ASSET PURCHASE AGREEMENT Dated as of February 28, 2006 Among E&M ADVERTISING INC., E&M ADVERTISING WEST/CAMELOT MEDIA, INC., and NEXTREFLEX, INC., as Sellers and IMPART MEDIA ADVERTISING, INC., as Buyer
Exhibit
2.1
Dated
as of February 28, 2006
Among
E&M
ADVERTISING INC.,
E&M
ADVERTISING WEST/CAMELOT MEDIA, INC., and
NEXTREFLEX,
INC., as Sellers
and
IMPART
MEDIA ADVERTISING, INC., as Buyer
TABLE
OF CONTENTS
Page
Schedule
3.8
|
Assumed
Contracts
|
iv
|
ARTICLE
I
|
1
|
|
1.1
|
Defined
Terms
|
1
|
ARTICLE
II
|
6
|
|
SALE
AND PURCHASE OF ASSETS
|
6
|
|
2.1
|
Agreement
to Sell and Buy
|
6
|
2.2
|
Excluded
Assets
|
7
|
2.3
|
Liabilities
|
7
|
2.4
|
Purchase
Price
|
9
|
2.5
|
Adjustments
and Prorations
|
9
|
2.6
|
Reserved
|
10
|
2.7
|
Reserved
|
10
|
2.8
|
Noncompetition
|
10
|
2.9
|
Allocation
|
11
|
ARTICLE
III
|
12
|
|
REPRESENTATIONS
AND WARRANTIES OF SELLERS
|
12
|
|
3.2
|
Authorization
and Binding Obligation
|
12
|
3.3
|
Absence
of Conflicting Agreements.
|
12
|
3.5
|
Real
Property
|
12
|
3.6
|
Title
to and Condition of Personal Property
|
13
|
3.7
|
No
Subsidiaries
|
13
|
3.8
|
Contracts
|
13
|
3.9
|
Consents
|
13
|
3.10
|
Intellectual
Property
|
14
|
3.11
|
Financial
Statements
|
14
|
3.12
|
Insurance
|
14
|
3.13
|
Reports
|
15
|
3.14
|
Employee
Benefit Plans
|
15
|
3.15
|
Labor
Relations
|
15
|
3.16
|
ERISA
|
15
|
3.17
|
Taxes
|
16
|
3.18
|
Claims;
Legal Actions
|
16
|
3.19
|
Compliance
with Laws
|
17
|
3.20
|
Undisclosed
Liabilities
|
17
|
3.21
|
Books
and Records
|
17
|
3.22
|
Assets
|
17
|
3.23
|
Environment,
Health and Safety
|
17
|
3.24
|
No
Material Adverse Change
|
18
|
3.25
|
Absence
of Certain Developments
|
18
|
3.26
|
Brokerage
|
19
|
3.27
|
Affiliated
Transactions
|
19
|
3.33
|
Full
Disclosure
|
20
|
ARTICLE
IV
|
20
|
|
REPRESENTATIONS
AND WARRANTIES OF BUYER
|
20
|
|
4.2
|
Authorization
and Binding Obligation
|
21
|
4.3
|
Absence
of Conflicting Agreements or Consents
|
21
|
4.4
|
Brokerage
|
21
|
4.5
|
Affiliation
with Accountants
|
21
|
4.6
|
Valid
Issuance of Acquired Shares
|
21
|
4.7
|
Full
Disclosure
|
21
|
ARTICLE
V
|
22
|
|
COVENANTS
OF SELLERS
|
22
|
|
5.1
|
Pre
Closing Covenants
|
22
|
5.2
|
Post
Closing Covenants
|
24
|
5.3
|
Medico
Covenant
|
24
|
ARTICLE
VI
|
24
|
|
COVENANTS
OF BUYER
|
24
|
|
6.1
|
Inconsistent
Action
|
24
|
6.2
|
Post
Closing Covenants
|
24
|
6.3
|
IMG
Covenant
|
24
|
ARTICLE
VII
|
25
|
|
SPECIAL
COVENANTS AND AGREEMENTS
|
25
|
|
7.1
|
Accounts
Receivable/Accounts Payable
|
25
|
7.2
|
Taxes,
Fees and Expenses
|
25
|
7.2
|
Bulk
Sales Law
|
25
|
7.4
|
Confidentiality
|
25
|
7.5
|
Cooperation
|
26
|
7.6
|
Risk
of Loss
|
26
|
7.7
|
Employees
|
26
|
ARTICLE
VIII
|
27
|
|
CONDITIONS
TO OBLIGATIONS OF BUYER AND SELLERS
|
27
|
|
8.1
|
Conditions
to Obligations of Buyer
|
27
|
8.2
|
Conditions
to Obligations of Seller
|
28
|
ARTICLE
IX
|
28
|
|
CLOSING
AND CLOSING DELIVERIES
|
28
|
|
9.2
|
Deliveries
by Sellers
|
28
|
9.3
|
Deliveries
by Buyer
|
29
|
ARTICLE
X
|
30
|
|
RIGHTS
OF BUYER AND SELLERS
|
30
|
|
10.1
|
Termination
|
30
|
10.2
|
Effect
of Termination
|
31
|
10.3
|
Specific
Performance
|
31
|
ARTICLE
XI
|
31
|
|
SURVIVAL
OF REPRESENTATIONS AND
|
31
|
|
11.1
|
Representations
and Warranties
|
31
|
11.2
|
Indemnification
by Sellers
|
31
|
11.3
|
Indemnification
by Buyer
|
32
|
11.4
|
Procedure
for Indemnification
|
32
|
11.5
|
Right
of Offset
|
33
|
ARTICLE
XII
|
34
|
|
MISCELLANEOUS
|
34
|
|
12.1
|
Notices
|
34
|
12.2
|
Benefit
and Binding Effect
|
35
|
12.3
|
Headings
|
35
|
12.4
|
Gender
and Number
|
35
|
12.5
|
Counterparts
|
35
|
12.6
|
Entire
Agreement
|
35
|
12.7
|
Amendment
|
36
|
12.8
|
Severability
|
36
|
12.9
|
Governing
Law; Consent to Jurisdiction and Venue
|
36
|
12.10
|
Cumulative
Remedies
|
36
|
SCHEDULE
2.8
|
39
|
|
Xxxxxx
Xxxxxx
|
39
|
EXHIBITS
Exhibit
A
|
-
Form of Xxxx of Sale
|
Exhibit
B
|
-
Form of Assignment and Assumption Agreement
|
Exhibit
C-1
|
-
Form of Copyright Assignment
|
Exhibit
C-2
|
-
Form of Trademark Assignment
|
Exhibit
D
|
-
Form of Seller’s Certificate
|
Exhibit
E
|
-
Form of Buyer’s Certificate
|
Exhibit
F
|
-
Form of Employment Agreement
|
SCHEDULES
Schedule
1.1(a)
|
Advertising
Contracts
|
Schedule
2.1(g)
|
Software
|
Schedule
2.1(j)
|
Acquired
Accounts Receivable
|
Schedule
2.2(a)
|
Excluded
Accounts Receivable
|
Schedule
2.8
|
Certain
Non-Affiliates
|
Schedule
3.4
|
Licenses
|
Schedule
3.5
|
Real
Property
|
Schedule
3.6(a)
|
Personal
Property
|
Schedule
3.8
|
Assumed
Contracts
|
Schedule
3.9
|
Consents
|
Schedule
3.10
|
Intellectual
Property
|
Schedule
3.11
|
Financial
Statements
|
Schedule
3.12
|
Insurance
Policies
|
Schedule
3.14(a)
|
Employees
|
Schedule
3.14(b)
|
Employment
Agreements, Employee Benefit Plans, Etc.
|
Schedule
3.15
|
Labor
Relations
|
Schedule
3.16
|
ERISA
|
Schedule
3.23
|
Environment,
Health and Safety
|
Schedule
3.25
|
Absence
of Certain Developments
|
Schedule
3.27
|
Affiliated
Transactions
|
Schedule
7.1(a)
|
Accounts
Receivable
|
Schedule
7.1(b)
|
Accounts
Payable
|
Schedule
7.7
|
Business
Employees
|
This
ASSET PURCHASE AGREEMENT, dated as of February 28, 2006, is by and among
E&M
ADVERTISING INC., a New York corporation (“E&M”),
E&M ADVERTISING WEST/CAMELOT MEDIA, INC., a New York corporation
(“Camelot”),
and
NEXTREFLEX, INC., a New York corporation (“Nextreflex”)
and,
collectively with E&M, Camelot and Nextreflex, the “Sellers”)
and
each individually a “Seller”, IMPART MEDIA ADVERTISING, INC., a Nevada
corporation (the “Buyer”),
and,
solely with respect to Section 2.4, Articles IV and IX, Impart Media Group,
Inc., a Nevada corporation and the parent entity of Buyer (“IMG”).
P
R E M I S E S:
A. Sellers
are in the business of providing direct marketing and other advertising
services, including without limitation, strategic planning, media services,
database marketing, telemarketing and online marketing, to businesses engaged
in
a variety of industries (the “Business”).
X. Xxxxxxx
desire to sell and Buyer desires to buy substantially all of the assets used
or
useful in the operation of the Business upon the terms and conditions
hereinafter set forth.
A
G R E E M E N T S:
In
consideration of the above premises and the covenants and agreements contained
herein, Buyer and Sellers agree as follows:
ARTICLE
I
DEFINED
TERMS
1.1 Defined
Terms.
The
following terms shall have the following meanings in this
Agreement:
“Accounts
Payable”
shall
have the meaning set forth in Section 7.1(b) hereof.
"Accounts
Receivable"
means
any and all amounts and other obligations owed to any Seller by reason of
a sale
of a good or provision of a service in the ordinary course of such Seller’s
conduct of the Business prior to the Closing Date.
"Acquired
Accounts Receivable"
means
all Accounts Receivable, other than the Excluded Accounts Receivable, including,
but not limited to those Accounts Receivable set forth on Schedule
2.1(j)
hereto.
“Advertising
Contracts”
shall
mean all Contracts, including trade advertising contracts, whether written
or
oral, for advertising services to be provided by any Seller in effect as
of the
date hereof and all other such Contracts entered into after such date and
in
effect on the Closing Date to which any Seller is a party or which have been
assumed by or assigned to any Seller, including the Contracts listed on
Schedule
1.1(a)
hereto.
“Affiliate”
shall
mean, with respect to any specified Person, (a) any other Person which, directly
or indirectly, owns or controls, is under common ownership or control with,
or
is owned or controlled by, such specified Person, (b) any other person which
is
a director, officer or general partner or is, directly or indirectly, the
beneficial owner of ten percent (10%) or more of any class of equity securities,
of the specified Person, (c) another Person of which the specified Person
is a
director, officer or general partner or is, directly or indirectly, the
beneficial owner of ten percent (10%) or more of any class of equity securities,
(d) another Person in which the specified Person has a substantial beneficial
interest or as to which the specified Person serves as trustee or in a similar
capacity, or (e) any relative or spouse of the specified Person or any of
the
foregoing Persons, and to the extent they share a common household with the
specified Person, any relative of such spouse or any spouse of any such
relative.
"Assets"
means
all the tangible and intangible assets owned, leased or licensed on or before
the Closing by any Seller which are used or useful in or relate to the Business,
including, but not limited to, those items described in Section
2.l.
"Assumed
Contracts"
means
(i) all Contracts described and set forth on Schedule
3.8
hereto,
including, but not limited to, the Advertising Contracts, except those expressly
designated in writing by Buyer as not being assumed by Buyer, and (ii) all
Contracts related directly and solely to the Business, entered into by any
Seller on or after the date of this Agreement and before the Closing in
accordance with the applicable provisions of Section 5.1(a)(2).
“Assumed
Liabilities”
shall
mean the liabilities and obligations of the Sellers under (i) the Assumed
Contracts to be performed after the Closing Date and (ii) the Assumed Accounts
Payable.
“Business
Employees”
shall
have the meaning set forth in Section 3.13(a) hereof.
"Chose
in Action"
means a
right to receive or recover property, debt or damages on a cause of action,
whether pending or not and whether arising in contract, tort or otherwise.
The
term shall include, but not be limited to, rights to judgments, settlements
and
proceeds from judgments or settlements.
"Closing"
means
the consummation of the transactions contemplated by this Agreement in
accordance with the provisions of Article IX hereof.
"Closing
Date"
means
the date of the Closing specified in Article IX hereof.
"Code"
means
the Internal Revenue Code of 1986, as amended to the date hereof.
“Computer
Documentation”
means
the technical documentation pertaining to the any software included in the
Assets including, without limitation, any end-user manuals, product
specifications, algorithms, diagrams, bug lists, and electronic machine readable
versions of such manuals, product answer books and other related documentation
and additionally any marketing or sales materials.
"Consents"
means
the consents of third parties necessary to transfer the Assets and Assumed
Contracts to Buyer or otherwise to consummate the transactions contemplated
hereby, all of which Consents are set forth on Schedule
3.9
hereto.
"Contracts"
means
each agreement, written or oral (including any amendments and other
modifications thereto), to which Seller is a party and which relate directly
and
solely to the Assets or the Business or operations of the Business.
“Deferred
Cash Amount”
shall
have the meaning set forth in Section 2.4(b) hereof.
"Environmental
Claims"
refers
to any complaint, summons, citation, notice, directive, order, claim,
litigation, investigation, judicial or administrative proceeding, judgment,
letter or other communication from any governmental agency, department, bureau,
office or other authority, or any third party involving violations of
Environmental Laws or Releases of Hazardous Materials from (i) any assets,
properties or businesses of Seller or any predecessor in interest; (ii) from
adjoining properties or businesses; or (iii) from or onto any facilities
which
received Hazardous Materials generated by any Seller or any predecessor in
interest.
"Environmental
Laws"
includes the Comprehensive Environmental Response, Compensation and Liability
Act (“CERCLA”), 42 U.S.C. 9601 et seq., as amended; the Resource Conservation
and Recovery Act (“RCRA”), 42 U.S.C. 6901 et seq., as amended; the Clean Air Act
(“CAA”), 42 U.S.C. 7401 et seq., as amended; the Clean Water Act (“CWA”), 33
U.S.C. 1251 et seq., as amended; the Occupational Safety and Health Act
(“OSHA”), 29 U.S.C. 655 et seq., and any other federal, state, local or
municipal laws, statutes, regulations, rules or ordinances imposing liability
or
establishing standards of conduct for protection of the
environment.
"Environmental
Liabilities"
means
any monetary obligations, losses, liabilities (including strict liability),
damages, punitive damages, consequential damages, treble damages, costs and
expenses (including all reasonable out-of-pocket fees, disbursements and
expenses of counsel, out-of-pocket expert and consulting fees and out-of-pocket
costs for environmental site assessments, remedial investigation and feasibility
studies), fines, penalties, sanctions and interest incurred as a result of
any
Environmental Claim filed by any governmental authority or any third party
which
relate to any violations of Environmental Laws, Remedial Actions, any personal
injury (including wrongful death) or property damage (real or personal) arising
out of exposure to Hazardous Materials used, handled, generated, transported
or
disposed of by any Seller at any Real Property, any Releases or threatened
Releases of Hazardous Materials from or onto (i) any property presently or
formerly owned by any Seller or a predecessor in interest if such property
was
used in connection with the Business, or (ii) any facility which received
Hazardous Materials generated by any Seller or a predecessor in
interest.
"ERISA"
means
the Employee Retirement Income Security Act of 1974, as amended.
"Excluded
Accounts Receivable"
means
those Accounts Receivable for which an invoice has been issued by any Seller
prior to January 30, 2006 to the extent such excluded accounts receivable
are
set forth on Schedule
2.2(a)
hereto.
“Excluded
Assets”
shall
have the meaning set forth in Section 2.2 hereof.
“Excluded
Liabilities”
shall
have the meaning set forth in Section 2.3(b) hereof.
"Financial
Statements"
means
the financial statements of Seller relating to the Business attached as
Schedule
3.11
hereto.
"Hazardous
Materials"
shall
include (a) any element, compound, or chemical that is defined, listed or
otherwise classified as a contaminant, pollutant, toxic pollutant, toxic
or
hazardous substance, extremely hazardous substance or chemical, hazardous
waste,
biohazardous or infectious waste, special waste, or solid waste under
Environmental Laws; (b) petroleum, petroleum-based or petroleum-derived
products; (c) polychlorinated biphenyls; (d) any substance exhibiting a
hazardous waste characteristic including but not limited to corrosivity,
ignitability, toxicity or reactivity as well as any radioactive or explosive
materials; and (e) any raw materials, building components, including but
not
limited to asbestos-containing materials and manufactured products containing
Hazardous Materials.
"Intellectual
Property"
means
all statutory, common law and registered copyrights, trademarks, service
marks
and tradenames (including registrations and applications for registration
of any
of the foregoing), and all trade secrets, designs, logos, and other intangible
rights and interests owned by Seller and used in connection with the Business,
including, without limitation, all intellectual property listed on Schedule
3.10
hereto.
“Investment”
means
as applied to any Person (i) any direct or indirect purchase or other
acquisition by such Person of any notes, obligations, instruments, stock,
securities or ownership interest (including partnership interests and joint
venture interests) of any other Person and (ii) any capital contribution
by such
Person to any other Person.
"Licenses"
means
all of the licenses, permits and other authorizations issued by any federal,
state or local governmental authorities to any Seller and used in the operation
of the Business, including those listed on Schedule
3.4
hereto
with any additions thereto between the date hereof and the Closing
Date.
“Liens”
means
any claims, mortgages, pledges, liens, security or other third party interests,
conditional sales agreements, options, encumbrances or charges of any kind
affecting real or personal property.
“Medico”
shall
have the meaning set forth in Section 2.8(a).
“Person”
means
an individual, a partnership, a corporation, a limited liability company,
an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.
"Personal
Property"
means
all of the machinery, equip-ment, computer programs, computer software, tools,
motor vehicles, furniture, leasehold improvements, office equipment, supplies,
plant, spare parts and other tangible or intangible personal property which
are
owned or leased by Seller directly and solely in the operation of the Business,
all of which is listed on Schedule
3.6
hereto,
together with any additions or deletions thereto expressly permitted by Buyer
or
this Agreement between the date hereof and the Closing Date.
“Plans”
shall
have the meaning set forth in Section 3.13(b) hereof.
“Prepaid
Accounts”
means
any amounts prepaid to Seller for the provision of advertising services to
be
performed on of after the Closing Date.
"Purchase
Price"
means
the consideration payable to Seller for the Assets as pro-vided in Section
2.4
hereof.
"Real
Property"
means
any Seller’s leasehold inter-ests, easements, licenses, rights to access, and
rights-of-way which are used in the operation of the Business and which such
Seller shall assign or transfer to Buyer at Closing, all of which are identified
in Schedule
3.5
hereto.
"Release"
means
any spilling, leaking, pumping, emitting, emptying, discharging, injecting,
escaping, leaching, migrating, dumping, or disposing of Hazardous Materials
(including the abandonment or discarding of barrels, containers or other
closed
receptacles containing Hazardous Materials) into the environment.
"Remedial
Action"
means
all actions taken to (i) clean up, remove, remediate, contain, treat, monitor,
assess, evaluate or in any other way address Hazardous Materials in the indoor
or outdoor environment; (ii) prevent or minimize a Release or threatened
Release
of Hazardous Materials so they do not migrate or endanger or threaten to
endanger public health or welfare or the indoor or outdoor environment; (iii)
perform pre-remedial studies and investigations and post-remedial operation
and
maintenance activities; or (iv) any other actions authorized by 42 U.S.C.
9601.
"Taxes"
mean
all federal, state, county, local, foreign and other taxes of any kind
whatsoever (including, without limitation, income, profits, premium, estimated,
excise, sales, use, occupancy, gross receipts, franchise, ad valorem, severance,
capital levy, production, transfer, license, stamp, environmental, withholding,
employment, unemployment compensation, payroll-related and property taxes,
import duties and other governmental charges and assessments), whether or
not
measured in whole or in part by net income, and including deficiencies,
interest, additions to tax or interest, and penalties with respect thereto,
and
including expenses associated with contesting any proposed adjustment related
to
any of the foregoing.
"Tax
Return"
means
any return, information report or filing with respect to Taxes, including
any
schedules attached thereto and including any amendment thereof.
ARTICLE
II
SALE
AND PURCHASE OF ASSETS
2.1 Agreement
to Sell and Buy.
Subject
to the terms and conditions set forth in this Agreement, each Seller hereby
agrees to transfer and deliver to Buyer on the Closing Date, and Buyer agrees
to
purchase on the Closing Date all of the Assets used by such Seller in connection
with the operation of the Business, free and clear of any liabilities,
mortgages, liens, pledges, conditions or encumbrances of any nature whatsoever,
including but not limited to:
(a)
|
All
Personal Property;
|
(b)
|
All
Assumed Contracts;
|
(c)
|
All
Real Property;
|
(d)
|
All
of Seller’s right, title and interest in and to all
Licenses;
|
(e)
|
All
Intellectual Property;
|
(f)
|
All
files, books and other records relating solely to the Business,
including,
without limitation, executed copies of the Assumed Contracts or,
if no
executed agreement exists, summaries of the Assumed Contracts,
price
lists, marketing information, sales records, customer lists and
files;
|
(g)
|
Software
related to the computer programs used in the operation of the Business
owned by Seller (and the Computer Documentation pertaining thereto)
and
transferable under applicable license agreements, including without
limitation, those listed on Schedule
2.1(g)
hereto;
|
(h)
|
All
of Seller’s goodwill in and going concern value of the Business;
|
(i)
|
All
Prepaid Accounts;
|
(j)
|
All
Acquired Accounts Receivable;
|
(k)
|
All
credits, prepaid expenses, deferred charges, advance payments,
security
deposits and deposits owned, used, or held for use by any Seller;
and
|
(l)
|
All
cash on hand and in banks and other cash items and equivalents
of Seller,
in each case, only to the extent such amounts were collected in
respect of
Acquired Accounts Receivable.
|
2.2 Excluded
Assets.
The
following assets of the each Seller shall not be acquired by the Buyer and
shall
be deemed excluded assets (the “Excluded Assets”):
(a) The
Excluded Accounts Receivable;
(b) Seller’s
corporate minute books and other books and records relating to internal
corporate matters, including canceled checks, bank statements, income tax
returns and worksheets relating thereto, and any other books and records
related
to the Business;
(c) Any
claims, rights and interest in and to any refunds of Taxes which relate solely
to the period prior to the Closing Date;
(d) All
of
Seller’s Plans listed on Schedule
3.14(b)
hereto
and all assets or funds held in trust, or otherwise, associated with or used
in
connection with Seller’s Plans.;
(e) Any
Contracts which Buyer designates as not being an Assumed Contract;
(f) All
Choses in Action of Seller which existed on or prior to the Closing Date
and
which relate entirely to the period before the Closing Date, including without
limitation, any rights to recover any amounts arising out of that certain
lawsuit titled E& M Advertising, Inc. v. Vertical Lend, Inc., et al., in the
New York Supreme Court, New York County, NY, Index # 603424/2005;
and
(g) All
cash
on hand and in banks and other cash items and equivalents of Seller, in each
case, except such amounts were collected in respect of Acquired Accounts
Receivable.
2.3 Liabilities
(a) Assumed
Liabilities.
At
Closing, Buyer shall assume the Assumed Liabilities.
(b) Excluded
Liabilities.
Except
for the Assumed Liabilities, neither Buyer nor any of its Affiliates shall
assume or otherwise be liable in respect of, or be deemed to have assumed
or
otherwise be liable in respect of, any debt, claim, obligation, or other
liability of any Seller, or any of their respective Affiliates (the “Excluded
Liabilities”), regardless or whether such debt, claim, obligation, or other
liability is matured or unmatured, contingent or fixed, known or unknown.
Excluded Liabilities shall include, without limitation, (i) any long-term
debt
or notes payable of any Seller and any debt, claim, obligation or liability
of
any Seller to any of its Affiliates; (ii) any liability for Taxes of any
Seller
or the Business or related to the Assets for any period prior to the Closing
Date, any Tax liability of any Seller for any period after the Closing Date
(in
each case, subject to the proration provisions set forth in Section 2.5 below)
and any Tax liability arising from the sale of the Business and Assets to
Buyer
contemplated herein or any liquidation and dissolution of any Seller; (iii)
any
obligation, commitment or liability of or claim against any Seller which
constitutes or arises from a breach by such Seller of any representation,
warranty or covenant herein; (iv) any obligation, commitment, liability of
any
Seller (other than Assumed Liabilities) or claim which may arise from such
Seller’s operation of the Business and Assets prior to Closing; (v) any
obligation, commitment or liability of or claim which may arise from events
or
conditions relating to or affecting the Assets or the Business prior to the
Closing Date (other than Assumed Liabilities) or resulting from any Seller’s
consummation of the transactions contemplated by this Agreement (other than
Assumed Liabilities); (vi) any obligation, commitment or liability of or
claim
against any Seller which may arise from the rendering of investment banking,
brokerage fees, professional, legal, accounting, appraisal, engineering or
other
similar services to such Seller in connection with the transactions herein;
(vii) any obligation, commitment or liability of any Seller under any of
such
Seller’s Plans; (viii) any and all claims of employees of any Seller, (ix)
obligations or liabilities under any Contract not included in the Assumed
Contracts, (x) obligations or liabilities under any Assumed Contract for
which a
Consent, if required, has not been obtained as of the Closing, (xi) any
obligations or liabilities arising under the Assumed Contracts or otherwise
relating to the time period prior to the Closing Date or arising out of events
occurring prior to the Closing Date (including liabilities for breach by
any
Seller prior to Closing), (xii) all Accounts Payable, other than the Assumed
Accounts Payable, (a) any and all expenses and liabilities relating to any
litigation and similar claims against any Seller arising out of events occurring
prior to the Closing Date, including without limitation that certain lawsuit
against Vertical Lend, Inc. (as more fully described above); (xiii) any
obligations or liabilities of any Seller arising from its arrangements,
understandings or agreements with Information Technology Services, Inc. d/b/a
Infotech and (xiv) any forfeiture, claim or pending litigation or proceeding
relating to the Business, prior to the Closing Date, shall remain and be
the
obligation and liability the Sellers. The Sellers agree, jointly and severally,
that they shall pay promptly when due any and all Excluded Liabilities not
discharged by them at or prior to Closing. Buyer is not the successor employer
of any Seller’s employees for any purpose and is not required to employ any of
such employees.
2.4 Purchase
Price.
Subject
to adjustment as provided in Section 2.5 hereof, the Purchase Price for the
Assets is shall be payable as follows:
(a) Two
Hundred Thousand Dollars ($200,000.00) shall be paid to the Sellers (or their
designees) at Closing by wire transfer to an account or accounts designated
by
the Sellers of which Buyer shall be notified in writing at least three (3)
business days prior to the Closing Date;
(b) Four
Hundred Thousand Dollars ($400,000.00) shall be paid to the Sellers or their
designees on the earlier of (x) March 15, 2006 or (y) three (3) business
days
following Buyer’s receipt of clear funds totaling at least $600,000 in respect
of Acquired Accounts Receivable by wire transfer to the account designated
by
Seller in subparagraph (a) above;
(c) Two
Hundred Thousand Dollars ($200,000.00) shall be paid to the Sellers or their
designees on the first anniversary of the Closing Date by wire transfer to
an
account or accounts designated by the Sellers of which Buyer shall be notified
in writing at least ten (10) business days prior to the first anniversary
of the
Closing Date (the “Deferred
Cash Amount”);
and
(d) Not
later
than three (3) business days after the Closing Date, Buyer shall cause IMG
to,
and IMG shall, issue to the Sellers’ designees 1,608,392 duly authorized,
validly issued, fully paid and nonassessable, restricted shares (the
“Acquired
Shares”)
of
IMG’s common stock, $.001 par value per share (the “IMG
Common Stock”).
2.5 Adjustments
and Prorations.
(a) All
revenues arising from the operation of the Business earned or accrued up
until
midnight on the day prior to the Closing Date, and all expenses, costs and
liabilities, arising therefrom incurred, accrued or payable up until such
time
including, without limitation, business, license, utility charges, real and
personal property taxes and assessments levied against the Assets, property
and
equipment rentals, applicable copyright or other fees, sales and service
charges, taxes, wages, salaries, vacation and sick pay shall be prorated
between
Buyer and Seller in accordance with the principle that (i) Sellers shall
receive
all revenues, refunds and deposits of any Seller held by third parties (except
to the extent such items are included in the Assets), and shall be responsible
for all expenses, costs and liabilities incurred, payable or allocable to
the
conduct of the Business for the period prior to the Closing Date and (ii)
Buyer
shall receive all revenues earned or accrued, and shall be responsible for
all
expenses, costs and liabilities incurred, payable or allocable to the conduct
of
the Business for the period commencing on and continuing after the Closing
Date.
(b) Adjustments
or prorations pursuant to this Section 2.5 will, insofar as feasible, be
determined and paid on the Closing Date based upon Sellers’ calculation
delivered to Buyer five (5) days prior to the Closing Date and approved by
Buyer, with final settlement and payment by the appropriate party occurring
no
later than thirty (30) days after the Closing Date. The determination of
the
amount of adjustment under Section 2.5 shall be made in accordance with
generally accepted accounting principles, consistently applied. Within thirty
(30) days after the Closing Date, Buyer shall submit its determination of
any
adjustments to Sellers for approval. If Sellers disagree with the determination
made by Buyer of the adjustment, Seller shall give prompt written notice
thereof, but in no event later than ten (10) days after receipt of such
determination, specifying in reasonable detail the nature and extent of such
disagreement, and Buyer and Sellers shall have a period of ten (10) days
in
which to resolve such disagreement. If the parties are unable to resolve
such
disagreement within such 10-day period, the matter shall be submitted to
the New
York City office of Deloitte & Touche, an independent certified public
accounting firm, which accounting firm shall be directed to submit a final
resolution within thirty (30) days. Such accounting firm's determination
shall
be binding on Buyer and Sellers. Each party shall bear the fees and expenses
of
its own representatives, including its independent accountants, if any, and
shall share equally the fees and expenses of any firm selected to resolve
any
disagreement between the parties. Within ten (10) business days following
a
final determination hereunder, the party obligated to make payment will make
the
payments determined to be due and owing in accordance with this Section 2.5.
This obligations of the parties under this Section 2.5 shall survive the
Closing.
2.6
|
Reserved.
|
2.7
|
Reserved.
|
2.8
|
Noncompetition.
|
(a) Sellers’
Non-Compete.
(i) As
additional consideration for Buyer’s agreement to purchase the Assets and pay
the Purchase Price, each Seller, its respective Affiliates and Xxxxxxx Xxxxxx
(“Medico”)(each of such parties are hereinafter referred to collectively as the
“Restricted Parties”) agrees to the noncompetition provision set forth in
subparagraph (ii) below (the “Seller Restrictive Covenant”). Each of the
Restricted Parties represent and admits that the Seller Restrictive Covenant
is
being entered into in connection with Sellers’ sale of the Assets and in the
absence of these covenants each of the Restricted Parties understands that
the
sale would not be consummated by Buyer. For the purposes hereof, the term
Affiliates shall not include natural Persons who would not otherwise be deemed
an Affiliate but for his or her employment relationship with such
Seller.
(ii) For
a
period of five (5) years following the Closing Date (the “Noncompete Period”),
the Restricted Parties shall not:
(x) Own,
manage, operate, join, control, or participate in the ownership, management,
operation or control of, or be connected with as a director, officer, employee
or administrative employee, partner, lender, consultant or otherwise with
any
business or division or line of business or organization in the United States
which engages in a business substantially similar to or directly or indirectly
competitive with the Business of the Buyer or any of its subsidiaries and
affiliates. Nothing herein shall prohibit the Sellers and all other Restricted
Parties collectively from being passive owners of an aggregate of not more
than
five (5%) percent of the outstanding stock of any class of securities of
a
corporation which is publicly traded and substantially similar to or competitive
with the Business of the Buyer or any of its subsidiaries and affiliates,
so
long as, if the Restricted Party is a natural person, he has no active
participation (including, without limitation, as a consultant or advisor)
in the
business of such corporation or other entity;
(y) Induce
or
attempt to persuade any current or then current customer or vendor of the
Buyer,
or any of its subsidiaries or affiliates to terminate such relationship with
the
Buyer, or any of its subsidiaries or affiliates; and
(z) Induce
or
attempt to persuade any employee or consultant of the Buyer to terminate
or to
refuse to enter into any employment, agency or other business relationship
with
the Buyer, or any of its subsidiaries or affiliates.
(c) If,
at
the time of enforcement of the Seller Restrictive Covenant, a court shall
hold
that the duration, scope, area or other restrictions stated herein are
unreasonable, the parties agree that reasonable maximum duration, scope,
area or
other restrictions may be substituted by such court for the stated duration,
scope, area or other restrictions and upon substitution by such court, this
Agreement shall be automatically modified without further action by the parties
hereto.
(d) Each
of
the Restricted Parties hereby agrees that damages at law, including, but
not
limited to, monetary damages, will be an insufficient remedy to other party
hereto in the event that the Seller Restrictive Covenants described above
are
violated and that, in addition to any remedies or rights that may be available
to the parties, all of which other remedies or rights shall be deemed to
be
cumulative, retained by each party and not waived by the enforcement of any
remedy available hereunder, including, but not limited to, the right to xxx
for
monetary damages, such party shall also be entitled, upon application to
a court
of competent jurisdiction, to obtain injunctive relief, including, but not
limited to, a temporary restraining order or temporary, preliminary or permanent
injunction, to enforce the Seller Restrictive Covenant described herein,
all of
which shall constitute rights and remedies to which Buyer or Seller may be
entitled.
(e) For
the
purposes of this Section 2.8, the term “Affiliate” shall not include the Persons
listed on Schedule 2.8.
2.9 Allocation.
The
Purchase Price shall be allocated to the Assets in a manner which complies
with
Section 1060 of the Code with respect to the allocation of the Purchase Price
(as well as any Assumed Liabilities) among the Assets. The allocation shall
be
consistently reported by Buyer and Sellers on Form 8594 in compliance with
Section 1060 based upon an asset valuation mutually agreed to by Buyer and
Sellers. If Buyer and Sellers cannot agree as to the asset valuation, such
asset
valuation shall be supplied by an appraiser selected by Buyer. The cost of
the
appraisal shall be shared equally by Buyer, on the one hand, and Seller on
the
other hand. The appraisal shall be provided to Sellers no later than ninety
(90)
days after the Closing.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF SELLERS
Each
Seller jointly and severally represents and warrants to Buyer as to itself
and
each other Seller as follows:
3.1 Organization,
Standing and Authority.
Each
Seller is a corporation duly organized and validly existing and in good standing
under the laws of the state of its incorporation. Each Seller has all necessary
power and authority to own, lease and operate the Assets and to carry on
the
Business as now being conducted and as proposed to be conducted by it between
the date hereof and the Closing Date.
3.2 Authorization
and Binding Obligation.
Each
Seller has the requisite power and authority to execute, deliver, and perform
this Agreement and all other agreements to be executed and delivered by it
hereunder or in connection herewith, and all necessary actions on the part
of
each Seller have been duly and validly taken to authorize the execution,
delivery and performance of this Agreement and such other agreements and
instruments to be executed and delivered by each Seller in connection herewith.
This Agreement has been duly executed and delivered by each Seller and
constitutes the legal, valid and binding obligation of each Seller enforceable
against such Seller in accordance with its terms.
3.3 Absence
of Conflicting Agreements.
Neither
the execution, delivery and performance of this Agreement and such other
agreements and instruments (with or without the giving of notice, the lapse
of
time, or both) nor the consummation of the transactions contemplated hereby,
(i)
conflicts with any provision of the Certificate of Incorporation or Articles
of
Incorporation, as applicable, or the By-laws, as applicable, of any Seller;
(ii)
conflicts with, results in a breach of, or constitutes a default under any
applicable law, judgment, order, ordinance, decree, rule, regulation or ruling
of any court or governmental authority or subdivision; (iii) results in a
breach
of, conflicts with, constitutes a default under or permits any party to
terminate, modify, accelerate the performance of or cancel the terms of,
any
agreement, lease, license, indenture, instrument of indebtedness or other
obligations to which any Seller is a party or by which any Seller may be
bound;
or (iv) creates any liability, mortgage, lien, pledge, condition or encumbrance
of any nature whatsoever upon any of the Assets.
3.4 Licenses
and Permits.
Schedule
3.4
hereto
contains a true and complete list of all of the Licenses used in the Business.
The Licenses comprise all of the licenses, permits and other authorizations
necessary to conduct the Business in the manner and to the full extent now
being
conducted by any Seller, and none of the Licenses is subject to any restriction
or condition which would limit the full operation of the Business as presently
operated. Sellers have provided Buyer with copies of all such
Licenses.
The
Licenses are in full force and effect, and the conduct of the Business is
in
accordance therewith.
3.5 Real
Property. Schedule
3.5
hereto
contains descriptions of the Real Property (including name of lessor, expiration
date and monthly rent). Each of the leases in connection with the Real Property
is in full force and effect. Except as set forth on Schedule
3.5,
there
are no parties in possession of all or any portion of the Real Property (other
than public rights of way) other than the Seller identified on Schedule
3.5,
whether
as lessees, tenants at will, trespassers or otherwise. No zoning, building
or
other federal, state or municipal law, ordinance, regulation or restriction
is
violated by the continued maintenance, operation or use of the Real Property
or
any tract or portion thereof or interest therein in its present manner. The
current use of the Real Property and all parts thereof as aforesaid does
not
violate any restrictive covenants of record affecting the Real Property.
All
necessary licenses, permits and authorizations required by any governmental
authority with respect to the Real Property have been obtained, have been
validly issued and are in full force and effect. Except as otherwise disclosed
on Schedule
3.5,
no
Seller is, and to each Seller’s knowledge, no other party is in material default
under any lease or other instrument of conveyance. Each Seller, as applicable,
has the full legal power and authority to assign its rights under the leases
listed in Schedule
3.5
hereto
to Buyer. All leasehold interests (including the improvements thereon) are
available for immediate use in the conduct and operation of the Business.
3.6 Title
to and Condition of Personal Property. Schedule
3.6
hereto
contains a description of the items of Personal Property which comprise all
Personal Property used in connection with the Business or which permits the
operation of the Business as now being conducted (having a replacement value
of
not less than $100 for each item). The Sellers have good title to all Personal
Property and none of the Personal Property is subject to any Lien, except
for
Liens which shall be discharged or removed by the Sellers prior to or at
Closing. No Seller is, and to each Seller’s knowledge no other party is, in
default under any of the leases, licenses and other agreements relating to
the
Personal Property. Except as otherwise disclosed in Schedule
3.6
hereto,
the Personal Property is in good operating condition and repair (ordinary
wear
and tear excepted), permits the operation of the Business as currently conducted
without any immediate need for replacement and is available for immediate
use in
the Business.
3.7 No
Subsidiaries.
No
Seller owns
any
capital stock or has any interest of any kind whatsoever in any other
Person.
3.8 Contracts.
Schedule
3.8
hereto
contains descriptions of all the Contracts in effect on the date hereof relating
to the Business (including, but not limited to, all Advertising Contracts).
On
or prior to the date hereof, Sellers have provided Buyer with true and complete
copies of the Contracts set forth on Schedule
3.8.
All of
the Contracts listed on Schedule
3.8
are in
full force and effect, and are valid, binding and enforceable in accordance
with
their terms. Except as otherwise disclosed on Schedule
3.8,
there
is no default or breach by any Seller or any Affiliate of any Seller , or
to
each Seller’s knowledge, any other party to any Contract set forth on
Schedule
3.8
and
there are no negotiations pending or in progress to revise, modify, terminate
or
extend any such Contracts.
3.9 Consents. Schedule
3.9
sets
forth (i) those Assumed Contracts which require consent for assignment to
Buyer
and (ii) all other consents, governmental or otherwise, required to consummate
the transactions contemplated hereby. Except for the Consents described in
Schedule
3.9
hereto,
no consent, authorization, approval, order, license, certificate or permit
of or
from, or declaration or filing with, any federal, state, local or other
governmental authority or any court or other tribunal, and no consent or
waiver
of any party to any contract to which any Seller is a party is required or
declaration to or filing with any governmental or regulatory authority, or
any
other third party is required to (a) execute this Agreement, (b) consummate
this
Agreement and the transactions contemplated hereby, (c) permit any Seller
to
assign or transfer the Assets to Buyer or (d) enable Buyer to conduct the
Business in the same manner as such Business is presently
conducted.
3.10 Intellectual
Property.
Schedule
3.10
hereto
is a true and complete list of all Intellectual Property used in connection
with
the Business. Schedule
3.10
describes all Intellectual Property, if any, which are licensed to third
parties. No Seller nor any of its Affiliates or officers, directors or employees
has received any notices of infringement, misappropriation, or conflict from
any
third party with respect to the Intellectual Property; and to each Seller’s
knowledge, no Seller has infringed, misappropriated or otherwise con-flicted
with any proprietary rights of any third parties. Except as set forth on
Schedule
3.10,
none of
the Intellectual Property is the subject of any Lien or other agreement granting
rights therein to any third party. The employees, consultants and contractors
who have been and are engaged to develop the Intellectual Property have been
required to sign assignable and legally binding confidentiality and, as
applicable, assignment-of-invention and/or work-for-hire
agreements.
3.11 Financial
Statements.
Schedule
3.11
hereto
contains true and complete copies of (i) the unaudited, reviewed financial
statements of Sellers pertaining to the Business, which financial statements
contain balance sheets and profit and loss statements as at and for fiscal
years
ended December 31, 2002 (the "2002 Financials"), December 31, 2003 (the "2003
Financials") and December 31, 2004 (the “2004 Financials”) and (ii) an unaudited
balance sheet and profit and loss statement of Sellers as at and for the
nine-month period ended September 30, 2005 (the "Stub Financials") (the 2002
Financials, the 2003 Financials and the 2004 Financials are collectively
referred to herein as the “Year-End Financials”, and the Stub Financials and
Year-End Financials are collectively referred to herein as the "Financial
Statements"). The Financial Statements were prepared in accordance with
generally accepted accounting principles, consistently applied. The Financial
Statements are true and correct in all material respects and present fairly
the
operating income and financial condition of Sellers and the Business as at
their
respective dates. Except as otherwise indicated in the Financial State-ments,
the accounting practices used by Sellers in pre-paring their respective internal
financial statements for the Year-End Financials and the Stub Financials
were
the same in each of such xxxxx-cial statements and were consistently followed
throughout the periods reflected therein.
3.12 Insurance.
Schedule
3.12
hereto
comprises a true and complete list of all insurance policies of Sellers covering
any of the Assets, employees and operations of the Business. All policies
of
insurance listed in Schedule
3.12
hereto
are in full force and effect and all premiums have been paid in full and
no
Seller is in default with respect to their obligations thereunder. On or
prior
to the date hereof, Sellers have provided Buyer with true and complete copies
of
the policies of insurance set forth on Schedule
3.12.
3.13 Reports.
All
returns, reports and statements which the Business is required to file with
any
governmental authority have been filed, and all reporting requirements of
governmental authorities having jurisdiction thereof have been complied
with.
3.14 Employee
Benefit Plans.
(a)
Schedule
3.14(a)
contains
a complete list of all each Seller’s employees relating to the Business
(collectively, the “Business Employees”), date of hire, accrued vacation and
sick days, job description and pay-roll information, as at January 31, 2006.
(b) Schedule
3.14(b)
contains
a true and complete list as of the date of this Agreement of all employment
agreements, employee benefit plans or arrangements currently applicable to
the
Business Employees and of all fixed or contingent liabilities or obligations
of
each Seller with respect to any Business Employee, including pension or thrift
plans, individual or supplemental pension or accrued compensation arrangements,
contributions to hospitaliza-tion or other health or life insurance programs,
incentive plans, bonus arrangements and vacation, sick leave, disability
and
termination arrangements or policies (“Plans”). Sellers have furnished Buyer
with a summary of all employment practices, a summary of all currently
applicable plan documents, trust documents, insurance contracts, contracts
with
employees and plan description of the written plans and arrangements listed
in
Schedule
3.14 (b)
hereto
relating to the Business, and with descriptions, in writing, of the unwritten
plans and arrangements listed in Schedule
3.14(b)
hereto
relating to the Business. All employee benefits and welfare plans or
arrangements listed in Schedule
3.14(b)
hereto
were established and have been executed, managed and administered without
material exception in accordance with all applicable requirements of the
Code
and ERISA, as amended, and of other applicable laws. There
exists no action, suit or claim (other than routine claims for benefits)
with
respect to any of such plans or arrangements pending or threatened against
any
of such plans or arrangements, nor any facts which could give rise to any
such
action, suit or claim.
3.15 Labor
Relations.
As of
the date hereof, no Seller is a party to nor subject to any collective
bargaining agreements with respect to the Business and no Seller has any
written
or oral contracts of employment with any Business Employees other than those
listed in Schedule
3.15
hereto.
As of the date hereof, each Seller has complied in all material respects
with
all applicable laws, rules and regulations relating to the employment of
the
Business Employees, including those related to wages, hours, collective
bargaining; occupational safety; sex, age, national origin, race and religious
discrimination; and the payment of social security and other payroll related
taxes, and as of the date hereof Seller has not received any notice alleging
that it has failed to comply with any such laws, rules or regulations. No
labor
union or other collective bargaining unit represents or claims to represent
any
Business Employees as of the date hereof.
3.16 ERISA.
(a) Except
as
specified on Schedule
3.16(a),
any
plan any Seller ever sponsored or maintained, or in which Seller ever
participated or contributed, on behalf of any Business Employee, former
employees, retirees or sales personnel which was subsequently terminated
was
terminated in compliance with the requirements of the Code and ERISA and
no
Seller has incurred any liability with respect to such plan or the termination
or such plan that is due and owing and has not yet been satisfied under the
terms of the plan, the Code, ERISA or any other law or regulation pursuant
to
which Buyer may incur liability or have liability attributed to them under
any
federal, state or local law as a result of the consummation of the transactions
contemplated by this Agreement. Except as specified on Schedule
3.16(a),
no
Seller maintains or contributes to, nor has such Seller ever maintained or
contributed to: (i) an "employee welfare benefit plan", as that term is defined
in Section 3(1) of ERISA or (ii) any “employee pension benefit plan” covered by
Section 3(2) of ERISA.
(b) There
are
no agreements or arrangements between any Seller and any individual consultant,
former consultant, employee or former employee, director or former director
obligating such Seller to make any payment to or accelerate the timing of
or
vesting in any payment or stock based compensation for any such individual
as a
result of the transactions contemplated by this Agreement.
3.17 Taxes.
Each
Seller has filed or caused to be filed all federal, state, county, local
or city
tax returns affecting the Business or the Assets which are required to be
filed
by such Seller, and all tax assessments and other governmental charges which
are
due and payable have been timely paid. There are no tax liens upon the Business
or the Assets. All tax reports filed by each Seller fairly reflect the taxes
of
such Seller for the periods covered thereby and Seller has received no notice
of
any tax deficiency or delinquency. No Internal Revenue Service audit of any
Seller is pending or to the knowledge of each Seller, threatened and the
results
of any completed audits are properly reflected in the Financial Statements.
All
monies required to be withheld by any Seller from employees or collected
from
customers for income taxes, social security and unemployment insurance taxes
and
sales, excise and use taxes, and the portion of any such taxes to be paid
by
such Seller to governmental agencies or set aside in accounts for such purposes
have been so paid or set aside, or such monies have been approved, reserved
against and entered upon the books and Financial Statements. On or prior
to the
date hereof, Sellers have provided Buyer with true and complete copies of
all
tax returns affecting the Business or the Assets filed by any Seller relating
to
the three years ended December 31, 2004.
3.18 Claims;
Legal Actions.
There
are no actions, suits, proceedings, orders, investigations or claims pending
or
threatened against any
Seller by any third party, or pending or threatened by any Seller against
any
third party, at law or in equity, or before or by any governmental department,
commission, board, bureau, agency or instrumentality (including, without
limitation, any actions, suits, proceedings or investigations with respect
to
the transactions contemplated by this Agreement) relating to the Assets or
the
Business. No Seller is
subject to any arbitration proceedings or any governmental investigations
or
inquiries (including, without limitation, inquiries as to the qualification
to
hold or receive any license or permit), and, to each Seller’s knowledge, there
is no basis for any
of
the foregoing.
No
Seller is subject to any judgment, order or decree of any court or other
governmental agency relating to the Assets or the Business, and Seller has
received no written opinion or memorandum from legal counsel to the effect
that
it is exposed, from a legal standpoint, to any liability which may be material
to the Business.
3.19 Compliance
with Laws.
Each
Seller has complied in all respects with (i) the Licenses, and (ii) all
applicable federal, state and local laws, rules, regulations, ordinances,
codes,
statutes, judgments, orders and decrees and (iii) all bonding requirements
of
each municipality relating to the Business. Neither the ownership or use
of the
Assets by any Seller relating to the Business nor the conduct of the Business
conflicts with the rights of any other Person.
3.20 Undisclosed
Liabilities.
With
respect to the Business or the Assets, except as disclosed in this Agreement,
(a) no Seller has any liability, secured or unsecured (whether absolute,
accrued, contingent or otherwise and whether due or to become due) of a nature
required by generally accepted accounting principles to be reflected in a
balance sheet or disclosed in the notes thereto except (i) as such liabilities
and obligations are reflected in Seller’s balance sheet as at December 31, 2004,
or (ii) for liabilities and obligations incurred after December 31, 2004,
in the
ordinary course of business consistent with past practices (none of which
is a
liability resulting from breach of contract, breach of warranty, tort,
infringement, claim or lawsuit), none of which individually or in the aggregate
are materially adverse to the Assets or operations of the Business and (b)
no
Seller has any contingent liabilities or other liabilities outside the ordinary
course of business not reflected in the Financial Statements.
3.21 Books
and Records.
The
books of account of the Business and other records of each Seller relating
to
the Business are complete and correct in all material respects. At the Closing,
all such books and records shall be located at the business office of such
Seller, except for those that constitute, or solely relate to, the Excluded
Assets.
3.22 Assets.
The
Assets include all assets used in connection with the Business as currently
conducted and all assets which permit the operation of the Business as currently
conducted.
3.23 Environment,
Health and Safety.
Except
as set forth on Schedule
3.23:
(a) The
operations of the Business are in full compliance with Environmental Laws.
The
Business has obtained and is in compliance with all necessary permits or
authorizations that are required under Environmental Laws to operate the
facilities, Assets and Business;
(b) There
has
been no Release at any property included within the Real Property (and, to
each
Seller’s knowledge, no Release with respect to public rights of way) and, to the
knowledge of each Seller, there has been no Release at any property formerly
owned, leased or operated by any Seller or at any disposal or treatment facility
which received Hazardous Materials generated by any Seller or any predecessor
in
interest which is reasonably likely to result in Environmental
Liabilities;
(c) No
Environmental Claims have been asserted against any Seller, nor does any
Seller
have knowledge or notice of any threatened or pending Environmental Claim
against any Seller which is reasonably likely to result in Environmental
Liabilities. No Environmental Claims have been asserted against any facilities
that may have received Hazardous Materials generated by any Seller which
is
reasonably likely to result in Environmental Liabilities;
(d) Sellers
further represents that it has delivered to Buyer, if any, true and complete
copies of all environmental reports, studies, investigations or correspondence
regarding (i) any environmental conditions of which any Seller has knowledge
at
any of the Real Property locations or (ii) any Environmental Liabilities
of any
Seller.
3.24 No
Material Adverse Change.
Since
December 31, 2004, there has been no material adverse change in the Business,
the Assets, condition (financial or otherwise), prospects, or results of
operations of any Seller.
(a) borrowed
any amount or incurred or become subject to any liabilities, except current
liabilities incurred in the ordinary course of business and liabilities under
contracts entered into in the ordinary course of business;
(b) discharged
or satisfied any Lien or paid any obligation or liability, other than current
liabilities paid in the ordinary course of business;
(c) declared
or made any payment or distribution
of cash or other property to their respective members;
(d) mortgaged
or pledged any of the Assets or subjected them to any lien, except Liens
for
current property taxes not yet due and payable;
(f) sold,
assigned, transferred, or permitted to lapse, any rights for the use of any
Intellectual Property right, or disclosed, any proprietary confidential
information to any Person;
(h) suffered
any extraordinary
losses or waived any rights of value, whether or not in the ordinary course
of
business, or consistent with past practice;
(i) made
capital expenditures or commitments therefor that aggregate in excess
of
$10,000.00;
(j) made
any
loans or advances to, guarantees
for the benefit of
or any
Investments in, any Person in excess of
$10,000.00 in the aggregate;
(l) suffered
any damage, destruction or casualty loss exceeding in the
aggregates $5,000.00, not fully covered by insurance;
(o) except
for this Agreement or any other agreement contemplated hereby, entered into
any
other material transaction other than in the ordinary course of
business; or
(p) granted
to any officer or employee of the Business any increase in compensation or
benefits, other than increases of compensation or benefits to employees in
the
ordinary course of business and consistent with past practice.
3.26 Brokerage.
Except
for Sellers’ obligations to Capital Metrics, LLC (“Capital Metrics”) pursuant to
that certain agreement dated September 15, 2005, as amended by an agreement
dated January 13, 2006 (a copy of which has been previously provided to Buyer),
there are no claims for brokerage commissions, finders' fees or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement or agreement binding upon any Seller.
Sellers shall, jointly and severally, pay, and hold Buyer harmless against,
any
liability, loss or expense (including, without limitation, reasonable attorneys'
fees and out-of-pocket
expenses) arising in connection with any such claim
by
Capital Metrics.
3.27 Affiliated
Transactions.
Except
as set forth on Schedule
3.27
hereto,
no officer, director, employee, stockholder, or Affiliate of any Seller or
any
individual related by blood, marriage,
or adoption to any such individual or any entity in which such person or
individual owns any beneficial interest, is a party to any agreement,
contract, commitment, or transaction with any Seller or has any interest
in any
property used by any Seller or the Assets.
3.28 Affiliation
with Accountants.
Neither
Sellers nor any their respective Affiliates (i) currently uses the services
of
Deloitte & Touche or has used such services within the past two years, or
(ii) is currently affiliated in any way with Deloitte & Touche
3.29 No
Third Party Options.
There
are no existing agreements with, options or rights of, or commitments to
any
Person other than to Buyer to acquire any of the Assets or any interest
therein.
3.30 Accounts
Receivable.
The
amount of all Acquired Accounts Receivable, unbilled invoices (including
without
limitation unbilled invoices for services and out-of-pocket expenses) and
other
debts due or recorded in the records and books of account of any Seller as
being
due to such Seller and reflected on the Financials or otherwise on the books
and
records of such Seller will be good and collectible in full (less the amount
of
any provision, reserve or similar adjustment therefor reflected on the
Financials). There has been no material change since December 31, 2004 in
the
amount of Acquired Accounts Receivable or other debts due to any Seller or
the
reserves with respect thereto.
3.31 Customers.
Schedule
3.31
hereto
includes a list of all of Seller Material Customers (as defined below) and
the
aggregate
dollar amount of revenue received by any Seller from each such Seller Material
Customer.
To each
Seller’s knowledge (without making any special inquiry), no Seller Material
Customer (as defined below) has advised any Seller orally or in writing that
it
is (x) terminating or considering terminating the handling of its business
by
any Seller as a whole or in any substantial part or (y) planning to reduce
its
future spending with any Seller in any material manner. For purposes of this
Agreement, a “Seller Material Customer” means, with respect to each Seller, any
customer that accounted for more than five percent (5%) of such Seller’s
revenues during fiscal 2005.
3.32 Acquired
Shares.
Sellers
are
acquiring the Acquired Shares for its own account, and not with a view toward
resale or distribution thereof and
no
Seller has the present intention of selling or otherwise distributing the
Acquired Shares, except in compliance with applicable securities laws. Sellers
have such knowledge and experience in financial and business matters that
it is
capable of evaluating the merits and risks of investment in IMG Common Stock.
Seller
acknowledges that the certificate(s) representing the Acquired Shares shall
each
prominently set forth on the face or back thereof a legend in substantially
the
following form:
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID
ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
3.33 Full
Disclosure.
No
representation or warranty made by Seller herein nor any certificate, document
or other written instrument furnished or to be furnished pursuant hereto
contains or will contain any untrue statement of a material fact nor shall
any
such certificate, document or written instrument omit any material fact
necessary in order to make any statement herein or therein not
misleading.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF BUYER
Buyer
and
IMG, jointly and severally represent and warrant to Sellers as
follows:
4.1 Organization,
Standing and Authority.
Buyer
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Nevada.
4.2 Authorization
and Binding Obligation.
Buyer
has the requisite power and authority to execute, deliver, and perform this
Agreement and all other agreements to be executed and delivered by it hereunder
or in connection herewith and all necessary action on the part of Buyer has
been
duly and validly taken to authorize the execution, delivery and perfor-xxxxx
of
this Agreement and such other agreements and instru-ments to be executed
and
delivered by Buyer. This Agreement has been duly executed by Buyer and
constitutes the legal, valid, and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms.
4.3 Absence
of Conflicting Agreements or Consents.
Subject
to Sellers obtaining the Consents, no consent, authorization, approval, order,
license, certificate or permit of or from, or declaration or filing with
any
federal, state, local or other governmental authority or any court or other
tribunal, and no consent or waiver of any party to any material contract
to
which Buyer is a party is required for the execution, delivery and performance
of this Agreement or any of the agreements or instruments contem-plated hereby.
Subject to Sellers obtaining the Consents, neither the execution, delivery
and
performance of this Agreement and such other agreements and instruments (with
or
without the giving of notice, the lapse of time, or both) nor the consummation
of the transactions contemplated hereby (i) con-flicts with the Articles
of
Incorporation or By-laws of Buyer; (ii) conflicts with, results in a breach
of,
or constitutes a default under any applicable law, judgment, order, injunction,
decree, rule, regulation or ruling of any court or governmental instrumentality
or (iii) conflicts with, results in a breach of, constitutes a default under,
permits any party to terminate, modify, accelerate the performance of or
cancel
the terms of, any agreement, lease, instrument of indebtedness, license or
other
obliga-tions to which Buyer is a party, or by which Buyer may be bound, such
that Buyer could not acquire or operate the Assets.
4.4 Brokerage.
There
are no claims for brokerage commissions, finders' fees or similar compensation
in connection with the transactions contemplated by this Agreement based
on any
arrangement or agreement binding upon Buyer. Buyer shall pay, and hold Seller
harmless against, any liability, loss or expense (including, without limitation,
reasonable attorneys fees and out-of-pocket expenses) arising in connection
with
any such claim.
4.5 Affiliation
with Accountants.
Neither
Buyer nor any Affiliate of Buyer (i) currently uses the services of Deloitte
& Touche or has used such services within the past two years, or (ii) is
currently affiliated in any way with Deloitte & Touche.
4.6 Valid
Issuance of Acquired Shares.
The
Acquired Shares have been duly authorized by all necessary corporate action
and,
when paid for or issued in accordance with the terms hereof, the Acquired
Shares
shall be validly issued and outstanding, fully paid and nonassessable and
free
and clear of all liens, encumbrances of any kind.
4.7 Full
Disclosure.
No
representation and warranty made by Buyer herein nor any certificate, document
or other written instrument furnished or to be furnished pursuant hereto
contains or will contain any untrue statement of a material fact nor shall
such
representations and warranties omit any statement necessary in order to make
any
material statement contained herein or therein not misleading.
ARTICLE
V
COVENANTS
OF SELLERS
5.1 Pre-Closing
Covenants.
Except
as contemplated or required by this Agreement, commencing on the date hereof
until the Closing Date, Sellers shall cause the Business to be operated in
the
ordinary course of business in accordance with past practices; provided,
however:
(a) Negative
Covenants.
Sellers
shall not do any of the following without the prior written consent of the
Buyer:
(1) Compensation.
Except
in accordance with normal past practices or reasonable bonuses relating to
the
Closing hereunder, (A) increase the compensation of any Business Employee,
(B)
pay or grant bonuses or other benefits payable or to be payable to any Business
Employee, or (C) enter into any employment, severance or similar agreement
with
any Business Employee which does not by its terms terminate, or cannot be
terminated or satisfied by Seller without premium or penalty, prior to or
at the
Closing;
(2) Contracts.
Except
as expressly provided in Section 5.1(b) hereof, (a) modify, amend or terminate
any of the Assumed Contracts or (b) enter into new Contracts other than in
the
ordinary course of business consistent with past practices. Schedule
3.8
will be
amended and supplemented to include any Contracts permitted to be entered
into,
amended or approved pursuant to this Section 5.1(a)(2);
(3) Disposition
of Assets.
Sell,
assign, lease, or otherwise transfer or dispose of, or agree to sell, assign,
lease or otherwise transfer or dispose of, any of the Assets, other than
obsolete Assets, or in connection with the acquisition of replacement property
of equivalent kind and value;
(4) Encumbrances.
Create
or assume any xxxx-xxxx, xxxx, pledge, condition, charge or encumbrance of
any
nature whatsoever, or permit to exist any liability, mortgage, lien, pledge,
condition, charge or encumbrance of any nature whatso-ever, upon the Assets,
except for those in existence on the date of this Agreement and disclosed
on
Schedule
3.6
hereto;
(5) Labor
Relations.
Enter
into any collective bargaining agreement or, through nego-tiations or otherwise,
make any commitment or incur any liabil-ity to any labor organization with
respect to the employees of the Business; or
(6) No
Inconsistent Action.
Take
any action which is inconsistent with its obligations hereunder or which
could
hinder or delay the consummation of the transaction con-templated by this
Agreement.
(b) Affirmative
Covenants.
Each
Seller shall do the following:
(1) Access
to Information.
Upon
prior notice to any Seller allow Buyer and its authorized representatives
reasonable access at Buyer's expense during normal business hours to the
Assets,
the personnel of the Business and to all other properties, equipment, books,
records, contracts and documents relating to the Business for the purpose
of
audit and inspection, and furnish or cause to be furnished to Buyer or its
authorized representatives all information with respect to the affairs of
the
Business as Buyer may reasonably request and make its independent accountants
and key employees reasonably available, it being understood that the rights
of
Buyer hereunder shall not be exercised in such a manner as to interfere
unreasonably with the operation of the Business.
(2) Maintenance
of Assets.
Maintain all of the Assets or replacements thereof and improvements thereon
in
good working order and repair, with inventories of spare parts and expendable
supplies being maintained at levels consistent with past practices and at
normal
and adequate amounts needed to operate the Business in the usual and customary
manner;
(3) Insurance.
Maintain all existing insurance policies, or comparable coverage, for the
Business and the Assets;
(4) Preservation
of Business.
Use its
best ef-forts to maintain and preserve the Business and maintain and preserve
consistent with the ordi-nary course of business, the goodwill of and present
relation-ships with suppliers, advertisers, customers and others having business
relations with such Seller;
(5) Books
and Records.
Maintain the books and records of such Seller relating to the Business in
accordance with past practices;
(6) Notification.
Promptly notify Buyer in writing of the following:
(i) any
notice or other communication from any person alleging that the consent of
such
person is or may be required in connection with the transactions contemplated
by
this Agreement;
(ii) any
notice or other communication from any governmental entity in connection
with
the transactions contemplated by this Agreement;
(iii) any
actions, suits, claims, investigations or proceedings commenced or, to their
knowledge, threatened, relating to or involving or otherwise affecting such
Seller that, if pending on the date of this Agreement, would have been required
to have been disclosed in the Schedules hereto or that relate to the
consummation of the transactions contemplated by this Agreement;
(iv) the
occurrence, or failure to occur, of any condition, event or development that
(A)
causes any representation or warranty of such Seller contained in this Agreement
to be untrue or inaccurate, at any time from the date hereof to the Closing
Date
or (B) would have been required to be set forth or described in the Schedules
hereto if existing or known at the date of this Agreement; and
(v) any
failure on the part of Seller to comply with or perform in any respect any
agreement or covenant to be complied with or performed by it hereunder;
provided
that the
delivery of any notice pursuant to this Section 5.1(b)(6) shall not limit
or
otherwise affect the remedies available hereunder to Buyer; and
(7) Compliance
with Laws.
Use
their best ef-forts to comply in all respects with all rules, regulations,
and
other laws to which the Business or the Assets are subject.
5.2 Post-Closing
Covenants.
After
the Closing, each Seller shall (A) take such actions, and shall execute and
deliver to Buyer such further deeds, bills of sale or other transfer documents
as, in the reasonable opinion of counsel for Buyer, may be neces-sary to
ensure,
complete and evidence the full and effective transfer of the Assets to Buyer
pursuant to this Agreement and (B) use its best efforts to promptly forward
to
Buyer all sales leads and inquiries and contacts in connection with the Business
for a period of one year after the Closing Date.
5.3 Medico
Covenant.
Medico
shall use his best efforts to cause each Seller to comply, in all material
respects, with its respective obligations, covenants and conditions set forth
in
this Agreement.
ARTICLE
VI
COVENANTS
OF BUYER
6.1 Inconsistent
Action.
Prior
to Closing, Buyer will not take any action that is inconsistent with its
obligations under this Agreement.
6.2 Post-Closing
Covenants.
After
the Closing, Buyer shall take such actions, and shall execute and deliver
to
Seller such documents as, in the reasonable opinion of counsel for Sellers
and
Buyer, may be neces-sary to ensure, complete and evidence the full and effective
transfer of the Assets to Buyer pursuant to this Agreement.
6.3 IMG
Covenant.
IMG
shall use its best efforts to cause Buyer to comply, in all material respects,
with Buyer’s obligations, covenants and conditions set forth in this
Agreement.
ARTICLE
VII
SPECIAL
COVENANTS AND AGREEMENTS
7.1 Accounts
Receivable/Accounts Payable.
(a) Accounts
Receivable.
It is
the intention of the parties that all rights to and the benefit of the Acquired
Accounts Receivable shall be included in the Assets transferred by Sellers
to
Buyer. Accordingly, all Acquired Accounts Receivable outstanding on the Closing
Date shall be collected by Buyer. At Closing, Sellers shall deliver to Buyer
a
complete statement of each Account Receivable as of the Closing Date which
shall
be attached hereto at Closing as Schedule
7.1(a).
Each
Seller agrees to cooperate with Buyer to effect the purpose and intent of
this
Section 7.1(a), including, but not limited to, immediately turning over to
Buyer
any and all such Acquired Accounts Receivable which are received or collected
by
any Seller after the Closing.
(b) Accounts
Payable.
At
Closing, Sellers shall deliver to Buyer a complete statement of each accounts
payable accrued or incurred by any Seller under any Advertising Contract
(or
otherwise accrued or incurred for the provision of advertising services by
Seller) on or prior to the Closing Date regardless of when such payables
become
due and owing (the “Accounts Payable”) which shall be attached hereto at Closing
as Schedule
7.1(b).
Schedule
7.1(b)
shall
further set forth each Account Payable accrued or incurred on or after January
30, 2006 (the “Assumed Accounts Payable”). Each Seller agrees to pay and
discharge in the ordinary course all such Accounts Payable (other than the
Assumed Accounts Payable) and provide evidence of such payment to Buyer.
No
adjustment to the Purchase Price shall be made in respect of such payments
by
any Seller.
7.2 Taxes,
Fees and Expenses.
All
sales, use, transfer, and purchase taxes and fees, if any, arising out of
the
transfer of the Assets pursuant to this Agree-ment shall be paid by Sellers,
jointly and severally. Except as otherwise pro-vided in this Agreement, each
party shall pay its own expenses incurred in connection with the authorization,
preparation, ex-ecution, and performance of this Agreement, including all
fees
and expenses of counsel, accountants, agents and other
represent-atives.
7.3 Bulk
Sales Law.
Buyer
hereby waives compliance by Seller with the provisions of the bulk sales
laws of
New York, if applicable, and each Seller, jointly and severally, warrants
and
agrees to pay and discharge when due all claims of creditors which could
be
asserted against Buyer by reason of such noncompliance to the extent that
such
liabilities arise before the Closing, and agrees to protect, defend, same
harmless and indemnify Buyer from and against any and all such claims and
demands pursuant to the procedures set forth in Article XI hereof which shall
apply thereto in all respects.
7.4 Confidentiality.
Except
as necessary for the consum-mation of the transaction contemplated hereby,
each
party hereto shall keep confidential any information which is obtained from
the
other party in connection with the transactions contemplated hereby; and
except
to the extent that such materials or infor-mation are or become readily
available to the industry, have been obtained from independent sources, were
known to Buyer on a non-confidential basis prior to disclosure to Buyer from
Sellers or are required to be disclosed in public filings or by law. In the
event this Agreement is terminated and the purchase and sale contemplated
hereby
abandoned, each party will return to the other party all documents, work
papers
and other written mate-rial obtained by it in connection with the transaction
contem-plated hereby. Commencing on the date hereof, Sellers, Buyer and their
respective Affiliates shall not make any public announce-ment or press release
concerning the transactions contemplated hereby without the consent of both
parties hereto, which consent shall not be unreasonably withheld. Section
7.4
shall survive the termination or cancellation of this Agreement for a period
of
one (1) year from the date of termination or cancellation.
7.5 Cooperation.
Buyer
and Sellers shall cooperate fully with each other and their respective counsel
and accountants in connection with any actions required to be taken as a
part of
their respective obligations under this Agreement, including but not limited
to
the obtaining of Consents. After the Closing, Sellers and Buyer shall take
such
actions, and shall execute and deliver to the other party such further documents
as, in the reasonable opinion of counsel for such other parties, may be
necessary to ensure, complete and evidence the full and effective transfer
of
the Assets to Buyer or to otherwise consummate the transactions pursuant
to this
Agreement.
7.6 Risk
of Loss. The
risk
of any loss, damage or impairment, confiscation or condemnation of any of
the
Assets from any cause whatsoever shall be borne by Sellers at all times prior
to
the Closing. In the event of any such loss, damage or impairment, confiscation
or condemnation, whether or not covered by insurance, Buyer shall have the
right
to terminate this Agreement upon notice to Sellers prior to Closing and,
thereupon, the parties shall have no further obligations hereunder, except
for
the obligations that expressly survive termination of this Agreement.
7.7 Employees.
Buyer
shall not be obligated to employ any of the Business Employees. Buyer shall
have
no liability to any current or former employees of any Seller, including
without
limitation any liabilities which may arise as a result of the consummation
of
the transactions contemplated by this Agreement or arising under any Seller’s
Plans listed on Schedule
3.14
hereto
or under applicable federal or state law including without limitation under
the
Worker Adjustment and Retraining Notification Act (“WARN”) and Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”). Buyer may offer employment
to those persons listed by Buyer on Schedule
7.7
hereto,
which schedule must be delivered to Sellers within thirty (30) days of the
date
of this Agreement. Each Seller hereby consents to any such offer of employment
and to Buyer’s negotiations with any Business Employees prior to the Closing
Date in connection therewith. On the date prior to the Closing Date, each
Seller
shall terminate all of their respective employees listed on Schedule
7.7.
The
provisions of this Section 7.7 shall survive the Closing.
ARTICLE
VIII
CONDITIONS
TO OBLIGATIONS OF BUYER AND SELLERS
8.1 Conditions
to Obligations of Buyer.
All
obligations of Buyer at the Closing hereunder are subject to the fulfillment
prior to and at the Closing Date of each of the following
conditions:
(a) Representations
and Warranties.
All
representations and warranties of Sellers in this Agreement shall be true
and
complete in all respects at and as of the Closing Date as though such
representations and warranties were made at and as of such time.
(b) Covenants
and Conditions.
Each
Seller shall have in all respects performed and complied with all covenants,
agreements and conditions required by this Agreement to be per-formed or
complied with by it prior to or on the Closing Date.
(c) Consents.
All
Consents listed on Schedule
3.9
hereto
shall have been duly obtained and delivered to Buyer.
(d) Licenses.
Sellers
shall be the holder of the Licenses, and there shall not have been any
modi-fication of any of such Licenses. No proceeding shall be pending or
threatened, the effect of which would be to revoke, cancel, fail to renew,
sus-pend or modify on a materially adverse basis any of the Licenses.
(e) Deliveries.
Each
Seller shall have made or cause to be made and able to make or cause to be
made
all the deliveries to Buyer set forth in Section 9.2 hereof.
(f) Adverse
Change.
There
shall have been no material adverse change in the Business, the Assets, or
the
condition (financial or otherwise), prospects, or results of operations of
any
Seller.
(g) Good
and Marketable Title to Assets.
At
Closing, the title of each Seller to the Assets will be in the form described
in
Sections 3.5 and 3.6, free and clear of all Liens, except as otherwise provided
in Section 3.6.
(h) No
Adverse Proceedings.
No
action or proceeding shall have been instituted by any governmental entity
against, and no order, decree or judgment of any court, agency, commis-sion
or
governmental authority shall be subsisting against, any party that would
render
it unlawful, as of Closing, to effect the transactions contemplated by this
Agreement in accordance with the terms hereof or would materially adversely
affect, as of Closing, the validity of the Licenses or would adversely affect
the Assets or operations (financial or otherwise) of the Business.
8.2 Conditions
to Obligations of Seller.
All
obligations of Sellers at the Closing hereunder are subject to the fulfill-ment
prior to and at the Closing Date of each of the following
conditions:
(a) Representations
and Warranties.
All
representations and warranties of Buyer contained in this Agreement shall
be
true and complete in all respects at and as of the Closing Date as though
such
representations and warranties were made at and as of such time.
(b) Covenants
and Conditions.
Buyer
shall have in all respects performed and complied with all covenants,
agreements, and conditions required by this Agreement to be per-formed or
complied with by it prior to or on the Closing Date.
(c) Deliveries.
Buyer
shall have made or stand will-ing and able to make all the deliveries set
forth
in Section 9.3 hereof.
(d) No
Adverse Proceeding.
No
action or proceeding shall have been instituted by any governmental entity
against, and no order, decree or judgment of any court, agency, commission
or
governmental authority shall be subsisting against, any party that would
render
it unlawful, as of Closing, to effect the transactions contemplated by this
Agreement in accordance with the terms hereof or would adversely affect,
as of
Closing, the Assets or operations of the Business.
ARTICLE
IX
CLOSING
AND CLOSING DELIVERIES
9.1 Closing.
The
Closing shall take place at 10:00 A.M. (New York City time) on February 28,
2006
or such other date as may be mutually agreed upon by Buyer and Seller. The
Closing shall be held at the offices of Buyer's attorney or such other place
as
shall be mutually agreed upon by Buyer and Seller.
9.2 Deliveries
by Sellers.
Prior
to or on the Closing Date, Sellers shall deliver or cause to be delivered
to
Buyer the fol-low-ing, in form and substance reasonably satisfactory to Buyer
and its counsel:
(a) Xxxx
of Sale.
A duly
executed Xxxx of Sale, substantially in the form of Exhibit
A
hereto,
from Sellers;
(b) Assignment
Agreement.
A duly
executed Assignment and Assumption Agreement with respect to the Assumed
Contracts, substantially in the form of Exhibit
B
hereto,
from Sellers;
(c) Intellectual
Property Assignments.
A duly
executed Copyright Assignment and Trademark Assignment with respect to the
Intellectual Property, substantially in the form of Exhibits
C-1 and C-2
hereto
respectively;
(d) Consents.
The
original of each Consent;
(e) Secretary’s
Certificate.
A
certificate, dated as of the Closing Date, executed by the duly elected
Secretary of each Seller certifying that the resolutions, as attached to
such
certificate, were duly adopted by such Seller’s board of directors, authorizing
and approving the execution of this Agreement and the consummation of the
transactions contemplated hereby and that such resolutions remain in full
force
and effect;
(g) Licenses,
Contracts, Business Records, Etc.
To the
extent they are in possession of any Seller, copies of all Licenses, Assumed
Contracts, marketing plans, proposals, lists, projections, statistics, records,
and all files and records used by any Seller in connection with the Business,
which copies shall be avail-able at the Closing;
(h) Seller’s
Certificate.
A
Certificate, dated as of the Closing Date, executed by the duly elected Chief
Executive Officer of each Seller, in the form attached hereto as Exhibit
D;
(i) Employment
Agreement.
Sellers
shall cause Xxxxxxx Xxxxxx to execute an Employment Agreement with Buyer,
which
agreement shall be substantially in the form of Exhibit
F.
(j) Good
Standing.
A
certificate of Good Standing of each Seller issued by the Secretary of State,
or
similar office, of the States of New York and California, as applicable,
each
dated within five (5) days of the Closing Date;
(k) UCC
Termination Statements.
UCC-3
Termination Statements terminating any outstanding Liens on the
Assets;
(l) Estoppel
Certificate.
If
requested by Buyer, Seller shall use their reasonable efforts to deliver
estoppel certificates for all leased property being assigned to Buyer hereunder
in form and substance satisfactory to Buyer;
(m) Other.
Duly
executed copies of all other deeds, endorsements, assignments, consents and
instruments as, in the opinion of Buyer’s counsel, are necessary to transfer the
Assets to Buyer.
9.3 Deliveries
by Buyer.
Prior
to or on the Closing Date, Buyer shall deliver to Seller the following, in
form
and sub-stance reasonably satisfactory to Seller and their counsel:
(a) Purchase
Price.
The
Purchase Price as provided in Section 2.4(a) and (c) hereof;
(b) Assumption
Agreements.
A duly
executed counterpart of an Assignment and Assumption Agreement with respect
to
the Assumed Contracts, substantially in the form of Exhibit
B
hereto,
with Sellers;
(c) Secretary’s
Certificate.
A
certificate, dated as of the Closing Date, executed by the duly elected
Secretaries of Buyer and IMG certifying that the resolutions, as attached
to
such certificate, were duly adopted by Buyer’s and IMG’s respective board of
directors, authorizing and approving the execution of this Agreement and
the
consummation of the transactions contemplated hereby and that such resolutions
remain in full force and effect;
(d) IMG
Officer’s Certificate.
A
Certificate, dated as of the Closing Date, executed by the duly elected Chief
Executive Officer of IMG, in the form of Exhibit
E;
and
(d) Employment
Agreement.
A duly
executed counterpart of the Employment Agreement, substantially in the form
of
Exhibit
F,
with
Xxxxxxx Xxxxxx.
(e) Good
Standing.
A
certificate of Good Standing of Buyer and IMG issued by the Secretary of
State,
or similar office, of the State of Nevada, each dated within five (5) days
of
the Closing Date.
ARTICLE
X
TERMINATION
10.1
Termination.
This
Agreement may be terminated by either Sellers, on the one hand, or Buyer,
on the
other hand, if the terminating party is not then in breach of any material
obligation under this Agreement (provided that Sections 7.2 and 7.4 will
continue in full force and ef-fect), on written notice to the other at any
time
prior to Clos-ing as follows:
(a) By
Buyer,
in accordance with the provisions of Section 7.6;
(b) By
Buyer
upon written notice to any Seller if any Seller has suffered a material adverse
change in its Assets, Business, condition (financial or otherwise), prospects
or
results of operations since the execution date of this Agreement;
(c) By
Buyer
or Sellers, as the case may be, if the other shall commit a material breach
of
any of the provisions applicable to it hereunder;
(d) By
mutual
agreement of Buyer and Sellers, at any time, set forth in a writing executed
by
all parties;
(e) By
Buyer
if the result of its due diligence review of Sellers, the Business or the
Assets
is unsatisfactory to Buyer for any reason in its sole discretion;
or
(f) By
Buyer
or Sellers if the Closing shall not have occurred on or before February 28,
2006.
10.2
Effect
of Termination.
In the
event of termination of this Agreement as provided above, this Agreement
shall
forthwith become void and of no further force and effect, except that the
covenants and agreements set forth in Sections 7.4, 7.5, 10.2 and 12.9 shall
survive such termination indefinitely, and except that nothing in Section
10.1
or this Section 10.2 shall be deemed to release the non-terminating party
from
any liability for any breach by such party of the terms and provisions of
this
Agreement or to impair the right of any party to compel specific performance
by
another party of its obligations under this Agreement.
10.3
Specific
Performance.
The
parties recognize that in the event Seller should refuse to perform under
the
provisions of this Agreement, monetary damages alone will not be adequate.
Buyer
shall therefore be entitled, in addition to any other remedies which may
be
available, including money damages, to ob-tain specific performance of the
terms
of this Agreement. In the event of any action to enforce this Agreement
specifically, Seller hereby waives the defense that there is an adequate
remedy
at law.
ARTICLE
XI
SURVIVAL
OF REPRESENTATIONS AND
WARRANTIES
AND INDEMNIFICATION
11.1 Representations
and Warranties.
Notwithstanding any examination made for or on behalf of any of the parties
hereto, the knowledge of any officer, director or employee or agent of any
of
the parties hereto or any of their respective Affiliates, or the acceptance
of
any certificate or opinion, all represen-tations, warranties and covenants
contained in this Agreement and the Closing Certificate shall be deemed
continuing representations, warranties and covenants, and shall survive the
Closing Date for a period of one (1) year, except for any breach of the
representations and warranties under Sections 3.6, 3.17, 3.22, 3.23, 3.26,
4.4
hereof which shall survive until the expiration of the applicable statute
of
limitations (the “Survival Period”). Expiration of the Survival Period shall not
affect the rights of any party under this Article IX in respect of (i) any
specific claim for losses, liabilities or damages made in writing the party
requesting indemnification and received by the other party prior to expiration
of the Survival Period and (ii) any claims based upon fraud or intentional
misrepresentation.
11.2
Indemnification
by Sellers.
Notwithstanding the Closing, and regardless of any investigation made at
any
time by or on behalf of Buyer or any information Buyer may have, Sellers
and
Medico, jointly and severally, shall indemnify and hold Buyer harmless against
and with respect to, and shall reimburse Buyer for all claims, notice of
which
have been received by any Seller within the Survival Period, relating
to:
(a) Any
and
all losses, liabilities or damages result-ing from any untrue representation,
breach of warranty or nonfulfillment of any covenant by any Seller contained
herein or in any cer-tificate, document or instrument delivered to Buyer
hereunder;
(b) Other
than the Assumed Liabilities, any and all obligations or liabilities of any
Seller relating to the Business, including without limitation, any such
obli-gation or liability imposed on Buyer by process of law as a suc-cessor
to
the business of any Seller;
(c) Any
and
all losses, liabilities or damages result-ing from each Seller’s operation or
control of the Business prior to the Closing Date, including any and all
liabilities arising under the Licenses, the Accounts Payable or the Assumed
Contracts which relate to events occurring prior to the Closing Date;
and
(d) Any
and
all actions, suits, proceedings, claims, demands, assessments, judgments,
costs
and expenses, including reasonable legal fees and expenses, incident to any
of
the fore-going or in enforcing this indemnity.
11.3
Indemnification
by Buyer and IMG.
Notwithstanding the Closing, and regardless of any investigation made at
any
time by or on behalf of Seller or any information Seller may have, Buyer
and IMG
shall, jointly and severally, indemnify and hold Sellers harmless against
and
with respect to, and shall reimburse Seller for all claims, notice of which
have
been received by Buyer within the Survival Period relating to:
(a) Any
and
all losses, liabilities or damages result-ing from any untrue representation,
breach of warranty or nonfulfillment of any covenant by Buyer or IMG contained
herein or in any certificate, document or instrument delivered to any Seller
hereunder;
(b) Any
and
all losses, liabilities or damages resulting from Buyer's operation or control
of the Business on and after the Closing Date, including any and all liabilities
arising under the Assumed Contracts which relate to events occurring after
the
Closing Date; and
(c) Any
and
all actions, suits, proceedings, claims, demands, assessments, judgments,
costs
and expenses, including reasonable legal fees and expenses, incident to any
of
the foregoing or in enforcing this indemnity.
11.4 Procedure
for Indemnification.
The
procedure for indemnification shall be as follows:
(a) The
party
claiming indemnification (the "Claim-ant") shall give reasonably prompt notice
to the party from whom indemnification is claimed (the "Indemnifying Party")
of
any claim, whether between the parties or brought by a third party, specifying
(i) the factual basis for such claim and (ii) the amount of the claim. If
the
claim relates to an action, suit or proceeding filed by a third party against
Claimant, such notice shall be given by Claimant within ten (10) days after
written notice of such action, suit or proceeding is received by
Claimant.
(b) Following
receipt of notice from the Claimant of a claim, the Indemnifying Party shall
have twenty (20) days (or such shorter period of time as is required to respond
to the subject litigation or proceeding) to make such investigation of the
claim
as the Indemnifying Party deems necessary or desirable. For the purposes
of such
investigation, the Claimant agrees to make available to the Indemnifying
Party
or its authorized representative(s) the information relied upon by the Claimant
to substantiate the claim. If the Claimant and the Indemnifying Party agree
at
or prior to the expiration of said 20-day period (or any mutually agreed
upon
extension thereof) to the validity and amount of such claim, the Indemnifying
Party shall immediately pay to the Claimant the full amount of the claim;
provided,
however,
that if
such claim has been brought by a third party, and the Claimant and Indemnifying
Party mutually agree, the Indemnifying Party shall pay directly to such third
party the full amount of the claim. If the Claimant and the Indemnifying
Party
do not agree within said period (or any mutually agreed upon extension thereof),
the Claimant may seek appropriate legal remedy.
(c) With
respect to any claim by a third party as to which the Claimant is entitled
to
indemnification hereunder, the Indemnifying Party shall have the right at
its
own expense, to participate in or assume control of the defense of such claim,
and the Claimant shall cooperate fully with the Indemnifying Party. If the
Indemnifying Party elects to assume control of the defense of any third-party
claim, the Claimant shall have the right to participate in the defense of
such
claim and retain separate co-counsel at its own expense; provided if requested
to participate at Indemnifying Party's request or if the Claimant reasonably
believes (based upon an opinion of counsel) that a conflict of interest exists
between Claimant and the Indemnifying Party, then the Claimant will be
reimbursed for reasonable expenses of counsel. The Indemnifying Party will
select counsel reasonably satisfactory to the Claimant. The Indemnifying
Party
will not consent to an entry of judgment or settlement without release of
liability and, with respect to nonmonetary terms, the Claimant's consent
(not to
be unreasonably withheld or delayed); provided that if Claimant does not
consent
to settlement of a claim solely with respect to the monetary terms thereof,
pursuant to which Claimant has been released without liability, Seller’s
liability under this Section 11 shall be limited to the amount of the settlement
or entry of judgment, plus costs (including attorney fees).
(d) If
a
claim, whether between the parties or by a third party, requires immediate
action, the parties will make every effort to reach a decision with respect
thereto as expeditiously as possible.
(e) If
the
Indemnifying Party does not elect to assume control or otherwise participate
in
the defense of any third party claim, it shall be bound by the results obtained
by the Claimant with respect to such claim.
(f) The
remedies provided herein shall be cumulative and shall not preclude the
assertion by any party hereto of any other rights or the seeking of any other
remedies against any other party hereto.
11.5
Right
of Offset.
If,
after compliance with the procedures set forth in this Article IX, it is
determined that Buyer is entitled to indemnification from any Seller, Buyer
shall have the right, exercisable in its sole discretion, to set off all
or a
portion of such claim against the Deferred Cash Amount payable to Sellers
pursuant to Section 2.4 hereof. In instances when Buyer, as Claimant, and
Sellers, as Indemnifying Party are unable to agree with respect to the payment
of any claim hereunder and Buyer seeks an alternative legal remedy, Buyer
shall
have the right of set off only upon the final judgment of a court of competent
jurisdiction.
ARTICLE
XII
MISCELLANEOUS
12.1 Notices.
All
notices, demands, and requests required or permitted to be given under the
provisions of this Agreement shall be (i) in writing, (ii) delivered by personal
delivery, or sent by commercial delivery service or registered or certified
mail, return receipt requested or sent by telecopy, (iii) deemed to have
been
given on the date of personal delivery or the date set forth in the records
of
the delivery service or on the return receipt or, in the case of a telecopy,
upon receipt thereof and (iv) addressed as follows:
If
to any Seller:
|
||
c/o
Xxxxxxx Xxxxxx
|
||
460
Xxxxxxx Xxxxxx, 0xx
Xxxxx
|
||
Xxx
Xxxx, XX 00000
|
||
Facsimile
No.: (000) 000-0000
|
||
With
a copy to:
|
||
Xxxxx
Xxxxxxxx Xx., Esq.
|
||
Xxxxxx
Xxxxxxxx & Xxxx, P.C.
|
||
20
Xxxxxxxx Xxxxx, 00xx
Xxxxx
|
||
Xxx
Xxxx, XX 00000
|
||
Facsimile
No.: (000) 000-0000
|
If
to Buyer:
|
||
c/o
Impart Media Group, Inc.
|
||
1300
X. Xxxxxxxxx Xxx
|
||
Xxxxxxx,
Xxxxxxxxxx 00000
|
||
Attn:
Xxxxxx Xxxxxxxx, Chief Financial Officer
|
||
Facsimile
No.: (000) 000-0000
|
||
With
a copy to:
|
||
Xxxx
X. Xxxxxxx, Esq.
|
||
Xxxxx
Xxxxxxx Xxxxxxx & Xxxxx LLP
|
||
410
Xxxx Xxxxxx, 00xx
Xxxxx
|
||
Xxx
Xxxx, XX 00000
|
||
Facsimile
No.: (000) 000-0000
|
or
to any
such other or additional persons and addresses as the parties may from time
to
time designate in a writing delivered in accordance with this Section
12.1.
12.2 Benefit
and Binding Effect.
Neither
party hereto may assign this Agreement without the prior written consent
of the
other party hereto; provided,
however,
that
Buyer may assign its rights and obligations under this Agreement, upon notice
to
Sellers, to a majority-owned entity in which the owners of the stock of Buyer
have an equity or operating interest. This Agreement shall be binding- upon
and
inure to the benefit of the parties hereto and their respective successors
and
permitted assigns.
12.3 Headings.
The
headings herein are included for ease of reference only and shall not control
or
affect the meaning or construction of the provisions of this
Agreement.
12.4 Gender
and Number.
Words
used herein, regardless of the gender and number specifically used, shall
be
deemed and construed to include any other gender, masculine, feminine or
neuter,
and any other number, singular or plural, as the context requires.
12.5 Counterparts.
This
Agreement may be signed in any number of counterparts with the same effect
as if
the signature on each such counterpart were upon the same
instrument.
12.6 Entire
Agreement.
This
Agreement, all schedules and exhibits hereto and all documents, writings,
instruments and certificates delivered or to be delivered by the parties
pursuant hereto collectively represent the sole and entire understanding
and
agreement between Buyer and Seller with respect to the subject matter hereof.
All schedules, and exhibits attached to this Agreement shall be deemed part
of
this Agreement and incorporated herein, as if fully set forth herein. This
Agreement supersedes all prior negotiations and understandings between Buyer
and
Seller whatsoever, and all letters of intent and other writings relating
to such
negotiations and understandings.
12.7 Amendment.
This
Agreement cannot be amended, supplemented or modified except by an agreement
in
writing which makes specific reference to this Agreement or an agreement
delivered pursuant hereto, as the case may be, and which is signed by the
party
against which enforce-ment of any such amendment, supplement or modification
is
sought.
12.8 Severability.
If in
any jurisdiction any provision of this Agreement or its application to any
party
or circumstance is restricted, prohibited or unenforceable, such provision
shall, as to such jurisdiction, be ineffective only to the extent of the
restriction, prohibition or unenforceability without invalidating the remaining
provisions hereof and without affecting the validity or enforceability of
such
provision in any other jurisdiction or its application to other parties or
circumstances. In addition, if any one or more of the provisions contained
in
this Agreement shall for any reason in any jurisdiction be held excessively
broad as to time, duration, geographical scope, activity or subject, it shall
be
construed, by limiting and reducing it, so as to be enforceable to the extent
compatible with the applicable law of such jurisdiction as it shall then
appear.
12.9 Governing
Law; Consent to Jurisdiction and Venue.
This
Agreement will be governed by, and construed and enforced in accordance with,
the laws of the State of New York, without regard to conflicts of law principles
thereof. Each of the parties hereto hereby (a) irrevocably and unconditionally
submits to the non-exclusive jurisdiction of any New York State or Federal
court
sitting in the County of New York, New York in any action or proceeding arising
out of or relating to this Agreement, any other agreement or document delivered
pursuant hereto or any transaction contemplated hereby and (b) irrevocably
waives, to the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding.
12.10
Cumulative
Remedies.
All
remedies available to the parties with respect to this Agreement or available
at
law or in equity shall be cumulative and may be pursued concurrently or
successively.
[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
This
Asset Purchase Agreement has been executed by the following parties as of
the
date first above written.
IMPART MEDIA ADVERTISING, INC. | |||
By: |
/s/Xxxxxx
Xxxxxxxx
|
||
Name: Xxxxxx Xxxxxxxx | |||
Title: Chief Financial Officer | |||
E&M ADVERTISING, INC. | |||
By: |
/s/Xxxxxxx
Xxxxxx
|
||
Name: Xxxxxxx Xxxxxx | |||
Title: Chief Executive Officer | |||
E&M ADVERTISING WEST/CAMELOT MEDIA, INC. | |||
By: |
/s/Xxxxxxx
Xxxxxx
|
||
Name: Xxxxxxx Xxxxxx | |||
Title: Executive Vice President | |||
NEXTREFLEX, INC. | |||
By: |
/s/Xxxxxxx
Xxxxxx
|
||
Name: Xxxxxxx Xxxxxx | |||
Title: Chief Executive Officer |
The
undersigned has executed this Agreement as of the date first above written
solely with respect to Articles IV and XI hereof.
IMPART MEDIA GROUP, INC. | |||
By: |
/s/Xxxxxx
Xxxxxxxx
|
||
Name: Xxxxxx Xxxxxxxx | |||
Title: Chief Financial Officer |
The
undersigned have executed this Agreement as of the date first above written
solely with respect to Section 2.8 and 5.3 and Article IX hereof.
/s/Xxxxxxx
Xxxxxx
|
||
Xxxxxxx
Xxxxxx
|