ASSET PURCHASE AGREEMENT by and among AutoWeb, Inc., Tradein Expert, Inc., Car Acquisition, LLC, Carzuz.com LLC, McCombs Family Partners, Ltd., And Phil Kandera Dated as of July 31, 2021 ASSET PURCHASE AGREEMENT
Exhibit 2.1
Certain attachments to this Exhibit 2.1 have been omitted pursuant
to Item 601(a)(5) of Regulation S-K because the information
contained therein is not material and is not otherwise publicly
disclosed. AutoWeb, Inc. will furnish supplementally copies of such
attachments to the SEC or its staff upon request.
by and among
Tradein Expert, Inc.,
Car Acquisition, LLC,
▇▇▇▇▇▇.▇▇▇ LLC,
▇▇▇▇▇▇▇ Family Partners, Ltd.,
And
▇▇▇▇ ▇▇▇▇▇▇▇
Dated
as of July 31, 2021
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This
Asset Purchase Agreement is made and entered into as of July 31,
2021 (“Effective
Date”) by and among AutoWeb, Inc., a Delaware
corporation (“Purchaser
Parent”), Tradein Expert, a Delaware corporation
(“Purchaser”),
Car Acquisition, LLC, a Texas limited liability company, dba
CarZeus (“Seller”), ▇▇▇▇▇▇.▇▇▇ LLC, a Texas
limited liability company (“Seller Class A Member”), ▇▇▇▇▇▇▇
Family Partners, Ltd., a Texas limited partnership
(“Seller Class B
Member”) and ▇▇▇▇ ▇▇▇▇▇▇▇, an individual and affiliate
of Seller and Seller Class A Member (“Kandera”). Purchaser Parent and
Purchaser are collectively referred to herein as the
“Purchasing
Group” and sometimes each individually as a
“Purchasing Group
Member;” Seller Class A Member and Seller Class B
Member are collectively referred to herein as “Seller Members” and sometimes each
individually as a “Seller
Member;” Seller, Seller Class A Member and Seller
Class B Member are collectively referred to herein as the
“Selling Group”
and sometimes each individually as a “Selling Group Member;” and
Purchaser Parent, Purchaser, Seller, Seller Class A Member, Seller
Class B Member and Kandera are referred to herein collectively as
the “Parties”
and sometimes each individually as a “Party.”
BACKGROUND
Seller
is engaged in the Business. Upon the terms and subject to the
conditions set forth in this Agreement, Seller desires to sell to
the Purchaser, and the Purchaser desires to purchase from Seller,
all of the Purchased Assets.
In
consideration of the mutual representations, warranties, covenants
and agreements, and upon the terms and subject to the conditions
hereinafter set forth, the Parties, intending to be legally bound,
do hereby agree as follows.
ARTICLE I
DEFINITIONS
1.1 Certain
Definitions. As used in this Agreement, the following
defined terms shall have the meanings ascribed below:
“Accounts Receivable” means all
billed and unbilled trade accounts receivable and other rights to
receive payments from any Person, and all notes, bonds or other
evidences of rights to receive payments from any Person, and all
rights, claims or remedies related to any of the foregoing and the
full benefit of all security for any of the foregoing, including
miscellaneous receivables, credits, rebates, security deposits and
the like, and any rights with respect to any third party collection
procedures or any other Actions which have been commenced in
connection therewith.
“Action” means any complaint,
claim, demand, prosecution, indictment, action, litigation,
lawsuit, arbitration, proceeding, hearing, inquiry, audit, or
investigation (whether civil, criminal, judicial or administrative,
and whether formal or informal, and whether public or private) made
or brought by any Person or brought or heard by or before any
Governmental Authority.
“Affiliate” means, with respect to
any Person, (i) each Person that, directly or indirectly, owns or
controls, whether beneficially, or as a trustee, guardian or other
fiduciary, more than 50% of the voting capital shares or other
voting equity interests or securities of such Person, and (ii) each
Person that controls, is controlled by or is under common control
with such Person or any Affiliate of such Person. For the purpose
of this definition, “control” of a Person
means the possession, directly or indirectly, of the power to
direct or cause the direction of its management or policies,
whether through the ownership of voting securities, by contract or
otherwise.
“Agreement” means this Asset
Purchase Agreement and all Exhibits, Schedules and other
attachments hereto, as the same may be amended from time to time in
accordance with the terms hereof.
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“Arbitration Venue” means New
Castle County, Delaware.
“Assumed Contracts” means only
those Business Contracts listed on the Purchased Assets and Assumed
Liabilities and Obligations Schedule as Assumed
Contracts.
“Assumed Liabilities and
Obligations” means only those Liabilities of the
Business listed on the Purchased Assets and Assumed Liabilities and
Obligations Schedule as Assumed Liabilities and
Obligations.
“▇▇▇▇ of Sale and Assignment” means
the ▇▇▇▇ of Sale and Assignment substantially in the form of
Exhibit D attached hereto.
“Business” means the business of
buying or selling used motor vehicles as conducted by Seller prior
to and as of the Closing.
“Business Contracts” means the
Leases, the Intellectual Property Contracts, and the other
Contracts required to be identified in any Schedule to this
Agreement, including in the Disclosure Schedule (and
“Business
Contract” means any one of them
individually).
“Business Day” means any day, other
than a Saturday, Sunday, or a day on which banks located in the
State of Texas, USA are authorized or required by Law to
close.
“Business Employees” means the full
and part-time (if any) employees of Seller.
“Business Records” means all books,
records, data and information, in any form, related to or
concerning the Business, the Former Business Employees, the
Purchased Assets, or the Assumed Liabilities and Obligations,
whether or not in the possession of Seller, including all lists of
current and prospective Business Relationships, all supplier and
vendor lists, records, files and information, service and warranty
records, equipment logs, operating guides and manuals, personnel
records and files of or relating to the Former Business Employees,
marketing and promotional materials used in the Business, whether
in electronic or paper form, including advertising materials,
product data, price lists, sales materials, scientific and
commercial publications, market research and other materials
associated with the Business.
“Business Location” means ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
“CCPA” means the California
Consumer Privacy Act of 2018 and all amendments thereto and any
implementing regulations issued by the Attorney General of the
State of California.
“Change in Control” means the
consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of a
party or (ii) the acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under such
act) of more than 50% of either (1) the then outstanding shares of
common stock of such party; or (2) the combined voting power of the
then outstanding voting securities of such party entitled to vote
generally in the election of directors.
“Closing Proration and Allocation
Payment” means the amount payable by Purchaser to
Seller or by Seller to Purchaser, as applicable, based on the
reconciliation of various expense and other prorations and
allocations determined by the Parties as set forth on the
Transition Services Schedule.
“Closing Schedule” means Exhibit C
attached hereto.
“COBRA” means Section 4980B of the
Code and Part 6 of Subtitle B of Title I of ERISA.
“Code” means the Internal Revenue
Code of 1986, as amended, or any successor Law, and the rules and
regulations issued by the IRS pursuant thereto or to any successor
Law.
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“Common Stock” means the
Company’s common stock, $0.001 par value per
share.
“Consent” means any approval,
consent, permission, ratification, waiver, or other authorization
of any Person (including any Governmental Authority).
“Contract” means any agreement,
contract, obligation, promise, note, bond, mortgage, undertaking,
indenture, purchase order, sales order, instrument, lease,
franchise, license, permit, understanding, arrangement, commitment
or undertaking, whether written or oral, or express or implied, and
in each case, including all amendments thereto.
“Current Fiscal Year” means
Seller’s fiscal year ending December 31, 2021.
“Disclosure Schedule” means the
schedule to be delivered to the Purchasing Group Members by the
Selling Group Members concurrently with the execution and delivery
of this Agreement by the Parties, which schedule contains responses
to items to be listed pursuant to the various representations and
warranties being made by the Selling Group Members in Article III
of this Agreement and may contain exceptions to such
representations and warranties noted by the Selling Group
Members.
“DOL” means the United States
Department of Labor.
“EEOC” means the United States
Equal Employment Opportunity Commission.
“Electronic Transmission” means a
communication (i) delivered by facsimile, telecommunication or
electronic mail when directed to the facsimile number of record or
electronic mail address of record, respectively, which the intended
recipient has provided to the other party for sending notices
pursuant to this Agreement and (ii) that creates a record of
delivery and receipt that is capable of retention, retrieval, and
review, and that may thereafter be rendered into clearly legible
tangible form.
“Employee Benefit Plans” means
collectively, all “employee benefit plans” within the
meaning of Section 3(3) of ERISA (including multiemployer
plans within the meaning of Section 3(37) of ERISA), and all stock
purchase, stock option, severance, employment, change-in-control,
fringe benefit, collective bargaining, bonus, incentive, deferred
compensation, employee loan, and other employee benefit plans
(including health, medical, dental, and similar benefit plans),
programs, Contracts and other arrangements, whether or not subject
to ERISA, including any funding mechanism therefor now in effect or
required in the future as a result of the Transactions or
otherwise, whether formal or informal, oral or written, legally
binding or not, under which (i) any current or former
employee, or any current or former owner, director, officer, or
consultant of Seller or any Predecessor has any present or future
right to benefits and which are contributed to, sponsored by or
maintained by or for the benefit of Seller or any of its
Affiliates, or (ii) Seller has or could have any present or future
Liability, or (iii) the Purchaser or any of its Affiliates could
have any Liability after the Closing.
“Encumbrance” means any mortgage,
charge, claim, condition, equitable interest, community or other
marital property interest, lien, option, pledge, security interest,
right of first refusal, right of first option, easement,
right-of-way, encroachment, or restriction of any kind, including
any restriction on use, voting, transfer, receipt of income, or
exercise of any other attribute of ownership and including any
conditional sale or other title retention agreement, any lease in
the nature thereof and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any
jurisdiction, and including any lien or charge arising by statute
or other Laws or which secures the payment of a debt (including any
Taxes due and payable) or the performance of an
obligation.
“Environment” means all air,
surface waters, groundwater, or land, including soil, land surface
or subsurface, including all fish, wildlife, biota and all other
natural resources.
“Environmental Claim” means any
Action, notice or other communication of any kind (whether written
or oral) by any Person alleging any violation of any Environmental
Laws or any actual or potential Environmental
Liabilities.
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“Environmental Law” means any and
all federal, state, local, provincial and foreign, civil and
criminal laws, statutes, ordinances, orders, codes, rules,
regulations, Environmental Permits, policies, guidance documents,
judgments, decrees, injunctions, or agreements with any
Governmental Authority, relating to the protection of health or the
Environment, or worker health and safety, or governing the
handling, use, generation, treatment, storage, transportation,
disposal, manufacture, distribution, formulation, packaging,
labeling, or Release of Hazardous Materials, whether now existing
or subsequently amended or enacted, including: the Clean Air Act,
42 U.S.C. § 7401 et
seq.; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C.
§ 9601 et
seq. (“CERCLA”); the Federal
Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Hazardous Material
Transportation Act, 49 U.S.C. § 1801 et seq.; the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. § 136
et seq.; the
Resource Conservation and Recovery Act of 1976 (“RCRA”), 42 U.S.C. §
6901 et seq.; the
Toxic Substances Control Act, 15 U.S.C. § 2601
et seq.; the
Occupational Safety & Health Act of 1970, 29 U.S.C. § 651
et seq.; the Oil
Pollution Act of 1990, 33 U.S.C. § 2701 et seq.; and the state
analogies or similar laws thereto, all as amended or superseded
from time to time; and any common law doctrine, including
negligence, nuisance, trespass, personal injury, or property damage
related to or arising out of the presence, Release, or exposure to
a Hazardous Material.
“Environmental Liabilities” means
any Liabilities relating to or arising under any Environmental Laws
or otherwise relating to the Environment. Environmental Liabilities
include the cost of any Response, Removal, or Remedial Action or
any other action, including investigation, reporting or monitoring
relating to the Environment.
“Environmental Permit” means any
Governmental Authorizations under or in connection with any
Environmental Law and includes any and all Orders or Contracts
issued or entered into by or with a Governmental Authority under
any Environmental Law.
“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means any trade
or business, whether or not incorporated, under common control with
Seller within the meaning of Section 414(b), (c), (m) or (o) of the
Code.
“Excluded Assets” means only those
assets of Seller listed on the Excluded Assets and Liabilities and
Obligations Schedule as Excluded Assets.
“Excluded Assets and Liabilities and Obligations
Schedule” means Exhibit B attached
hereto.
“Excluded Business Records” means
the following Business Records: (i) Highly-Sensitive Personal
Information; (ii) transaction documents for vehicle purchase or
sale transactions occurring prior to the Closing; (iii) employee
records and files for Business Employees; and (iv) Tax records
relating to periods prior to the Closing.
“Excluded Contracts” means all
Contracts to which Seller or any other Selling Group Member is a
party or bound, other than the Assumed Contracts.
“Excluded Liabilities and
Obligations” means all Liabilities and obligations of
Seller other than the Assumed Liabilities and Obligations. The
Excluded Liabilities and Obligations include without limitation:
(i) any Liabilities with respect to Taxes, whether now or hereafter
existing; (ii) any Liabilities to current or former employees,
including Liabilities under any Contracts with any such current or
former employees, and Liabilities for compensation or severance
payable to any such current or former employees; (iii) any trade
accounts payable and other Liabilities arising out of or relating
to the Purchased Assets or the conduct of the Business before the
Closing; (iv) any Liabilities with respect to any Actions or
threatened Actions arising out of or based on events, occurrences,
facts, acts, omissions or circumstances existing or occurring, or
relating to periods, before the Closing or the conduct of the
Business before the Closing, even if such Action or threatened
Action is disclosed as an exception in the Disclosure Schedule; (v)
any Liabilities arising out of the operations and business of
Seller or its Predecessors or Affiliates before the Closing; (vi)
any Liabilities arising from or in connection with or relating to
any Excluded Assets; (vii) any Liabilities with respect to any
Indebtedness; (viii) any Environmental Liabilities; (ix) any
Liabilities resulting from Seller entering into and performing its
obligations in connection with, or consummating, the Transaction;
(x) any Liabilities arising out of or in connection with any
Employee Benefit Plans, including any failure to comply with
applicable Laws with respect thereto or the governing documents
thereof; (xi) any Liabilities arising out of or relating to any
failure to obtain a Consent under a Nonassignable Contract before
the Closing; (xii) any Liabilities for defective goods or services
sold on or before the Closing Date or for damage or injury to
person or property that arise out of or relate to occurrences,
events, facts or circumstances that existed or occurred on or
before the Closing Date; (xiii) any Liabilities to any current or
former holders of any securities of Seller or any Affiliates of
Seller (including any holders of any preferred stock or membership
interests of Seller, and any holders of options or warrants to
acquire securities of Seller), including Liabilities to pay
dividends, whether or not arising out of or relating to the
Transaction; (xiv) any Liabilities for severance or other
obligations to Business Employees, including any compensation or
other amounts payable to any current or former employee (including
any Business Employee) arising out of or relating to such
Person’s employment (or the termination thereof) with Seller,
including hourly pay, commission, bonus, salary, accrued vacations,
fringe, pension or profit sharing benefits, retention or severance
pay payable to any current or former employee (including any
Business Employee) of Seller; (xv) obligations under any Real
Property, real or personal property leases, debts, liabilities and
obligations of any nature whatsoever, whether accrued, absolute or
contingent, whether known or unknown, whether due or to become due,
related to the operation of the Business, the Assumed Contracts, or
the Purchased Assets prior to the Closing Date and regardless of
when asserted, except to the extent expressly included in the
Assumed Liabilities and Obligations; and (xvi) the Liabilities and
obligations listed on the Excluded Assets and Liabilities and
Obligations Schedule.
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“Financial Statements” means (i)
the unaudited financial statements of Seller consisting of the
balance sheets of the Seller as of December 31 in each of the years
2019 and 2020 and the related statements of income and retained
earnings, stockholders’ equity and cash flow for the years
then ended, (ii) unaudited financial statements consisting of the
Most Recent Balance Sheet and the related statements of income and
retained earnings, stockholders’ equity and cash flow for the
six (6) month period then ended, and (iii) the Monthly Financial
Statements.
“Former Business Employees” means
Business Employees existing immediately prior to the
Closing.
“GAAP” means generally accepted
accounting principles for financial reporting in the United States
as in effect as of the Closing Date, applied consistently with past
practice.
“Governing Documents” means (i)
with respect to a corporate Person, such Person’s (1)
certificate or articles of incorporation or other formation
document, as amended to date, (2) bylaws, and (3) any resolution
adopted by the board of directors or shareholders of such Person;
(ii) with respect to a limited liability company Person, such
Person’s (1) certificate of formation or organization or
other formation document, (2) operating or similar agreement or
document, and (3) any resolution adopted by the board of directors,
manager, managing member or members of such Person; and (iii) with
respect to any partnership or limited liability partnership Person,
such Person’s (1) certificate of formation or organization or
other formation document, (2) operating, partnership or similar
agreement or document, and (3) any resolution adopted by the
manager, managing partner or partners of such Person.
“Governing Law State” means the
State of Delaware.
“Governmental Authority” means any:
(i) nation, state, county, city, town, or other jurisdiction of any
nature; (ii) federal, state, local, municipal, foreign, or other
government; (iii) governmental or quasi-governmental authority of
any nature (including any governmental agency, branch, department,
official, or entity and any court or other tribunal); (iv)
multi-national organization or body; (v) stock exchange or
quotation service; (vi) body exercising, or entitled to exercise,
any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature; (vii)
arbitrator or mediator; or (viii) any official or authorized
representative of any of the foregoing.
“Governmental Authorization” means
any Consent, permit, license, Order or other authorization issued,
granted, given, or otherwise made available by or under the
authority, or any requirement, of any Governmental Authority or
pursuant to any Laws, including Environmental Permits.
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“Hazardous Material” means any
waste, substance or material that is classified, or otherwise
characterized under or pursuant to any Environmental Law as
“hazardous,” “toxic,”
“pollutant,” “contaminant,”
“radioactive,” or words of similar meaning or effect,
including petroleum and its by-products, asbestos, polychlorinated
biphenyls, radon, mold, medical waste and urea formaldehyde
insulation and any other substance or material that is regulated or
could result in liability under any Environmental Law.
“Highly Sensitive Personal
Information" means Personal Information such as (i) an
individual's government-issued identification number (including
Social Security number, driver's license number, or state-issued
identification number) or copies of related cards or documents
(including Social Security Cards or driver’s licenses); (ii)
financial account number, credit card number, debit card number, or
credit report information, with or without any required security
code, access code, personal identification number, or password that
would permit access to an individual’s financial account;
(iii) health, medical, or medical insurance data; (iv) biometric
data such as fingerprints, facial recognition, photos or any other
data used for unique identification of an individual based upon
physical characteristics; or (v) birthdates.
“HIPAA” means Section 9801 of the
Code and Part 7 of Subtitle B of Title I of ERISA.
“Holdback Amount” means
Seventy-Five Thousand Dollars ($75,000.00).
“Holdback Release Date” means the
date on which the Holdback Period expires.
“Holdback Period” means the period
commencing on the Closing Date and ending on the six-month
anniversary of the Closing Date.
“Immediate Family Member” means a
child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, of a natural person.
“Indebtedness” means all (i)
indebtedness for borrowed money, (ii) obligations evidenced by
bonds, notes or similar instruments, (iii) guarantees of
indebtedness of others or other commitments, obligations, or
undertakings to pay any obligations of others or to assure any
creditor against loss, (iv) obligations upon which interest charges are
customarily paid, (v) capitalized lease obligations, (vi)
obligations under conditional sale or
other title retention agreements, (vii) obligations issued or assumed as the deferred
purchase price of property or services, (viii) obligations secured
by any Encumbrance on property or assets, and (ix) all
accrued and unpaid interest and penalties on any of the foregoing
(including prepayment penalties), and all costs, expenses and other
charges included in any of the foregoing.
“Indemnification Cap” means Four
Hundred Fifty Thousand Dollars ($450,000.00)
“Indemnification Expiration Date”
means the second annual anniversary of the Closing
Date.
“Intellectual Property” means (i)
all inventions (whether patentable or unpatentable and whether or
not reduced to practice), all improvements thereto, and all
patents, patent applications, and patent disclosures, together with
all reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations thereof; (ii) all trademarks,
service marks, trade dress, logos, trade names, and other
indications of origin, and all corporate names, including all
goodwill associated therewith, and all applications, registrations,
and renewals in connection therewith in any jurisdiction; (iii) all
copyrights and works of authorship (whether copyrightable or not),
and all applications, registrations, and renewals in connection
therewith in any jurisdiction; (iv) all mask works and all
applications, registrations, and renewals in connection therewith
in any jurisdiction; (v) all Trade Secrets and Confidential
Information; (vi) all Software; (vii) all websites, website
content, and domain names (including registrations thereof); (viii)
all other intellectual property and/or proprietary rights; (ix) all
tangible embodiments of any of the foregoing (in whatever form or
medium), including all copies thereof; and (x) all claims and
causes of action for infringement, misappropriation or dilution of
any of the foregoing.
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“Intellectual Property Assignment”
means Exhibit E attached hereto.
“Inventory” means any inventory,
including all vehicles, raw materials, work-in-process, finished
goods and products under research and development, and all spare
parts and accessories thereto, and all other materials and supplies
used, usable or held for use in the production of finished goods,
wherever located.
“IRS” means the United States
Internal Revenue Service or any successor agency and, to the extent
relevant, the United States Department of the
Treasury.
“Knowledge” (and any derivations
thereof) means the actual knowledge of (i) Seller; (ii) any other
Selling Group Member; (iii) any officer, director or manager of
Seller; or (iv) Kandera, and the knowledge that each such Person
would reasonably be expected to obtain in the course of diligently
performing such Person’s duties and responsibilities for
Seller or any other Selling Group Member, in each case after due
inquiry (including due inquiry of all officers, directors,
managers, or employees of the Seller and other Selling Group
Members).
“Laws” means all federal, state,
local, municipal, foreign, international, multinational, or other
order, constitution, law, ordinance, principle of common law,
regulation, statute, rule, treaty, permit, license, certificate,
judgment, Order, decree, award or other decision or requirement of
any arbitrator or Governmental Authority.
“Liability” means, with respect to
any Person, any liability or obligation of such Person of any kind,
nature, character or description, whether known or unknown,
absolute or contingent, accrued or unaccrued, disputed or
undisputed, liquidated or unliquidated, secured or unsecured, joint
or several, due or to become due, vested or unvested, executory,
determined, determinable or otherwise, and whether or not the same
is required to be accrued on the financial statements of such
Person.
“Material Adverse Effect” means any
material adverse change in, or effect on, the assets, financial
condition, results of operations or prospects of Seller or the
Business or that could reasonably be expected to have any material
adverse change in, or effect on, Purchaser’s ability to
operate the Business after the Closing.
“Monthly Financial Statements”
means unaudited balance sheets of Seller as at the last day of each
calendar month during the period commencing January 1, 2021 and
ending June 30, 2021 and income statements, statements of cash flow
and statements of shareholders’ equity of Seller for the
partial year ending on the last day of each such calendar
month.
“Most Recent Balance Sheet” means
the unaudited balance sheet of Seller as at June 30,
2021.
“Most Recent Fiscal Year End” means
December 31, 2020.
“Non-Capped Indemnification
Damages” means Damages arising out of, relating to or
covered by (i) any inaccuracy in or breach of any representations
or warranties in Sections 3.1, 3.2, 3.3 or 3.4; (ii) any
fraudulent, intentional or willful breach by any Seller Group
Member in connection with a representation or warranty contained in
this Agreement or in any certificate, instrument or document
delivered herewith; or (iii) the Excluded Assets or Excluded
Liabilities and Obligations, including the Excluded
Contracts.
“Off-the-Shelf Software” means
commercially available desktop computer Software licensed
non-exclusively under “shrink wrap” or other comparable
standard form licenses.
-8-
“Open Source Software” means each
of: (a) any Software that contains, or is derived in any
manner (in whole or in part) from, any Software that is distributed
as free Software, open source Software (e.g., GNU General Public License,
Apache Software License, or MIT
License), or pursuant to similar licensing and distribution
models, and (b) any Software that requires as a condition of
use, modification, hosting, and/or distribution of such Software,
or of other Software used or developed with, incorporated into,
derived from, or distributed with such Software, that such Software
or other Software: (i) be disclosed or distributed in source code
form, (ii) be licensed for the purpose of making derivative works,
(iii) be redistributed, hosted or otherwise made available at no or
minimal charge, or (iv) be licensed, sold or otherwise made available on terms that:
(x) limit in any manner the ability to charge license
fees or otherwise seek compensation in connection with marketing,
licensing or distribution of such Software or other Software, (y)
grant the right to decompile, disassemble, reverse engineer or
otherwise derive the source code or underlying structure of such
Software or other Software, or (z) limit in any manner the ability
to enforce the Intellectual Property Rights in such
Software.
“Opinion of Seller Counsel” means
the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, PLLC, counsel to Seller and the
Seller Members in the form of Exhibit F attached
hereto.
“Order” means any judgment,
decision, order, injunction, decree, award, or writ of any
Governmental Authority.
“Ordinary Course of Business” means
an action taken by a Person with respect to the Business that is
consistent with past practices of the Business and is similar in
nature and magnitude to actions taken in normal day-to-day
operations of the Business (including with respect to quantity and
frequency) consistent with past practices and was not taken in
contemplation of any of the Transactions.
“PBGC” means the Pension Benefit
Guaranty Corporation.
“Permitted Encumbrances” means
liens for Taxes not yet due and payable.
“Person” means any natural person,
corporation (including any non-profit corporation), general or
limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union or other
entity, or a Governmental Authority.
“Predecessor” means any Person
whose Liabilities, including Tax Liabilities or Environmental
Liabilities, have been retained or assumed by Seller, or to which
Seller is otherwise the successor, either contractually or by
operation of Law.
“Privacy and Data Security Laws”
means all any federal, state, local, municipal, foreign,
international, multinational, or other order, constitution, law,
ordinance, principle of common law, regulation, statute, rule,
treaty, permit, license, certificate, judgment, Order, decree,
award or other decision or requirement of any arbitrator or
Governmental Authority that (i) relate to the protection of the
privacy and Personal Information, (ii) provide consumers, with
certain rights with respect to their Personal Information; (iii)
require implementation and maintenance of measures, practices and
procedures to protect data and information, including Personal
Information, from unauthorized access, destruction, use,
modification, disclosure, theft or exfiltration; and (iv) require
notifications to consumers regarding breaches of data
security.
“Prospective Business Relationship”
means any client, customer, supplier, vendor, independent
contractor, or other Person that Purchaser or Purchaser Parent is
actively preparing to engage in a business
relationship.
“Purchased Assets” means all of the
assets, rights, privileges, interests, and properties, of every
type and description, owned, leased, used, useable or held for use
by Seller, or by any other Selling Group Member in connection with
the Business, other than the Excluded Assets, including all of the
assets listed on the Purchased Assets and Assumed Liabilities and
Obligations Schedule.
-9-
“Purchased Assets and Assumed Liabilities and
Obligations Schedule” means Exhibit A attached
hereto.
“Purchaser-Hired Former Business
Employees” means Former Business Employees terminated
by Seller as of the Closing and employed by Purchaser or Purchaser
Parent effective immediately after the Closing, which former
employees are listed on the Purchaser-Hired Former Business
Employees Schedule.
“Purchaser-Hired Former Business Employees
Schedule” means Exhibit G attached
hereto.
“Related Party” means (i) Seller;
(ii) any other Selling Group Member; (iii) any current or former
director, manager, officer, employee, shareholder, partner or
member of Seller or Seller Class A Member; (iv) Kandera; (v) any
Immediate Family Member of Kandera; and (vi) any Affiliate of the
Seller Class A Member.
“Release” means any spilling,
leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, or disposing of a Hazardous
Material into the Environment.
“Response,” “Removal,” and “Remedial Action” have the meanings
ascribed to them in Sections 101(23)-101(25) of the
CERCLA.
“Restricted Area” means the State
of Texas.
“Restricted Business” means the
business of buying or selling used motor vehicles.
“Restricted Period” means the
period commencing on the Closing Date and ending on the second
annual anniversary of the Closing Date.
“Software” means all computer
software and subsequent versions thereof, including source, object,
executable, or binary codes, objects, comments, screens, user
interfaces, report formats, templates, menus, buttons and icons,
and all files, data, materials, manuals, design notes and other
items and documentation related thereto or associated
therewith.
“Tangible Personal Property” means
any machinery, equipment, computers, furniture, tools, supplies,
Inventory, motor vehicles, and other tangible personal
property, including all attachments and accessories to, and
replacements of, any of the foregoing (and any parts or components
thereof), and all express or implied warranties of, and rights
against all, manufacturers, suppliers, sellers, lessors or
licensors of any of the foregoing (or any parts or components
thereof).
“Tax” or “Taxes” means any federal, state,
local, or foreign income, gross receipts, license, payroll,
employment, occupation, sales, use, excise, severance, stamp,
occupancy, premium, windfall profits, environmental (including
Taxes under Section 59A of the Code), customs duties, capital
stock, franchise, profits, net proceeds, transfer, withholding,
social security or similar, unemployment, disability, greenmail,
real and personal property (tangible and intangible), production,
escheat, registration, value added, alternative or add-on minimum,
estimated or other similar taxes, or other tax, charge, fee, levy,
deficiency or other assessment of whatever kind or nature, imposed
by any Tax Authority, together with any interest, penalties or
additions to tax relating thereto, and including an obligation to
indemnify or assume or otherwise succeed to or otherwise be liable
for the tax liability of any other Person (including any
Predecessor) as a transferee or successor or
otherwise.
“Tax Authority” means any branch,
office, department, agency, instrumentality, court, tribunal,
officer, employee, designee, representative, or other Person that
is acting for, on behalf or as a part of any Governmental Authority
that is engaged in or has any power, duty, responsibility or
obligation relating to the legislation, promulgation,
interpretation, enforcement, regulation, monitoring, supervision or
collection of or any other activity relating to any Tax or Tax
Return.
-10-
“Tax Proceeding” means any audit,
examination, review, reassessment, litigation or other
administrative or judicial proceeding or other Action relating to
any Tax for which Seller is (or is asserted to be) or may be
liable.
“Tax Return” means any return,
election, declaration, report, schedule, information return,
document, information, opinion, statement, or any attachment or
amendment to any of the foregoing (including any consolidated,
combined or unitary return) submitted or required to be submitted
to any Tax Authority and any claims for refund of Taxes
paid.
“Trade Secrets and Confidential
Information” means know-how, trade secrets,
confidential information, proprietary information, information of or regarding the Business and its
operations, assets, results of operations, customers, vendors,
plans and financial condition, data, databases and technical
information and all rights in, arising out of or associated
therewith.
“Transaction Documents” means this
Agreement, the ▇▇▇▇ of Sale and Assignment, Intellectual Property
Assignment and any other Transfer Documents, and the other
agreements, certificates, documents or instruments contemplated by
and executed and delivered pursuant to or in connection with this
Agreement.
“Transaction” means the transaction
contemplated by the Transaction Documents.
“Transfer Documents” means the ▇▇▇▇
of Sale and Assignment, Intellectual Property Assignment and such
other deeds, agreements and instruments of sale, assignment and
transfer, each in form and substance mutually satisfactory to the
Purchaser, as Purchaser deems necessary or appropriate to transfer
good, valid and marketable title to the Purchased Assets from
Seller to Purchaser, free and clear of all Encumbrances other than
Permitted Encumbrances.
“Transition Services Schedule”
means Exhibit H attached hereto.
“WARN” means the federal Worker
Adjustment and Retraining Notification Act or any similar state or
local laws, rules or regulations.
1.2 Other
Definitions. In addition to terms otherwise defined in this
Agreement, each of the following terms is defined in the Section
set forth opposite such term:
|
Term
|
Section
|
|
“Affiliate
Assignee”
“Business
Intellectual Property”
|
7.3
3.16
|
|
“Business
Names”
|
Purchased
Assets and Assumed Liabilities and Obligations
Schedule
|
|
“Business
Products”
|
3.16
|
|
“Business
Real Property”
|
Purchased
Assets and Assumed Liabilities and Obligations
Schedule
|
|
“Business
Relationships”
|
Purchased
Assets and Assumed Liabilities and Obligations
Schedule
|
|
“Business
Services”
|
3.16
|
-11-
|
“Closing
Date”
|
2.1
|
|
“Compliance
Policies”
|
3.8
|
|
“Consents
Required For Closing”
|
Closing
Schedule
|
|
“Damages”
|
6.1
|
|
“Disputed
Holdback Claim Resolution”
|
6.6
|
|
“Effective
Time”
|
2.1
|
|
“Encumbrance
Termination Documents”
|
5.7
|
|
“Indemnified
Party”
|
6.3
|
|
“Indemnifying
Party”
|
6.3
|
|
“Insurance
Policy” or “Insurance Policies”
|
3.22
|
|
“Intellectual
Property Contracts”
|
3.16
|
|
“Leases”
|
3.14
|
|
“Licensed
Intellectual Property”
|
3.16
|
|
“Material
Business Relationships”
|
3.18
|
|
“Material
Suppliers”
|
3.18
|
|
“Nonassignable
Contract”
|
2.4
|
|
“Notice
of Indemnification Claim”
|
6.3
|
|
“Owned
Intellectual Property”
|
3.16
|
|
“Party”
or “Parties”
|
Preamble
|
|
“Payoff
Letters”
|
Closing
Schedule
|
|
“Power
of Attorney”
|
5.9
|
|
“Purchase
Consideration”
|
2.5
|
|
“Purchase
Consideration Closing Payment”
|
2.5
|
|
“Purchasing
Group Indemnitees”
|
6.1
|
|
“Related
Party Contract”
|
3.24
|
|
“Required
Intellectual Property Assignments
|
Closing
Schedule
|
|
“Seller
Governmental Authorizations”
|
3.8
|
|
“Seller
Consents and Approvals”
|
Closing
Schedule
|
|
“Selling
Group Indemnitees”
|
6.2
|
-12-
ARTICLE II
TERMS OF PURCHASE
AND SALE
2.1 The
Closing.
(a) The
closing of the Transactions (“Closing”) took place on the
Effective Date. The date of the Closing is referred to as the
“Closing Date.”
The Closing shall be effective for all purposes as of 12:01 a.m.
Central Time on the Closing Date (“Effective Time”).
(b) At
the Closing (i) Seller, at its expense, caused the Purchased Assets
to be delivered to and put in the possession and control of
Purchaser free and clear of Encumbrances other than Permitted
Encumbrances; and (ii) the respective Parties took the actions and
delivered to the other Parties, as applicable, the items listed on
the Closing Schedule.
2.2 Purchased
and Excluded Assets.
(a) Effective
as of the Effective Time, Seller hereby sells, transfers, conveys,
assigns and delivers to Purchaser (or at Purchaser’s option,
to Purchaser’s designated Affiliate) good, valid and
marketable title to all Purchased Assets, free and clear of all
Encumbrances other than Permitted Encumbrances.
(b) Seller
shall retain its rights, title and interests in the Excluded Assets
from and after the Effective Time.
2.3 Assumed
and Excluded Liabilities and Obligations
(a) Effective
as of the Effective Time, Purchaser hereby assumes only the Assumed
Liabilities and Obligations. All Liabilities and Obligations of
Seller (including its Predecessors) that are not expressly included
in the Assumed Liabilities and Obligations shall be Excluded
Liabilities and Obligations.
(b) Notwithstanding
any provision in this Agreement to the contrary, and regardless of
any disclosures made by Seller or any other Selling Group Member in
any Transaction Document or otherwise, Purchaser is assuming only
the Assumed Liabilities and Obligations (including the Assumed
Contracts) and neither Purchaser nor Purchaser Parent is assuming
any Excluded Liabilities and Obligations or any other Liability or
obligation of Seller or any other Selling Group Member or any of
their respective Affiliates not specifically included in the
Assumed Liabilities and Obligations. The Excluded Liabilities and
Obligations shall be retained by and remain Liabilities and
obligations of Seller and the other Selling Group Members, as
applicable, and Seller and the other Selling Group Members, as
applicable, shall pay, perform, and discharge or otherwise satisfy
when due each and every Excluded Liability and Obligation shall be
solely liable and responsible therefor.
2.4 Assumed
Contracts.
(a) Effective
as of the Effective Time, Purchaser assumes the Assumed Contracts
and the Assumed Liabilities and Obligations related to the Assumed
Contracts that arise on or after the Closing Date and that relate
to the ownership of the Purchased Assets and operation of the
Business on and after the Closing Date.
-13-
(b) If
any Assumed Contracts included in the Purchased Assets may not be
transferred without the Consent of another Person, or if such
transfer or attempted transfer, absent the Consent of the Person,
would constitute a breach thereof or a violation of any Law or
Governmental Authorization, or cause or permit the loss or waiver
of any right or entitlement thereunder, or cause or permit the
termination thereof or any change in the terms thereof (each, a
“Nonassignable
Contract”), then Seller shall, at its own expense
(including payment of any fees and costs imposed in connection with
the request for, or as a condition to the issuance of, any such
Consent) and without any amendments to or changes in the terms of
(or any of the respective rights and obligations of the Parties
under) any Nonassignable Contract (except as expressly permitted or
required under this Agreement or consented to by Purchaser in
writing), obtain all such Consents before the Closing. If any
Consent to a Nonassignable Contract is not obtained before the
Closing, then Seller shall, after the Closing (i) obtain such
Consent as soon as possible after the Closing at Seller’s
sole cost and expense (including payment of any fees and costs
imposed in connection with the request for, or as a condition to
the issuance of, any such Consent) and without any amendments to or
changes in the terms of (or any of the respective rights and
obligations of the parties under) any Nonassignable Contract, and
cooperate with Purchaser in endeavoring to obtain, such Consent at
no out-of-pocket cost or expense to Purchaser; and (ii) if and for
so long after the Closing as such Consent has not been obtained,
cooperate with Purchaser in any arrangement proposed by Purchaser
in good faith that is designed to provide for Purchaser the
material benefits (including all economic benefits), claims, and
rights under any such Nonassignable Contract, including the
enforcement for the benefit of Purchaser of any and all rights of
Seller against any other party thereto. In obtaining any Consent
with respect to any Nonassignable Contract, Seller will not agree
to or permit any amendments or changes to any of the terms of (or
any of the respective rights and obligations of the Parties under)
any Nonassignable Contract without the consent of Purchaser.
Notwithstanding the foregoing, only the Consent Required For
Closing shall be a condition to the Closing, provided that Seller
shall use commercially reasonably efforts to obtain all Consents to
Nonassignable Contracts before the Closing, and provided further
that Seller shall be and remain obligated to obtain after the
Closing as provided in this Section 2.4(b) any such Consents that
are not obtained before the Closing.
2.5 Purchase
Consideration.
(a) The
consideration to be paid to Seller for the Purchased Assets
(“Purchase
Consideration”) shall be cash in the amount of Four
Hundred Thousand Dollars ($400,000.00). The Purchase Consideration,
less the Holdback Amount, is hereinafter referred to as the
“Purchase Consideration
Closing Payment”).
(b) The
Parties acknowledge and agree that the Purchase Consideration
represents fair consideration and reasonable equivalent value for
the Purchased Assets, and the covenants and agreements set forth in
this Agreement and the other Transaction Documents, which
consideration was agreed upon as a result of arms’ length,
good-faith negotiations among the Parties and their respective
representatives.
(c)
The Parties agree that the Purchase Consideration shall be
allocated among the Purchased Assets for all purposes (including
tax and financial accounting) at fair market value, except for
tangible assets which will be valued at net book
value.
2.6 Transfer
Taxes and Fees. The Selling Group shall be responsible for
and shall timely pay all transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties
and interest) incurred in connection with the Transaction,
including with respect to the transfer of the Purchased Assets and
Assumed Liabilities and Obligations, and the Selling Group will, at
its own expense, file all necessary Tax Returns and other
documentation with respect to all such transfer, documentary,
sales, use, stamp, registration and other Taxes and
fees.
2.7 Withholding
Tax. The Purchasing Group shall be entitled to deduct and
withhold from the Purchase Consideration and from any other
payments payable to Seller hereunder, all Taxes that the Purchaser
may be required to deduct and withhold under any provision of Tax
Law. All such withheld amounts shall be treated as delivered to
Seller hereunder.
2.8 Expenses.
Except as expressly otherwise provided in this Agreement, each
Party shall pay all costs and expenses incurred by it or on its
behalf in connection with this Agreement and the Transaction,
including the generality of the foregoing, fees and expenses of its
own financial consultants, accountants, investment bankers, legal
counsel and other advisors.
-14-
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE
SELLING
GROUP
The
Selling Group Member hereby jointly and severally represent and
warrant to the Purchasing Group Members that, except as set forth
on the Disclosure Schedule, which exceptions shall be deemed to be
part of the representations and warranties made hereunder, knowing
and intending that the Purchasing Group Members are relying on the
accuracy of such representations and warranties in entering into
the Transaction, the representations and warranties set forth in
this Article III are true, complete and accurate as of the Closing.
The Disclosure Schedule shall be arranged in sections corresponding
to the numbered and lettered sections and subsections contained in
this Article III, and the disclosures in any section or subsection
of the Disclosure Schedule does not qualify other sections and
subsections of this Article III without specific reference or cross
reference to specific disclosure made in another section or
subsection.
3.1 Organization
and Good Standing.
(a) Seller
is a limited liability company, duly formed, organized, validly
existing, and in good standing under the Laws of the State of
Texas. Seller has the requisite power and lawful authority to own
and hold its properties (including the Purchased Assets) and
conduct the Business as now owned, held, and conducted by it in its
state of formation and the other states (or other jurisdictions) in
which it is required to register or qualify to do business as a
result of the operation of the Business. Section 3.1 of the
Disclosure Schedule sets forth each jurisdiction in which Seller is
licensed, registered or qualified to do business, and Seller is
duly licensed, registered or qualified to do business and is in
good standing in, and current with respect to any and all reports
and filings required to be made under the Laws of, each
jurisdiction in which the ownership of the Purchased Assets or the
operation of the Business makes such licensing, registration or
qualification necessary. Seller has not engaged in any trade or
business other than the Business or conducted the Business under
any name (including any “trading” or “doing
business as” name) other than its legal name in the State of
Texas.
(b) Seller
Class A Member is a limited liability company, duly formed,
organized, validly existing, and in good standing under the Laws of
the State of Texas.
(c) Seller
Class B Member is a limited partnership, duly formed, organized,
validly existing, and in good standing under the Laws of the State
of Texas.
3.2 Power
and Authorization. Seller and each other Selling Group
Member has the requisite power and lawful authority to enter into
and to perform its obligations under the Transaction Documents to
which it is a party and to consummate the Transaction. The
execution, delivery, and performance by Seller and the other
Selling Group Members of the Transaction Documents to which it is a
party, and the consummation by Seller and the other Selling Group
Members of the Transaction, have been duly and properly authorized
in accordance with applicable Laws, and no other action, entity or
otherwise, on the part of Seller, any other Selling Group Member or
any other Person is necessary to authorize the execution, delivery,
and performance by Seller and each other Selling Group Member of
the Transaction Documents to which it is a party and the
consummation of the Transaction, and no Person has dissenters,
appraisal or similar rights under any Laws with respect to the
Transaction.
3.3
Execution and
Performance of Agreement; Validity and Binding Nature. This
Agreement has been duly executed and delivered by Seller and each
other Selling Group Member, and each of the other Transaction
Documents to be executed and delivered by Seller or any other
Selling Group Member, as applicable, will, when executed and
delivered by Seller or such other Selling Group Member, be duly
executed and delivered by Seller and such other Selling Group
Member, and this Agreement is, and each of the Transaction
Documents, when duly executed and delivered by all parties whose
execution and delivery thereof is required, shall be, the legal,
valid, and binding obligations of each Seller and each Selling
Group Member, enforceable against Seller and each other Selling
Group Member in accordance with their respective terms, except to
the extent that such enforceability is limited by bankruptcy,
receivership, moratorium, conservatorship, or reorganization Laws
or other Laws of general application affecting the rights of
creditors generally or by general principles of
equity.
-15-
3.4 No
Conflicts/Consents.
(a) The execution,
delivery and performance by Seller and the other Selling Group
Members of the Transaction Documents to which each is a party do
not and will not (with or without the passage of time or the giving
of notice):
(i) violate or conflict
with any provision of Seller’s or any other Selling Group
Member’s Governing Documents or any Laws to which the
Business or Seller or any other Selling Group Member or any of
Seller’s or other Selling Group Member’s respective
assets or properties (including the Purchased Assets) is subject or
by which any of them is bound;
(ii) violate
or conflict with, result in a breach of any provision of, or
constitute a default, or otherwise cause any loss of any benefit
under any Contract or other obligation to which Seller, any other
Selling Group Member or the Business is a party or by which any of
their respective assets or properties (including the Purchased
Assets) are bound, or result in the termination or cancellation of
any Contract to which Seller, any other Selling Group Member or the
Business is a party or by which any of their respective assets or
properties (including the Purchased Assets) are bound, or give rise
to any rights of others (including rights of termination,
foreclosure, cancellation, or acceleration), in or with respect to
the Purchased Assets or the Business;
(iii) give
any Governmental Authority or other Person the right to challenge
any Transaction Document or any aspect of the Transactions or to
exercise any remedy or obtain any relief under any Law to which the
Business, Seller, any other Selling Group Member or any of their
respective assets or properties (including the Purchased Assets)
may be subject;
(iv) result
in, require, or permit the creation or imposition of any
Encumbrance upon or with respect to any of the assets or properties
owned, leased, or used by Seller or any other Selling Group Member
in the operation of the Business, including any Purchased Assets;
or
(v) cause the Purchaser
or any of its Affiliates to become subject to, or to become liable
for the payment of, any Tax as a result of the consummation of the
Transactions.
(b) Section
3.4(b) of the Disclosure Schedule contains a complete and accurate
list of each Governmental Authorization, Consent or registration,
notification, filing and/or declaration with, or requirement of,
any Governmental Authority, creditor, lessor or other Person
required to be obtained, given, made or undertaken by Seller and
each other Selling Group Member in connection with the execution,
delivery and performance of the Transaction Documents or the
consummation of the Transaction (including all Consents required
under Nonassignable Contracts). All Governmental Authorizations,
Consents, registrations, notifications, filings, declarations and
requirements listed in Section 3.4(b) of the Disclosure Schedule
have been obtained, given, made or undertaken or, if not required
to have been obtained, given, made or undertaken before the
execution of this Agreement, in each case without payment of
premium or penalty by, or loss of benefit to, the Business, the
Purchased Assets or the Purchaser; provided, however, that in the
case of NonAssignable Contracts, Consents may be deferred until
after Closing in accordance with Section 2.4(b) unless such Consent
is designated in Section 3.4(b) of the Disclosure Schedule as a
“Consent Required For
Closing,” in which case such Consent may not be
deferred until after Closing in accordance with Section 2.4(b).
Neither Seller nor any other Selling Group Member has received any
request from any Governmental Authority for information with
respect to the Transaction.
-16-
3.5 Governing
Documents; Directors and Officers; Equity Ownership; Powers of
Attorney.
(a) True
and complete copies of the Governing Documents of Seller and of the
Seller Class A Member (in each case together with all amendments
thereto) have been delivered to Purchaser. The Governing Documents
of Seller and of the Seller Class A Member, in the form delivered
to Purchaser, are in full force and effect and have not been, nor
will be, amended, repealed or modified before the Closing. The
Governing Documents of the Seller Class B Member are in full force
and effect and have not been, nor will be, amended, repealed or
modified before the Closing.
(b) Section
3.5(b) of the Disclosure Schedule contains an accurate and complete
list of all shareholders, members, partners, directors, officers,
managers and Affiliates of Seller and of Seller Class A
Member.
(c) Seller
has not given any powers of attorney or comparable delegations of
authority, and no such power of attorney or comparable delegations
of authority are in effect, with respect to Taxes or otherwise to
any Person for any reason with respect to or that could affect the
Purchased Assets or the Business as conducted by Seller prior to
the Closing or as conducted by Purchaser after the
Closing.
(d) The
beneficial and record owners of all of the issued and outstanding
capital stock, membership interests, partnership interests and
other securities of Seller and of the Seller Class A Member
(including all options, warrants, convertible securities and rights
to acquire capital stock) is identified in Section 3.5(d) of the
Disclosure Schedule, and no Person, other than the Seller Members,
holds or has any rights to acquire any securities of Seller or
otherwise has any rights or interests whatsoever in Seller or any
of its assets or profits. No Person other than Seller has any
direct or indirect rights in or to the proceeds of the Transaction.
No stockholder, member, or partner, as applicable, of any Selling
Group Member has any appraisal rights under applicable Law as a
result of the execution of the Transaction Documents or the Closing
of the Transaction.
(e) Seller
does not have any Predecessors.
3.6 Business
Records. All of the Business Records have been made
available to Purchaser and are complete and correct in all material
respects and have been maintained in accordance with sound business
practices, and matters contained therein are in all material
respects accurately reflected in the Financial Statements to the
extent necessary. At the Closing, all of the Business Records have
been delivered to Purchaser and all right, title and interest in
the Business Records shall vest in Purchaser, free and clear of any
Encumbrances. Each transaction of Seller with respect to the
Business is properly and accurately recorded in the Business
Records.
3.7 Title
to Assets/Sufficiency of Assets, Subsidiaries, Investments and
Loans, Capitalization.
(a) Seller
owns, beneficially and of record, or has the legal right to possess
and use, all of the Purchased Assets. At the Closing, Seller has
sold, assigned, transferred and delivered to Purchaser legal, valid
and marketable title to the Purchased Assets, free and clear of all
Encumbrances other than Permitted Encumbrances. No Related Party
owns, holds or uses any assets used, useable or held for use by
Seller. Seller does not have any commitment or legal obligation,
absolute or contingent, to any Person other than Purchaser to sell,
assign, transfer, or effect the sale, assignment or transfer of the
Business or any of the Purchased Assets, or to effect any sale,
merger, consolidation, liquidation, dissolution or other
reorganization of Seller or the Business, or to enter into any
Contract with respect to any of the foregoing.
(b) The
Purchased Assets together with the Business Employees constitute
all of the assets, properties, rights and employees (i) used or
held for use by Seller in the conduct and operation of the
Business, and (ii) necessary to conduct and operate the Business as
presently conducted by Seller and in compliance with all
Laws.
(c) Seller
does not own or have any right to acquire, directly or indirectly,
any capital stock, partnership interest, membership interest or
other equity interest or security of any Person, and there is no
Person in which Seller has, directly or indirectly, made any
investment. Seller is not
under any obligation to acquire any securities from any Person or
to make any investment, loan, cash contribution or other advance to
any Person. Neither Seller nor any Related Party has any beneficial
interest, direct or indirect, in any Person (other than Seller) (i)
which is or has been a supplier of any goods or services to Seller,
(ii) from which Seller has received fees, commissions, compensation
or benefits, or (iii) which is engaged in the Business or is a
competitor of Seller.
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3.8 Compliance
with Laws.
(a) Seller is operating
and has always operated the Business in compliance in all material
respects with all applicable Laws, including Laws with respect to
the ownership or use of the assets and properties (including the
Purchased Assets) used in the operation of the Business, the
privacy and safeguarding of personally identifiable information;
email, facsimile, telephone (land, wireless or cellular) or text
messaging advertising or solicitations; motor vehicle dealer
licensing; and fair and accurate advertising, and Seller has not
received any notice, Order or other communication from any
Governmental Authority of any alleged, actual, or potential
violation of or failure to comply with any Law.
(b) All Governmental
Authorizations required for the operation of the Business by
Seller, or the use, occupancy or operation by Seller of any assets
or properties of Seller (including the Business Real Property) in
compliance with applicable Laws, including all Environmental
Permits, are set forth in Section 3.8(b) to the Disclosure Schedule
(“Seller Governmental
Authorizations”). All Seller Governmental
Authorizations are in full force and effect without any default or
violation thereunder by Seller or by any other party thereto, and
Seller has not received any notice of any claim or charge that
Seller is or has been in violation of or in default under any
Seller Governmental Authorization. No Action is pending or, to the
Knowledge of Seller and to the Knowledge of each other Selling
Group Member, threatened by any Person that could result in the
revocation of, denial of, renewal of, or impairment of any Seller
Governmental Authorization. Seller has not been notified that any
such Seller Governmental Authorization may not be renewed upon its
expiration or that, by virtue of the Transaction, any Seller
Governmental Authorization may not be granted or renewed. No Seller
Governmental Authorization expires or must be renewed sooner than
the last day of the Current Fiscal Year. At the Closing, Seller has
transferred, free and clear of any Encumbrances, to Purchaser all
Seller Governmental Authorizations, and neither Seller nor any
other Selling Group Member has Knowledge of any circumstance that
could reasonably be expected to result in any Seller Governmental
Authorization not being transferred or reissued to Purchaser on or
after the Closing Date.
(c) Neither Seller, any
officer, director, employee (including any Business Employees),
representative or agent of Seller nor any other Person acting on
behalf of Seller or any other Selling Group Member has, directly or
indirectly, given or agreed to give any gift or similar benefit to
any Business Relationship, customer, supplier, governmental
employee or other Person who is or may be in a position to help or
hinder the Business (or assist Seller in connection with any actual
or proposed transaction) which: (i) could subject Seller, the
Business or Purchaser to any Liability or penalty in any civil,
criminal or governmental Action; (ii) if not given in the past,
might have had an adverse effect on the assets, business,
prospects, financial condition or operations of the Business; or
(iii) if not continued in the future, might have an adverse effect
on the Business or which might subject Seller or Purchaser to an
Action or to any Liability or penalty in any Action.
(d) Set forth in
Section 3.8(d) of the Disclosure Schedule is a true, accurate and
complete list of all internal policies and procedures of Seller
with respect to the Business, including all compliance and
licensing policies, privacy and confidentiality policies and
anti-fraud policies (collectively, the “Compliance Policies”). Seller has
delivered to Purchaser true, complete and correct copies of all
Compliance Policies. The Business has been operated in compliance,
and all current and former employees of Seller and the Business
have complied, in all material respects with Compliance
Policies.
3.9 Actions.
There are no pending Actions involving or affecting Seller or any
other Selling Group Member (including any claims made under
Seller’s general liability, errors and omissions, or
worker’s compensation insurance policies, or by any Business
Employees or former employees of the Business before the EEOC or
alleging discrimination, harassment, or wrongful termination, or
involving or relating to any Environmental Law), and, to the
Knowledge of Seller and each other Selling Group Member (i) no such
Action is presently threatened or contemplated; and (ii) there are
no facts that could reasonably serve as a basis for any such
Action. There are no, and during the past five (5) years have not
been any, unsatisfied or outstanding Orders against, binding upon
or adversely affecting Seller, the Purchased Assets or the
Business. Section 3.9 of the Disclosure Schedule sets forth a list
and an accurate summary of all Actions involving Seller or any
other Selling Group Member that were resolved or settled during the
five (5) year period immediately preceding the date of this
Agreement (including all claims made under Seller’s general
liability, errors and omissions or worker’s compensation
insurance policies).
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3.10 Financial
Statements/Liabilities.
(a) Seller has
delivered to Purchaser true, complete and accurate copies of the
Financial Statements. The Financial Statements, including any
footnotes thereto: (i) have been prepared from the books and
records of Seller as prepared in the Ordinary Course of Business,
(ii) have been prepared in accordance with GAAP consistently
applied throughout the periods therein indicated, subject to normal
year-end adjustments for interim-period Financial Statements and
the absence of disclosure normally made in footnotes to financial
statements, (iii) are true, correct and complete in all material
respects, and (iv) present fairly in all material respects the
financial position of Seller on a consolidated basis as of their
respective dates, and the results of the operations of Seller as of
their respective dates and for the respective periods indicated
therein, and changes in the financial positions of Seller for the
respective periods therein indicated. All prepaid expenses included
in the Purchased Assets that would be reflected as assets of Seller
in financial statements represent payments theretofore made by
Seller in the Ordinary Course of Business, the benefit and
advantage of which may be obtained and realized by Purchaser after
the Closing within the time anticipated for such realization, but
in no event later than twelve months following the Closing Date.
The accounting books and records of the Business have been kept in
accordance with GAAP applied consistently with past practices, and
do and will fairly, accurately and completely, reflect the
operating and financial transactions of Seller on such
basis.
(b) There is no direct
or indirect Indebtedness or Liability of Seller or any other
Selling Group Member affecting the Business or the Purchased
Assets, except Liabilities reflected in the Financial Statements
and trade payables incurred in the Ordinary Course of Business
since the date of the most recent Monthly Financial Statements,
none of which are in default as to payment. Section 3.10(b) of the
Disclosure Schedule sets forth a complete and accurate list of each
Contract (i) to which Seller, or any other Selling Group Member
with respect to the Business, is a party or by which Seller, or any
other Selling Group Member with respect to the Business, is bound
relating to any Indebtedness of Seller or any other Selling Group
Member or the Business or relating to the imposition of
Encumbrances on any assets of Seller, including any Contracts under
which Seller or any other Selling Group Member has directly or
indirectly guaranteed any Liabilities of any other Person, and (ii)
pursuant to which any Person has directly or indirectly guaranteed
any Liabilities of Seller, any other Selling Group Member or the
Business. Except for advances of commissions and compensation to
Business Employees in the Ordinary Course of Business, neither
Seller nor any other Selling Group Member with respect to the
Business, has made any loan, extended credit or provided financial
accommodations to any Person. On or before the Closing Date, Seller
has or will pay in full and discharge, or cause the payment in full
and discharge of, all Indebtedness of Seller outstanding as of the
Closing Date that is secured by or has resulted in any Encumbrances
on any Purchased Assets, or the payment of which is required for
the performance by Seller or any other Selling Group Member of its
obligations in connection with the Transaction.
3.11 Taxes.
(a) Seller and each
other Selling Group Member has timely filed or caused to be filed
with the appropriate Governmental Authorities all Tax Returns
required to be filed by Seller and such Selling Group Member for
periods ending on or before the Closing Date and neither Seller nor
any other Selling Group Member is currently the beneficiary of any
extension of time within which to file any Tax Return.
(b) A complete and
accurate list of all jurisdictions in which Seller is required to
file Tax Returns, and the Tax Returns filed by each of them in each
such jurisdiction, are as set forth in Section 3.11(b) to the
Disclosure Schedule.
(c) All Tax Returns of
Seller and each other Selling Group Member, as the same may have
been amended, are true, correct and complete, were prepared in
compliance with all applicable Laws, and all Taxes owed by Seller
or any other Selling Group Member (whether or not shown or required
to be shown on any Tax Return) have been paid.
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(d) There are no
reasonable grounds for assertion of any accuracy-related penalty
under Section 6662 of the Code with respect to any Tax Returns of
Seller or any other Selling Group Member and neither Seller nor any
other Selling Group Member is or has been a party to any
“reportable transaction” (as defined in Code
§6701A(c)(2)).
(e) Seller has
delivered to the Purchaser: (i) complete and correct copies of all
income Tax Returns of Seller relating to the Business for each of
the fiscal years during which Seller has been in existence and (ii)
complete and correct copies of all private letter rulings, revenue
agent reports, closing agreements, settlement agreements,
deficiency notices and any similar documents submitted by, received
by or agreed to by or on behalf of Seller and relating to material
Taxes for such taxable periods.
(f) Except for Taxes
that are being contested in good faith and by appropriate
proceedings and reserved for on the Most Recent Balance Sheet: (i)
all Taxes payable with respect to the operations of the Business
before the Closing Date or shown to be due in Tax Returns filed by
Seller have been duly paid or provided or reserved for, and (ii)
all deficiencies and assessments for any amount of Taxes that are
or were payable by Seller and chargeable as an Encumbrance upon any
of the Purchased Assets have been paid in full, and there are no
pending, current or threatened in writing Encumbrances for unpaid
Taxes upon any of the Purchased Assets except for Encumbrances for
Taxes not yet due and payable.
(g) The Business
Records are sufficient to prove the income tax basis of Sellers in
each of the Purchased Assets.
(h) Seller: (i) is not
a “foreign person” within the meaning of Section
1445(f)(3) of the Code, (ii) is not liable for Taxes to any foreign
taxing authority and (iii) has not had a permanent establishment in
any foreign country (as defined in any applicable tax treaty or
convention between the United States and such foreign
country).
(i) No examination,
audit or other Action relating to the assessment or collection of
any Taxes of Seller by any Tax Authority is currently in progress
or is, threatened in writing or otherwise known to Seller or any
other Selling Group Member, no assessment of any Tax has been
proposed in writing against Seller, and there are no outstanding
Contracts or waivers extending the statutory period of limitation
applicable to any claim for, or the period for the collection or
assessment of, Taxes due from or with respect to Seller for any
taxable period.
(j) Each Seller has
duly and timely withheld all Taxes required to be withheld in
connection with any amounts paid or owing to any current or former
employee, independent contractor, creditor, stockholder, member,
partner or other third party, and paid over to the appropriate
Governmental Authorities all amounts required to be so withheld and
paid over for all periods under all applicable Laws and all W-2 and
1099 forms required with respect thereto have been properly
completed and timely filed.
(k) The Business
Employees and all other Persons who currently provide or who have
in the past provided services to or for Seller or who otherwise
work or worked in the Business, have been properly classified as
employees or independent contractors, as applicable, and Seller has
not been the subject of any Action, or threatened Action, by any
Governmental Authority with regard to such classification of any
such Business Employees or other Persons.
(l) Seller has no
obligation to make any, and Seller is not a party to any Contract
that has resulted or could, separately or in the aggregate, result
in the, payment of: (i) any “excess parachute payment”
within the meaning of Section 280G of the Code (or any
corresponding provision of state, local or foreign Tax Laws), (ii)
any amount that will not be fully deductible as a result of Section
162(m) of the Code (or any corresponding provision of state, local
or foreign Tax Laws), or (iii) any compensation that is subject to
the provisions of Section 409A of the Code.
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(m) Neither Seller nor
any other Selling Group Member (i) is or has ever been a party to,
is bound by or has any obligation under, any Tax allocation,
sharing or indemnification Contract or similar Contract or any
Contract that obligates it to make any payment computed by
reference to Taxes, taxable income or taxable losses of any other
Person; (ii) is or has ever been a member of an affiliated group
(within the meaning of Code Section 1504(a) or similar group
defined under any similar provision of any Law) filing a
consolidated federal income Tax Return; or (iii) has any Liability
for the Taxes of any Person under Treasury Regulations Section
1.1502-6 (or any similar provision of any Law), as a transferee or
successor, by Contract or otherwise.
(n) Neither Seller nor
any other Selling Group Member is or has been a member of an
affiliated group (within the meaning of Code Section 1504(a) or
similar group defined under any similar provision of any Law)
filing a consolidated federal income Tax Return, and neither Seller
nor any other Selling Group Member has any Liability for the Taxes
of any Person under Treasury Regulations Section 1.1502-6 (or any
similar provision of any Law), as a transferee or successor, by
Contract or otherwise.
(o) Seller (i) is
not nor has ever been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code;
(ii) has not distributed equity interests or securities of another
Person, or had their equity interests or securities distributed by
another Person, in a transaction that was purported or intended to
be governed in whole or in part by Section 355 or Section 361 of
the Code; (iii) is not a party to any safe harbor lease within the
meaning of Section 168(f)(8) of the Code, as in effect before
amendment by the Tax Equity and Fiscal Responsibility Act of 1982;
(iv) is not subject to, or is required by any Governmental
Authority or pursuant to any Action, Law, Contract or other
requirement, or otherwise has any obligation to collect or pay, any
sales or use (or similar) Taxes with respect to or otherwise in
connection with the conduct of the Business; or (v) is not and has
never engaged in a listed transaction within the meaning of
Treasury Regulation § 1.6011-4 (or any predecessor provision)
or any transaction that could give rise to: (A) a registration
obligation with respect to any Person under Section 6111 of the
Code or the regulations thereunder, (B) a list maintenance
obligation with respect to any Person under Section 6112 of the
Code or the regulations thereunder, (C) a disclosure obligation as
a “reportable transaction” under Section 6011 of the
Code and the regulations thereunder, or (D) any filing under
Section 999 of the Code.
(p) Seller is not
liable, nor will as a result of the Transactions be liable, for any
Tax on built-in gains as set forth in Section 1374 of the Code, and
no Seller: (i) has acquired assets from another corporation in a
transaction in which Seller’s Tax basis for the acquired
assets were determined, in whole or in part, by reference to the
Tax basis of the acquired assets (or any other property) in the
hands of the transferor, (ii) has acquired the stock of any
corporation that is a qualified subchapter S subsidiary, (iii) owns
any shares of stock in a passive foreign investment company as
defined in Section 1297 of the Code or a controlled foreign
corporation as defined in Section 957 of the Code, or (iv) has ever
made a transfer of intangible assets to which Section 367(d) or 482
of the Code applies.
(q) None of the
Purchased Assets (i)
were acquired in a reorganization within the meaning of Section
368(a) of the Code or a liquidation qualifying under Sections 332
or 337 of the Code, or have been financed with or directly or
indirectly secures any industrial revenue bonds or debt the
interest on which is tax-exempt under Section 103(a) of the Code,
and Seller is not a borrower or guarantor of any outstanding
industrial revenue bonds, or is a tenant, principal user or related
person to any principal user (within the meaning of Section 144(a)
of the Code) of any property that has been financed or improved
with the proceeds of any industrial revenue bonds, or (ii) are
tax-exempt use property within the meaning of Section 168(h) of the
Code.
(r) Neither Seller nor
any other Selling Group Member has Liabilities or obligations with
respect to unclaimed property or the failure to file or to file on
a timely basis any reports or other documents with respect to
unclaimed property in any jurisdiction as may be required with
respect to unclaimed property, or under applicable escheat Laws of
any jurisdiction, and Seller and each other Selling Group Member
has timely filed in each jurisdiction any and all reports or other
documents required to be filed in such jurisdiction with respect to
unclaimed property.
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(s) The Transactions
are not subject to the tax withholding provisions of Section 3406
of the Code, or of Subchapter A of Chapter 3 of the Code or of any
other provision of Law.
3.12 Accounts
Receivable.
(a)
The Accounts Receivable of Seller reflected on the Most
Recent Balance Sheet and all Accounts Receivable of Seller arising
after the date thereof (i) have arisen from bona fide transactions
entered into by Seller involving the sale of goods or the rendering
of services in the Ordinary Course of Business; (ii) constitute
only valid, undisputed claims of Seller not subject to claims of
set-off or other defenses or counterclaims, other than normal cash
discounts accrued in the Ordinary Course of Business; and (iii)
subject to adequate reserves for bad debts shown on the Financial
Statements, if any, or, with respect to Accounts Receivable arising
after the date of the Most Recent Balance Sheet, in the accounting
books and records of Seller, are collectible in full within 60 days
after billing or receipt of vehicle title, whichever is later.
Section 3.12(a) of the Disclosure Schedule sets forth a correct and
complete aging of the Accounts Receivable of the Business as of the
Closing Date reflecting the aggregate dollar amount due Seller from
each payee which have been outstanding for the following numbers of
days or less past their due dates: 30, 60, and 90, and more than 90
days. The reserves for bad debts shown in the Financial Statements
or, with respect to Accounts Receivable arising after the date of
the Most Recent Balance Sheet, in the accounting books and records
of Seller, have been determined in accordance with GAAP,
consistently applied, subject to normal year-end adjustments and
the absence of disclosures normally made in footnotes. Since the
Most Recent Fiscal Year End, Seller has not written off, written
down or agreed to a reduction of, placed for collection with any
Person, accelerated the collection of, or materially changed the
terms of payment of any Accounts Receivable.
(b) All compensation, revenue or
benefits with respect to the Business are paid or payable directly
to Seller and not to any Person other than Seller (not including
compensation payable by a Seller in the Ordinary Course of Business
to Business Employees, vendors and suppliers).
3.13 Accounts
Payable.
(a) Section 3.13 of the
Disclosure Schedule sets forth a correct and complete aging of all
accounts payable and accrued Liabilities of Seller with respect to
the Business as of the date of this Agreement. Seller has paid all
accounts payable relating to the Business in accordance with their
terms on or before their due date, other than accounts payable of
the Business that Seller is disputing in good faith and that are
specifically identified as disputed accounts payable in Section
3.13 of the Disclosure Schedule.
(b) There is no compensation or other consideration with
respect to the Business payable, whether currently or in the
future, by Seller to any Person, other than compensation payable by
Seller to Business Employees, vendors and suppliers in the Ordinary
Course of Business.
3.14 Real
Property. Section 3.14 of the Disclosure Schedule sets forth
a complete and accurate list and description (including addresses)
of the Business Real Property. The Business Real Property is the
only real property used in the operation of the Business. Section
3.14 of the Disclosure Schedule describes each interest in the
Business Real Property currently used by Seller in the conduct of
the Business, a complete and accurate description of each lease,
sublease or other use or occupancy Contract pursuant to which
Seller derives its right to use such Business Real Property
(collectively, the “Leases”) and the identity of the
lessor thereunder. Seller does not own any fee simple interest in
any real property. The Business Real Property and the premises
located thereon occupied by Seller are sufficient for the operation
of the Business as currently conducted by Seller. To the Knowledge
of Seller and of each other Selling Group Member, there are no
proposed special assessments, or proposed material changes in
property Tax or land use or other Laws affecting the Business Real
Property. Seller has delivered to the Purchaser a true, correct and
complete copy of each Lease. Seller owns all right, title, and
interest in all leasehold estates and other rights purposed to be
granted to it by the Leases, in each case, free and clear of all
Encumbrances, except for Permitted Encumbrances. Each Lease
constitutes the entire agreement to which Seller is a party with
respect to the Business Real Property demised pursuant thereto. To
the Knowledge of Seller and of each other Selling Group Member, all
of the buildings and structures to the extent of the Business Real
Property are structurally sound with no material defects, are in
good operating condition and repair, and have adequate rights of
ingress and egress for the operation of the Business as currently
conducted by Seller. To the Knowledge of Seller and of each other
Selling Group Member, no such building or structure, or any
appurtenance thereto or equipment therein, or the operation or
maintenance thereof violates in any material respect any
restrictive covenant or any Laws (including any such Laws relating
to health, safety, subdivision, and zoning) or encroaches on any
property owned by others. There is no pending or, to the Knowledge
of Seller and of each other Selling Group Member, threatened Action
that would interfere with the use or quiet enjoyment of any of the
Business Real Property by Seller or, after the Closing, by
Purchaser. All Governmental Authorizations required in connection
with the operation of the Business Real Property and all
improvements thereon and the conduct of the Business thereon have
been duly obtained, are in full force and effect and no proceedings
are pending or, to the Knowledge of Seller and of each other
Selling Group Member, threatened which could lead to a revocation
or other impairment of any thereof. No condemnation proceeding is
pending or, to the Knowledge of Seller and of each other Selling
Group Member, threatened with respect to any of the Business Real
Property.
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3.15 Personal
Property.
(a) Section 3.15(a) of
the Disclosure Schedule sets forth a list of all of Tangible
Personal Property of Seller as of the Closing, and any items of
Tangible Personal Property that Seller has committed or expects to
purchase, lease or license before the Closing Date. Seller has, and
at the Closing will convey to Purchaser good, valid and marketable
title, to the Purchased Assets owned by Seller, free and clear of
any Encumbrance or other defect of title, except Permitted
Encumbrances.
(b) All of the tangible
and intangible assets owned, possessed, or used, usable or held for
use in the Business by Seller are: (i) in the possession of
and under the control of Seller; (ii) in good operating
condition and repair, subject to normal wear and tear; (iii)
suitable for the purposes for which they are being used; (iv) of a
condition, nature, and quantity sufficient for the conduct of the
Business as it is presently conducted and sufficient for the
continued conduct of the Business after the Closing in
substantially the same manner as conducted before the Closing; and
(v) included in the Purchased Assets. Seller’s rights with
respect to the assets owned, possessed, or used, usable or held for
use in the Business by Seller are exclusive and no other Person has
any rights with respect thereto (except for the lessors of leased
or licensed assets and property in accordance with the terms of the
applicable lease or license, each of which is included in the
Contracts included in the Purchased Assets). None of the Purchased
Assets has been purchased or otherwise acquired from any Related
Party in anticipation of the Transaction.
(c) Set forth in
Section 3.15(c) of the Disclosure Schedule is a true, complete and
accurate list of all telephone and fax numbers used or held for use
in the Business by Seller, all of which are used exclusively for
the Business and are not shared with any other Person.
(d) All Inventory of
Seller as of the Closing is listed in Section 3.15(d) of the
Disclosure Schedule.
3.16 Intellectual
Property.
(a) Section 3.16(a) of
the Disclosure Schedule sets forth a list of all Intellectual
Property that is owned, legally or equitably, in whole or in part,
alone or jointly with others, by Seller, and all registrations
thereof and applications for registration with respect thereto
(collectively, the “Owned
Intellectual Property”). Seller does not license or
permit any other Person to use any Owned Intellectual Property, and
Seller’s interests and rights in, and use of, such Owned
Intellectual Property is exclusive. All required filings and fees
related to the Owned Intellectual Property have been timely filed
with and paid to the relevant Governmental Authorities and
authorized registrars, and all registrations (and applications for
registrations) of Owned Intellectual Property are in good standing.
Section 3.16(a) of the Disclosure Schedule lists all fees, actions,
or renewals that are due within six (6) months after Closing to
maintain Owned Intellectual Property. Seller has provided Purchaser
with true and complete copies of file histories, records,
documents, certificates, office actions, and material
correspondence related to all Owned Intellectual Property that is
subject to any issuance, registration, application or other filing
by, to or with any Governmental Authority or authorized private
registrar in any jurisdiction.
(b) Section 3.16(b) of
the Disclosure Schedule sets forth a list of all Intellectual
Property (other than Off-the-Shelf Software) that is licensed,
used, held for use or otherwise exploited by Seller (collectively,
the “Licensed Intellectual
Property” and, together with the Owned Intellectual
Property, the “Business
Intellectual Property”), and a list of each
Intellectual Property Contract (other than for Off-the-Shelf
Software). All Off-the-Shelf Software used, useable or held for use
in the Business by Seller has been acquired by Seller through
normal business channels and is validly and appropriately licensed
by Seller. Except as disclosed in Section 3.16(b) of the Disclosure
Schedule, Seller has the right to use on an exclusive basis any
Licensed Intellectual Property and Seller sublicenses or permits
any other Person to use any Licensed Intellectual Property. Seller
has, and as of the Closing will have, paid as and when due all
amounts payable under any Intellectual Property Contracts or
otherwise with respect to any Licensed Intellectual
Property.
(c) Section 3.16(c) of
the Disclosure Schedule sets forth a list of all Contracts (i)
under which Seller derives any rights with respect to any Business
Intellectual Property, including Contracts under which Seller
acquired any ownership rights in or to any Owned Intellectual
Property or licenses or uses any Licensed Intellectual Property,
and (ii) to which Seller is a party for the development,
maintenance or support of any Business Intellectual Property or for
the escrow of any source codes of any Business Intellectual
Property (collectively, the “Intellectual Property Contracts”).
Section 3.16(c) of the Disclosure
Schedule also sets forth a complete list of Persons to whom Seller
has granted rights to use the Business Intellectual Property, other
than under an Intellectual Property Contract, and the terms for use
of that Business Intellectual Property.
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(d) Seller possesses
all right, title and interest in all Owned Intellectual Property
and has the valid and enforceable right to use all Licensed
Intellectual Property that is used or held for use by Seller, free
and clear of all Encumbrances. Upon consummation of the
Transactions, Purchaser shall exclusively own all right, title and
interest in and to all of the Owned Intellectual Property and shall
have the right and license to use all of the Licensed Intellectual
Property in the manner used by Seller before the Closing, in each
case free from any Encumbrances and without additional cost or
expense to Purchaser.
(e) There is no
unlicensed or non-rightful use by Seller of any Business
Intellectual Property, and the use by Seller of the Business
Intellectual Property, the manufacture and sale of any Business
Products, and the providing of any Business Services by the
Business, does not, and the use by Purchaser after the Closing of
the Business Intellectual Property, the manufacture and sale of any
Business Products, and the providing of any Business Services in
the Business, in substantially the same manner as used,
manufactured or provided by Seller before the Closing will not,
infringe on, violate, misappropriate, or dilute the Intellectual
Property of any Person, and, to the Knowledge of Seller and of each
other Selling Group Member, no Person has infringed, violated,
misappropriated, or diluted any of the Business Intellectual
Property. Section 3.16(e) of the Disclosure Schedule lists all
licenses to third parties of any Business Intellectual Property.
The Business Intellectual Property is all the Intellectual Property
necessary for Purchaser to conduct the Business as it is currently
being conducted.
(f) All Persons who
have contributed to the creation, invention, or development of any
Owned Intellectual Property have assigned to Seller all of their
rights therein that do not vest initially in Seller by operation of
Law. Section 3.16(f) of the Disclosure Schedule contains a list of
such assignments. Seller takes reasonable actions to protect and
maintain (i) any Trade Secret Information that is Business
Intellectual Property, including executing confidentiality and
non-disclosure agreements with employees and contractors, and (ii)
the confidentiality, integrity, and security of its software,
databases, systems, networks, and Internet websites, and
information stored or contained therein or transmitted thereby, and
all transactions consummated in connection therewith, from any
unauthorized use, access, interruption, or modification by third
parties, including the use of reliable encryption protection (or an
equivalent).
(g) Seller has taken
all commercially reasonable actions which are consistent with
industry standards to back up all Software that is Business
Intellectual Property and its computer systems, and databases used
or held for use in the Business in a manner sufficient to enable
resumed or continued functioning in all material respects following
a hardware, telecommunications, ransomware, hacking, network
security incident or related interruption or failure.
(h) All Software that
is Business Intellectual Property substantially conforms to all
existing documentation for its use in the conduct of the Business
as currently conducted, is functioning in all material respects in
accordance with applicable specifications and, to the Knowledge of
Seller and of each other Selling Group Member, is free of viruses
and other contaminants. All source codes relating to Software that
is Business Intellectual Property, if any, are in the possession of
Seller, and no Person other than Seller has any copy of any such
source codes or any right, title, interest or license, conditional
or otherwise, including under any escrow agreements, with respect
to any such source codes, and Seller has not granted any such
right, title, interest or license covering any future period, with
respect to any such source codes. Seller is in possession of and
maintains documentation with respect to all such source codes and,
upon consummation of the Transactions, Purchaser will exclusively
own and have possession of, and shall have the right to use, all
such source codes and related documentation, as applicable, free
from any Encumbrances. Seller also owns and has possession of, and
Purchaser will also own and have possession of after the Closing,
all other existing documentation with respect to all Business
Intellectual Property.
-24-
(i) There are no
warranties (express or implied) outstanding with respect to any
Business Intellectual Property currently or formerly licensed,
developed, sold or distributed, including with respect to any
products made that include Business Intellectual Property,
(“Business
Products”), or any related services rendered, by
Seller or its Affiliates related to the Business
(“Business
Services”), beyond that set forth in the standard
warranties provided by Sellers. Each Product licensed, developed,
sold or distributed, or service rendered, by Seller is and has been
in conformity in all material respects with, and performs and has
performed in accordance, in all material respects with, all
applicable contractual commitments and warranties and all
applicable Laws. There are no claims, existing or, to the Knowledge
of Seller and of each other Selling Group Member, threatened (in
writing) under or pursuant to any warranty, whether express or
implied, on Business Products or Business Services licensed,
developed, sold or distributed by Seller, and there have never been
any such claims.
(j) Neither Seller nor
any other Selling Group Member has received any threats or notices
claiming any violation of any third party Intellectual Property
Rights in the conduct of the Business. Neither Seller nor any other
Selling Group Member has received any communications offering to
license Seller under any third party Intellectual Property rights.
No lawsuits are currently pending or have been filed against or by
Seller or any other Selling Group Member for any violation of any
Intellectual Property rights. To the Knowledge of Seller and of
each other Selling Group Member, there is no basis for a third
party to assert any claim or bring any lawsuit for any violation,
infringement or misappropriation of any Intellectual Property right
of any third party.
(k) Seller
has not incorporated into any Product or Service or otherwise
accessed, used or distributed any Publicly Available Software, in
whole or in part.
3.17 Contracts
and Contract Parties.
(a) Section
3.17(a) to the Disclosure Schedule sets forth a complete and
accurate list of all Contracts (in the case of unwritten Contracts,
such list includes a brief description of the subject matter
thereof), to which Seller is a party or is otherwise bound,
including the following:
(i) any
Contract relating to Indebtedness (including any such agreement
pursuant to which Seller has extended credit or made other
financial accommodations to any other Person), whether incurred,
assumed, guaranteed or secured by any asset, or relating to the
imposition of Encumbrances on any assets of Seller;
(ii)
any Contract or series of related Contracts, including any option
Contract, relating to the acquisition or disposition of any
business, capital stock, membership interests or assets of
Seller;
-25-
(i)
any Contract or series of related Contracts for the purchase of
materials, supplies, goods, services, equipment or other
assets;
(ii)
any Contract under which Seller
would expect to receive payments or under which Purchaser could
expect to receive payments after the Closing;
(iii)
any
Contract providing for payments (contingent or otherwise) to or by
any Person based on sales, purchases or profits; and
(iv)
any
other Contract that is material to the earnings, business,
operation, prospects or financial condition of Seller or the
Business.
(a) Neither Seller nor
any other Selling Group Member is a party to or bound by any (i)
partnership, joint venture, joint operating or similar Contract
relating to or affecting the Business; (ii) Contract which could
require Seller (or Purchaser after the Closing) to purchase any
product or service exclusively from a Person or otherwise deal
exclusively with any Person; (iii) Contract which contains
so-called “best in house” or “most favored
nation” clauses, or otherwise limits Seller (or could limit
Purchaser after the Closing) from selling or purchasing any product
or service to or from any Person or in any geographic territory or
from otherwise conducting the Business in any manner; (iv) Contract
containing any provision providing for the payment by Seller of any
amounts to any Person, or the enhancement of any rights of any
Person, or the vesting or the acceleration of any rights or
benefits of any Person, upon or as a result of the consummation of
the Transactions or otherwise upon a sale of the Business or Seller
or any of its assets (or which could become obligations of
Purchaser after the Closing); (v) Contract relating to any interest
rate, derivatives, hedging or swap transaction; (vi) Contract
containing provisions providing for any indemnification obligations
to any Person; (vii) Contract providing for the granting of
exclusivity to a third party; or (viii) Contract subjecting Seller
or any other Selling Group Member to a noncompetition
obligation.
(b) Each Business
Contract is valid, enforceable and binding on the parties thereto
in accordance with its terms and is in full force and effect.
Neither Seller or, to the Knowledge of Seller and of each other
Selling Group Member, any other party thereto is in breach of or
default under (or is alleged to be in breach of or default under)
in any material respect, or has provided or received any notice of
any intention to terminate, cancel or modify in any material
respect, any Business Contract. No event or circumstance has
occurred that, with notice or lapse of time or both, would
constitute a breach of or an event of default under any Business
Contract or result in a termination thereof or would cause or
permit the acceleration or other changes of any right or obligation
or the loss of any benefit thereunder. There are no material
disputes pending or, to the Knowledge of Seller and of each other
Selling Group Member, threatened under any Assumed Contract. No
party to any Assumed Contract has expressed to Seller orally or in
writing its intention to cancel or otherwise terminate or alter in
any material respect its relationship with Seller as it relates to
the Business, and Seller has no information that could lead it to
believe that any such Person intends to cancel or terminate, reduce
or limit, or otherwise alter in any material respect, its
relationship with Seller relating to the Business or with Purchaser
after the Closing, whether as a result of the consummation of the
Transactions or otherwise. To the Knowledge of Seller and of each
other Selling Group Member, there is no reasonable basis (other
than any existing right to terminate for convenience or without
cause) for any party to any Business Contract to cancel or
otherwise terminate, or to reduce or limit, or to otherwise alter
in any material respect its relationship with Seller relating to
the Business or with Purchaser after the Closing. All of the
Assumed Contracts will be transferred to Purchaser at the Closing
without any loss of rights or benefits thereunder, increase or
change in obligations thereunder, or additional cost or penalty to
Purchaser.
(c) Complete and
correct copies of each Business Contract (including all
modifications, amendments and supplements thereto and waivers
thereunder) have been provided to Purchaser. The complete original
of each Business Contract, or an accurate and complete copy
thereof, is located at headquarter offices of the Business or
electronically stored on Seller equipment or systems that are
included in the Purchased Assets.
-26-
3.18 Material
Business Relationships and Material Suppliers.
(a) Set
forth in Section 3.18(a) of the Disclosure Schedule is a complete
and accurate list of all Business Relationships (by revenues
derived by Seller) (collectively, the “Material Business Relationships”)
(i) from which Seller derived the most revenues in each of the
three most recent concluded fiscal years of Seller, and (ii) from
which Seller derived or reasonably expects (based on annualized
revenues paid to date) to derive the most revenues in the current
fiscal year of Seller. No Material Business Relationship has
expressed to Seller its, and neither Seller nor any other Selling
Group Member has Knowledge of a Material Business
Relationship’s intention or desire to cancel or terminate,
reduce or to otherwise alter in any material respect, its
relationship with Seller.
(b) Set
forth in Section 3.18(b) of the Disclosure Schedule is a complete
and accurate list of all suppliers, vendors or consultants (by
amounts paid by Seller thereto) (i) to whom Seller paid the most in
each of the three most recent concluded fiscal years of Seller, and
(ii) to whom Seller has paid or reasonably expects to pay the most
in Seller’s current fiscal year (collectively, the
“Material
Suppliers”). No Material Supplier has expressed to
Seller its, and neither Seller nor any other Selling Group Member
has Knowledge of a Material Supplier’s intention or desire to
cancel or terminate, reduce or to otherwise alter in any material
respect, its relationship with Seller.
(c) Set
forth in Section 3.18(c) of the Disclosure Schedule is a list of
all businesses or business interests of Seller.
3.19 Business
Employees.
(a) Section
3.19(a) of the Disclosure Schedule sets forth a complete and
accurate list as of the Closing Date of the names and titles of
each Business Employee, the date of hire of each such Business
Employee, the base salary of and any incentive compensation
received by or accrued for the benefit of each such Business
Employee for the Most Recent Fiscal Year and the rate of base
salary and bonus opportunity of, and bonuses or incentive
compensation received by or accrued for the benefit of each such
Business Employee since the end of the Most Recent Fiscal Year
through the Closing Date. Section 3.19(a) of the Disclosure
Schedule also sets forth for each Business Employee all proposed
salary increases for the Current Fiscal Year, as well as any salary
increases that have been granted since the end of the Most Recent
Fiscal Year. All bonuses and incentive compensation payable to
Business Employees will be accrued by Seller on a pro rata basis
through the Closing Date. There are no Business Employees who are
on layoff, disability, sick time or other leaves of absence or not
actively at work in performing services on the Closing Date. No
Business Employee has notified Seller that such Business Employee
intends to leave or is considering leaving the employ of Seller or
Purchaser after the Closing. The Business Employees are dedicated
exclusively to the operation of the Business and, together with the
independent contractors listed in Section 3.19(a) of the Disclosure
Schedule, are sufficient for the conduct of the Business as
presently conducted.
(b) Set
forth in Section 3.19(b) of the Disclosure Schedule is a complete
and accurate list of each Contract to which Seller is a party, or
relating to the Business under which Purchaser could have any
payment or performance obligation or other Liability after the
Closing: (i) pertaining to the employment or termination of
employment of any Business Employee, or former employee of Seller
or the Business, or (ii) providing for the payment of severance or
other compensation or benefits to any Business Employee, or former
employee of Seller or the Business, including severance or
compensation payable after or by reason of a termination of
employment (other than that which is required by applicable
Laws).
(c) Set
forth in Section 3.19(c) of the Disclosure Schedule is a complete
and accurate list of each Contract with an independent contractor
to which Seller is a party or to which any other Selling Group
Member is a party and that relates to the Business, or under which
Purchaser could have any payment or performance obligation or other
Liability after the Closing.
3.20 Employee
Benefit Plans.
(a) Set forth in
Section 3.20(a) of the Disclosure Schedule is a true and complete
list of each Employee Benefit Plan. The Business Employees do not
participate in any plan, program, fund, or arrangement (whether or
not qualified for federal income Tax purposes), whether benefiting
a single individual or multiple individuals, and whether funded or
not, that is an “employee pension benefit plan,” or an
“employee welfare benefit plan,” as such terms are
defined in ERISA, or any incentive or other benefit arrangement for
such employees and their respective dependents and
beneficiaries.
(b) Neither
Seller nor any ERISA Affiliate
maintains or has ever maintained, or is obligated to contribute to
or has ever been obligated to contribute to, a “multiemployer
plan” (as such term is defined in Section 3(37) of ERISA)
or a “defined benefit
plan” (as such term is defined in Section 3(35) of ERISA)
or any other plan that is
subject to Section 412 of the Code.
-27-
(c) Seller and each
ERISA Affiliate are and have always been in material compliance
with the requirements of ERISA, the Code, and all other Laws
applicable with respect to all Employee Benefit Plans. Each
Employee Benefit Plan that is intended to be qualified within the
meaning of Section 401(a) of the Code is and has from its
establishment been so qualified and has received a favorable
determination letter or opinion letter as to its qualification.
Neither Seller nor any ERISA Affiliate has engaged in any
“prohibited transaction” within the meaning of Section
406(a) or Section 406(b) of ERISA or of Section 4975(c) of the
Code. No unsatisfied Liabilities to participants, the IRS, the DOL
or any other Person have been incurred by Seller or any ERISA
Affiliate as a result of the cessation or reduction of
contributions under, the transfer of sponsorship of, or the
termination of any, Employee Benefit Plan. Seller and each ERISA
Affiliate has made full payment of all amounts it is required,
under applicable Law or the terms of each Employee Benefit Plan, to
have contributed thereto before the Closing Date for all periods
through the Closing Date.
(d) With respect to
each Employee Benefit Plan, no Actions (other than routine claims
for benefits in the ordinary course) are pending or, to the
Knowledge of Seller and of each other Selling Group Member,
threatened, and no facts or circumstances exist that could
reasonably be expected to give rise to any such
Actions.
(e) All reports and
information required to be filed with the DOL, IRS or other
Governmental Authority or furnished to plan participants or their
beneficiaries with respect to each Employee Benefit Plan have been
filed and/or furnished, all annual reports (including Form 5500
series) of such Employee Benefit Plans were certified without
qualification by each such Employee Benefit Plan’s
accountants, and no material change has occurred with respect to
matters covered by the most recent Forms 5500 since the filing date
thereof.
(f) There has been no
violation of the “continuation coverage requirement” of
“group health plans” as set forth in COBRA with respect
to any Employee Benefit Plan to which such continuation coverage
requirements apply. There has been no violation of the health
insurance obligations imposed by HIPAA with respect to any Employee
Benefit Plan which is a “group health plan” (as defined
in Section 5000(b)(1) of the Code and Section 706 of ERISA) to
which such insurance obligations apply (including the requirement
under HIPAA that certificates of creditable coverage be provided to
certain employees and their dependents).
3.21 Labor
Relations. Seller is not a party to any Contract, collective
bargaining or otherwise, or understanding with a labor union or
other labor organization covering any of the Business Employees or
the Business, and Seller has never been affected by any strike or
other labor disturbance involving the Business Employees or the
Business nor, to the Knowledge of Seller and of each other Selling
Group Member, has any union attempted to represent, as collective
bargaining agent, the Business Employees. Seller is not and has
never been the subject of any Action asserting that Seller
committed an unfair labor practice or seeking to compel Seller to
bargain with any labor union or other labor organization, nor has
there ever been or is there pending or, to the Knowledge of Seller
or of any other Selling Group Member, threatened any labor strike,
dispute, walk-out, work stoppage, slow-down, or lockout involving
Seller or the Business. Seller has never taken any action that
could constitute a “mass layoff,” “mass
termination,” or “plant closing” within the
meaning of WARN or that could otherwise trigger notice requirements
or Liability under any federal, local, state, or foreign plant
closing notice or collective dismissal Laws.
-28-
3.22 Insurance.
(a) Section
3.22(a) of the Disclosure Schedule sets forth (i) an accurate and
complete list of each insurance policy and fidelity bond which
covers the Business and Seller with respect to the Business
(“Insurance
Policies”) and (ii) with respect to the Business, a
list of all pending claims and the claims history for Seller, each
other Selling Group Member and their respective Affiliates during
the Most Recent Fiscal Year and the Current Fiscal Year (including
with respect to insurance obtained but not currently maintained).
There are no pending claims under any of such Insurance Policies
with respect to the Business as to which coverage has been
questioned, denied or disputed by the insurer or in respect of
which the insurer has reserved its rights. Section 3.22(a) of the
Disclosure Schedule describes any self-insurance arrangement by or
affecting Seller or any of its Affiliates with respect to the
Business, including any reserves thereunder, and describes the loss
experience for all claims that were self-insured in the three most
recent concluded fiscal years of Seller or in the Current Fiscal
Year. All Insurance Policies are in full force and effect and, to
the Knowledge of Seller and of each other Selling Group Member, are
enforceable in accordance with their terms and issued by insurers
which are financially sound and reputable. Seller has not received
any notice that any issuer of an Insurance Policy has filed for
protection under bankruptcy or insolvency laws or is otherwise in
the process of liquidating or has been liquidated or any other
indication that an Insurance Policy may no longer be in full force
or effect or that the issuer of an Insurance Policy may be
unwilling or unable to perform its obligations thereunder. The
Insurance Policies provide adequate insurance coverage for the
Business, and are sufficient for compliance with all Laws and
Contracts related to the Business to which Seller is a party or by
which it is bound.
(b) All
premiums due under the Insurance Policies have been paid in full
or, with respect to premiums not yet due, accrued. Neither Seller
nor any of its Affiliates has received a notice of cancellation of
any Insurance Policy or of any material changes that are required
in the conduct of the Business as a condition to the continuation
of coverage under, or renewal of, any such Insurance Policy. There
is no existing default or event which, with the giving of notice or
lapse of time or both, would constitute a default under any
Insurance Policy or entitle any insurer to terminate, cancel or
limit or reduce the coverage under any Insurance Policy. Neither
Seller nor any of its Affiliates has any Knowledge of any
threatened termination of any Insurance Policy. No Insurance Policy
will be affected by, terminate or lapse by reason of the
Transaction.
3.23 Environmental
Matters. Seller has obtained and holds all Environmental
Permits that are required by Environmental Laws to be obtained and
held by Seller with respect to the operation of the Business and
the Purchased Assets. Section 3.23 of the Disclosure Schedule sets
forth a list of all Environmental Permits held by Seller. The
operations of Seller with respect to the Business and the Purchased
Assets are currently and have always been in compliance with all
Environmental Laws. Seller has not received from any Person any
notice or Action of any violation of Environmental Laws. Seller has
not retained or assumed or is responsible or liable for, by
Contract or operation of Law, any Liabilities of any other Person
under any Environmental Law. There are no Environmental Claims
pending against or involving Seller and, to the Knowledge of Seller
and of each other Selling Group Member, there is no basis for any
Environmental Claim to be made against Seller or which could, after
the Closing, result in any Liability to the Purchaser or any of its
Affiliates.
3.24 Related
Party Transactions. Section 3.24 of the Disclosure Schedule
sets forth of each Contract or other arrangement related to the
Business to which Seller and a Related Party is a party (each a
“Related Party
Contract”). No Related Party Contract is included in
the Purchased Assets or will have any effect on the Business or the
Purchaser after the Closing. Neither Seller nor, to the Knowledge
of Seller, any other Selling Group Member, or Kandera, the Seller
Class A Member or Kandera has any direct or indirect interest in,
or derives any income from, any Person in a business which is
competitive with or similar to the Business. No Related Party
Contracts are necessary or required to operate the Business from
and after the Closing in substantially the same manner as it was
operated by Seller before the Closing.
3.25 Absence
of Certain Changes and Events. Since the end of the Most
Recent Fiscal Year, (i) Seller has conducted the Business in the
Ordinary Course of Business, (ii) there has not been any Material
Adverse Effect, and (iii) neither Seller nor any Selling Group
Member has taken or agreed to take any action that would, after the
date hereof, be prohibited or omitted to take or agreed to omit to
take any action that would, after the date hereof, be required, as
the case may be, by Section 5.1 of this Agreement.
3.26 Brokers.
No Person acting on behalf of Seller or any other Selling Group
Member or any of their Affiliates or under the authority of any of
the foregoing is or will be entitled to any broker’s or
finder’s fee or any other commission or similar fee, directly
or indirectly, in connection with any of the
Transactions.
-29-
3.27 Privacy
and Cyber Security.
(a) Seller
has, with respect to Personal Information used or obtained in the
operation of the Business: (i) protected the privacy of such
Personal Information; (ii) exercised its best efforts to ensure
against unauthorized access to such Personal Information,
unauthorized transfers of such Personal Information and misuse of
such Personal Information; and (iii) exercised its best efforts to
ensure that no Business Employee, former employee or independent
contractor has: (1) used or exploited any Personal Information for
any purpose other than to perform such Person’s duties as an
employee or contractor in the operation of the Business; or (2)
disclosed, transferred or disposed of such Personal Information to
any third parties except in compliance with Law and the policies of
Seller. There have been no unauthorized or inadvertent disclosures
of Personal Information. Seller has not engaged in any text
messaging, voice communications or email communications in
violation of applicable Laws.
(b) Seller
has implemented and maintains reasonable physical, technical and
administrative measures, practices and procedures appropriate for
the nature of Seller’s data and information, including the
Personal Information collected and maintained by Seller, which
measures, practices and procedures are no less rigorous than
accepted industry practices (including, but not limited to, ISO
27001, COBIT, GLBA, NIST Cybersecurity Framework or other
applicable industry standards for information and data security),
to protect such data and information from unauthorized access,
destruction, use, modification, disclosure, theft or exfiltration.
All such measure, practices and procedures, and the manner in which
Personal Information is collected, accessed, used, stored,
processed, disposed of and disclosed, comply with applicable
Laws.
3.28 Solvency.
No Seller or Selling Group Member is, or has been in the past six
years involved in any Action under bankruptcy Laws or any other
insolvency or debtor’s relief Laws, or for the appointment of
a trustee, receiver, liquidator, assignee, sequestrator, or other
similar official. As of and after the Effective Time, (i) Seller
will be able to pay its debts, Liabilities, and obligations as they
become due in the normal and usual course of business, (ii) Seller
will have unreasonably small or insufficient capital with which to
conduct its present or proposed future business, (iii) the present
saleable value of Seller’s assets does and will exceed its
debts and other anticipated debts, Liabilities and obligations,
taking into account all contingent and/or unliquidated debts,
Liabilities, and obligations and pending and threatened litigation,
and (iv) the cash available to Seller, after taking into account
all other anticipated uses, will be sufficient to pay all such
debts, Liabilities, and obligations in accordance with their
terms.
3.29
Full
Disclosure. Neither this Agreement nor any of the exhibits,
schedules, attachments, written statements, documents, certificates
or other items prepared and/or supplied to Purchaser by or on
behalf of Seller or any other Selling Group Member with respect to
the Transactions contain any untrue statement of a material fact or
omit a material fact necessary to make each statement contained
herein or therein not misleading. There is no event, circumstance
or other fact known to Seller or any other Selling Group Member
which, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect and which
has not been disclosed to Purchaser.
-30-
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF PURCHASING GROUP
The
Purchasing Group Members hereby jointly and severally represent and
warrant to the Selling Group Members that, knowing and intending
that the Selling Group Members are relying on the accuracy of such
representations and warranties in entering into the Transaction,
the representations and warranties set forth in this Article IV are
true, complete and accurate as of the Closing.
4.1 Organization
and Good Standing.
(a) Purchaser
is a corporation duly incorporated, validly existing, and in good
standing under the Laws of the State of Delaware.
(b) Purchaser
Parent is a corporation duly incorporated, validly existing, and in
good standing under the Laws of the State of Delaware.
4.2 Power
and Authorization. Purchaser and Purchaser Parent each have
the requisite power and lawful authority to enter into and to
perform its obligations under the Transaction Documents to which it
is a party and to consummate the Transaction. The execution,
delivery, and performance by Purchaser and Purchaser Parent of the
Transaction Documents to which it is a party, and the consummation
by Purchaser and Purchaser Parent of the Transaction, have been
duly and properly authorized in accordance with applicable Laws,
and no other action, entity or otherwise, on the part of Purchaser
or Purchaser Parent or any other Person is necessary to authorize
the execution, delivery, and performance by Purchaser and Purchaser
Parent of the Transaction Documents to which it is a party and the
consummation of the Transaction.
4.3 Execution
and Performance of Agreement; Validity and Binding Nature.
This Agreement has been duly executed and delivered by Purchaser
and Purchaser Parent, and each of the other Transaction Documents
to be executed and delivered by Purchaser or Purchaser Parent, as
applicable, will, when executed and delivered by Purchaser or
Purchaser Parent, be duly executed and delivered by Purchaser and
Purchaser Parent, and this Agreement is, and each of the
Transaction Documents, when duly executed and delivered by all
parties whose execution and delivery thereof is required, shall be,
the legal, valid, and binding obligations of Purchaser and
Purchaser Parent, enforceable against Purchaser and Purchaser
Parent in accordance with their respective terms, except to the
extent that such enforceability is limited by bankruptcy,
receivership, moratorium, conservatorship, or reorganization Laws
or other Laws of general application affecting the rights of
creditors generally or by general principles of
equity.
4.4 No
Conflicts/Consents.
(a) The
execution and delivery by Purchaser and Purchaser Parent of the
Transaction Documents to be executed and/or delivered by Purchaser
or Purchaser Parent and the performance by Purchaser and Purchaser
Parent of the terms of the Transaction Documents to be executed
and/or delivered by Purchaser or Purchaser Parent, as applicable,,
and the consummation of the Transaction, do not and will not (with
or without the passage of time or the giving of notice or both) (i)
contravene, conflict with, or result in a violation of any
provisions of the Governing Documents of Purchaser or Purchaser
Parent or any action of the stockholders or directors of Purchaser
or Purchaser Parent or any Laws binding upon Purchaser or Purchaser
Parent, or (ii) give any Governmental Authority or other Person the
right to challenge this Agreement or the Transaction or to exercise
any remedy or obtain any relief under any Law to which Purchaser or
Purchaser Parent is subject.
(b) All
Governmental Authorizations and other Consents required to be
obtained, given or made by Purchaser or Purchaser Parent in
connection with the execution, delivery and performance of any of
the Transaction Documents or the consummation of the Transaction
have been obtained, given or made.
-31-
ARTICLE V
POST-CLOSING
MATTERS
5.1 Employees
and Employee Benefits.
(a) From
and after the Closing Date:
(i) Seller shall (A) to
the extent Seller or any member of the Selling Group offers or
provides Employee Benefit Plans to Business Employees, maintain and
continue all health Employee Benefit Plans (including medical,
dental, prescription, and vision Employee Benefit Plans), and take
all actions necessary to ensure the continuance of such health
Employee Benefit Plans through the end of the calendar month in
which the Closing Date occurs, and (B) retain all Liabilities with
respect to, and provide in accordance with applicable Laws and be
solely responsible and liable for providing to all current or
former employees (including Business Employees) of Seller and its
Predecessors and Affiliates, and their covered dependents), any
applicable benefits or continuing insurance coverage under COBRA or
similar benefits, and Purchaser shall not have any Liabilities
whatsoever with respect to (or to provide to any current or former
employee (including any Business Employee)) any of the foregoing
benefits for which Seller is responsible.
(ii) Seller
shall be and remain solely responsible and liable for (A) the
satisfaction of all claims for medical, dental, life insurance,
health accident or disability benefits brought by or in respect of
any current or former employee (including any Business Employee) or
agents of Seller or its Predecessors or Affiliates which relate to
events occurring on or before the Closing Date or their employment
with Seller or its Predecessors or Affiliates; (B) all
worker’s compensation claims of any current or former
employee (including any Business Employee) or agent of Seller or
its Predecessors or Affiliates which relate to events occurring on
or before the Closing Date or their employment with Seller or its
Predecessors or Affiliates, and Seller shall pay or cause to be
paid all such amounts to the appropriate Persons as and when due;
(C) any salary, wages, incentive payments, bonuses or other
compensation relating to any period prior to the Closing; and (D)
any payments or amounts due to Business Employees resulting from
their termination of employment by Seller, including any accrued
vacation, sick, or personal time off .
(b) To
the extent any Purchaser-Hired Former Employee is subject to
noncompetition, nonsolicitation or similar restrictive covenants in
favor of Seller or any other Selling Group Member, any Predecessor
or Affiliate of Seller, or the Business, Seller and the applicable
Selling Group Member hereby waives compliance by each such
Purchaser-Hired Former Employee with such covenants and agrees that
such covenants shall not apply to any such Purchaser-Hired Former
Employee from and after the Closing Date for so long as the
Purchaser-Hired Former Employee is employed (or retained as an
independent contractor) by Purchaser.
5.2 Payment
of Liabilities and Obligations and Receipt of Payments. As
of the Closing Date, Seller shall have paid or provided for all
Liabilities that are due and payable in respect of the Purchased
Assets, Business Employees, Assumed Contracts or operation of the
Business for periods up to and including the Closing Date or which
are or will be incurred by Seller as a result of the consummation
of the Transaction, including (i) paying or providing for all Taxes
payable in respect of the operation of the Business before the
Closing, and (ii) paying in full or providing for the full payment
of all compensation (including bonuses and other incentive
compensation and severance) that would be payable to Business
Employees in respect of the operation of the Business before the
Closing. After the Closing Date, Seller will pay and perform as and
when due all Liabilities, the payment or performance of which is
necessary to the performance of Seller’s obligations under
any Transaction Documents, or the failure of which to pay or
perform could adversely effect Seller’s ability to perform
its obligations under any of the Transaction Documents or
Purchaser, the Purchased Assets or the operation of the Business by
Purchaser after the Closing.
5.3 Confidentiality.
From and after the Closing, Seller, each other Selling Group
Member, and any Affiliate of any of them shall keep confidential
and shall not directly or indirectly disclose to any third party or
use, any Trade Secrets and Confidential Information of Seller or
the Business (it being understood that from and after the Closing,
all Trade Secrets and Confidential Information relating to the
Seller or the Business is included in the Purchased Assets and
shall constitute confidential or proprietary information or trade
secrets of Purchaser), except with the prior written consent of
Purchaser; provided,
however, that Trade Secrets
and Confidential Information shall not include any of the foregoing
that is or becomes generally available to the public without breach
of any obligation of confidentiality owed by any Selling Group
Member to Purchaser or Purchaser Parent. Notwithstanding the
foregoing, if a Selling Group Member is required in the course of
judicial or administrative Action or governmental inquiries to
disclose any Trade Secrets and Confidential Information, such
Selling Group Member shall give Purchaser prompt written notice
thereof so that Purchaser may seek an appropriate protective order
and/or waive the Selling Group Member’s compliance with the
confidentiality provisions of this Section 5.3.
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5.4
Non-Competition.
(a) During
the Restricted Period, neither Seller, Seller Class A Member nor
Kandera shall, and Seller, Seller Class A Member and Kandera shall
cause each of their respective Affiliates (excluding the Seller
Class B Member and the Affiliates of Seller Class B Member) to not,
directly or indirectly, alone or with others, for itself or for
another Person: (i) operate or engage in, or establish or acquire,
or have any interest whatsoever in, or provide any services,
assistance, financing or advice to (or to any Person who operates
or engages in), or participate in the management or control of, or
be associated with, any business that operates or is engaged in,
anywhere in the Restricted Area, any aspect of the Restricted
Business; (ii) endorse, recommend, promote, support, sponsor,
subsidize, or fund any Person that conducts any business in the
Restricted Area that competes with any aspect of the Restricted
Business; (iii) cause, induce, influence, encourage or solicit any
Material Business Relationship, other actual business relationship
or Prospective Business Relationship (provided that Seller, any
other Selling Group Member, or Kandera, as applicable, has
Knowledge of such other actual business relationship or Prospective
Business Relationship) with Purchaser, Purchaser Parent or any of
their respective Affiliates to terminate or modify in any respect
any such Material Business Relationship, other actual business
relationship or Prospective Business Relationship; or (iv) sell or
otherwise transfer or dispose of, or agree to sell or otherwise
transfer or dispose of, any of the Excluded Assets to any Person
that (A) is a direct or indirect competitor of the Restricted
Business, or (B), to the Knowledge of Seller, any other Selling
Group Member or Kandera, intends to use or permit to be used the
Excluded Assets in connection with a business that competes
directly or indirectly with the Restricted Business.
(b) During
the Restricted Period, without the prior written consent of
Purchaser, Seller, each other Selling Group Member and Kandera will
not, and Seller, Seller Class A Member and Kandera will cause their
respective Affiliates (excluding Affiliates of the Seller Class B
Member) to not, directly or indirectly, (i) solicit for employment
or hire, or cause, induce, influence or encourage to terminate,
reduce or modify their relationship with Purchaser, Purchaser
Parent or any of their respective Affiliates any Purchaser-Hired
Former Employee; or (ii) solicit for employment, or cause, induce,
influence or encourage to terminate, reduce or modify their
relationship with Purchaser, Purchaser Parent or any of their
respective Affiliates any other Person who is or was during the
previous twelve (12) months an employee of Purchaser, Purchaser
Parent or any of their respective Affiliates. Notwithstanding
anything to the contrary contained in this Agreement, any response
by an employee or former employee to a general, published
advertisement not targeting the Purchaser’s or Purchaser
Parent’s employees shall not be a violation of this Section
5.4(b).
(c) The
Parties acknowledge that the restrictions contained in this Section
5.4 are reasonable and necessary to protect the legitimate
interests of Purchaser, Purchaser Parent and their respective
Affiliates and constitute a material inducement to Purchaser to
enter into this Agreement and consummate the Transaction. In the
event that any covenant contained in this Section 5.4 should ever
be adjudicated to exceed the time, geographic, product or service
or other limitations permitted by applicable Law in any
jurisdiction, then any court is expressly empowered to reform such
covenant, and such covenant shall be deemed reformed, in such
jurisdiction to the maximum time, geographic, product or service or
other limitations permitted by applicable Law. The covenants
contained in this Section 5.4 and each provision hereof are
severable and distinct covenants and provisions. The invalidity or
unenforceability of any such covenant or provision as written shall
not invalidate or render unenforceable the remaining covenants or
provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such
covenant or provision in any other jurisdiction.
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5.5 Insurance.
Seller Class B Member shall not take any action to terminate or
reduce the types (e.g., property & casualty, general liability,
cyber errors and omissions, automotive, workers compensation, and
employment practices) and level of insurance coverages covering
Seller and its business as such policies existed prior to the
Closing and with respect to pre-closing incidents, events or
losses.
5.6 Certain
Tax Matters.
(a) Sellers
and each other Selling Group Member shall be responsible for, and
covenant and agree to pay, or cause to be paid, as and when due,
any and all Taxes due and payable in respect of the operation of
the Business or the ownership, use and possession of the Purchased
Assets before the Closing (whether or not such Taxes are due and
payable as a result of the Transactions), and any Taxes due and
payable as a result of the Transactions. Sellers and each other
Selling Group Member shall furnish or cause to be furnished to
Purchaser, upon request and as promptly as reasonably practicable,
such information and assistance relating to the Purchased Assets
(including access to books and records) and Purchaser-Hired Former
Business Employees as is reasonably necessary for the preparation
and filing by Purchaser or any of its Affiliates of any Tax
Returns, the making by Purchaser or any of Purchaser’s
Affiliates of any election related to Taxes, and the preparation,
prosecution or defense by Purchaser or any of Purchaser’s
Affiliates of any Action relating to any Tax or Tax Return by any
Governmental Authority.
(b) Sellers
and each other Selling Group Member shall comply, and shall provide
Purchaser with the information and documentation required by
Purchaser to comply, and cooperate with Purchaser in its
compliance, with all applicable bulk sales and tax notification
Laws (and all similar laws, rules and regulations) of every
jurisdiction in which the Purchased Assets are located relating to
the purchase and sale of the Purchased Assets as contemplated
herein. If Purchaser is required by any Governmental Authority or
Tax Authority to withhold a portion of the Purchase Consideration,
Purchaser shall withhold, and not pay to Seller, the applicable
amounts, and shall hold such amounts until the applicable
Governmental Authority or Tax Authority authorizes Purchaser to
release and pay over such amounts, and shall release and pay out
such amounts in compliance with the instructions of the
Governmental Authority or Tax Authority.
(c) If
any taxing authority asserts that Seller is liable for any Tax,
Seller shall promptly pay when due any and all such amounts and
shall provide evidence to Purchaser, including a copy of a receipt,
that such Taxes have been paid in full or otherwise
satisfied.
(d) On
and after the Closing, Purchaser shall furnish or cause to be
furnished to Seller, upon request and as promptly as reasonably
practicable, such information and assistance relating to the
operation of the Business prior to the Closing (including access to
books and records) as is reasonably necessary for the preparation
and filing by Seller and the other Selling Group Members or any of
their Affiliates of any Tax Returns, the making by Seller or any
other Selling Group Member or any of their Affiliates of any
election related to Taxes, and the preparation, prosecution or
defense by Seller or any other Selling Group Member or any of their
Affiliates of any Action relating to any Tax or Tax Return by any
Governmental Authority.
5.7 Encumbrance
Termination Documents. On or before the Closing Date, Seller
shall deliver to the Purchaser UCC-3 Termination Statements or
other written terminations, discharges, or releases, as applicable,
of any and all Encumbrances on the Purchased Assets, together with
such consents, approvals, or authorizations as are necessary or
appropriate to permit Sellers to cause the same to be filed and/or
recorded, as applicable, with the appropriate persons, all in form
and substance satisfactory to the Purchaser (collectively, the
“Encumbrance Termination
Documents”). On or before the Closing Date, at
Purchaser’s option and on its request, Seller shall either
(i) at its expense, cause all Encumbrance Termination Documents to
be filed in the appropriate jurisdictions and provide Purchaser
with written evidence of the same, or (ii) deliver the original
Encumbrance Termination Documents to Purchaser for Purchaser to
file and then, on receipt of Purchaser’s invoice therefor,
reimburse Purchaser for the filing fees and other reasonable
expenses incurred by Purchaser in filing the same.
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5.8 Seller
Existence and Name.
(a) Seller
shall not dissolve, wind up or change, or otherwise modify its
entity form or existence in any manner for a period of at least six
(6) months after the Closing without Purchaser’s prior
written consent and, during such six-month period, Seller shall
maintain its existence in good standing (in its state of
incorporation or organization and in any other states in which
Seller conducted business as of the Closing Date.
(b) Effective
as of the Effective Time, Seller shall cease all conduct of the
Business and shall not use the Business Names or any other name
used by Seller in connection with conducting the Business, or any
name similar to any of the foregoing for any purpose; provided,
however, Seller may continue to use the Car Acquisition name for a
period not to exceed six (6) months following the Closing Date in
connection with disposing of the vehicle inventory included in the
Excluded Assets and the collection of payments for such vehicles
and otherwise settling accounts payable and receivables included in
the Excluded Assets.
5.9 Power
of Attorney. Effective upon the Closing, Seller hereby
Purchaser as Seller’s true and lawful attorney-in-fact, in
the name of Seller, but on behalf of Purchaser and for its own
account, to receive and open all mail, packages and other
communications addressed to Seller related to the Business
(“Power of
Attorney”). Seller agrees that the foregoing
appointment shall be coupled with an interest and shall be
irrevocable. If requested by Purchaser, Seller shall execute and
deliver to Purchaser written powers of attorney, in form and
substance reasonably acceptable to Purchaser, to further document
the foregoing grant of the Power of Attorney.
5.10 Post-Closing
Transition Services and Actions. After the Closing, the
parties, as applicable, shall perform the post-closing transition
services and actions set forth on the Transition Services
Schedule.
5.11
Intellectual
Property Assignments. If, with the written consent of
Purchaser given prior to the Closing, Seller has not obtained prior
to the Closing written assignments of rights to all Intellectual
Property, in form and substance acceptable to Purchaser
(“Intellectual Property
Assignments to Seller”) from all current and former
employees or independent contractors who or which have invented,
authored or otherwise created Intellectual Property that is
included or intended to be included in the Purchased Assets, then
the Selling Group Members shall, after the Closing and at their own
expense (including payment of any fees, compensation or costs
imposed in connection with the request for, or as a condition to
the issuance of, any such Intellectual Property Assignment), (i)
obtain such Intellectual Property Assignments as soon as possible
after the Closing and cooperate with Purchaser and Purchaser Parent
in endeavoring to obtain, such Intellectual Property Assignments at
no out-of-pocket cost or expense to Purchaser or Purchaser Parent,
and (ii) if and for so long after the Closing as such Intellectual
Property Assignment has not been obtained, cooperate with Purchaser
and Purchaser Parent in any arrangement proposed by Purchaser in
good faith, including obtaining adequate license rights at no cost
to Purchaser or Purchaser Parent, that is designed to provide for
Purchaser and Purchaser Parent the material benefits (including all
economic benefits), claims, and rights to the applicable
Intellectual Property and enforcement for the benefit of Purchaser
and Purchaser Parent of any and all rights of Seller in such
Intellectual Property. Notwithstanding the foregoing, only the
Required Intellectual Property Assignments shall be a condition to
the Closing, provided that Seller shall use commercially reasonably
efforts to obtain all Intellectual Property Assignments before the
Closing, and provided further that Seller shall be and remain
obligated to obtain after the Closing any such Intellectual
Property Assignments that are not obtained before the
Closing.
5.12 Survival.
All representations, warranties, covenants, and obligations in this
Agreement, any Schedules, and each other Transaction Document,
shall survive the Closing and the consummation of the Transaction.
The waiver of any condition based on the inaccuracy of any
representation or warranty, or on the non-performance of or
compliance with any covenant or obligation, will not affect the
right to indemnification, reimbursement, or other remedy based on
such representations, warranties, covenants and
obligations.
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5.13 Further
Assurances.
(a) From
time to time after the Closing, as and when requested by any Party,
and at such requesting Party’s expense (except to the extent
this Agreement otherwise imposes the expense with respect to a
matter on such Party), any other Party shall execute and deliver,
or cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all such further
or other actions as such requesting Party may reasonably deem
necessary or desirable to evidence and give effect to the
Transaction, including further actions as Purchaser or Purchaser
Parent may reasonably deem necessary to transfer or confirm the
transfer of, or vest or confirm the vesting of, title to any and
all Purchased Assets in Purchaser.
(b)
After the Closing,
upon request by Purchaser Parent, the Selling Group Members will
provide Purchaser Parent access to Excluded Business Records and
permit Purchaser Parent to copy Excluded Business
Records.
ARTICLE
VI
INDEMNIFICATION
6.1 Indemnification
by Selling Group Members.
(a) The
Selling Group Members shall jointly and severally indemnify,
defend, and hold harmless Purchaser, Purchaser Parent and each of
their respective Affiliates, officers, directors, managers,
employees, members, partners, stockholders, agents, and other
representatives (collectively, “Purchasing Group Indemnitees”)
from, against and in respect of any and all losses, costs,
expenses, claims, damages, Actions, suits, proceedings, hearings,
investigations, charges, complaints, demands, injunctions,
judgments, Orders, decrees, rulings, directions, dues, penalties,
fines, amounts paid in settlement, Liabilities, Taxes,
Encumbrances, and fees, including interest, penalties and attorneys
and collection agency fees and disbursements (collectively,
“Damages”),
arising out of, based upon or otherwise in respect of:
(i) any
inaccuracy in or breach of any representation or warranty of any
Selling Group Member made in or pursuant to this Agreement or any
other Transaction Documents (in each case, disregarding all
qualifications as to materiality or Material Adverse Effect or
similar qualifications contained in any such representation or
warranty)
(ii)
any breach or nonfulfillment of any covenant or obligation of any
Selling Group Member contained in this Agreement or any other
Transaction Document;
(iii)
all Excluded Liabilities and Obligations;
(iv)
all Excluded Assets;
(v)
the failure to obtain before the Closing any Governmental
Authorization or other Consent from a third party required to be
obtained in connection with the execution, delivery or performance
by Seller or any other Selling Group Member of the Transaction
Documents or the consummation of the Transaction; or
(vi)
any failure to comply with applicable bulk sales notification
requirements (or similar requirements), if applicable, and delivery
of Tax Clearance Certificates, if waived by Purchaser as a
condition to the Closing.
(b) Notwithstanding
the foregoing provisions of this Section 6.1(a), the Seller Class B
Member shall not have any indemnification obligations for any
breach by Kandera or the Seller Class A Member of Kandera’s
or the Seller Class A Member’s obligations contained in
Section 5.4(a).
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6.2 Indemnification
by Purchaser. The Purchasing Group Members shall jointly and
severally indemnify, defend, and hold harmless the Selling Group
Members and their respective Affiliates, officers, directors,
managers, employees, members, partners, stockholders, agents, and
other representatives (collectively, the “Selling Group Indemnitees”) from,
against and in respect of any and all Damages arising out of, based
upon or otherwise in respect of: (i) any inaccuracy in or breach of
any representation or warranty of and Purchasing Group Member made
in or pursuant to this Agreement or any other Transaction Document;
and (ii) any breach or nonfulfillment of any covenant or obligation
of and Purchasing Group Member contained in this Agreement or any
other Transaction Document; and (iii) any Damages incurred by any
Selling Group Member to the extent resulting from Purchaser’s
operation of the Business after the Closing, excluding any such
Damages arising out of, based upon or otherwise in respect of any
Damages for which Seller and or any other Selling Group Member is
obligated to indemnify any Purchaser Indemnitee under this Article
VI.
6.3 Indemnification
Claims. Any Person seeking indemnification pursuant to this
Article VI (“Indemnified
Party”) shall promptly notify the other Person(s) from
whom such indemnification is sought (“Indemnifying Party”) of the
Indemnified Party’s assertion of such claim for
indemnification (“Notice of
Indemnification Claim”), describing the basis of such
claim, but failure to give such notice within any particular time
period shall not adversely affect the Indemnified Party’s
rights to indemnification except to the extent that the
Indemnifying Party can show that the failure to give such notice on
a timely basis materially and adversely affected the Indemnifying
Party’s ability to defend the claim.
6.4 Third
Party Claims.
(a) Each
Indemnified Party shall promptly notify the Indemnifying Party of
the assertion by any third party of any claim to which the
indemnification set forth in this Article VI relates (which shall
also constitute the Notice of Indemnification Claim required by
Section 6.3), but failure to give such notice within any particular
time period shall not adversely affect the Indemnified
Party’s rights to indemnification except to the extent that
the Indemnifying Party can show that the failure to give such
notice on a timely basis materially and adversely affected the
Indemnifying Party’s ability to defend the
claim.
(b)
Subject to the Indemnified Party’s good faith determination
that such undertaking would be appropriate and practical and not
raise conflict of interest concerns, and except as set forth below
in this Section 6.4(b), the Indemnifying Party shall have
the right, upon written notice to the Indemnified Party within
thirty (30) days after the receipt of any such notice, to undertake
the defense of such third-party claim. The failure of the
Indemnifying Party to give such notice and to undertake the defense
of such a claim shall constitute a waiver of the Indemnifying
Party’s rights to defend such third party claim under this
Section 6.4(b) and in the absence of gross negligence or willful
misconduct on the part of the Indemnified Party shall preclude the
Indemnifying Party from disputing the manner in which the
Indemnified Party may conduct the defense of such claim or the
reasonableness of any amount paid by the Indemnified Party in
satisfaction of such claim. The election of the Indemnifying Party
to undertake the defense of any third-party claim pursuant to this
Section 6.4(b) will, without admitting liability to any third party
with respect to such claim, conclusively establish for the purposes
of this Agreement that the claims made in such third-party claim
are within the scope of, and subject to, indemnification pursuant
to this Article VI. The Indemnifying Party must provide reasonable
assurance to the Indemnified Party of its financial capacity to
defend a third-party claim and provide indemnification with respect
thereto as a condition to undertaking the defense of such claim.
Notwithstanding the foregoing, under no circumstances shall an
Indemnifying Party be entitled to undertake the defense of a
third-party claim if (i) such claim could result in criminal
proceedings or liability for any Indemnified Party, (ii) such claim
involves requests for injunctive or other equitable relief in
respect of a Purchaser Indemnitee or its business or (iii) such
claim could result in Damages that, taken with Damages with respect
to other existing claims of the Purchaser Indemnitees under this
Article VI, would not be fully indemnified hereunder, or (iv)
Purchaser or Purchaser Parent determines in good faith that such
claim could result in damage to its business or reputation of a
Purchaser Indemnitee.
(c)
So long as the Indemnifying Party is defending a claim actively and
in good faith, the Indemnified Party shall not settle such claim
without the Indemnifying Party’s consent, which will not be
unreasonably withheld, conditioned or delayed. The Indemnified
Party shall, subject to obligations of confidentiality or other
restrictions under Contract or Law, make available to the
Indemnifying Party or its representatives all records and other
materials reasonably required by them and in the possession or
under the control of the Indemnified Party for the use of the
Indemnifying Party and its representatives in defending any such
claim, and shall in other respects give reasonable cooperation in
such defense.
(d)
The Indemnifying Party must obtain the prior written consent of the
Indemnified Party (which the Indemnified Party will not
unreasonably withhold) before entering into any settlement or
compromise of such claim or proceeding or ceasing to defend such
claim or proceeding. Notwithstanding the foregoing, the
Indemnifying Party may, without the prior written consent of the
Indemnified Party, settle or compromise any third-party claim, or
consent to the entry of judgment with respect to a third-party
claim, provided such settlement, compromise, or judgment involves
solely the payment of monetary damages by the Indemnifying Party
and includes, as an unconditional term thereof, a full and complete
release of the Indemnified Party by the claimant or the plaintiff
of all Liability with respect to such claim.
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(e) The
election by the Indemnifying Party, pursuant to Section 6.4(b), to
undertake the defense of a third-party claim shall not preclude the
party against which such claim has been made also from
participating or continuing to participate in such defense, so long
as such party bears its own legal fees and expenses for so
doing.
6.5
Right of
Set-Off.
(a) Purchaser
Parent, on behalf of itself and any other Purchasing Group
Indemnitee, may set-off any amounts owed to any of them by any
Selling Group Member pursuant to the Transaction Documents against
any amounts or consideration owed by Purchaser, Purchaser Parent or
any of their respective Affiliates to any Selling Group Member
(including the Holdback Amount). In addition, if there are any
outstanding indemnification claims or matters for which a
Purchasing Group Indemnitee may be entitled to indemnification
hereunder or other amounts to which any Purchasing Group Indemnitee
may be entitled pursuant to any Transaction Document, Purchaser
Parent may hold back and defer payment of any amounts or
consideration owed by Purchaser or Purchaser Parent to any Selling
Group Member (including the Holdback Amount) until such matters are
resolved and may deduct and retain from any amounts so held back
any amounts any Selling Group Member owes any Purchasing Group
Indemnitee hereunder. The exercise of such right of set-off by
Purchaser Parent shall not constitute an event of default under any
obligation owed by Purchaser or Purchaser Parent to any Selling
Group Member. Neither the exercise nor the failure to exercise such
right of set-off will constitute an election
of
6.6 Holdback.
(a) At
the Closing, as a source of security for any indemnification and
other obligations of Seller and the other Selling Group Members
under this Agreement, the Purchasing Group Members shall withhold
the Holdback Amount from the Cash Consideration Component to be
held by Purchaser Parent for the Holdback Period as a non-exclusive
source for effecting the payment and discharge of any
indemnification or other obligations of Seller or any other Selling
Group Member under this Agreement. The Holdback Amount does not set
a maximum amount of liability of Seller and the other Selling Group
Members for their indemnification and other obligations under this
Agreement. Unless consented to by Purchaser Parent in writing,
which consent may be withheld in Purchaser Parent’s sole
discretion, Seller and the other Selling Group Members must pay any
amounts payable by Seller or any other Selling Group Member out of
funds other than the Holdback Amount.
(b)
If the Purchasing Group Members at any time, and from time to time,
determine that any Purchasing Group Member may be entitled to
payment, reimbursement or indemnification for any amount under this
Agreement (“Holdback
Claim”), the Purchasing Group Members will notify the
Selling Group Members of such claim (“Holdback Claim Notice”). The
Holdback Claim Notice shall set forth the amount claimed and the
basis of the Purchasing Group Members’ claim in reasonable
detail, together with any supporting documentation.
(c) Within
fifteen (15) days after delivery of a Holdback Claim Notice, the
Selling Group Members may deliver to the Purchasing Group Members a
written objection to all or any part of the Holdback Claim Notice
(“Holdback Claim
Objection”). A Holdback Claim Objection shall set
forth the amount of the Holdback Claim Notice disputed and the
basis of the Selling Group Members’ objection to the Holdback
Claim Notice in reasonable detail, together with any supporting
documentation.
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(d) If
Seller fails to deliver a Holdback Claim Objection to Purchaser by
5:00 P.M. Eastern Time on the 15th day following delivery of a
Holdback Claim Notice to Seller (or the next succeeding Business
Day if such 15th day is not a
Business Day), the Holdback Amount and the Purchase Consideration
shall be reduced by the amount requested in the Holdback Claim
Notice. Purchaser shall continue to hold the remaining balance of
the Holdback Amount, if any, in accordance with the terms of this
Agreement.
(e) If
the Selling Group Members deliver a Holdback Claim Objection within
the time provided in Section 6.6(d) with respect to all or any
portion of a Holdback Claim Notice, the Holdback Amount shall not
be reduced by the amount requested in the Holdback Claim Notice or
the disputed portion thereof, as applicable, pending either (i)
written agreement of the Purchasing Group Members and the Selling
Group Members as to the action to be taken in respect of such
Holdback Claim Notice; or (ii) the submission of such Holdback
Claim Notice and Holdback Claim Objection to arbitration in
accordance with Section 7.6 and a final non-appealable award with
respect to such arbitration having been rendered (in each case
under clause (e)(i) or (ii), a “Disputed Holdback Claim
Resolution”). Upon resolution of a disputed Holdback
Claim, and if the Disputed Holdback Claim Resolution provides for a
payment or reimbursement to any Purchasing Group Member, the
Purchase Consideration and the Holdback Amount shall be reduced in
accordance with the Disputed Holdback Claim Resolution. If the
Disputed Holdback Claim Resolution does not provide for a payment
or reimbursement to Purchaser, then Purchaser shall continue to
hold the amount of the resolved Holdback Claim in the Holdback fund
in accordance with the terms of this Agreement.
(f) The
Holdback Amount remaining as of the Holdback Release Date, if any,
shall be reduced by an amount equal to the excess (if any) of (i)
the balance of the Holdback Amount on the Holdback Release Date;
over (ii) the sum of all amounts reflected in any then outstanding
and unresolved Holdback Claim Notices and the sum of all amounts
which have not been paid to the Purchasing Group Members prior to
the Holdback Release Date as a result of Holdback Claims resolved
under Section 6.6(d) or Section 6.6(e) (the excess amount, if any
being referred to herein as the “Holdback Release Amount.” As
promptly as practicable after the Holdback Release Date, and not
later than the fifth Business Day following the Holdback Release
Date, Purchaser shall release from and disburse the Holdback
Release Amount to Seller.
6.7 Limitation
on Indemnification Damages
The maximum
aggregate amount of Damages that may be recovered by the Purchasing
Group under this Article VI will not exceed the Indemnification
Cap; provided that the Indemnification Cap shall not be applicable
to, or limit recovery of, Non-Capped Indemnification
Damages.
6.8 Survival.
(a) All
representations and warranties in this Agreement shall survive the
Closing and shall remain in full force and effect and shall expire
on the Indemnification Expiration Date, and no Indemnifying Party
will be liable for any Damages under this Article VI with respect
to a breach of such representations and warranties unless a Notice
of Indemnification Claim is given by the Indemnified Party to the
Indemnifying Party with respect thereto prior to the
Indemnification Expiration Date; provided, that the foregoing
limitation on survival and liability for Damages shall not apply to
(i) the representations and warranties included in Non-Capped
Indemnification Damages, which shall survive indefinitely; and (ii)
liability for Damages relating to fraudulent, intentional or
willful breaches by any Seller Group Member in connection with a
representation or warranty contained in this Agreement or in any
certificate, instrument or document delivered herewith shall
survive until the expiration of the applicable statute of
limitations (giving effect to any waiver, mitigation or extension
thereof) plus sixty (60) days.
(b) All
covenants, obligations and agreements of the Parties contained
herein shall survive the Closing indefinitely or for such shorter
period as may be explicitly specified herein with respect to
particular covenants, obligations or agreements. Notwithstanding
the foregoing, any claims asserted in good faith with reasonable
specificity (to the extent known at such time) and in writing by
notice from the non-breaching party to the breaching party prior to
the expiration date of the applicable survival period shall not
thereafter be barred by the expiration of the relevant
representation or warranty and such claims shall survive until
finally resolved.
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6.10 Effect
of Investigation. The representations, warranties, covenants
and obligations of an Indemnifying Party, and an Indemnified
Party’s right to indemnification with respect thereto, shall
not be affected or deemed waived by reason of any investigation or
due diligence conducted by or on behalf of the Indemnified Party
(including by any of its representatives) prior to the Closing, or
any knowledge acquired (or capable of being acquired) about, the
accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant or obligation. The waiver of any
condition based on the inaccuracy of any representation or
warranty, or on the non-performance of or compliance with any
covenant or obligation, will not affect the right to
indemnification, reimbursement, or other remedy based on such
representations, warranties, covenants or obligations.
Notwithstanding the foregoing provisions of this Section 6.10, an
Indemnified Party shall not be entitled to obtain indemnification
under this Article VI with respect a particular indemnification
claim to the extent the Indemnified Party had actual knowledge
prior to Closing (i) of the particular facts or circumstances that
gave rise to the claim for indemnification and (ii) that such
particular facts or circumstances would constitute the basis for a
claim for indemnification under this Article VI.
6.11 Tax
Treatment of Indemnification Payments. All indemnification
payments made under this Agreement shall be treated by the parties
as an adjustment to the Purchase Consideration for Tax purposes,
unless otherwise required by Law.
ARTICLE VII
MISCELLANEOUS
7.1 Entire
Agreement. This Agreement, including all exhibits attached
hereto, all of which are hereby incorporated herein by reference,
sets forth the entire agreement and supersedes any and all prior
agreements, understandings, promises or representations of the
Parties with respect to the transactions and subject matter set
forth herein. No Party shall be bound by, and each party
specifically objects to, any term, condition or other provision
which is different from or in addition to the provisions of this
Agreement (whether or not it would materially alter this Agreement)
and which is proffered by the other Party in any correspondence or
other document, unless the Party to be bound thereby specifically
agrees to such provision in writing.
7.2 Amendments
and Waivers. This Agreement may be amended, modified,
superseded, or cancelled, and the terms and conditions hereof may
be waived, only by a written instrument signed by the Parties.
Absent such a written agreement between the Parties, no delay on
the part of a Party in exercising any right, power, or privilege
hereunder will operate as a waiver thereof, nor will any waiver on
the part of any party of any right hereunder, nor any single or
partial exercise of any rights hereunder, preclude any other or
further exercise thereof or the exercise of any other right
hereunder.
7.3
Assignment.
No Party shall assign this Agreement or any right, interest or
benefit under this Agreement without the prior written consent of
the other Parties. Notwithstanding the foregoing, (i) any Party may
assign this Agreement in its entirety, upon prior written notice to
the other Parties, to any entity controlling, controlled by, or
under common control with, the assigning Party (an
“Affiliate
Assignee”); provided that (1) such Affiliate
Assignee has the financial and other resources necessary to perform
all obligations under this Agreement; (2) such Affiliate
Assignee agrees in writing to be bound by this Agreement; (3) the
assigning Party remains fully responsible for the performance of
this Agreement, and (4) the assigning Party provides the other
Parties with written notice of such assignment prior to such
assignment being made; and (ii) this Agreement may be assigned in
its entirety by Purchaser to the acquirer of Purchaser in
connection with a Change in Control of Purchaser. This Agreement
will be binding on and inure to the benefit of each Party and to
each Party's respective permitted successors and
assigns.
7.4
Notices. Any
notice required or permitted under this Agreement shall be in
writing, and shall be delivered to the intended recipient as
follows: (i) by certified mail, postage prepaid and return receipt
requested; (ii) by courier service; or (iii) by Electronic
Transmission. Notice shall be deemed given if by certified mail or
courier service on the date of first-attempted delivery to the
intended recipient’s address as set forth on the signature
page to this Agreement (or such other address as a Party may
hereafter designate by written notice to the other Parties pursuant
to this Section 7.4); and notice by Electronic Transmission shall
be deemed given on the date of the sender’s receipt of an
Electronic Transmission from the intended recipient. The street
addresses and electronic mail addresses of the Parties are set
forth on the signature page to this Agreement and may be changed
from time to time by notice given by a Party to the other Parties
pursuant to the provisions of this Section 7.4.
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7.5 Governing
Law. All issues and questions concerning the construction,
validity, interpretation and enforceability of this Agreement and
the Exhibits and Schedules hereto shall be governed by and
construed in accordance with the Laws of the Governing Law State,
without giving effect to any choice of Law or conflict of Law rules
or provisions (whether of the Governing Law State or any other
jurisdiction) that would cause the application of the Laws of any
jurisdiction other than the Governing Law State.
7.6 Dispute
Resolution, Forum.
(a) The
Parties consent to and agree that any dispute or claim arising out
of, or in any way related to, this Agreement shall be submitted to
binding arbitration in the Arbitration Venue and conducted in
accordance with the Judicial Arbitration and Mediation Service
(“JAMS”) rules
of practice then in effect or such other procedures as the Parties
may agree in writing, and the Parties expressly waive any right
they may otherwise have to cause any such action or proceeding to
be brought or tried elsewhere. The Parties further agree that (i)
any request for arbitration shall be made in writing and must be
made within a reasonable time after the claim, dispute or other
matter in question has arisen; provided however, that in no event
shall the demand for arbitration be made after the date that
institution of legal or equitable proceedings based on such claim,
dispute, or other matter would be barred by the applicable
statue(s) of limitations; (ii) the appointed arbitrator must be a
former or retired judge or attorney at law with at least ten (10)
years’ experience in commercial matters; (iii) costs and fees
of the arbitrator shall be borne by the Parties equally, unless the
arbitrator or arbitrators determine otherwise; (iv) depositions may
be taken and other discovery may be obtained during such
arbitration proceedings to the same extent as authorized in civil
judicial proceedings; and (v) the award or decision of the
arbitrator, which may include equitable relief, shall be final, and
judgment may be entered on such award in accordance with applicable
law in any court having jurisdiction over the matter. The
arbitrator shall be required to follow applicable law in rendering
the arbitrator’s decision.
(b)
TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, THE RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
(c) The
Parties acknowledge and agree that money damages may not be a
sufficient remedy for a breach of certain provisions of this
Agreement, including but not limited to Sections 5.3 and 5.4, and
accordingly, a non-breaching Party may be entitled to specific
performance and injunctive relief as remedies for such violation.
Accordingly, the Parties agree that a non-breaching party may seek
relief in a court of competent jurisdiction for the purposes of
seeking equitable relief hereunder, and that such remedies shall
not be deemed to be exclusive remedies for a violation of the terms
of this Agreement but shall be in addition to all other remedies
available to the non-breaching party at law or in
equity.
(d)
In any action, or other proceeding by which a Party
either seeks to enforce its rights under this Agreement, or seeks a
declaration of any rights or obligations under this Agreement, the
prevailing party will be entitled to reasonable attorneys’
fees, and subject to Section 7.6(a) above, reasonable costs and
expenses incurred to resolve such dispute and to enforce any final
judgment.
(e) No
remedy conferred on a Party by any of the specific provisions of
this Agreement is intended to be exclusive of any other remedy, and
each and every remedy will be cumulative and will be in addition to
every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or otherwise. The election of one or
more remedies by a Party will not constitute a waiver of the right
to pursue other available remedies.
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7.7
Public
Communications. The Parties shall not make any public
statements, including any press releases, with respect to the
Transaction Documents and the Transactions without the prior
written consent of the other Party(ies) (which consent shall not be
unreasonably withheld) except as may be required by Law, any
Governmental Authority or the rules of any securities exchange or
market. If a public statement is required to be made by Law, by any
Governmental Authority or the rules of any securities exchange or
market, the Parties shall use reasonable efforts to consult with
each other in advance as to the contents and timing thereof.
Notwithstanding the foregoing, the Selling Group hereby consents to
the making of public announcements and filings of the Transaction
and the Transaction Documents, and the filing of Transaction
Documents with Governmental Authorities, by the Purchasing Group
without requiring the prior written consent or review of the
Selling Group.
7.8
In the event any provision of this Agreement is deemed to be
invalid or unenforceable by a court or other authority having
competent jurisdiction: (a) said provision shall nevertheless be
enforced to the maximum extent thereby permitted so as to give as
much effect as possible to the intention of the Parties; and (b)
the remaining provisions not so affected will continue in full
force and effect.
7.9 Interpretation.
(a)
Every provision of this Agreement is the result of full
negotiations amongst the Parties, both of whom have either been
represented by counsel throughout or otherwise been given an
opportunity to seek the aid of counsel. Each Party further agrees
and acknowledges that it is sophisticated in legal affairs and has
reviewed this Agreement in detail. Each Party acknowledges that the
provisions of this Agreement were negotiated to reflect an
informed, voluntary allocation between them of all risks (both
known and unknown) associated with the transactions contemplated
hereunder. The limitations and disclaimers related to warranties
and liability contained in this Agreement are intended to limit the
circumstances and extent of liability. No provision of this
Agreement shall be construed in favor of or against any of the
Parties hereto by reason of the extent to which any such Party or
its legal counsel participated in the drafting
thereof.
(b)
Captions and headings of sections contained in this Agreement are
for convenience only and shall not control the meaning, effect, or
construction of this Agreement.
(c)
Time periods used in this Agreement shall mean calendar periods
unless otherwise expressly indicated.
(d)
Except as otherwise provided or if the context otherwise requires,
whenever used in this Agreement, (i) any noun or pronoun shall be
deemed to include the plural and the singular as well as the
masculine, feminine and neuter genders, (ii) the terms
“include,” “includes” and
“including” shall be deemed to be followed by the
phrase “without limitation,” (iii) the word
“or” shall be inclusive and not exclusive, (iv) all
references to Articles, Sections, subsections, preambles or
recitals, refer to the Articles, Sections, subsections, preamble
and recitals of this Agreement, and all references to Schedules
refer to the Schedules attached to this Agreement or delivered with
this Agreement, as appropriate, and all references to Exhibits
refer to the Exhibits attached to this Agreement, each of which is
made a part of this Agreement for all purposes, (v) the terms
“hereunder,” “hereof,”
“hereto,” and words of similar import shall unless
otherwise stated be deemed references to this Agreement as a whole
and not to any particular Article, Section or other provision
hereof, (vi) the terms “dollars” or “$”
means United States dollars, (vii) reference to any agreement,
document or instrument means such agreement, document or instrument
as amended or modified through the date hereof in accordance with
the terms thereof and includes all addenda, exhibits and disclosure
schedules thereto, (viii) any reference to any Person includes such
Person’s successors and assigns but, if applicable, only if
such successors and assigns are permitted by this Agreement, and
(ix) any reference to any Governmental Authority includes any
designee thereof or successor thereto.
(e)
The Parties intend that each representation, warranty, and covenant
contained in this Agreement shall have independent significance. If
any Party has breached any representation, warranty, or covenant
contained in this Agreement in any respect, the fact that there
exists another representation, warranty, or covenant relating to
the same subject matter (regardless of the relative levels of
specificity) which the Party has not breached shall not detract
from or mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
(f)
In the event of any inconsistency between the statements made in
the body of this Agreement and those contained in the Schedules
(other than an express exception to a specifically identified
statement), those in this Agreement shall control. Any disclosures
in any Schedule or in any other Transaction Document of any
information that is not required under the terms hereof or thereof
to be disclosed herein or therein shall not change or diminish the
disclosure requirements herein or therein.
7.10 Counterparts;
Facsimile or PDF Signature. This Agreement may be executed
in counterparts, each of which will be deemed an original hereof
and all of which together will constitute one and the same
instrument. This Agreement may be executed by facsimile or PDF
signature by a Party and such signature shall be deemed binding for
all purposes hereof, without delivery of an original signature
being thereafter required.
[The
remainder of this page intentionally left blank; signature page and
exhibits follow]
-42-
IN
WITNESS WHEREOF, each of the Parties has caused this Agreement to
be executed on its behalf as of the date first above
written.
Purchasing Group
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AutoWeb,
a Delaware Corporation
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By:
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇,
President and Chief Executive Officer
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Tradein Expert,
Inc., a Delaware corporation
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By:
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/s/ ▇▇▇▇▇ ▇.
▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇,
President and Chief Executive Officer
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Purchasing Group Notice Contact
Information:
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▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇
Executive Vice
President, Chief Legal Officer and Secretary
Email Address:
▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
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Selling
Group
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Car Acquisition,
LLC, a Texas limited liability company
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By:
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/s/ ▇▇▇▇▇
▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Manager
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▇▇▇▇▇▇.▇▇▇ LLC, a
Texas limited liability company
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By:
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/s/ ▇▇▇▇
▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇, Chief
Executive Officer and Managing Member
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▇▇▇▇▇▇▇ Family
Partners Ltd., a Texas limited
partnership
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By:
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/s/ ▇▇▇▇▇
▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
President
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Selling Group Notice Contact
Information:
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Car
Acquisition, LLC
▇▇▇▇▇▇.▇▇▇,
LLC
▇▇▇▇▇▇▇
Family Partners, Ltd.
c/o
McCombs Enterprises
▇▇▇ ▇
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇
▇▇▇▇▇▇▇, Director of Business Development
Email
Address: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
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Kandera
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/s/ ▇▇▇▇
▇▇▇▇▇▇▇
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Kandera Notice Contact
Information:
[Personal Notice Contact Information for Mr. Kandera has been
redated in accordance with Regulation SK 601(a)(6)]
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Exhibit A
Purchased Assets
And
Assumed Liabilities and Obligations Schedule
I.
Purchased
Assets
All of
the assets, rights, privileges, interests, and properties, of every
type and description, owned, leased, used, useable or held for use
by Seller, or by any other Selling Group Member in connection with
the Business, The Purchased Assets include, without limitation, the
following:
●
All Tangible
Personal Property owned, leased, licensed, used, useable or held
for use by Seller, wherever located, and whether or not carried on
the books of Seller, including all furniture, fixtures, computers,
printers, appliances, and other items located at the Business
Location, including, without limitation the following (but
excluding only such office furniture and other items listed as
Excluded Assets):
o
Tables and
Chairs
o
Electronics,
including computers, printers, monitors, televisions, Internet and
telephone equipment (e.g., headsets, handsets and routers and
switches)
o
Inspection tools
(e.g., paint gauges)
o
White
boards
●
All work in process
of whatever nature;
●
All Business
Intellectual Property;
●
All rights, title
and interests of Seller in and to tenant improvements and fixtures
attached or appurtenant to, and possession of, Seller’s
office location as of the Closing, and all easements, licenses,
rights and appurtenances relating thereto (“Business Real
Property”);
●
All keys to
buildings, offices, security codes, passwords, and identification
numbers pertaining to the operation of the Business Real
Property;
●
all Contracts to
which Seller or any Selling Group Member is a party and which
relate to the Business or any Purchased Assets, including all
Contracts with Business Relationships or vendors or suppliers of
goods or services to or for the benefit of the Business, the
Intellectual Property Contracts, and all other Contracts pursuant
to which Seller acquired or otherwise derives any rights or
entitlements with respect to the Business or any Purchased Assets,
including all confidentiality, non-competition, non-solicitation
and similar Contracts; provided, however, excluding all Excluded
Contracts;
●
all accounts and
relationships with any Persons who pay Seller, or from whom Seller
derives, any revenues and other Persons having business dealings
with Seller (“Business
Relationships”);
●
all Business
Records, other than Excluded Business Records;
-45-
●
all prepaid
expenses and deposits paid by or to Seller, including all advances
and security deposits made by Seller to any Person, and all other
prepaid items, credits, and discounts for or toward the purchase of
goods or services, excluding the security deposit for
Kandera’s pre-Closing lease for the Business
Location;
(iii) all
telephone and fax numbers;
(iv) all
goodwill and going concern value of and related to the
Business;
(v) all bank accounts,
trust accounts, suspense accounts or similar accounts, and safe
deposit boxes of Seller, other than those bank accounts listed on
the Excluded Assets and Liabilities and Obligations
Schedule;
(vi) all
insurance benefits, including rights and proceeds, arising from or
relating to the Purchased Assets or the Assumed Liabilities and
Obligations;
(vii) All
names and dba’s under which Seller conducts the Business,
including the names CarZeus and CarZuz (collectively, the
“Business
Names”);
(viii) all
rights, claims, credits, causes of action, rights to
indemnification and contribution or rights of set-off of Seller
against third parties, whether ▇▇▇▇▇▇ or inchoate, known or
unknown, contingent or non-contingent;
(ix) all
express or implied warranties of manufacturers, sellers, or lessors
of any Purchased Assets and all other warranties and guaranties for
the benefit of Seller;
(x) all Assumed
Contracts;
(xi) all
Business Intellectual Property; and
(xii) the
CarZeus logo.
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II.
Assumed
Liabilities and Obligations
The
following are the only Assumed Liabilities and
Obligations:
Assumed Liabilities and Obligations
●
The performance of
Seller’s obligations which arise after the Closing Date under
the Assumed Contracts, but expressly not including any Liabilities,
whenever arising or asserted, which relate to or arise out of any
breach or violation of any Assumed Contract, or any default or
failure to perform under any Assumed Contract prior to the
Effective Time.
●
Only payment
obligations under the Assumed Contracts arising after the Closing
Date.
Assumed Contracts
●
All Contracts
listed on Schedule A-1 attached hereto.
●
All
Confidentiality, Non-Disclosure and Noncompetition Agreements
between Seller and any third parties protecting Seller’s
Confidential Information, including any of the foregoing with
Business Employees.
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Schedule A-1
Assumed Contracts
[Omitted pursuant to Item 601(a)(5) of Regulation S-K]
-48-
Exhibit B
Excluded Assets
And
Liabilities and Obligations Schedule
I.
The following
assets of Seller constitute the only Excluded Assets:
●
All cash and cash
equivalents.
●
All Seller bank
accounts.
●
Tax Returns and Tax
records of Seller and the Seller entity’s seal, minute books,
stock books and other records having to do with the organization,
capitalization and governance of Seller.
●
All rights of
Seller under this Agreement.
●
All Employee
Benefit Plans and all amounts held or invested by Seller in
connection therewith.
●
The Contracts set
forth on Schedule B-1 attached hereto.
●
The vehicles in
inventory as of the Closing listed on Schedule B-2 attached
hereto.
●
The Accounts
Receivable generated prior to Closing listed on Schedule B-3
attached hereto.
●
All Excluded
Business Records.
●
The security
deposit for Kandera’s pre-Closing lease for the Business
Location.
●
The following items
located at the Business Location:
o
personal
effects of Business Employees
o
(2) Leather Chairs
& Table in front lobby
o
(2) White
decorative plants, (2) silver potted plants & (2) wall art in
front lobby
o
(2) Dell Monitors -
Service tag FQXV352
o
(1) Storage table
(Coffee stand) in break area
o
(1) Custom made
wooden clock in hallway
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Schedule B-1
Excluded Contracts
[Omitted pursuant to Item 601(a)(5) of Regulation ▇-▇]
-▇▇-
▇▇▇▇▇▇▇▇ ▇-▇
Excluded Vehicles Inventory
None.
Seller has no Vehicle Inventory as of Closing
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Schedule B-3
Excluded Accounts Receivable
[Omitted pursuant to Item 601(a)(5) of Regulation S-K]
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II. Excluded Liabilities and Obligations
The
Excluded Liabilities and Obligations include, without limitation,
the following:
●
Any Damages
incurred by any Purchasing Group Member to the extent resulting
from Seller’s operation of the Business prior to the
Closing.
●
Any liabilities for
breaches of or events of default under Assumed Contracts occurring
prior to Closing.
●
All Excluded
Contracts
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Exhibit C
Closing Schedule
I.
Closing Deliveries
and Actions by Selling Group. At the Closing, the Selling
Group Members took the following actions and delivered the
following documents, as applicable, to the Purchasing
Group:
●
This Agreement,
duly executed by Seller and each other Selling Group
Member.
●
All other
Transaction Documents to which Seller or any other Selling Group
Member is a party, duly executed by Seller and such other Selling
Group Members.
●
The ▇▇▇▇ of Sale,
duly executed by Seller.
●
Written Consents
for assignment of the Nonassignable Contracts and all other
Consents referenced in Section 3.4(b) of the Disclosure Schedule
and designated therein as a “Consent Required For
Closing” (collectively the “Consents Required For Closing”),
if any.
●
Seller shall have
obtained and delivered to Purchaser all Governmental Authorizations
and other Consents from third parties, and shall have made or given
all filings, submissions and notifications required under any Law
applicable to such party or any of its Affiliates, that may be or
become necessary for the performance of their respective
obligations under the Transaction Documents or the consummation of
the Transactions. Seller will not permit or agree to any changes to
the terms of, or waive or agree to waive any rights with respect
to, the Business or any Purchased Assets (including any Contracts
included therein) in connection with or to obtain any such Consent
without the prior written approval of the Purchaser.
●
At or before the
Closing, Sellers shall deliver to the Purchaser, written evidence,
in form and substance reasonably satisfactory to the Purchaser,
that the boards of directors, stockholders, managers, all partners
and all members, as applicable, of Seller and each other Selling
Group Member have consented to, approved, and duly authorized the
Transaction and waived any dissenter’s appraisal or similar
rights that any of them may have with respect to the Transactions
(collectively, the “Seller
Consents and Approvals”).
●
The Intellectual
Property Assignment duly executed by the parties
thereto.
●
Entity Consents for
Seller and each other Selling Group Member and a certificate signed
by an authorized officer certifying as to (i) the incumbency of the
officers of such entity executing documents or instruments on its
behalf and (ii) the Entity Consents; and attaching a good standing
certificate of Seller and each other Selling Group Member as of a
date within five of the Closing Date.
●
UCC searches for
Seller showing no Encumbrances on any Purchased
Assets.
●
A Section 1445
Certification dated as of the Closing Date, stating, under
penalties of perjury, the transferor’s United States taxpayer
identification number and that the transferor is not a foreign
person, pursuant to Section 1445(b)(2) of the Code.
●
The Encumbrance
Termination Documents.
●
The Powers of
Attorney.
●
A properly
completed and duly executed IRS Form W-9.
●
The Opinion of
Seller Counsel.
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●
Documentation
effecting the transfer of registration of all domain names to
Purchaser or Purchaser Parent (as designated by Purchaser
Parent).
●
Documentation
effecting the termination of all dba’s held by Seller and
related to the Business, including the assumed names CarZeus and
CarZuz.
●
Termination of
▇▇▇▇▇ ▇▇▇▇▇▇▇ Service Center Lease Agreement dated May 8, 2017, as
amended by First Amendment to Lease dated October 17, 2018, by and
between ▇▇▇▇▇▇ Non Exempt Family Trust B (landlord) and Kandera
(tenant)
●
Termination of
Sublease dated May 20, 2019 between Kandera (sublessor) and Seller
Class A Member (sublessee)
●
Termination of
Sublease Agreement dated November 18, 2019 between Seller Class A
Member (sublessor) and Seller (sublessee)
II.
Closing Deliveries
and Actions by Purchasing Group. At the Closing, the
Purchasing Group Members took the following actions and delivered
the following documents, as applicable, to the Selling
Group:
●
This Agreement,
duly executed by Purchaser and Purchaser Parent.
●
All other
Transaction Documents to which Purchaser or Purchaser Parent is a
party, duly executed by Purchaser and Purchaser Parent, as
applicable.
III.
Payment of Purchase
Consideration Closing Payment.
At the
Closing, Purchaser paid the Purchase Consideration Closing Payment
by wire transfer of immediately available funds to Seller or its
designees in accordance with the written instructions of Seller
delivered to Purchaser prior to the Closing, which written
instructions shall provide the identity of each payee, the amounts
to be paid to such payee and the instructions for making payment to
such payee.
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Exhibit D
Form of ▇▇▇▇ of Sale and Assignment
▇▇▇▇ OF SALE AND ASSIGNMENT
This
▇▇▇▇ of Sale and Assignment (“▇▇▇▇ of Sale”) is made and entered
into as of July 31, 2021 (“Effective Date”), by and between
Car Acquisition, LLC, a Texas limited liability company
(“Seller”), and
Tradein Expert, Inc., a Delaware corporation (“Purchaser”).
Background
This
▇▇▇▇ of Sale is made and given by Seller pursuant to and in
accordance with that certain Asset Purchase Agreement entered into
by and among Seller, Purchaser and other third parties as of the
Effective Date (“Asset
Purchase Agreement”), pursuant to which Seller has
agreed to sell to the Purchaser, and the Purchaser has agreed to
purchase from Seller, the Purchased Assets. Capitalized terms used
herein but not defined herein shall have the respective meanings
given to them in the Asset Purchase Agreement.
NOW,
THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound, the Seller
hereby agrees as follows:
1. Sale and Transfer
of Purchased Assets and Assignment of Assumed
Contracts.
(a) Pursuant
to the terms and subject to the conditions of the Asset Purchase
Agreement, effective as of the Effective ▇▇▇▇ ▇▇▇▇▇▇ does hereby
sell, assign, transfer, grant, bargain, convey and deliver to the
Purchaser good, valid and marketable title to all Purchased Assets,
free and clear of all Encumbrances other than Permitted
Encumbrances.
(b) Pursuant
to the terms and subject to the conditions of the Asset Purchase
Agreement, effective as of the Effective ▇▇▇▇ ▇▇▇▇▇▇ hereby
transfer and assigns to Purchaser all of Seller rights, title and
interests in, to and under the Assumed Contracts.
2.
Terms
of the Asset Purchase Agreement. This ▇▇▇▇ of Sale is given
in accordance with the Asset Purchase Agreement and is subject to
the rights, obligations, representations, and warranties therein
contained. The terms of the Asset Purchase Agreement are not in any
way superseded, modified, replaced, amended, changed, rescinded or
waived by this ▇▇▇▇ of Sale. In the event of any conflict or
inconsistency between the terms of the Asset Purchase Agreement and
the terms hereof, the terms of the Asset Purchase Agreement shall
control.
3.
Further
Assurances. Seller agrees to perform, execute and/or deliver
or cause to be performed, executed and/or delivered any and all
such further acts and assurances as Purchaser may reasonably
require to perfect its interest in and ownership of the Purchased
Assets sold, assigned, transferred, granted, bargained, conveyed
and delivered pursuant to the Asset Purchase Agreement and this
▇▇▇▇ of Sale. This ▇▇▇▇ of Sale shall inure to the benefit of
and shall be binding upon the parties hereto and their respective
successors and assigns.
4.
Power
of Attorney. Seller hereby constitutes and appoints
Purchaser as Seller’s true and lawful attorney, with full
power of substitution, for it and in its name, place and stead, or
otherwise, to demand and receive from time to time, the Purchased
Assets hereby sold, transferred, assigned, conveyed and delivered,
or intended so to be, and to get receipts and releases for and in
respect of the same or any part thereof, and from time to time to
institute and prosecute in the name of Seller or otherwise, any and
all proceedings at law, in equity or otherwise, that Purchaser may
deem proper in order to collect, assert or enforce any claim, right
or title, of any kind, in and to the Purchased Assets hereby sold,
transferred, assigned, conveyed, and delivered, or intended so to
be, and to defend and compromise any and all actions, suits or
proceedings in respect of any of the Purchased Assets, and
generally to do all and any such acts and things in relation
thereto as Purchaser shall deem advisable.
5.
Successors and
Assigns. This ▇▇▇▇ of Sale shall be binding upon and shall
inure to the benefit of the Assignors and Assignee and their
respective successors, legal representatives and assigns, and all
others acting by, through, with or under the Assignors’
direction and all those in privity therewith.
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6. Governing
Law. All issues and questions concerning the construction,
validity, interpretation and enforceability of this ▇▇▇▇ of Sale
shall be governed by and construed in accordance with the laws of
the State of Delaware, without giving effect to any choice of law
or conflict of law rules or provisions (whether of the State of
Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
Delaware.
7. Dispute
Resolution, Forum.
(a) The
Parties consent to and agree that any dispute or claim arising out
of, or in any way related to, this ▇▇▇▇ of Sale shall be submitted
to binding arbitration in the Arbitration Venue and conducted in
accordance with the Judicial Arbitration and Mediation Service
(“JAMS”) rules
of practice then in effect or such other procedures as the Parties
may agree in writing, and the Parties expressly waive any right
they may otherwise have to cause any such action or proceeding to
be brought or tried elsewhere. The Parties further agree that (i)
any request for arbitration shall be made in writing and must be
made within a reasonable time after the claim, dispute or other
matter in question has arisen; provided however, that in no event
shall the demand for arbitration be made after the date that
institution of legal or equitable proceedings based on such claim,
dispute, or other matter would be barred by the applicable
statue(s) of limitations; (ii) the appointed arbitrator must be a
former or retired judge or attorney at law with at least ten (10)
years’ experience in commercial matters; (iii) costs and fees
of the arbitrator shall be borne by the Parties equally, unless the
arbitrator or arbitrators determine otherwise; (iv) depositions may
be taken and other discovery may be obtained during such
arbitration proceedings to the same extent as authorized in civil
judicial proceedings; and (v) the award or decision of the
arbitrator, which may include equitable relief, shall be final, and
judgment may be entered on such award in accordance with applicable
law in any court having jurisdiction over the matter. The
arbitrator shall be required to follow applicable law in rendering
the arbitrator’s decision.
(b)
TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, THE RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT
OF OR RELATING TO THIS ▇▇▇▇ OF SALE OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
(c) The
Parties acknowledge and agree that money damages may not be a
sufficient remedy for a breach of this ▇▇▇▇ of Sale, and
accordingly, a non-breaching Party may be entitled to specific
performance and injunctive relief as remedies for such violation.
Accordingly, the Parties agree that a non-breaching party may seek
relief in a court of competent jurisdiction for the purposes of
seeking equitable relief hereunder, and that such remedies shall
not be deemed to be exclusive remedies for a violation of the terms
of this ▇▇▇▇ of Sale but shall be in addition to all other remedies
available to the non-breaching party at law or in
equity.
(d)
In any action, or other proceeding by which a Party either seeks to
enforce its rights under this ▇▇▇▇ of Sale, or seeks a declaration
of any rights or obligations under this ▇▇▇▇ of Sale, the
prevailing party will be entitled to reasonable attorneys’
fees, and subject to Section 7(a) above, reasonable costs and
expenses incurred to resolve such dispute and to enforce any final
judgment.
(e) No
remedy conferred on a Party by any of the specific provisions of
this ▇▇▇▇ of Sale is intended to be exclusive of any other remedy,
and each and every remedy will be cumulative and will be in
addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or otherwise. The
election of one or more remedies by a Party will not constitute a
waiver of the right to pursue other available
remedies.
8. Counterparts;
Facsimile or PDF Signature. This ▇▇▇▇ of Sale may be
executed in any number of counterparts, each of which will be
deemed an original hereof and all of which together will constitute
one and the same instrument. This ▇▇▇▇ of Sale may be executed by
facsimile, PDF or electronic signature by a Party and such
signature shall be deemed binding for all purposes hereof and have
the same force and effect as original signatures, without delivery
of an original signature being thereafter required.
[Remainder of Page Intentionally
Left Blank; Signature page follows]
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IN
WITNESS WHEREOF, the Parties have caused this ▇▇▇▇ of Sale to be
duly executed as of the Effective Date.
Purchaser
Tradein
Expert, Inc.
By:
___________________________
▇▇▇▇▇
▇. ▇▇▇▇▇▇, Executive Vice President, Chief Legal and
Secretary
Seller
Car
Acquisition, LLC
By:
___________________________
▇▇▇▇▇
▇▇▇▇▇▇▇▇, Manager
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Exhibit E
Form of Intellectual Property Assignment
[Omitted pursuant to Item 601(a)(5) of Regulation S-K]
-59-
Exhibit F
Form of Opinion of Seller Counsel
[Omitted pursuant to Item 601(a)(5) of Regulation S-K]
-60-
Exhibit G
Purchaser-Hired Former Business Employees Schedule
[Omitted pursuant to Item 601(a)(5) of Regulation S-K]
-61-
Exhibit H
Transition Services Schedule
Seller Vehicles in Inventory
Prior
to the Closing, Seller surrendered to the Texas Department of Motor
Vehicles all Texas Motor Vehicle Dealer licenses related to the
Business Location. Prior to surrendering its motor vehicle dealer
licenses, Seller ceased acquiring vehicles, and all vehicles
acquired prior to Closing and in inventory were moved off the
Business Location premises prior to the Closing.
Purchaser-Hired
Former Business Employees will made reasonably available to assist
in title processing and receivables collection activity for vehicle
inventory owned and sold by Seller prior to the Closing. This
assistance will continue for up to sixty (60) days following the
Closing. This assistance is conditioned upon Seller continuing to
provide Purchaser-Hired Former Business Employees access to
Seller’s instance of ▇▇▇▇▇▇ DMS software as necessary to
provide the assistance.
Accounts Receivable
1. After
the Closing, Purchaser shall, at no cost to Seller, promptly
forward to Seller all checks or other payments received by
Purchaser after the Closing and relating to payments for vehicle
Inventory retained by Seller and included in the Excluded
Assets.
2. The
Parties acknowledge that neither member of the Purchasing Group
will be responsible for undertaking to collect Seller’s
Accounts Receivable that are retained by Seller.
Accounts Payable
Seller
is responsible for all Accounts Payable, vendor payables or
employee obligations of the operations incurred prior to the
closing date. Any prepayments of vendors will be reconciled
per the process described in the Closing Proration and Allocation
Payment.
Correspondence and Communications
1.
After the Closing, the Selling Group Members shall, at no cost to
Purchaser, promptly forward to Purchaser all correspondence,
emails, texts or other communications received by the Selling Group
Member relating to the Business or the Purchased Assets, and use
commercially reasonable efforts to forward any calls or inquiries
received concerning the Business to Purchaser.
2. After
the Closing, Purchaser shall, at no cost to Seller, promptly
forward to Seller all correspondence, emails, texts or other
communications received by any Purchasing Group relating to the
operation of the Business prior to Closing or to the Excluded
Assets, and use commercially reasonable efforts to forward any
calls or inquiries received concerning the foregoing to
Purchaser.
Closing Proration and Allocation Payment. Within thirty (30)
days following the Closing, Seller and Purchaser shall reconcile
all accounts payable, accounts receivable and prepaid amounts, if
any, that are to be allocated to the respective parties as of the
Closing Date. Upon completion of that reconciliation, Seller shall
pay to Purchaser, or Purchaser shall pay to Seller, as applicable,
the Closing Proration and Allocation Payment, assuming that there
are any prorations and allocations that need to be made based on
the reconciliation.
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