Exhibit 4.7
ASSET EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
This ASSET EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement")
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is made as of December 29, 1999, by and between VerticalNet, Inc., a
Pennsylvania corporation (the "Purchaser"), and GovCon, Inc., a Delaware
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corporation (the "Company" or the "Seller") Xxxxx X. Xxxxxxxx, Xxxxxxx Xxxxx,
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Xxxxx Xxxxx and Xxxxx Xxxxxxx, each (other than Xxxxx X. Xxxxxxxx) individuals
employed by the Company and each being the holders of all of the issued and
outstanding capital stock of the Company (the "Shareholders", and together with
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the Seller, the "Seller Parties").
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BACKGROUND
GovCon, Inc. is a Delaware corporation dedicated to providing business
information and opportunities to companies and individuals desiring or doing
business with the federal government. The Company utilizes the fictitious names
GovCon, Government Contractor Resource Center, Government Contractor Resource
Institute and BidRadar and is engaged in the business (the "Business") of
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developing, owning and operating the Internet websites named "GovCon" and
"BidRadar" with the respective domain names xxxxxx.xxx and xxxxxxxx.xxx each an
"Active Website" and collectively the "Active Websites") and activities
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associated therewith.
Seller desires to sell, and Purchaser desires to buy, substantially all of
the assets of Seller associated with the Business upon the terms described
below.
The parties to this Agreement intend that the transactions contemplated
hereby be treated as a reorganization within the meaning of Section 368(a)(1)(C)
of the Internal Revenue Code of 1986, as amended.
In consideration of the mutual covenants and agreements set forth in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
1. Sale and Purchase.
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1.1 Sale and Purchase of Assets. Subject to the terms and conditions set
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forth in this Agreement, Seller hereby sells, assigns, transfers and delivers to
Purchaser, and Purchaser hereby purchases, acquires and takes assignment and
delivery of, all of the right, title and interest of Seller in and to all of the
assets, properties and rights of any kind owned by Seller used in connection
with or related to the Business, of every type and description, real, personal
and mixed, tangible and intangible, wherever located and whether or not
reflected on the books and records maintained by Seller in connection with the
Business, excluding those assets, properties and rights which are
specifically excluded pursuant to Section 1.2 hereof (collectively the
"Purchased Assets"), free and clear of all mortgages, liens, pledges, security
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interests, charges, claims, restrictions and encumbrances of any nature
whatsoever. The Purchased Assets include, without limitation, all of the right,
title and interest of Seller in or to the following:
(a) any and all rights (including any and all rights to Intellectual
Property (as defined in Section 3.15 hereof)) of Seller to the domain names,
sites and content (including, without limitation, text and graphics) of the
websites owned by or registered to Seller (the "Websites");
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(b) except as provided on Schedule 1.1(b) hereto, any and all rights of
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Seller to software programs, modules, routines, data, text or graphics files,
source or object codes and other components of the Websites used in operation of
the Websites, or in the process of being developed, by or on behalf of Seller
for use in the Business;
(c) any and all rights of Seller to the domain names of the Websites, the
trade names, trade dress, trademarks and service marks used on the Websites and
the goodwill associated therewith;
(d) any and all rights of Seller to any other Intellectual Property (as
defined in Section 3.15 hereof) used in the conduct of the Business;
(e) all furniture, fixtures, equipment, machinery and other tangible
personal property used or held for use in the conduct of the Business at the
locations at which the Business is conducted or at suppliers' premises or
customers' premises on consignment, or otherwise used or held for use by Seller
in the conduct of the Business, including any of the foregoing purchased subject
to any conditional sales or title retention agreement in favor of any other
person;
(f) to the extent assignable and subject to any required consents, all
leases or subleases, if any, of tangible personal property used by Seller in the
conduct of the Business as to which Seller is the lessor or sublessor or is the
lessee or sublessee, together with any options to purchase or sell the
underlying property (the "Business Leases");
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(g) any and all rights of Seller in and under all arrangements (written or
oral) to provide advertising for third parties on the Active Websites pursuant
to which there are unbilled, partially billed or unfulfilled obligations (the
"Advertising Commitments");
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(h) any and all rights of Seller in and under all arrangements (written or
oral) to provide web-design and development business operations to third parties
pursuant to which there are unbilled, partially billed or unfulfilled
obligations (the "Web-Design Commitments");
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(i) any and all rights of Seller in and under all contracts, agreements and
arrangements (written or oral) to which Seller is a party and which are
utilized in the conduct of the
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Business, including but not limited to the Business Leases, the Advertising
Commitments and the Web Design Commitments (the "Business Contracts");
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(j) any and all rights of Seller to all information and records and
customer and/or visitor files maintained by Seller (in electronic or paper
format) used or held for use in the conduct of the Business including, without
limitation, principal contacts, E-mail and street addresses, telephone numbers,
personal information, and purchasing history of customers or visitors;
(k) except as otherwise provided in Section 1.2(a) hereof, any and all
rights of Seller to cash or any other payment received in connection with the
Business on or after the Closing Date;
(l) except as otherwise provided in Section 1.2(a) hereof, any and all
rights of Seller to accounts receivable, and all notes, bonds and other
evidences of indebtedness of and rights to receive payments arising out of sales
occurring in the conduct of the Business and the security agreements related
thereto, including any rights of Seller with respect to any third party
collection proceedings or any other actions or proceedings which have been
commenced in connection therewith (the "Accounts Receivable");
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(m) any and all rights of Seller to prepaid expenses relating to the
Business;
(n) to the extent assignable and subject to any required consents, all
government permits, licenses, franchises, approvals and authorizations
(including applications therefor and any credits arising therefrom) utilized by
Seller in the conduct of the Business (the "Business Permits"); and
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(o) any and all rights of Seller under or pursuant to all warranties,
representations and guarantees made by suppliers, manufacturers and contractors
in connection with products sold to or services provided to Seller for the
Business.
1.2 Excluded Assets. Notwithstanding any provision of this Agreement to
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the contrary, Purchaser shall not acquire and there shall be excluded from the
Purchased Assets, Seller's interest in each of the following (the "Excluded
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Assets"):
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(a) any and all rights of Seller to cash received in the conduct of the
Business prior to the Closing Date, including all cash on hand or in banks, cash
equivalents, marketable and non-marketable securities and other investments and
all rights in any funds of any nature wherever maintained or held, but excluding
deferred advertising revenues as set forth in Section 1.4(a);
(b) all rights of Seller under this Agreement and the documents and other
papers delivered to Seller by Purchaser pursuant to this Agreement; and
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(c) the corporate seals, charter documents (including, but not limited to
the certificate or articles of incorporation), minute books, stock books, tax
returns, books of account or other records having to do with the corporate
organization of the Seller; and
(d) Seller's rights and interests in any liability, casualty, health, life
or other insurance policies, if any.
1.3 Assumed Obligations. At the Closing Purchaser shall assume, and agree
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to perform, fulfill and discharge, all obligations of the Seller (the "Assumed
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Obligations") required to be performed after the Closing (excluding payment
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obligations to third parties for goods or services the performance or delivery
of which occurs prior to the Closing) under any of the Business Contracts except
where (i) such obligations have arisen in contravention of this Agreement or
(ii) such obligations arise or have arisen out of any claim, lawsuit,
investigation, proceeding, arbitration or other dispute relating to an act or
omission taken or occurring prior to Closing.
1.4 No Other Liabilities or Obligations Assumed. Purchaser shall not and
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does not hereby assume any liability or obligation of Seller, known or unknown,
contingent or otherwise, asserted or unasserted, other than as specifically set
forth in Section 1.3. Subject to Section 1.3 hereof, nothing contained herein
shall cause Purchaser to assume (a) any liabilities or obligations arising out
of the conduct of the Business prior to the Closing, whether known or unknown on
the Closing Date, except for the performance of the deferred advertising
services for E-Serve in the amount of $4,000; (b) any liabilities or obligations
arising out of any provision of any agreement, contract, commitment or lease of
Seller, other than any liability or obligation under Business Leases, the
Advertising Commitments, the Web-Design Commitments or the other Business
Contracts to be performed after the Closing; (c) any federal, state or local
income or other tax (other than any sales or use tax payable with respect to the
acquisition of assets contemplated herein, for which Purchaser agrees to be
responsible): (i) payable with respect to the business, assets, properties or
operations of Seller, or (ii) incident to or arising as a consequence of the
negotiation or consummation by Seller of this Agreement and the transactions
contemplated hereby; (d) any liability or obligation under or in connection with
any assets not included in the Purchased Assets; (e) any employment-related
liability or obligation arising prior to or as a result of the Closing to any
employees, agents or independent contractors of Seller, or under any benefit
arrangement with respect thereto; or (f) any liability or obligation of Seller
arising or incurred in connection with the negotiation, preparation and
execution of this Agreement and the transactions contemplated hereby and fees
and expenses of counsel, accountants and other experts.
1.5 Consideration.
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(1) Purchase Price.
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(i) In exchange for the Purchased Assets and for the covenants
not to compete (the "Non-Compete Covenants") set forth in the Employment
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Agreement (as hereinafter defined)
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Purchaser shall deliver to the Shareholders seventy five thousand (75,000)
shares of Common Stock of the Purchaser (the "Consideration", which shall also
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constitute the "Purchase Price").
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(ii) Delivery of Consideration. As soon as possible after the
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Closing Date, Purchaser shall cause to be delivered to each Shareholder a
certificate issued in the Shareholder's name for the portion of the Stock
Consideration represented by the percentage allocation set forth on Schedule
1.5. The parties acknowledge and agree that the Consideration is being received
by the Shareholders as a liquidating distribution from the Seller.
(b) Freeware. Seller and Purchaser hereby agree that the
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consideration paid by Purchaser hereunder shall not be applied to, and is not in
consideration for, any freeware acquired by Purchaser under the terms of this
Agreement.
2. Closing. The closing of the purchase and sale of the Purchased Assets (the
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"Closing") shall take place simultaneously with the execution of this Agreement.
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The date on which the Closing occurs shall be called the "Closing Date." The
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Closing shall be consummated by facsimile transmission. The parties shall (x)
transmit facsimile copies of all executed documents required to be executed
pursuant to this Agreement and (y) mail via overnight courier four (4) executed
originals of each document to the offices of counsel for each of the respective
parties. On the Closing Date, subject to the terms and conditions herein
contained, the following shall occur:
2.1 Deliveries by Seller Parties at the Closing. On the Closing Date, the
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Seller Parties shall deliver, or cause to be delivered, to Purchaser:
(a) a Xxxx of Sale, Assignment and Assumption Agreement dated as of
even date herewith and in a form satisfactory to Purchaser, duly executed by
Seller;
(b) Employment Agreement, dated as of even date herewith and in a form
satisfactory to Purchaser, duly executed by Xxxxx Xxxxxxx (the "Employment
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Agreement");
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(c) Consulting Agreements, dated as of even date herewith and in a
form satisfactory to Purchaser, duly executed by Xxxxx Xxxxx and Xxxxxxx Xxxxx
(the "Consulting Agreements");
(d) a copy of the executed consents specified in Schedule 3.3 hereto;
(e) copies of the most recent statements for the bank accounts and
similar accounts held in connection with the Business;
(f) evidence of termination of Cyberreps Agreement;
(g) The disclosure schedules (the "Schedules") to the Agreement; and
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(h) such other documentation reasonably requested by Purchaser, in a
form reasonably satisfactory to Purchaser and its counsel, as shall be necessary
and effective to transfer and assign to, and vest in, Purchaser all of Seller's
right, title and interest in and to the Purchased Assets, and simultaneously
with such delivery, all steps will be taken as may be required to put Purchaser
in actual possession and operating control of the Purchased Assets.
2.2 Deliveries by Purchaser at the Closing. On the Closing Date or as
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otherwise provided herein, Purchaser shall deliver, or cause to be delivered to
Seller:
(a) evidence of irrevocable instructions to the Company's transfer
agent to deliver the Consideration to Seller's counsel on behalf of the
Shareholders in accordance with Section 1.5(a)(ii);
(b) the Xxxx of Sale, Assignment and Assumption Agreement duly
executed by Purchaser;
(c) the Employment Agreement, duly executed by Purchaser; and
(d) the Consulting Agreements, duly executed by Purchaser.
3. Representations and Warranties of Seller Parties. The Seller Parties,
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jointly and severally, hereby represent, warrant and covenant to Purchaser as
follows:
3.1 Organization. GovCon, Inc. is a Delaware corporation and utilizes the
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fictitious names GovCon, Government Contractor Resource Center, Government
Contractor Resource Institute and BidRadar.
3.2 Power and Authority. Seller has full right, power, lawful authority
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and legal capacity to execute and deliver this Agreement, the Xxxx of Sale,
Assignment and Assumption Agreement and the Employment Agreement (collectively,
the "Seller Transaction Agreements") and to consummate and perform the
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transactions contemplated hereby and thereby. The Seller Transaction Agreements
have been, and any other agreements, documents and instruments required to be
delivered by Seller in accordance with the provisions hereof have been or will
be, duly executed and delivered by or on behalf of Seller and constitute the
legal, valid and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms, except as enforceability may be limited
by laws of general application relating to bankruptcy, reorganization,
moratorium, insolvency and debtors' relief and similar laws affecting the
enforcement of creditors' rights, and by general principles of equity.
3.3 Conflicts; Consents. Neither the execution and delivery of the Seller
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Transaction Agreements by Seller nor the consummation and performance of the
transactions contemplated thereby (a) will conflict with or violate any
agreement to which Seller is a party or by which Seller is bound or any federal,
state, local or other governmental law or ordinance or (b) will require the
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authorization, approval or consent by, or any notice to or filing with, any
third party, except for (i) those authorizations, approvals and consents which
have already been granted or obtained and all of which are set forth on Schedule
3.3 attached hereto and (ii) such authorizations, approvals and consents which,
if not granted or obtained, would not in the aggregate have a material adverse
effect on the condition of the Purchased Assets or the Business.
3.4 Title. Seller has good, valid and marketable title to, or valid
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licenses to use, all of the Purchased Assets, free and clear of all liens,
pledges, mortgages, security interests, claims, liabilities, charges or
encumbrances of any nature whatsoever. With respect to the Purchased Assets
leased by Seller, if any, Seller is in compliance with such leases.
3.5 Financial Statements. Seller has delivered to Purchaser unaudited
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financial records (including without limitation, the balance sheet, income
statement and statement of cash flows) of the Business (i) for the year ended
December 31, 1998, and (ii) for the ten-month period ended October 31, 1999
(collectively, the "Financial Records"). The Financial Records present fairly
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the revenues of the Business, as applicable, for the periods indicated and were
prepared in accordance with the modified accrual basis.
3.6 No Material Changes. Since October 31, 1999 there has not been (a)
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any material adverse change in the Purchased Assets or the operations or
condition (financial, traffic or otherwise) of the Business or of Seller; or (b)
any actual or threatened trouble or disruption of Seller's relations with the
Business' agents, customers or suppliers. Since October 31, 1999, Seller has
conducted the Business only in the ordinary course consistent with past
practice, has not incurred any material liabilities, and has not entered into
any transaction, contract or arrangement, or made any payment or distribution
that reasonably can be expected to have a material adverse impact on the
Business.
3.7 Server Log Files. Seller has delivered to Purchaser true, correct and
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complete copies of the log files of the web server computer (the "Server") to be
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transferred from Seller to Purchaser pursuant to this Agreement.
3.8 Advertising Commitments. Attached hereto as Schedule 3.8 is a true,
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correct and complete list of all Advertising Commitments as of the date hereof,
including the name of the advertising party, any amounts unbilled to or unpaid
by such party and the term of the obligation to provide advertising on the
applicable Active Website.
3.9 Web-Design Commitments. Attached hereto as Schedule 3.9 is a true,
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correct and complete list of all Web-Design Commitments, and included in such
schedule with respect to each such commitment is the name of the party for which
such web design was or is being created, the applicable domain name, any amounts
unbilled to or unpaid by such party and a description of and the term of any
outstanding obligations with respect to such commitment as of the date hereof.
3.10 Customers. Attached hereto as Schedule 3.10 is a true, correct and
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complete list of all advertising customers of the Business. Seller currently
maintains good working relationships
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with all of the customers and suppliers of the Business. No current customer or
supplier of the Business has given Seller notice terminating, canceling or
threatening to terminate or cancel any contract, commitment or relationship with
Seller.
3.11 Tangible Property. Attached hereto as Schedule 3.11 is a true,
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correct and complete list of all tangible personal property, including without
limitation equipment, machinery, and furniture, in each case owned or leased by
Seller and material to the Business (collectively, the "Tangible Property")
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together with a description of all leases or subleases of Tangible Property to
which Seller is the lessor, sublessor, lessee or sublessee and all options to
purchase or sell the underlying property. Except as separately identified on
Schedule 3.11, no approval or consent of any person is needed so that the
interest of Seller in the Tangible Property shall continue to be in full force
and effect and enforceable by Purchaser following the transactions contemplated
by this Agreement.
3.12 Condition of Assets. All Purchased Assets constituting Tangible
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Property (i) are in "as is" condition (ii) are usable in the ordinary course of
the Business consistent with past practice and (iii) are in the possession or
under the control of Seller.
3.13 Contracts. Seller is not party to any contracts, agreements or
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commitments in connection with the Business or the Purchased Assets other than
the Advertising Commitments, the Web-Design Commitments and the other Business
Contracts. Attached hereto as Schedule 3.13 is a true, correct and complete
list of all Business Contracts in effect as of the date hereof. Except as
otherwise indicated on Schedule 3.13, true and complete copies of all Business
Contracts have been delivered to Purchaser and each Business Contract is a valid
and binding obligation in full force and effect in accordance with its
respective terms with respect to Seller (as applicable) and is a valid and
binding obligation in full force and effect in accordance with its respective
terms with respect to any other party thereto, except as enforceability may be
limited by laws of general application relating to bankruptcy, reorganization,
moratorium, insolvency and debtors' relief and similar laws affecting the
enforcement of creditors' rights, and by general principles of equity. Seller
is not in material default under any of the Business Contracts and, to Seller's
best knowledge and belief ("Seller's Knowledge"), no third party is in material
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default under any of the Business Contracts.
3.14 Legal Proceedings; Compliance with Law. There are no disputes,
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claims, actions, suits or proceedings, arbitrations or investigations pending
or, to Seller's Knowledge after due inquiry, threatened against or affecting the
Business or the Purchased Assets. Seller does not have any knowledge of any
state of facts that might reasonably form the basis of any claim, liability or
litigation against Seller affecting the Business or the Purchased Assets. The
conduct of the Business by Seller, and Seller's use of the Purchased Assets, are
in material compliance with all applicable federal, state, local or other
governmental laws, ordinances, codes, rules and regulations. Seller owns or
possesses in the operation of the Business all franchises, licenses, permits,
consents, approvals, rights, waivers and other authorizations, governmental or
otherwise, which are necessary for Seller to conduct Seller's business as now
conducted; Seller is not in default, nor has Seller received any notice of any
claim or default thereunder, or any notice of any other claim or
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proceeding or threatened proceeding relating thereto; and neither the execution
or delivery of this Agreement nor the consummation of the transactions
contemplated hereby will require any notice or consent thereunder or have any
material adverse effect thereon.
3.15 Intellectual Property. Attached hereto as Schedule 3.15 is a true,
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correct and complete list of all license agreements, copyrighted materials,
trademarks, trade names, domain names, service marks and all patents, and all
applications therefor, used or held for use by Seller in the conduct of the
Business (including without limitation a list of the domain names of all
Websites). (i) Seller owns (or has adequate rights to use or transfer pursuant
to license, sublicense, agreement or permission) all patents, trademarks, trade
names, service marks, logos, designs (including those acquired by assignment),
domain names, websites and website content, goodwill, customer lists or other
information regarding customers, copyrights (including those acquired by
assignment), software, computer code, data, trade secrets or know-how and
applications and registrations of any of the foregoing (collectively,
"Intellectual Property") used by Seller in the Business or transferred pursuant
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to this Agreement free and clear of any lien, mortgage, security interest,
pledge, restriction, defect of title or other claim, charge or encumbrance; (ii)
in connection with the operation of the Business, to Seller's Knowledge, Seller
does not infringe upon or unlawfully or wrongfully use any material Intellectual
Property owned or claimed by any other person or entity or otherwise use any
material that violates any right of publicity, right of privacy or any other
proprietary rights or defames, slanders or libels any individual or entity;
(iii) the Seller shall own or shall have the lawful right to use all
Intellectual Property that is used in the operation of the Business in the
ordinary course or otherwise; (iv) the content of any and all websites, whether
created by Seller for Seller or for others or for which Seller directly or
indirectly provided web hosting services at any time prior to the Closing Date,
was and continues to be lawful; (v) Seller is not in default under, and has not
received any notice of any claim of infringement or any other claim or
proceeding relating to any of the Intellectual Property; and (vi) subject to
Schedule 1.1(b), no other person (other than licensors in situations where
Seller is the licensee) owns or has any proprietary, financial or other
interest, direct or indirect, in whole or in part, in any of the Intellectual
Property, or in any application therefor, which Seller owns, possesses or uses
in Seller's operations as now or heretofore conducted.
3.16 Employee Relations. Seller is not a party to, involved in, or to the
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Seller's Knowledge, threatened by, any labor or employment dispute, unfair labor
practice charge, employment discrimination charge or other employment or labor
related claims.
3.17 Operational Elements. The Purchased Assets include any and all
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rights (whether by ownership or license) for software programs, modules,
routines, data, text or graphic files, source or object codes and other
components of the Websites which are used in the operation of the Websites
(except for the Excluded Assets) and such operational elements shall include all
written or electronic documentation which is in the possession of Seller.
3.18 Consents and Approvals of Governmental Authorities. No consent,
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approval or authorization of, or declaration, filing or registration with, any
court or other governmental or regulatory authority, agency, commission, or
other entity, domestic or foreign is required to be made
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or obtained by Seller in connection with the execution, delivery and performance
of this Agreement by Seller or the consummation of the sale of the Purchased
Assets to Purchaser.
3.19 Permits. Attached hereto as Schedule 3.19 is a true, correct and
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complete list of the Business Permits. All Business Permits are in full force
and effect and in good standing. Seller has not received notice of any claim of
revocation of any Business Permits and knows of no events which might given rise
to such a claim.
3.20 Undisclosed Liabilities. None of the Purchased Assets are subject to
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any liability, indebtedness, obligation or claim of any type, whether accrued,
absolute, contingent, matured or unmatured ("Liabilities"), except those
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Liabilities arising in the ordinary course of business consistent with past
practice.
3.21 Tax Returns.
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(a) Seller has filed all Tax Returns that it was required to file, for
any period or portion thereof ending on or before the Closing Date, (i) due as
of the Closing Date with respect to the Business which could result in any lien
or encumbrance on the Purchased Assets, have been fully paid by Seller or (ii)
due after the Closing Date with respect to the Business which could result in
any lien or encumbrance on the Purchased Assets, shall be fully paid by Seller
after the Closing Date. All such Tax Returns were correct and complete in all
respects. All Taxes owed by Seller (whether or not shown on any Tax Return)
have been paid. No claim has ever been made by an authority in a jurisdiction
where the Seller does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction. There are no liens for Taxes except for liens
for Taxes not yet due and payable.
(b) Seller has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
(c) As used in this Agreement, the term "Tax" and "Taxes" includes all
federal, state, local and foreign income, profits, franchise, gross receipts,
environmental, customs duty, capital stock, severance, stamp, payroll, sales,
employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of any
nature whatsoever, together with all interest, penalties and additions imposed
with respect to such amounts and any interest in respect of such penalties and
additions, and the term "Tax Returns" includes all returns and reports
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be supplied to a Tax authority relating to
Taxes.
3.22 Transactions with Affiliates. Except as set forth on Schedule 3.22
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attached hereto, neither Seller nor any affiliate of Seller nor any member of
Seller's immediate family, owns or has a controlling ownership interest in any
corporation or other entity that is a party to any agreement, commitment or
other arrangement with Seller in connection with the Business or the Purchased
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Assets. All disclosed transactions, if any, between Seller and an affiliate
thereof have been on substantially the same terms and conditions as similar
transactions between non-affiliated parties and are properly recorded on the
books and records maintained by Seller in connection with the Business.
3.23 Entire Business. The sale of the Purchased Assets to be sold by
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Seller to Purchaser pursuant to this Agreement shall effectively convey to
Purchaser the entire business of, and all of the tangible and intangible
property used by, Seller (whether owned, leased or held under license by Seller
or by others) in connection with the conduct of the Business as heretofore
conducted by Seller, except to the extent that Seller has used Seller's home in
the conduct of the Business. There are no material facilities, services, assets
or properties shared with any other person which are used by Seller in the
conduct of the Business, except to the extent that the Business has been and is
operated in the Seller's home. Seller is subletting space on a month-to-month
basis and the Assets of the Seller are located in such facilities.
3.24 Disclosure. There is no fact known to Seller which might materially
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and adversely affect the Business or the Purchased Assets which has not been
disclosed to Purchaser in this Agreement or a certificate, statement or other
document delivered by Seller.
4. Representations and Warranties of Purchaser. Purchaser represents and
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warrants to Seller as follows:
4.1 Organization and Good Standing. Purchaser is a corporation duly
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organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. Purchaser has full corporate power and authority
to conduct its business as now conducted and to own and operate the assets and
properties now owned and operated by it.
4.2 Power and Authority. Purchaser has the corporate power and authority
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to execute and deliver this Agreement, the Xxxx of Sale, Assignment and
Assumption Agreement, the Employment Agreement and the Consulting Agreements
(collectively, the "Purchaser Transaction Agreements") and to consummate and
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perform the transactions contemplated hereby and thereby. The execution,
delivery and performance by Purchaser of the Purchaser Transaction Agreements
and any other agreements, documents and instruments required to be delivered by
Purchaser in accordance with the provisions hereof have been duly authorized by
all necessary corporate action. The Purchaser Transaction Agreements have been
duly executed and delivered by or on behalf of Purchaser and constitute the
legal, valid and binding obligations of Purchaser, enforceable against Purchaser
in accordance with their respective terms, except as enforceability may be
limited by laws of general application relating to bankruptcy, reorganization,
moratorium, insolvency and debtors' relief and similar laws affecting the
enforcement of creditors' rights, and by general principles of equity.
4.3 Conflicts; Consents. The execution, delivery and performance of the
-------------------
Purchaser Transaction Agreements by Purchaser will not (i) violate or conflict
with the Articles of Incorporation, bylaws or other constitutional documents of
Purchaser; (ii) conflict with, or result in
-11-
the breach or termination of, or constitute a default under (whether with notice
or lapse of time or both), or accelerate or permit the acceleration of the
performance required by, any indenture, mortgage, lien, lease, agreement,
commitment or other instrument or any order, judgment or decree, to which
Purchaser is a party or by which it or its properties are bound; or (iii)
constitute a violation of any law, regulation, order, writ, judgment, injunction
or decree applicable to Purchaser, other than violations, conflicts, breaches,
terminations, accelerations and defaults specified in the foregoing clauses (ii)
and (iii) which could not reasonably be expected to have a material adverse
effect on Purchaser's ability to perform its obligations under any of the
Purchaser Transaction Agreements. No consent, approval or authorization of any
governmental authority is required on the part of Purchaser in connection with
the execution, delivery and performance of the Purchaser Transaction Agreements.
4.4 Valid Issuance of Common Stock of the Purchaser. The shares of Common
-----------------------------------------------
Stock of the Purchaser which are being issued to Seller hereunder, when issued,
sold and delivered in accordance with the terms hereof, shall be duly and
validly issued, fully paid and nonassessable and, assuming the accuracy of the
representations of Seller in this Agreement, will be issued in compliance with
all applicable federal and state securities laws. The Consideration will
constitute voting stock within the meaning of Section 368(a)(1)(C) of the
Internal Revenue Code of 1986, as amended.
4.5 SEC Documents. The Annual Report on Form 10-K for the year ended
-------------
December 31, 1998 and the Quarterly Report on Form 10-Q for the period ended
September 30, 1999 filed by Purchaser with the Securities and Exchange
Commission (the "SEC"), including all exhibits thereto (collectively, the "SEC
--- ---
Documents"), complied in all material respects with all applicable requirements
---------
of the Securities Act of 1933, as amended (the "Securities Act") and the
--------------
Securities Exchange Act of 1934, as amended, as in effect on the dates so filed.
None of the SEC Documents (as of their respective filing dates) contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
Purchaser has heretofore furnished to Seller copies of the SEC Documents.
4.6 Disclaimer.
----------
PURCHASER HAS NOT MADE ANY REPRESENTATION OR WARRANTY RELATING TO
PURCHASER, THE BUSINESS OF PURCHASER, THE COMMON STOCK OF THE
PURCHASER, OR OTHERWISE IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, OTHER THAN THOSE EXPRESSLY SET FORTH
IN THIS AGREEMENT, THE SCHEDULES HERETO AND THE DOCUMENTS TO BE
DELIVERED PURSUANT TO SECTION 2.2 HEREOF. IT IS UNDERSTOOD THAT ANY
ESTIMATES, PROJECTIONS OR OTHER PREDICTIONS, OR ANY OTHER DATA NOT
EXPRESSLY INCLUDED IN THIS AGREEMENT, THE
-12-
SCHEDULES HERETO OR THE DOCUMENTS DELIVERED PURSUANT TO SECTION 2.2
HEREOF, ARE NOT AND SHALL NOT BE DEEMED TO BE OR TO INCLUDE
REPRESENTATIONS OR WARRANTIES OF PURCHASER. EXCEPT AS SET FORTH
HEREIN, NO PERSON HAS BEEN AUTHORIZED BY PURCHASER TO MAKE ANY
REPRESENTATION OR WARRANTY RELATING TO PURCHASER, THE BUSINESS OF
PURCHASER , THE COMMON STOCK OF THE PURCHASER, OR OTHERWISE, IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY, AND IF MADE,
SUCH REPRESENTATION OR WARRANTY MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY PURCHASER.
5. Other Agreements.
----------------
5.1 Best Efforts. Subject to the respective rights and obligations of
------------
Seller and Purchaser under this Agreement, each party shall use its best efforts
to cause the transactions contemplated by this Agreement to be consummated in
accordance with Section 2 hereof.
5.2 Assignment of Contracts. If any required consent to the assignment of
-----------------------
any of the Business Contracts is not obtained or if an attempted assignment
thereof would be ineffective, Seller and Purchaser shall cooperate to provide
Purchaser with the benefits and obligations thereunder in accordance with such
agreement until such consent or effective assignment can be obtained or until a
replacement contract is in place. To the extent the assignment of any of the
Business Contracts is not obtained, Seller shall, to the extent legally
permissible, terminate such contract at the request of Purchaser.
5.3 Changing Trade Names. Seller shall take all steps necessary to change
--------------------
any trade names pursuant to which it conducted the business, to a name
dissimilar to the names by which the Business is known.
5.4 Bank Accounts; Cash. Seller agrees and covenants that any bank
-------------------
accounts or similar accounts held in connection with the Business in Seller's
name or in any other name as of the Closing Date shall be closed within sixty
business days of the Closing Date. Any cash or other payments received by
Seller after the Closing (except for the payments described on Schedule 1.2
hereto) in connection with the Business shall be directed to Purchaser as
Purchaser may direct. Seller shall provide to Purchaser copies of any and all
statements and all other correspondence with respect to such accounts received
on or after the Closing within five business days of receipt by Seller.
5.5 Transition of the Business. Purchaser and Seller shall use
--------------------------
commercially reasonable efforts to cooperate in an orderly transition of the
Business and transfer of the Purchased Assets to Purchaser. Without limiting
the generality of the foregoing, Seller will cooperate with Purchaser in
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migrating the contents and functionality of the Active Websites to such computer
systems as Purchaser shall direct.
5.6 Assignment of Intellectual Property. Seller shall, upon Purchaser's
-----------------------------------
request, take any and all actions necessary to transfer to Purchaser any and all
rights of Seller to the URLs, sites and contents of the Websites, including but
not limited to taking any and all actions necessary to effect the assignment of
the domain names for the Websites to Purchaser.
5.7 Software Licensing Agreements. Until the transition of the Business
-----------------------------
has been accomplished to the satisfaction of Purchaser or 90 calendar days after
the Closing Date, whichever occurs first, Seller hereby agrees (i) not to
terminate any and all software licensing agreements used by Seller in the
Business under which Seller is the licensee, and (ii) to maintain the existing
content and functionality of the Active Websites. Any costs associated with the
foregoing incurred on or after the Closing Date shall be borne by Purchaser.
5.8 Customers. Seller agrees and acknowledges that effective as of the
---------
Closing users accessing the Active Websites and any and all other customers of
the Business shall be considered customers of Purchaser and that Purchaser shall
have the right to contact such customers in any manner and for any reason as
Purchaser in its sole discretion deems appropriate.
5.9 Purchaser Common Stock Options. Purchaser has reserved up to 30,000
------------------------------
shares of the Common Stock of the Purchaser for grants of options (the
"Purchaser Options") to Xxxxx Xxxxxxx after the Closing Date. The Purchaser
-----------------
Options shall be granted under Purchaser's 1999 Equity Compensation Plan (the
"Plan") and in accordance with Purchaser's stock option policies. As required
----
under the terms of the Plan, granting of the Purchaser Options shall be subject
to the prior approval of the Compensation Committee of Purchaser's Board of
Directors. All Purchaser Options shall be granted with an exercise price equal
to the closing price of the Common Stock of the Purchaser on the date of grant
(or if such day is not a trading day, the last trading day prior to the date of
grant). For the purposes of this Section 5.9, the closing price of Common Stock
of the Purchaser on a trading day shall be the day's last trade price as
reported by the Nasdaq National Market. The Purchaser Options shall vest in
accordance with Purchaser's customary four-year vesting schedule.
5.10 Non-Competition Agreement
-------------------------
(a) For a period of three (3) years from and after the Closing Date,
the Shareholders hereby agree that they will not directly or indirectly own,
manage, operate, finance, join, control or participate in the ownership,
management, operation, financing or control of, or be connected as an officer,
employee, partner, principal, agent, representative, consultant or otherwise
with any business or enterprise engaged anywhere in the world that shall be
competitive with any of those activities in which the Purchaser or the
Shareholders were engaged in business at any time within two (2) years prior to
the date hereof, including without limitation any business or enterprise that:
-14-
(i) is engaged in the business of (i) owning or operating
industrial trade communities or portal sites on the Internet specializing in
government contracts, or (ii) owning or operating industrial trade communities
or portal sites on the Internet which are competitive with any industrial trade
communities operated or planned by VerticalNet, provided that the Shareholders
must have knowledge of such planned communities; and/or
(ii) is a competitor of VerticalNet, as set forth on the attached
Exhibit I; provided, however, that: (i) Xxxxxxx Xxxxx and Xxxxx Xxxxx shall be
---------
permitted to directly or indirectly own, manage, operate, join or participate in
the ownership, management, operation, financing or control of, or be connected
as an officer, employee, partner, principal, agent, representative, consultant
or otherwise with any business that purchases, licenses or enters into a co-
branding agreement or other similar arrangement with respect to the "AppSuite"
or "xxxxxxxxxxxx.xxx" websites or products (or such other name that may be used
for such business), and (ii) Xxxxx Xxxxxxxx shall be permitted to directly or
indirectly own, manage, operate, join or participate in the ownership,
management, operation, financing or control of, or be connected as an officer,
employee, partner, principal, agent, representative, consultant or otherwise
with respect to Mondial Marketing, Inc. or the "xxxxxxxxxx.xxx" website (or such
other name that may be used for such business).
(b) The Shareholders shall be permitted to own securities of a public
company not in excess of five percent (5%) of any class of such securities and
to own stock, partnership interests or other securities of any entity not in
excess of five percent (5%) of any class of such securities and such ownership
shall not be considered to be in competition with the Company.
(c) Each Shareholder acknowledges and understands that (i) the
Purchaser is and will be relying upon the agreements made by the Shareholders in
this Section 5.10 in entering into this Agreement and consummating the
transactions contemplated hereby; (ii) the restrictions contained in this
Section 5.10 are reasonable and necessary to protect the legitimate interests of
the Purchaser, and that any violation will result in irreparable injury to the
Purchaser, (iii) that the covenants contained in this Section 5.10 are
reasonable as to geographic and temporal scope and that such restrictions are
intended solely to protect the legitimate interests of the Purchaser, rather
than to prevent the Shareholders from earning a livelihood; (iv) that the
Purchaser competes for the industrial trade community market on the Internet on
a worldwide basis, and that the Employee's access to confidential information
makes it necessary for the Purchaser to restrict the Employee's activities in
all markets where the Purchaser competes and where the Employee's access to
confidential information and other proprietary information could be used to the
detriment of the Purchaser; and (v) that the Purchaser has the skills and
training to be able to continue to earn a livelihood without violating the terms
of the covenants contained in this Section 5.10.
(d) The Shareholders agree that the Purchaser shall be entitled to
preliminary and permanent injunctive relief, without the necessary or proving
actual damages, as well as an equitable accounting of all earnings, profits and
other benefits arising from any violation of this Section 5.10,
-15-
which rights shall be cumulative and in addition to any other rights or remedies
to which the Purchaser may be entitled. In the event that any of the provisions
of this Section 5.10 should ever be adjudicated to exceed the time, geographic,
product or service, or other limitations permitted by applicable law in any
jurisdiction, then such provisions shall be deemed reformed in such jurisdiction
to the maximum time, geographic, product or service, or other limitations
permitted by applicable law.
5.11 Tax-Free Reorganization. The parties to this Agreement intend that
-----------------------
the transactions provided for in this Agreement shall constitute a
reorganization as defined in Section 368(a)(1)(C) of the Internal Revenue Code
of 1986, as amended, for income tax purposes. Notwithstanding anything to the
contrary in this Agreement nor in any other instrument executed pursuant to this
Agreement, the parties shall not take or make any action that would prevent such
qualification. Each of the parties shall complete all relevant tax returns
consistent with such qualification and shall not take any positions inconsistent
with such qualification.
5.12 Liquidation of Seller. Seller shall take all steps necessary to
---------------------
liquidate simultaneously or within the time period thereafter required pursuant
to Section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended.
6. Covenants of Purchaser.
----------------------
6.1 Registration Rights.
-------------------
(a) Purchaser shall prepare and use its best efforts, and no later
than March 31, 2000 (the "Required Filing Date") to file with the Commission a
registration statement with respect to the resale of the shares received as
Consideration (the "Shares") by the Seller or its permitted assignees (the
"Required Registration Statement") and thereafter shall cause such registration
statement to be declared effective under the Securities Act as promptly as
practicable but in no event later than May 31, 2000 (the "Required Effective
Date"). Purchaser shall file a notification form for the listing of additional
shares to cover the listing of the Shares on the Nasdaq National Market, or such
other market or exchange, if any, on which the Common Stock shall trade.
Purchaser shall use its best efforts to cause the Required Registration
Statement to remain effective for a period of one year. Purchaser acknowledges
that Seller is relying on Purchaser's commitment to cause the Required
Registration Statement to become effective not later than the Required Filing
Date, and agrees that if for any reason the Required Registration Statement is
not declared effective by such date (as it may be extended as herein provided),
even if Purchaser is using its best efforts to cause such effectiveness to be
declared, then Seller shall be entitled to recover damages for any consequential
loss incurred.
(b) If Purchaser proposes to file a registration statement with
respect to the Common Stock prior to the filing of the Required Registration
Statement, Purchaser shall give prompt notice to the Seller and will include in
such registration (the "Piggyback Registration") subject to the allocation
provisions discussed in Section 6.1(d) and 6.1(e), all Shares with respect
-16-
to which Purchaser has received written request for inclusion within five (5)
Business Days after such notice is given by Purchaser; provided, however, that
the Seller shall have no Piggyback Registration rights in connection with a
registration statement filed in connection with Purchaser's 5 1/4% Convertible
Subordinated Debentures (the "Convertible Debentures"). No Purchaser
registration statement shall be declared effective unless and until the Required
Registration Statement shall have been declared effective, except for the
registration statement for the Convertible Debentures or if the Required
Registration Statement is not being declared effective due to a comment from the
Commission that relates only to a Seller.
(c) Purchaser will pay the expenses related to registration of the
Shares; provided, however, the Seller shall pay any underwriting commissions
related to the registration of the Shares.
(d) If a Piggyback Registration is an underwritten primary
registration on behalf of Purchaser and the managing underwriter advises
Purchaser in writing that marketing factors require a limitation on the number
of Shares to be offered and sold, there shall be included in the offering only
that number of Shares, if any, that such managing underwriter reasonably
believes, in its sole discretion, will not jeopardize the success of the
offering.
(e) If a Piggyback Registration is initiated as an underwritten
secondary registration on behalf of the holders of the Common Stock, and the
managing underwriters advise Purchaser in writing that marketing factors require
a limitation on the number of Shares to be offered and sold, Purchaser will
allocate the securities to be included as follows: pro rata on the basis of the
number of shares of Common Stock owned among (i) any other Person selling in the
registration and (ii) the Seller.
(f) If a Piggyback Registration is underwritten, the Seller shall not
be entitled to select the investment bank(s) or manager(s) nor shall the Seller
be entitled to make decisions regarding the underwriting arrangements for the
offering.
(g) If, prior to the Required Filing Date, Purchaser files a
registration statement with the Commission covering shares of its Common Stock
underlying the Convertible Debentures, Purchaser shall, within five (5) Business
Days of such filing, file the Required Registration Statement.
(h) Purchaser shall have no obligations under this Section 6.1 until
the Closing Date. If Purchaser files a registration statement covering shares of
its Common Stock underlying the Convertible Debentures prior to the Closing,
Purchaser, shall, within five (5) Business Days after the Closing, file a
registration statement covering the Shares.
7. Securities Act and Restrictions on Purchaser Stock.
--------------------------------------------------
7.1 Purchase Entirely for Own Account. The Seller Parties acknowledge and
---------------------------------
agree that the shares of Common Stock of the Purchaser to be received by the
Shareholders as a distribution
-17-
from the Seller, will be acquired for investment for Shareholder's own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that Shareholders have no present intention of selling,
granting any participation in, or otherwise distributing the same, but subject
to the ability of Shareholders to distribute Shareholders assets (including the
Consideration) to Shareholders affiliates (as such term is defined in Section
144 of the Securities Act).
7.2 Investment Experience. The Shareholders represent and warrant that
---------------------
Shareholders can bear the economic risk of an investment in Common Stock of the
Purchaser acquired pursuant to this Agreement and have such knowledge and
experience in financial or business matters that Shareholders are capable to
protect Shareholder's own interests in connection with the acquisition of Common
Stock of the Purchaser.
7.3 Information Supplied. Shareholders represent and warrant that
--------------------
Shareholders have had an adequate opportunity to ask questions and receive
answers from the officers of Purchaser concerning the terms and conditions of
the transaction contemplated by this Agreement and the shares of Common Stock of
the Purchaser to be issued in connection therewith. Shareholders represent and
warrant that Shareholders have asked any and all questions that Shareholders may
have in the nature described in the preceding sentence and that all such
questions have been answered to Shareholder's satisfaction. Shareholders
represent and warrant that Shareholders have reviewed the SEC Documents and that
Shareholders have had adequate opportunity to ask questions of and has received
answers to Shareholder's satisfaction from the officers of Purchaser concerning
the matters described therein.
7.4 Restricted Securities. Shareholders understand that the shares of
---------------------
Common Stock of the Purchaser to be received by Shareholders are characterized
as "restricted securities" under the federal securities laws inasmuch as they
are being acquired from Purchaser in a transaction not involving a public
offering and that under such laws and applicable regulations such securities may
not be resold without registration under the Securities Act, except in certain
limited circumstances. In this connection, Shareholders represent that
Shareholders are familiar with Rule 144 under the Securities Act, as presently
in effect, and understands the resale limitations imposed thereby and by the
Securities Act.
7.5 Further Limitations on Disposition. Without in any way limiting the
----------------------------------
representations set forth above, Shareholders further agree not to make any
disposition of all or any portion of the shares representing the Stock
Consideration except to Shareholder's affiliates unless and until:
(a) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
(b) Shareholders shall have notified Purchaser of the proposed
disposition and shall have furnished Purchaser with a detailed statement of the
circumstances surrounding the proposed disposition, and if reasonably requested
by Purchaser, Shareholders shall have furnished
-18-
Purchaser with an opinion of counsel, reasonably satisfactory to Purchaser, that
such disposition will not require registration of such shares under the
Securities Act. It is agreed that Purchaser will not require opinions of counsel
for transactions made pursuant to Rule 144 by Shareholders except in unusual
circumstances.
Notwithstanding the provisions of paragraphs (a) and (b) above, no such
registration statement or opinion of counsel shall be necessary for a transfer
by Shareholders (i) to an affiliate of Shareholders, or the transfer by gift,
will or intestate succession to Shareholder's spouse or lineal descendants or
ancestors, if the transferee agrees in writing to be subject to the terms of
this Section 7 to the same extent as if he or she were Shareholders, or (ii) at
any time after the provisions of subparagraph (k) of Rule 144 are applicable to
Shareholders.
7.6 Legends. It is understood that the certificates evidencing the
-------
Consideration may bear the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
ANY STATE SECURITIES OR BLUE SKY LAWS. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE
SECURITIES UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES AND BLUE SKY LAWS OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF THE
SECURITIES ACT."
7.7 Reporting Requirements. Purchaser covenants and agrees that it shall
----------------------
remain current with respect to all SEC reporting requirements to which Purchaser
is subject.
-19-
8. Indemnification.
---------------
8.1 Survival. All of the representations, warranties, covenants and
--------
obligations contained in this Agreement or in any instrument or document
delivered pursuant to this Agreement shall survive the execution of this
Agreement and the Closing, notwithstanding any investigation heretofore or
hereafter made by or on behalf of any party hereto; provided, however, that all
-------- -------
representations and warranties contained in this Agreement, and the obligations
of Seller Parties and Purchaser to indemnify each other for breaches thereof as
set forth in this Section 8, shall survive and continue for, and all
indemnification claims with respect thereto shall be made within, two years
following the Closing Date, except for (i) the indemnification obligations
related to Section 8.2(a) which shall survive until expiration of the applicable
statute of limitations, and (ii) the representations, warranties and related
indemnification obligations for which notice of an indemnification claim shall
have been received as of the end of the applicable period referred to in this
Section 8.1, which shall survive with respect to such indemnification claim
until the final disposition thereof.
8.2 Indemnification by Seller Parties. Seller Parties shall reimburse and
---------------------------------
indemnify and hold Purchaser and each of its directors, officers, shareholders,
employees, representatives and agents (collectively, the "Purchaser Parties")
-----------------
harmless against and in respect of any and all damage, loss, liability,
deficiency, settlement payments, costs, levies, expenses or obligations,
whether or not the result of a third party claim (collectively, "Damages"), in
-------
connection with, resulting from or relating to:
(a) any and all liabilities or obligations of any nature whatsoever
of or relating to claims for federal, state, local, foreign or other taxes
assessed against Purchaser, the Business or the Purchased Assets, which arise
out of or are related to Seller's operation or conduct of the Business prior to
the Closing, and not specifically assumed by Purchaser hereunder.
(b) any and all liabilities or obligations of any nature whatsoever
of or relating to Seller, or relating to or arising out of the Purchased Assets
prior to the Closing Date, Seller's operation of the Business prior to the
Closing Date or the actions of Seller's employees, representatives or agents;
(c) any misrepresentation, breach of warranty or nonfulfillment of
any covenant or agreement on the part of Seller Parties under this Agreement;
(d) any and all actions, suits, claims, allegations, proceedings,
investigations, audits, demands, assessments, fines, judgments, settlements,
levies, costs and other expenses (including without limitation reasonable audit
and legal fees) incident to any of the foregoing; and
(e) any claim that any content provided by Seller for use on any of
Purchaser's websites constitutes a defamation or invasion of the right of
privacy or publicity, or infringement of the copyright, trademark or other
intellectual property right, of any third party.
-20-
8.3 Indemnification by Purchaser. Purchaser shall reimburse and indemnify
----------------------------
and hold Seller Parties and each of its directors, officers, shareholders,
employees, representatives and agents harmless against and in respect of any
Damages in connection with, resulting from or relating to:
(a) any and all liabilities or obligations of any nature whatsoever
of or relating to claims for federal, state, local, foreign or other taxes
assessed against Seller which arise out of or are related to Purchaser's
operation or conduct of the Business after the Closing (excluding any claims
with respect to tax filings made after the Closing relating to the period prior
to the Closing);
(b) any and all liabilities or obligations of any nature whatsoever
of or relating to the Business (except for those liabilities and obligations of
or relating to Seller or the Business existing as of the Closing Date not
included among the Assumed Obligations) arising out of Purchaser's operation of
the Business after the Closing;
(c) any misrepresentation, breach of warranty or nonfulfillment of
any covenant or agreement on the part of Purchaser under this Agreement;
(d) any and all actions, suits, claims, allegations, proceedings,
investigations, audits, demands, assessments, fines, judgments, settlements,
levies, costs and other expenses (including without limitation reasonable audit
and legal fees) incident to the foregoing; and
(e) any and all sales or use tax imposed upon Seller under state law
as a consequence of the acquisition contemplated herein.
8.4 Procedure for Indemnification. If any claim is made against a party
-----------------------------
(an "Indemnified Party") that, if sustained, would give rise to a liability of
-----------------
another party (the "Indemnifying Party") under this Agreement, the Indemnified
------------------
Party shall promptly, and in any case within seven (7) calendar days, cause
notice of the claim to be delivered to the Indemnifying Party along with all of
the facts, information or materials relating to such claim of which the
Indemnified Party is aware and shall afford the Indemnifying Party and its
counsel, at the Indemnifying Party's sole expense, the opportunity to defend or
settle the claim.
(a) The Indemnifying Party shall have thirty (30) calendar days after
delivery thereof to elect, in writing to the Indemnified Party, to defend or
settle the claim, exercising reasonable business judgment, at its own expense.
Until written notice electing to defend or settle any claim that, if sustained,
would give rise to a liability under this Agreement, the Indemnified Party may
take, at the expense of the Indemnifying Party, any action it reasonably
believes necessary to preserve its rights with respect to such claim, after
promptly notifying the Indemnifying Party of its intention to take such action
and the Indemnifying Party does not elect to take such other action.
(b) If the Indemnifying Party shall so elect to defend or settle the
claim, the Indemnifying Party may not settle such claim without the prior
written consent of the Indemnified
-21-
Party, which consent shall not be unreasonably withheld; provided that, if the
--------
Indemnified Party does not consent to such a settlement, the Indemnifying
Party's liability to indemnify the Indemnified Party for such claim shall be
limited to the expenses and costs reasonably necessary to preserve its rights to
such claim (other than any costs of counsel retained by the Indemnified Party
solely to monitor the Indemnifying Party's obligations hereunder) that the
Indemnified Party has incurred up to the time of the proposed settlement plus
the amount of the proposed settlement. The Indemnified Party agrees to use
commercially reasonable efforts to cooperate with the Indemnifying Party in
defending any claim, at the Indemnifying Party's expense.
(c) If the Indemnifying Party shall fail to so elect to defend or
settle such claim (exercising reasonable business judgment) at its own expense,
within thirty (30) calendar days of delivery of notice of the claim, or
otherwise so fail to defend or settle the claim, the Indemnified Party shall
have the right, but not the obligation, to undertake the defense of and to
settle (exercising reasonable business judgment) the claim on behalf, for the
account and at the risk, of the so failing party. The Indemnified Party shall
use commercially reasonable efforts to settle any such claim at commercially
reasonable amounts determined in good faith by the Indemnified Party.
(d) In the event the Indemnified Party should have a claim against
the Indemnifying Party that does not involve a claim or demand by a third party,
the Indemnified Party shall promptly cause notice of such claim to be delivered
to the Indemnifying Party. The Indemnifying Party shall have fifteen (15)
calendar days after delivery thereof to elect, in writing to the Indemnified
Party, to settle the claim at its own expense. If the Indemnifying Party (i)
does not notify the Indemnified Party within fifteen (15) calendar days after
the Indemnified Party's notice that it disputes such claim or (ii) notifies the
Indemnified Party that it does not dispute such claim, the amount of such claim
shall be conclusively deemed as a liability of the Indemnifying Party. If the
Indemnifying Party notifies the Indemnified Party within the 15-day period that
it disputes such claim, the Indemnifying Party and the Indemnified Party shall
attempt in good faith for a period of twenty (20) calendar days to settle any
such dispute.
8.5 Limitations on Indemnification. No Indemnifying Party shall be
------------------------------
obligated to make any payment to an Indemnified Party pursuant to this Section 8
until such time as all claims for indemnification made by such Indemnified Party
pursuant to this Section 8 exceed $20,000 in the aggregate, at which point the
Indemnifying Party shall be obligated to make payment for all claims of such
Indemnified Party pursuant to this Section 8, but only to the extent such
claims, in the aggregate, exceed such initial $20,000 of claims; provided,
--------
however, that in no event shall an Indemnifying Party be liable under this
-------
Section 8 for an amount which is in excess of the Purchase Price in the
aggregate.
8.6 Other Remedies. The indemnity of this Section 8 shall be the exclusive
--------------
remedy of any party for a breach, misrepresentation, nonfulfillment,
or default in the performance of the representations, warranties, covenants, or
agreements of this Agreement or any certificate, exhibit, or schedule
contemplated hereby, except in the event of actual fraud or fraud in the
inducement.
-22-
9. Miscellaneous.
-------------
9.1 Broker's Fees. Each of the parties hereto (a) represents and warrants
-------------
that it, he or she (as the case may be) has not taken and will not take any
action that would cause any other party hereto to have any obligation or
liability to any person for a finder's or broker's fee except as may be agreed
to in writing and (b) agrees to indemnify the other parties hereto for breach of
the foregoing representation and warranty.
9.2 Expenses. Each party hereto shall pay its, his or her (as the case may
--------
be) own expenses, including without limitation the reasonable fees and expenses
of its, his or her counsel, incurred in connection with this Agreement and the
transactions contemplated hereby.
9.3 Bulk Sales Compliance. Purchaser hereby waives compliance by Seller
---------------------
with the provisions of the Bulk Sales Law of any state which may be applicable
to this transaction. In consideration of such waiver, Seller Parties agree to
defend and indemnify Purchaser against and hold it harmless from any and all
loss, liability, claims, damage or expense (including reasonable attorneys'
fees) arising out of or resulting from such noncompliance, provided that such
loss, liability, claim, damage or expense was not caused by Purchaser's conduct
of the Business.
9.4 Contents of Agreement; Amendment; Parties in Interest; Assignment;
------------------------------------------------------------------
Etc. This Agreement, which includes all schedules and exhibits hereto, sets
---
forth the entire understanding of the parties hereto with respect to the subject
matter hereof. There are no restrictions, promises, representations,
warranties, covenants or undertakings other than those expressly set forth or
referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties, including, without limitation, that certain
letter of intent bearing a November 24, 1999 date (the "Letter of Intent")
----------------
entered into by Seller Parties and Purchaser which is hereby rendered null and
void ab initio; provided, however, that Section 4 of the Letter of Intent shall
-- ------ -------- -------
survive and continue in full force and effect. This Agreement may be amended,
modified or supplemented only by written instrument duly executed by each of the
parties hereto. All representations, warranties, covenants, terms and
conditions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the respective heirs, legal representatives, successors
and permitted assigns of the parties hereto. No party hereto shall assign this
Agreement or any right, benefit or obligation hereunder to any other party
without obtaining the prior written consent of the other party; provided,
--------
however, that Purchaser may assign its rights and benefits hereunder, including
-------
without limitation the benefit of any representation, warranty or covenant, to
any affiliated entity and shall provide Seller with written notice thereof;
provided further, that no such assignment shall release Purchaser from its
-------- -------
obligations hereunder. Any term or provision of this Agreement may be waived at
any time by the party entitled to the benefit thereof by a written instrument
duly executed by such party.
9.5 Notices. All notices and other communications hereunder shall be in
-------
writing (including wire, telefax or similar writing) and shall be delivered,
addressed, or telefaxed as follows:
-23-
If to Purchaser:
VerticalNet, Inc.
000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xx. Xxxx X. Xxxxxx
Facsimile: 215.784.1968
with a required copy to (which copy shall not constitute notice):
Xxxxxx, Xxxxx & Xxxxxxx LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attn: Xxxxx X. XxXxxxxx, Esquire
Facsimile: 215.963.5299
If to Seller:
GovCon, Inc.
0000 Xxxxxxxx Xxxx. -- 0/xx/ xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxx
Xxxxx X. Xxxxxxxx
00000 Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Xxxxxxx Xxxxx
0000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
with a required copy to (which copy shall not constitute notice):
Law Offices of Xxxxxx X. Xxxxxxx
000 Xxxxxxxxx Xxxxxx, X.X. - 2/nd/ floor
Xxxxxxxxxx, X.X. 00000
Attn: Xxxx Xxxxxxx, Esq.
Facsimile: 202.393.2411
Each such notice, request or other communication shall be given by hand
delivery, by nationally recognized courier service or by telefax, receipt
confirmed. Each such notice, request or communication shall be effective (i) if
delivered by hand or by nationally recognized courier service, when delivered at
the address specified in this Section 9.5 (or in accordance with the
-24-
latest unrevoked written direction from such party); (ii) if given by telefax,
when such telefax is transmitted to the telefax number specified in this Section
9.5 (or in accordance with the latest unrevoked written direction from such
party), and the appropriate confirmation is received.
9.6 Severability. The invalidity of any provision of this Agreement or
------------
portion of a provision shall not affect the validity of any other provision of
this Agreement or the remaining portion of the applicable provision.
9.7 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND INTERPRETED IN
-------------
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT REGARD TO
ITS PROVISIONS CONCERNING CONFLICT OF LAWS.
9.8 Public Announcements. Seller shall not make any public statements,
--------------------
including without limitation, any press releases, with respect to this Agreement
and the transactions contemplated hereby without the prior consent of Purchaser,
except as may be required by law.
9.9 Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be considered an original and all of which
together shall constitute the same instrument. It shall not be necessary in
making proof of this Agreement or any counterpart hereof to produce or account
for any of the other counterparts.
9.10 Further Assurances. Each party hereto agrees to execute any and all
------------------
documents, and to perform such other acts, to the extent permitted by law, that
may be reasonably necessary or expedient to further the purposes of this
Agreement or to further assure the benefits intended to be conferred hereby.
9.11 Incorporation of Exhibits and Schedules. The exhibits and schedules
---------------------------------------
identified in this Agreement are incorporated herein by reference and made a
part hereof. The term "Agreement" shall include all such exhibits, schedules,
---------
certificates, and writings.
9.12 Rights of Third Parties. Nothing in this Agreement shall be construed
-----------------------
as giving any person, firm, corporation, or other entity, other than the parties
who are signatory hereto and their respective successors and permitted assigns,
any right, remedy, or claim under or in respect of this Agreement or any
provision hereof.
* * *
-25-
IN WITNESS WHEREOF, this Asset Exchange Agreement and Plan of
Reorganization has been executed by the parties hereto as of the day and year
first written above.
PURCHASER:
VERTICALNET, INC., a Pennsylvania corporation
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
COMPANY:
GOVCON, INC., a Delaware corporation
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
SHAREHOLDERS:
___________________________________________
XXXXX X. XXXXXXXX
___________________________________________
XXXXXXX XXXXX
___________________________________________
XXXXX XXXXX
___________________________________________
XXXXX XXXXXXX
S-1
Schedule 1.1(b)
---------------
I-1
Schedule 1.2
------------
I-2
Schedule 1.5
------------
Xxxxx X. Xxxxxxxx 40.8%
Xxxxxxx Xxxxx 19.6%
Xxxxx Xxxxx 19.6%
Xxxxx Xxxxxxx 20%
I-3
Schedule 3.3
------------
I-4
Schedule 3.8
------------
I-5
Schedule 3.9
------------
I-6
Schedule 3.10
-------------
I-7
Schedule 3.11
-------------
I-8
Schedule 3.13
-------------
I-9
Schedule 3.15
-------------
I-10
Schedule 3.19
-------------
I-11
Schedule 3.22
-------------
I-12
EXHIBIT I
---------
List of Competitors
3DNet
Xxxxx Publishing
Advanstar
AndoverNet
Aspect
Biomednet
Biz Xxxxx.xxx
Bio Online
BizPro Link
Cahners
Canon Publishing
Chemdex
Chem Web
Chemtronics
Chip Center
Cintas
CMI
Xxxxx Communications
Discoveryplace
xxxx.xxx
E-steel
Xxxxxx
FMC
Grainger
Gulf
Xxxxxx infoSource
Harts
xxxxxxxxxxx.xxx
Xxx.xxx
Instill
Xxxxxx
Xxxxxxxxxx-Raven
Medexplorer
Xxxxxx Xxxxxxx
Nepforma
Manufacturing Marketplace
Marshalls
McGraw Hill
Metal Site
I-13
Netbuy
Noranda
Order Zone
Pall corp
Partminer
Pennwell
Penton
Xxxxxxxx
PlasticsNet
Primedia
Xxxxxxxxxxx.xxx
Questlink
SciQuest
Stagnito
Summit Publishing
Technologynet
Xxxxxx Publishing
Trade Compass
Tradex
Trade Out
VWR
Xxxxx Publishing
York International
I-14
