defense of any Claim, if at all, by notice to such Indemnitees no later than
the earlier of: (i) the end of the second third of the Answer Period and (ii)
three (3) Business Days prior to the date by which an answer or other response
to the Claim is required to be made. Such Indemnitor's
failure to notify such Indemnitees within the specified time shall be
conclusively deemed an election by such Indemnitor not to assume such defense.
Any failure by such Indemnitees to give the requisite notice within the time
specified in this Section 7.10(f) will not relieve an Indemnitor of the
obligation to indemnify Indemnitees pursuant to this Article VII except to the
extent that the defense of any Claim is materially prejudiced by the delay.
(7) The Indemnitor or the Indemnitee, as appropriate, shall have the
right to participate in the defense of any Claim related to a loss that is the
subject of indemnification at its sole cost and expense and the cost and expense
of that participation shall not be a loss that is indemnified.
6 REMEDIES EXCLUSIVE; DUTY TO MITIGATE.
-------------------------------------
(1) The right to indemnification, if any, with respect to breaches
of representations, warranties and covenants pursuant to this Article VII shall
constitute the sole and exclusive remedy with respect thereto, shall preclude
any other monetary award (whether at law or in equity), and shall preclude
assertion by any party hereto of any right to any such monetary award from the
other party, other than in the case of fraud or intentional misconduct, in which
case each Person shall have all such remedies as may be available at law, in
equity or otherwise. Nothing in this Article VII shall limit the remedies
available to a party to enforce its right to indemnification or to injunctive
relief.
Each indemnified party shall cooperate with each indemnifying party
with respect to resolving any actual or potential Indemnified Losses arising out
of, attributable to, or resulting from any inaccuracy in or breach of any of the
representations, warranties, covenants or agreements of the other relevant
parties hereto, including by making such commercially reasonable efforts to
mitigate any or all such Indemnified Losses as the indemnified party would
reasonably use in mitigating its own losses (assuming it were not indemnified
hereunder). In the event that any indemnified party shall fail to make such
efforts as are described in the preceding sentence, then, notwithstanding
anything else to the contrary contained in this Agreement, the indemnifying
party shall not be required to indemnify any Person to the extent of any or all
of the Indemnified Losses that could reasonably have been avoided if the
indemnified party had made such efforts, but only to that extent.
7 SUBROGATION.
------------
(1) Any indemnifying party shall be subrogated to any right of
action which the indemnified party may have against any other Person with
respect to any matter giving rise to a claim for indemnification hereunder.
VII BROKERAGE.
----------
1 FINDERS AND BROKERS FEES.
-------------------------
Except for ▇▇▇▇▇ ▇▇▇▇, who was retained by Company, neither Buyer nor
Company has dealt with any broker or finder in connection with any of the
transactions contemplated by this
Agreement, and, insofar as it knows, no broker or other person is entitled to
any compensation including, without limitation, a commission or finder's fee, in
connection with any of these transactions. Company shall pay all fees due to
▇▇▇▇▇ ▇▇▇▇. The parties each agree to indemnify and hold harmless one another
against any loss, Liability, damage, cost, Claim, or expense incurred by reason
of any compensation, including, without limitation, brokerage, commission, or
finder's fee, alleged to be payable because of any act, omission, or statement
of the indemnifying party.
VIII GENERAL PROVISIONS.
-------------------
1 SALES AND TRANSFER TAXES.
-------------------------
Company and/or Parent shall pay any and all taxes, federal, state, or
local, in the nature of income, sales, use, transfer gains, conveyance,
recording, ad valorem, stamp, transfer and any similar tax, fee or duty required
to be paid in respect of the conveyance, assignment, or transfer to Buyer of the
Transferred Assets and the filing and recording thereof.
2 NO THIRD PARTY BENEFICIARIES.
-----------------------------
Nothing in this Agreement is intended, nor shall it be construed, to
confer any rights or benefits upon any Person (including, but not limited to,
any employee or former employee of Company) other than the parties hereto, and
no other Person shall have any rights or remedies hereunder. Except as provided
in Section 7.10, the Seller Indemnitees and Buyer Indemnitees shall have no
rights or remedies hereunder.
3 EXPENSES OF THE PARTIES; CERTAIN LITIGATION.
--------------------------------------------
All expenses involved in the preparation, authorization, and
consummation of this Agreement, incurred up to and including the Closing,
including, without limitation, all fees and expenses of agents, representatives,
counsel, and accountants in connection therewith, shall be borne solely by the
party who shall have incurred the same, and the other parties shall have no
liability in respect thereof; provided, however, that nothing herein shall be
construed to release or impair any claim for damages by any party. No such fees
and expenses of Company or Parent are included as Assumed Obligations.
4 AMENDMENT AND WAIVER.
---------------------
This Agreement may not be changed or terminated orally. No waiver of
compliance with any provision or condition hereof, and no consent provided for
herein shall be effective unless evidenced by an instrument in writing duly
executed by the party hereto sought to be charged with such waiver or consent.
5 MISCELLANEOUS.
--------------
The Section headings of this Agreement are for convenience of reference
only and do not form a part hereof and do not in any way modify, interpret, or
construe the intentions of the parties. This Agreement may be executed in one or
more counterparts and all such counterparts shall constitute one and the same
instrument.
6 BINDING EFFECT.
---------------
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective administrators, legal representatives,
successors and permitted assigns.
7 PUBLICITY.
----------
The parties hereto expect to make a public announcement of the
transactions contemplated herein as soon as practicable after the Closing
pursuant to separate press releases in the forms substantially similar to the
forms exchanged by Leisureplanet and Parent. Until the Closing and thereafter,
all general notices, releases, statements and communications to employees,
suppliers, distributors and customers of the Business and to the general public
and the press relating to the transactions contemplated by this Agreement shall
be made only at such times and in such manner as may be mutually agreed upon by
Parent and Leisureplanet; PROVIDED, HOWEVER, that each of Leisureplanet and
Buyer, and Company and Parent shall be entitled to make a public announcement
relating to the proposed transaction if, in the opinion of its legal counsel,
such announcement is required to comply with Law or any Environmental Law or
applicable stock exchange rules and regulations (in which case the disclosing
party shall use its best efforts to provide the other party with as much advance
notice as possible with respect to the reasons for and text of such announcement
and to make such announcement no more extensive than is necessary to meet the
minimum requirement imposed on the party making such announcement).
8 COMPLETE AGREEMENT.
-------------------
This Agreement and the Exhibits and Schedules and other documents
referred to herein contain the entire agreement between the parties hereto with
respect to the transactions contemplated herein and supersede all previous
negotiations, commitments, and writings.
9 NOTICES.
--------
Any notice, report, demand, waiver, consent or other communication
given by a party under this Agreement (each a "NOTICE") shall be in writing, may
be given by a party or its legal counsel, and shall be deemed to be duly given
(i) when personally delivered, or (ii) upon delivery by a internationally
recognized overnight courier service which provides evidence of delivery, or
(iii) when five (5) days have elapsed after its transmittal by registered or
certified mail, postage
prepaid, return receipt requested, addressed to the party at that party's
address as it appears below or another address of which that party has given
notice, or (iv) when delivered by facsimile transmission if a copy thereof is
also delivered in person or by overnight courier. Notices of address change
shall be effective only upon receipt notwithstanding the provisions of the
foregoing sentence.
Notice to Leisureplanet or Buyer shall be sufficient if given to:
Leisureplanet Holdings, Ltd.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
The Chrysler Building
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Notice to Company and/or Parent shall be sufficient if given to:
Action Performance Companies, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇ Traurig LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
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Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
10 ASSIGNMENT.
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Except as expressly provided herein, this Agreement and any rights
pursuant hereto shall not be assignable by any party without the prior written
consent of the other party. Except as provided in the previous sentence, this
Agreement and all of the rights and obligations hereunder
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns.
11 SEVERABILITY.
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If any term or provision of this Agreement shall be held to be invalid
or unenforceable for any reason, such term or provision shall be ineffective to
the extent of such invalidity or unenforceability without invalidating the
remaining terms and provisions hereof, and this Agreement shall be construed as
if such invalid or unenforceable term or provisions had not been contained
herein.
12 CHOICE OF LAW; CHOICE OF FORUM.
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(1) APPLICABLE LAW.
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All questions concerning the construction, validity, and interpretation
of this Agreement and the performance of the obligations imposed by this
Agreement shall be governed by the internal law, not the law of conflicts, of
the State of New York, United States of America.
(2) DISPUTE RESOLUTION.
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Any and all disputes arising out of or related to this Agreement
including, without limitation, questions concerning the construction,
enforceability, validity, and interpretation of this Agreement and the
performance of the obligations imposed by this Agreement, any dispute which
relates to the confidential or proprietary information of any party hereto, will
be initially mediated in accordance with the dispute resolution procedures set
forth in Section 9.13 below and Exhibit F. No provision of, or the exercise of
any rights, under Section 9.13 and Exhibit F shall limit the right of any party
pursue all legal remedies available to them, or obtain provisional or ancillary
remedies such as injunctive relief from a court having jurisdiction before,
during or after the pendency of any alternative dispute resolution.
1.10 RESOLUTION OF CONFLICTS; ARBITRATION.
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(A) In case any party ("First Party") shall so object to any claim or
claims by another party ("Second Party"), the Second Party shall have thirty
(30) days after receipt of an objection by the First Party to respond in a
written statement to the objection of the First Party. If after such thirty (30)
day period there remains a dispute as to any claims, the First Party and the
Second Party shall attempt in good faith for forty-five (45) days to agree upon
the rights of the respective parties with respect to each of such claims. If the
First Party and the Second Party should so agree, a memorandum setting forth
such agreement shall be prepared and signed by both parties.
(B) If no such agreement can be reached after good faith negotiation,
either party may, by written notice to the other, demand arbitration of the
matter unless the amount of the damage or loss is at issue in pending litigation
with a third party, in which event arbitration
shall not be commenced until such amount is ascertained or both parties agree to
arbitration; and in either such event the matter shall be settled by arbitration
conducted by three arbitrators. Within fifteen (15) days after such written
notice is sent, the parties shall each select one arbitrator, and the two
arbitrators so selected shall select a third arbitrator. The decision of the
arbitrators as to the validity and amount of any claim shall be binding and
conclusive upon the parties to this Agreement.
Judgment upon any award rendered by the arbitrators may be entered in
any court having jurisdiction. Any such arbitration shall be held in the State
of New York under the commercial rules then in effect of the American
Arbitration Association. For purposes of this Section 9.13, in any arbitration
hereunder in which any claim or the amount thereof stated is at issue, the First
Party shall be deemed to be the "Non-Prevailing Party" unless the arbitrators
award the First Party at least one-half (1/2) of the amount in dispute, plus any
amounts not in dispute; otherwise, the Second Party shall be deemed to be the
Non-Prevailing Party. The Non-Prevailing Party to an arbitration shall pay its
own expenses, the fees of each arbitrator, the administrative fee of the
American Arbitration Association, and the expenses, including without
limitation, attorneys' fees and costs, reasonably incurred by the other party to
the arbitration.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.
ACTION PERFORMANCE COMPANIES, INC.
By:/s/ R. ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: R. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Financial Officer
GORACING INTERACTIVE SERVICES, INC.
By:/s/ R. ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: R. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
LEISUREPLANET HOLDINGS, LTD.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
FANTASY SPORTS, INC.
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chairman