Exhibit 2.1
Execution Copy
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of April 1, 2004, by
and among Jupitermedia Corporation, a Delaware corporation ("Buyer"), Xxxxxxxx,
Inc., a Delaware corporation ("Seller") and with regard to certain provisions,
Xxxxx Xxxxxxx, Xxxxxxxx X. Xxxxxx, Xxxx Xxxxxxx, Xxxxxxx Xxxxxxx and Xxxxxx
Xxxxxxx (collectively the "Seller Shareholders").
WITNESSETH:
WHEREAS, Seller is in the business of producing and distributing premium
quality professional/commercial photographs and imagery in digital and other
formats (the "Business");
WHEREAS, Buyer desires to acquire from Seller, and Seller desires to sell
to Buyer, all of the assets, properties and rights of Seller used in connection
with or otherwise relating to the Business; and
WHEREAS, the Board of Directors of Seller has determined that it is in the
best interests of Seller to sell such assets, properties and rights to Buyer,
upon the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.01 Definitions.
The following terms, as used herein, have the following meanings:
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with such other
Person.
"Agreement" is defined in the preamble to this Agreement.
"Ancillary Agreements" is defined in Section 2.07 of this Agreement.
"Assumed Liabilities" is defined in Section 2.03 of this Agreement.
"Benefit Arrangement" means an employment, severance or similar contract,
arrangement or policy and each plan or arrangement providing for severance pay,
life insurance or health care coverage (including any self-insured
arrangements), flexible spending accounts or cafeteria benefit programs under
Code Section 125, workers' compensation, disability benefits,
dependent care benefits, supplemental unemployment benefits, vacation benefits,
pension or retirement benefits or providing for deferred compensation,
profit-sharing, cash or stock bonuses, stock options, stock appreciation rights,
stock purchase or other forms of incentive compensation or post-retirement life
insurance, health care or disability coverage that (i) is not an Employee Plan
and (ii) is maintained or contributed to by Seller or any of its ERISA
Affiliates.
"Xxxx of Sale and General Assignment" means the Xxxx of Sale and General
Assignment in substantially the form attached hereto as Exhibit A
"Business" is defined in the first recital of the preamble to this
Agreement.
"Buyer" is defined in the preamble to this Agreement.
"Buyer Plan" is defined in Section 6.01 of this Agreement.
"Closing" is defined in Section 2.07 of this Agreement.
"Closing Date" is defined in Section 2.07 of this Agreement.
"Closing Date Cash Payment" is defined in Section 2.06 of this Agreement.
"COBRA" is defined in Section 6.01 of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" means the confidentiality agreement between
Buyer and Seller dated February 17, 2004.
"Contracts" means all contracts, agreements, leases, licenses, commitments,
sales and purchase orders and other instruments (whether written or oral,
express of implied).
"Copyright Assignment Agreement" means that certain Copyright Assignment
Agreement between Buyer and Seller in substantially the form attached hereto as
Exhibit B.
"Domain Name Assignment Agreement" means that certain Domain Name
Assignment Agreement between Buyer and Seller in substantially the form attached
hereto as Exhibit C.
"Employee Plan" means each "employee benefit plan" of Seller, as such term
is defined in Section 3(3) of ERISA, that (i) is subject to any provision of
ERISA and (ii) is maintained or contributed to by either Seller or any of its
ERISA Affiliates.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" of any entity means any other entity that, together with
such entity, would be treated as a single employer under Section 414(b), (c),
(m) or (o) of the Code.
"Escrow Agent" means JPMorgan Chase Bank.
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"Escrow Agreement" means the Escrow Agreement by and among Buyer, Seller
and the Escrow Agent, dated as of the date hereof, in substantially the form
attached hereto as Exhibit F.
"Escrow Amount" is defined in Section 2.06 of this Agreement.
"Excluded Assets" is defined in Section 2.02 of this Agreement.
"Excluded Contracts" is defined in Section 2.02 of this Agreement.
"Excluded Liabilities" is defined in Section 2.04 of this Agreement.
"GAAP" means generally accepted accounting principals in the United States,
as consistently applied.
"Indemnified Person" is defined in Section 8.03 of this Agreement.
"Indemnifying Person" is defined in Section 8.03 of this Agreement.
"Intellectual Property" shall mean all of the following: (i) trademarks and
service marks, logos, trade dress, product configurations, trade names,
corporate names and other indications of origin, applications or registrations
in any jurisdiction pertaining to the foregoing and all goodwill associated
therewith; (ii) inventions (whether or not patentable), discoveries,
improvements, ideas, know-how, formula methodology, research and development,
business methods, processes, technology, software (including password
unprotected interpretive code or source code, object code, development
documentation, programming tools, drawings, specifications and data) and
applications or patents in any jurisdiction pertaining to the foregoing,
including re-issues, continuations, divisions, continuations-in-part, renewals
or extensions; (iii) trade secrets, including confidential information and the
right in any jurisdiction to limit the use or disclosure thereof; (iv)
copyrights in writings, designs, software, mask works, photographs, images,
graphics or other works, applications or registrations in any jurisdiction for
the foregoing and all moral rights related thereto; (v) database rights; (vi)
Internet Web sites, Web pages, domain names and applications and registrations
pertaining thereto and all intellectual property used in connection therewith or
contained therein; (vii) all rights under agreements relating to the foregoing;
(viii) books and records pertaining to the foregoing; and (ix) claims or causes
of action arising out of or related to past, present or future infringement or
misappropriation of the foregoing.
"Intellectual Property Agreements" means the Copyright Assignment
Agreement, the Trademark Assignment Agreement, the Patent Assignment Agreement
and the Domain Name Assignment Agreement.
"IRS" means the Internal Revenue Service.
"knowledge of the Seller," "Seller's knowledge" and other similar phrases
with respect to the Seller mean the actual knowledge of the officers and
directors of the Seller and also means the knowledge that such individuals would
have had after making due inquiry of Seller's employees and upon conducting a
reasonably comprehensive investigation concerning the relevant fact or subject
matter.
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"Lien" means, with respect to any asset, any mortgage, lien (including any
tax lien), pledge, charge, security interest or encumbrance of any kind in
respect of such asset.
"Listed Intellectual Property" is defined in Section 3.14 of this
Agreement.
"Losses" is defined in Section 8.02 of this Agreement.
"Material Adverse Effect" means any change in or effect on the Business of
Seller or the Purchased Assets that, individually or in the aggregate (taking
into account all other such changes or effects), is, or could reasonably be
deemed to be, materially adverse to the business, assets, condition (financial
or otherwise) or results of operations of the Business taken as a whole.
"Owned Intellectual Property" is defined in Section 3.14 of this Agreement.
"Patent Assignment Agreement" means that certain Patent Assignment
Agreement between Buyer and Seller in substantially the form attached hereto as
Exhibit D.
"Permits" is defined in Section 3.11 of this Agreement.
"Person" means an individual, corporation, partnership, association, trust
or other entity or organization, including a government or political subdivision
or an agency or instrumentality thereof.
"Purchase Price" is defined in Section 2.06 of this Agreement.
"Purchased Assets" means all assets, properties and rights of the Seller
used for or in connection with the Business, including without limitation the
Seller Intellectual Property and those assets, properties and rights listed on
Schedule 2.01 and the rights arising under the Contracts set forth on Schedule
3.10, but excluding the Excluded Assets and the Excluded Contracts.
"Receivables" is defined in Section 3.13 of this Agreement.
"Representatives" means Seller's or Buyer's respective officers, directors,
employees, accountants, counsel, consultants, advisors, agents and Affiliates.
"Required Consent" is defined in Section 3.04 of this Agreement.
"Seller" is defined in the preamble to this Agreement. All references to
Seller in this Agreement shall include the Seller and its Subsidiaries, unless
the context otherwise requires.
"Seller Intellectual Property" is defined in Section 3.14 of this
Agreement.
"Seller Shareholders" is defined in the preamble to this Agreement.
"Subsidiaries" means Xxxxxxxx (Luxembourg), S.ar.l, and Xxxxxxxx Photofile,
Limited, each a wholly-owned subsidiary of Seller.
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"Tax" means any federal, state, local or foreign income, gross receipts,
franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer,
registration, value added, excise, natural resources, severance, stamp, customs,
duties, real property, personal property, goods, services, capital stock, social
security, unemployment, disability, payroll, license, employee or other
withholding, or other tax, of any kind whatsoever, and including any interest,
penalties or additions to tax.
"Trademark Assignment Agreement" means that certain Trademark Assignment
Agreement between Buyer and Seller in substantially the form attached hereto as
Exhibit E.
"Transferred Employees" is defined in Section 6.01 of this Agreement.
ARTICLE II
PURCHASE AND SALE
2.01 Purchase and Sale. On the terms and subject to the conditions of this
Agreement, Seller shall, and shall cause its Subsidiaries to, sell, convey,
transfer, assign and deliver to Buyer or to the subsidiaries of the Buyer
designated by the Buyer on the Closing Date, and Buyer shall purchase and accept
from Seller and its Subsidiaries, on the Closing Date, all right, title and
interest of Seller in and to the Purchased Assets, wherever located, including
without limitation those assets, properties and rights set forth on Schedule
2.01 and the Contracts described on Schedule 3.10, but excluding the Excluded
Assets, the Excluded Contracts and the Excluded Liabilities.
2.02 Excluded Assets. Buyer expressly understands and agrees that the
following assets, properties and rights of Seller shall be excluded from the
Purchased Assets (collectively, the "Excluded Assets"):
(i) all cash and cash equivalents (including all bank accounts) and
security deposits (other than the security deposit associated with the
Seller's New Jersey lease);
(ii) all corporate records (including minute books and stock ledgers),
tax returns and financial records of the Seller and the Subsidiaries except
to the extent related to the Business or the Purchased Assets;
(iii) all Contracts set forth on Schedule 2.02 (the "Excluded
Contracts") and any Permits or Contracts which may not be transferred
without the consent, novation, waiver or approval of a third person or
entity and for which such consent, novation, waiver or approval has not
been obtained;
(iv) all capital stock held by the Seller in the Subsidiaries; and
(v) all insurance policies.
2.03 Assumption of Liabilities. On the Closing Date, Buyer shall only
assume and agree to perform the obligations of Seller set forth in the Contracts
described on Schedule 3.10
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(other than liabilities or obligations arising under the Excluded Contracts or
attributable to any failure by Seller to comply with the terms of any Contract),
but only to the extent such obligations relate to periods on or after the
Closing Date (the "Assumed Liabilities").
2.04 Excluded Liabilities. Buyer shall not assume any liabilities of Seller
or Seller Shareholders, other than the Assumed Liabilities (collectively, the
"Excluded Liabilities"), and Seller shall retain and pay and satisfy in the
ordinary course, and Buyer shall not assume, the Excluded Liabilities which
shall include, but not be limited to, the following:
(i) any obligation or liability for Tax arising from the operation of
the Business prior to the Closing Date for any period;
(ii) any liabilities or obligations under any Employee Plans and
Benefit Arrangements other than any liabilities for accrued vacation or
sick pay for the Transferred Employees;
(iii) any liabilities arising prior to the Closing Date under
Contracts included in the Purchased Assets;
(iv) any liabilities or obligations for continued health care coverage
for any employees or other qualified beneficiaries under COBRA who have a
qualifying COBRA event prior to the Closing Date;
(v) any liabilities relating to any litigation matters set forth on
Schedule 3.09; and
(vi) any liability or obligation relating to an Excluded Asset.
2.05 Assignment of Contracts and Rights. Anything in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign any Purchased Asset or any claim or right or any benefit arising
thereunder or resulting therefrom if an attempted assignment thereof, without
consent of a third party thereto, would constitute a breach or other
contravention thereof or in any way adversely affect the rights of Buyer or
Seller thereunder. At the Buyer's request, Seller shall use its reasonable best
efforts (but without any payment of money by Seller) to obtain the consent of
the other parties to any such Purchased Asset or claim or right or any benefit
arising thereunder for the assignment thereof to Buyer. The failure of Seller to
obtain such consents despite its reasonable best efforts shall not be a breach
of this Agreement and shall not affect the Purchase Price or the timing of any
payment due to Seller under this Agreement.
2.06 Purchase Price. The purchase price for the Purchased Assets shall be
$20,850,000 (the "Purchase Price"). The Purchase Price shall be paid in cash or
by wire transfer of immediately available funds to an account designated by the
Seller in accordance with the following:
(i) forty two and one half percent (42.5%) of the Purchase Price, or
$8,861,250, shall be paid to the Seller on the Closing Date (the "Closing
Date Cash Payment");
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(ii) forty two and one half percent (42.5%) of the Purchase Price, or
$8,861,250, shall be paid to the Seller upon the successful transfer to
Buyer of all Domain Names and Web sites and the delivery to Buyer of the
consents set forth on Schedule 3.04 listed as "Conditions to Second
Payment"; and
(iii) fifteen percent (15%) of the Purchase Price, or $3,127,500 (the
"Escrow Amount"), shall be paid to the Escrow Agent on the Closing Date and
held in escrow in accordance with the Escrow Agreement.
2.07 Closing. The closing (the "Closing") of the purchase and sale of the
Purchased Assets and the assumption of the Assumed Liabilities hereunder shall
take place at 5:00 p.m. on the date first written above (the "Closing Date") at
the offices of Buyer, 00 Xxx Xxxxx Xxxxxxx Xxxxx, Xxxxxx, XX 00000, or at such
other place as Buyer and Seller may agree. At the Closing:
(i) Buyer shall deliver the Closing Date Cash Payment to the Seller by
wire transfer of immediately available funds to the account or accounts
designated by Seller on or prior to the Closing Date;
(ii) Buyer shall deliver the Escrow Amount to the Escrow Agent by wire
transfer of immediately available funds to the account designated by the
Escrow Agent on or prior to the Closing Date;
(iii) Seller and Buyer shall enter into the Intellectual Property
Agreements and the Xxxx of Sale and General Assignment (collectively, the
"Ancillary Agreements"), and Seller shall deliver to Buyer such deeds,
bills of sale, endorsements, consents, assignments and other good and
sufficient instruments of conveyance and assignment as the parties and
their respective counsel shall deem reasonably necessary or appropriate to
vest in Buyer all right, title and interest in, to and under the Purchased
Assets; and
(iv) Seller and Buyer shall also execute and deliver all such
instruments, documents and certificates as may be reasonably requested by
the other party that are necessary, appropriate or desirable for the
consummation at the Closing of the transactions contemplated by this
Agreement, including without limitation a certificate of the secretary of
each of the Seller and the Buyer certifying and attaching a copy of their
respective corporate charters and bylaws, certifying the incumbency and
signatures of the officers executing this Agreement and the Ancillary
Agreements, and certifying and attaching all requisite resolutions or
actions of their respective boards of directors and (in the case of the
Seller only) shareholders, approving the execution and delivery of this
Agreement, the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby, including, in the case of the
Seller, the change of the name of Seller as contemplated by Section 5.07 of
this Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
AND certain SELLER SHAREHOLDERS
Seller and Seller Shareholders (other than Xxxxxx Xxxxxxx) hereby,
individually and not jointly and severally, represent and warrant to Buyer as
follows:
3.01 Organization and Qualification. The Seller has been duly organized and
is validly existing and in good standing under the laws of its jurisdiction of
incorporation and has the requisite corporate power and authority to own, lease
and operate its properties and to carry on the Business as it is now being
conducted. The Seller does not have any subsidiaries other than the
Subsidiaries.
3.02 Corporate Authorization.
(a) The execution, delivery and performance by Seller of this Agreement and
each of the Ancillary Agreements to which it is a party, and the consummation by
Seller of the transactions contemplated hereby and thereby, are within Seller's
corporate powers and have been duly authorized by all necessary corporate action
on the part of Seller. This Agreement and each of the Ancillary Agreements to
which Seller is a party have been duly executed and delivered by Seller and
constitute valid and binding agreements of Seller enforceable against Seller in
accordance with their respective terms, except that such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other laws (whether statutory, regulatory or decisional), now or
hereafter in effect, relating to or affecting the rights of creditors generally
or by equitable principles (regardless of whether considered in a proceeding at
law or in equity).
(b) This Agreement has been duly executed by the Seller Shareholders and
constitutes a valid and binding agreement of the Seller Shareholders enforceable
against them in accordance with its respective terms, except that such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other laws (whether statutory, regulatory or
decisional), now or hereafter in effect, relating to or affecting the rights of
creditors generally or by equitable principles (regardless of whether considered
in a proceeding at law or in equity).
3.03 Non-Contravention. The execution, delivery and performance by Seller
of this Agreement and each of the Ancillary Agreements to which Seller is a
party do not and will not (i) contravene or conflict with the corporate charter
or bylaws of Seller; (ii) contravene or conflict with or constitute a violation
of any provision of any law or regulation, judgment, injunction, order or decree
binding upon or applicable to Seller or the Business; (iii) result in the
creation or imposition of any Lien on any Purchased Asset or (iv) contravene or
conflict with or constitute a material violation of any provision of, or give
any Person the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of or payment under, or to cancel,
terminate or modify, any Contract required to be described on Schedule 3.10,
other than as disclosed on Schedule 3.04 with respect to required consents.
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3.04 Required Consents. Schedule 3.04 sets forth each Contract or Permit
requiring a consent, waiver, authorization or approval as a result of the
execution, delivery and performance of this Agreement and the Ancillary
Agreements or the consummation of the transactions contemplated hereby and
thereby (each such consent, a "Required Consent").
3.05 Absence of Certain Changes. Since December 31, 2003, Seller has
conducted the Business in the ordinary course consistent with past practices,
and, except as set forth on Schedule 3.05 hereto:
(a) Seller has not entered into any material transaction or incurred any
material liability or obligation with respect to the Business other than in the
ordinary course of business; and
(b) there has not been any Material Adverse Effect on the Purchased Assets.
3.06 Personal Property.
(a) Schedule 2.01 sets forth a description of all personal property
material to the Business and included in the Purchased Assets, including but not
limited to photographs, images, servers, computer workstations, machinery,
equipment, furniture, vehicles, spare and replacement parts, trade fixtures and
fixed assets.
(b) To the Seller's knowledge, the equipment included in the Purchased
Assets is in operating condition and repair and is suitable for its present
uses.
(c) No Purchased Asset is subject to any Lien.
3.07 Sufficiency of Purchased Assets. The Purchased Assets, together with
the rights provided under the Ancillary Agreements, constitute, and on the
Closing Date will constitute, all of the assets, properties and rights necessary
to conduct the Business as currently conducted and include all of the operating
assets of Seller except the Excluded Assets.
3.08 Title to Purchased Assets. Upon consummation of the transactions
contemplated hereby, Buyer will have acquired good and marketable title in and
to, or a valid leasehold interest in, each of the Purchased Assets, free and
clear of all Liens.
3.09 Litigation. Except as disclosed on Schedule 3.09, there is no action,
suit, arbitration, investigation or proceeding pending against or, to the best
of Seller's knowledge, threatened against or affecting the Business or any
Purchased Asset before any court or arbitrator or any governmental body, agency
or official.
3.10 Material Contracts.
(a) Schedule 3.10 sets forth a complete and accurate description (including
the title, the name of the parties and date) of each Contract constituting
Purchased Assets. Except for the Contracts disclosed in Schedule 3.10 and the
Excluded Contracts, Seller is not a party to or subject to any of the following
agreements, contracts or commitments relating to the Business or necessary or
useful for the operation of the Business:
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(i) any real property lease;
(ii) any contract for the purchase of materials, supplies, goods,
services, equipment or other assets providing for annual payments by Seller
or pursuant to which in the last year Seller paid in the aggregate $25,000
or more;
(iii) any sales, distribution or other similar agreement providing for
the sale by Seller of materials, supplies, goods, services, equipment or
other assets that provides for annual payments to Seller, or pursuant to
which in the last year either Seller or an Affiliate received in the
aggregate $25,000 or more;
(iv) any partnership, joint venture or other similar contract
arrangement or agreement;
(v) any contract relating to indebtedness for borrowed money or the
deferred purchase price of property (whether incurred, assumed, guaranteed
or secured by an asset);
(vi) any material license agreement, franchise agreement or agreement
in respect of similar rights granted to or held by Seller;
(vii) any agency, dealer, sales representative or other similar
agreement;
(viii) any agreement, contract or commitment that substantially limits
the freedom of Seller to compete in any line of business or with any Person
or in any area or to own, operate, sell, transfer, pledge or otherwise
dispose of or encumber any Purchased Asset or that would so limit the
freedom of Buyer after the Closing Date;
(ix) any agreement, contract or commitment which is or relates to an
agreement with or for the benefit of any Affiliate of Seller; or any other
agreement, contract or commitment which is material to the Business.
(b) Each Contract required to be disclosed pursuant to Section 3.10 is a
valid and binding agreement of Seller and is in full force and effect, except
that such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other laws (whether statutory, regulatory or
decisional), now or hereafter in effect, relating to or affecting the rights of
creditors generally or by equitable principles (regardless of whether considered
in a proceeding at law or in equity), and Seller is not, nor to the knowledge of
Seller is any other party thereto, in default in any material respect under the
terms of any such Contract, nor, to the knowledge of Seller, has any event or
circumstance occurred that, with notice or lapse of time or both, would
constitute any event of default thereunder.
3.11 Licenses and Permits. Seller possesses all material permits, licenses
and approvals (the "Permits") necessary or used in order to carry on the
Business. Schedule 3.11 hereto sets forth all Permits. Except as set forth on
Schedule 3.11 hereto, the Seller is in compliance in all material respects with
all Permits; there are no proceedings pending or, to the knowledge of Seller
threatened, to revoke, suspend, cancel or modify any Permit; and, except as
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set forth on Schedule 3.11 hereto, all such Permits may be assigned to Buyer as
contemplated hereby without the consent of the issuing authority. Seller does
not know of any reason why Buyer will not be able promptly to obtain all Permits
necessary in order to carry on, or used in, the Business.
3.12 Compliance with Laws. Seller is not in violation in any material
respect of any applicable law, regulation, ordinance, order or any other
requirement of any governmental body or court (including, without limitation,
matters relating to securities, loans, employment and improper payments) that
could reasonably be expected to have a Material Adverse Effect on the Purchased
Assets or the Business after the Closing, and no notice has been received by
Seller or any of its officers or directors alleging any such violation.
3.13 Receivables. Schedule 3.13 sets forth all of the accounts and other
receivables of the Seller existing as of the Closing Date (collectively, the
"Receivables"). The Receivables represent valid obligations arising from sales
actually made or services actually performed in the ordinary course of business.
Except to the extent paid prior to the Closing Date, to the knowledge of Seller,
such Receivables are or will be as of the Closing Date collectible net of the
respective reserves shown on Schedule 3.13 (which reserves Seller reasonably
believes are adequate and have been booked in accordance with GAAP and
consistent with past practice and which Seller reasonably believes will not
represent a materially greater percentage of revenues or a material adverse
change in the composition of such Receivables in terms of aging as compared to
historical accounts receivable for the first quarter of the past two years). To
the knowledge of Seller, there is no contest, claim, or right of set-off or any
basis for any of the foregoing, other than returns in the ordinary course of
business, under any contract with any obligor of any of the Receivables relating
to the amount or validity of such Receivables.
3.14 Proprietary Rights.
(a) Seller owns all right, title and interest in and to, or has a valid and
enforceable license to use, all the Intellectual Property used in connection
with the Business (the "Seller Intellectual Property"), which represents all
Intellectual Property necessary in all material respects to the conduct of the
Business as now conducted and presently contemplated. After the Closing, Buyer
will own all right, title and interest in and to, or have a valid and
enforceable license to use, the Seller Intellectual Property except to the
extent that the same would not have a Material Adverse Effect. Seller is in
compliance in all material respects with contractual obligations relating to the
protection of such of the Seller Intellectual Property as it uses pursuant to
license or other agreements. To Seller's knowledge, there are no conflicts with
or infringements of any Seller Intellectual Property by any third party. To the
knowledge of the Seller, neither the Seller Intellectual Property nor the
conduct of the Business as currently conducted or contemplated conflicts with or
infringes in any material respect any Intellectual Property or other proprietary
right of any third party. There is no claim, suit, action or proceeding pending
or, to the knowledge of Seller, threatened against Seller: (i) alleging any such
conflict or infringement with any third party's Intellectual Property or other
proprietary rights; or (ii) challenging Seller's ownership or use of, or the
validity or enforceability of, any Seller Intellectual Property.
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(b) Schedule 3.14(b) sets forth a complete and current list of all Seller
Intellectual Property in which Seller has an ownership interest, all
registrations/patents and applications with respect thereto, and the owner of
record, date of application or issuance and relevant jurisdiction as to each
registration/patent and application, provided, however, that such list need not
identify non-material unregistered copyrights unless such copyrights relate to
proprietary software or trade secrets ("Listed Intellectual Property"). Except
as described in Schedule 3.14(b), all Listed Intellectual Property is owned by
Seller, free and clear of security interests, liens, encumbrances or claims of
any nature. Except for anything that would not have a Material Adverse Effect,
all Listed Intellectual Property is valid, subsisting, unexpired, in proper form
and enforceable and all renewal fees and other maintenance fees that have fallen
due on or prior to the effective date of this Agreement have been paid. Except
as listed in Schedule 3.14(b), no Listed Intellectual Property is the subject of
any proceeding before any governmental, registration or other authority in any
jurisdiction, including any office action or other form of preliminary or final
refusal of registration.
(c) Schedule 3.14(c) sets forth a complete list of all agreements relating
to the Seller Intellectual Property or to the right of the Seller to use the
proprietary rights of any third party. Except as set forth in Schedule 3.14(c),
Seller is not under any obligation to pay royalties or other payments in
connection with any agreement relating to the Seller Intellectual Property, nor
is it restricted from assigning its rights respecting any Seller Intellectual
Property, nor will Seller otherwise be, as a result of the execution and
delivery of this Agreement or the performance of Seller's obligations under this
Agreement, in breach of any agreement relating to the Seller Intellectual
Property.
(d) No present or former employee, officer or director of Seller or any
subsidiary, or agent or outside contractor of Seller holds any right, title or
interest, directly or indirectly, in whole or in part, in or to any Seller
Intellectual Property.
(e) Other than with respect to copyrightable works Seller hereby represents
to be "works made for hire" within the meaning of Section 101 of the Copyright
Act of 1976, Seller has obtained from all individuals who participated in any
respect in the invention or authorship of any Seller Intellectual Property owned
by Seller (the "Owned Intellectual Property"), as consultants, as employees of
consultants or otherwise, effective waivers of any and all ownership rights of
such individuals in such Owned Intellectual Property, and written assignments or
releases to Seller of all rights with respect thereto. No officer or employee of
Seller is subject to any agreement with any third party that requires such
officer or employee to assign any interest in inventions or other Intellectual
Property or to keep confidential any trade secrets, proprietary data, customer
lists or other business information or that restricts such officer or employee
from engaging in competitive activities or solicitation of customers.
(f) (i) To Seller's knowledge, none of the Seller Intellectual Property has
been used, disclosed or appropriated to the detriment of Seller for the benefit
of any third party; (ii) to Seller's knowledge, no employee, independent
contractor or agent of Seller or any subsidiary has misappropriated any trade
secrets or other confidential information of any third party in the course of
the performance of his or her duties as an employee, independent contractor or
agent of Seller; and (iii) Seller has taken actions to protect the Seller
Intellectual Property that are consistent with those customary in Seller's
industry.
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(g) To Seller's knowledge, Seller's transmission, reproduction, use,
display or modification (including framing and linking Web site content) or
other practices do not infringe or violate any Intellectual Property or other
proprietary right of any third party and no claim relating to such infringement
or violation is pending, or, to Seller's knowledge, threatened.
(h) Seller will not use, seek to register, register or authorize others to
use, seek to register or register the Seller Intellectual Property or any other
Intellectual Property substantially or confusingly similar thereto anywhere in
the world and will not challenge Buyer's right to use, seek to register or
register the Seller Intellectual Property anywhere in the world.
(i) Except as set forth in Schedule 3.14(i), Seller owns or has the right
to use, disclose and transfer, without the consent of any third party, all
computer software, software systems and databases and all other information
systems material to the Business.
3.15 Employees; Labor Matters.
(a) Schedule 3.15(a) sets forth a true and complete list of the names,
titles, and annual salaries of all employees of Seller primarily engaged in the
Business who are Transferred Employees.
(b) A copy or description of each material Employee Plan and Benefit
Arrangement that covers any employee primarily engaged in the Business has
previously been made available or furnished to Buyer.
(c) Except as set forth in Schedule 3.15(c), with respect to each Employee
Plan: (i) if intended to qualify under Section 401(a) of the Code, such plan has
received a determination letter from the Internal Revenue Service stating that
it so qualifies and that its trust is exempt from taxation under Section 501(a)
of the Code and to the knowledge of Seller nothing has occurred since the date
of such determination that could reasonably be expected to result in the loss of
such qualification or exempt status; (ii) such plan has been administered and
operated in all material respects in accordance with its terms and applicable
law (including ERISA and the Code, and all rules and regulations promulgated
thereunder); (iii) no breaches of fiduciary duty have occurred which might
reasonably be expected to give rise to material liability on the part of the
Company or any of its ERISA Affiliates, as applicable; (iv) all contributions
required to be made by or under any Benefit Plan (or trust or fund established
thereunder or in connection therewith) or any related collective bargaining
agreement as of the date hereof (taking into account any extensions of time for
the making of such contributions) have been made in full; (v) no Employee Plan
has incurred an accumulated funding deficiency, as defined in Section 302 of
ERISA or Section 412 of the Code, whether or not waived; and (vi) no liability
under Title IV or Section 302 of ERISA has been incurred by the Company or any
ERISA Affiliate that has not been satisfied in full, and to the knowledge of
Seller no condition exists that presents a material risk to the Company or any
ERISA Affiliate of incurring any such liability.
(d) Except as disclosed in on Schedule 3.15(d), no Employee Plan that is a
"welfare plan" (as defined in Section 3(l) of ERISA) provides medical or death
benefits with respect to current or former employees of the Company or any of
its Subsidiaries beyond their
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termination of employment (other than (i) to the extent required by applicable
law and (ii) benefits the full cost of which is borne by the current or former
employee or his beneficiary).
(e) Except as set forth on Schedule 3.15(e), (i) Seller is not a party to
any union or collective bargaining agreements covering any of the employees of
the Business listed on Schedule 3.15(e), (ii) Seller does not know of any
activities or proceedings of any labor union to organize any such employees, and
(iii) Seller does not have any employment agreements with any of such employees.
Seller is in compliance with all applicable laws relating to employment and
employment practices, wages, hours and terms and conditions of employment, in
each case relating to employees primarily engaged in the Business, except to the
extent that such non-compliance would not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
(f) Except as set forth on Schedule 3.15(f), the consummation of the
transactions contemplated by this Agreement shall not entitle any employee
listed on Schedule 3.15(a) or former employee who was primarily engaged in the
Business, to severance benefits, bonuses or other payment from Buyer.
3.16 Finders' Fees. Except for Xxxx X'Xxxxxx, who will be paid by Seller,
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of Seller who might be
entitled to any fee or commission from Seller or any of their Affiliates upon
consummation of the transactions contemplated by this Agreement.
3.17 Content. All content and images related to the rights-managed,
royalty-free and flat-rate images divisions of Seller are wholly owned by
Seller, with the exception that with respect to approximately 69% of the
rights-managed images commissions are due to third parties. Such content and
images consist of approximately 350,000 original chrome photos and 51,000
digitized photos (a.19,000 high resolution royalty free, b. 15,000 high
resolution flat rate, c. 17,000 review resolution rights managed).
3.18 Financial Information. The audited balance sheets of the Seller as of
December 31, 2001, December 31, 2002, December 31, 2003 and related statements
of income, retained earnings and cash flows for the periods then ended and the
notes thereto (i) are included as Schedule 3.18, (ii) were prepared in
accordance with GAAP, and (iii) present fairly the financial condition and the
results of operations of the Business as of the dates and for the periods
indicated thereon.
3.19 Capitalization; Ownership by Seller Shareholders. The authorized
equity securities of Seller consist of Ten Million (10,000,000) shares of common
stock, par value $.01 per share, of which Two Million One Hundred and Ninety
Thousand (2,190,000) shares are issued and outstanding. The Seller Shareholders
are and will be on the Closing Date the record and beneficial owners and holders
of the number and type of shares of Seller set forth on Schedule 3.19 opposite
their names.
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3.20 Tax Matters.
(a) To the knowledge of the Seller, with respect to all taxable periods or
portions thereof ending on or before the Closing Date, the Seller has complied
in all material respects with all applicable Tax laws and has fully paid all
material Taxes (whether or not shown on any Tax return) due and payable by
Seller on or before the Closing Date to any governmental authority such that no
Tax Liens (i) will attach to the Purchased Assets after the Closing or (ii) are
currently attached to the Purchased Assets and will be attached to the Purchased
Assets after the Closing. To the knowledge of the Seller, there are no Liens on
any of the Purchased Assets of the Seller that arose in connection with any
failure (or alleged failure) to pay any material Tax.
(b) The Seller has withheld and paid all Taxes required to have been
withheld and paid on or prior to the Closing Date in connection with amounts
paid or owing to any Transferred Employee and all Forms W-2 required to be filed
before the Closing Date with respect to such amounts have been filed.
(c) To the knowledge of the Seller, there is no dispute, audit,
investigation, proceeding or claim concerning any Liability with respect to
Taxes of the Seller either (i) claimed or raised by any authority in writing or
(ii) as to which Seller has knowledge based upon contact with any agent of such
authority.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller and the Seller Shareholders
that:
4.01 Organization and Qualification. Buyer has been duly organized and is
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted.
4.02 Corporate Authorization. The execution, delivery and performance by
Buyer of this Agreement and each of the Ancillary Agreements, and the
consummation by Buyer of the transactions contemplated hereby and thereby are
within Buyer's powers and have been duly authorized by all necessary action on
the part of Buyer. This Agreement and each of the Ancillary Agreements to which
Buyer is a party have been duly executed and delivered by Buyer and constitute
valid and binding agreements of Buyer, enforceable against Buyer in accordance
with their respective terms.
4.03 Non-Contravention. The execution, delivery and performance by Buyer of
this Agreement and each of the Ancillary Agreements to which Buyer is a party do
not and will not (i) contravene or conflict with the organizational documents or
bylaws of Buyer, (ii) contravene or conflict with or constitute a material
violation of any provision of any law or regulation, judgment, injunction, order
or decree binding upon or applicable to Buyer; or (iii) constitute a material
default under or give rise to any right of termination, cancellation or
acceleration of any material right or obligation of Buyer or to a loss of any
material benefit relating to Buyer's business to which Buyer is entitled under
any provision of any material agreement, contract or other instrument binding
upon Buyer or by which any of Buyer's assets is or may be bound.
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4.04 Litigation. There is no material action, suit, arbitration,
investigation or proceeding pending against or, to the best of Buyer's
knowledge, threatened against the Buyer before any court or arbitrator or any
governmental body, agency or official that would be required to be disclosed in
any periodic report or on Form 8-K that is not otherwise disclosed in the
Buyer's annual report on Form 10-K for the 12 month period ending December 31,
2003 or any subsequent reports or filings made with the Securities and Exchange
Commission.
4.05 Non-Contravention. The execution, delivery and performance by Buyer of
this Agreement and each of the Ancillary Agreements to which Buyer is a party do
not and will not (i) contravene or conflict with the corporate charter or bylaws
of Buyer or (ii) contravene or conflict with or constitute a violation of any
provision of any law or regulation, judgment, injunction, order or decree
binding upon or applicable to the Buyer.
4.06 Finders' Fees. There is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of
Buyer who might be entitled to any fee or commission from Buyer or any of its
Affiliates upon consummation of the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF the parties
The parties hereto agree that:
5.01 Best Efforts; Further Assurances.
(a) Subject to the terms and conditions of this Agreement and except as
otherwise set forth in this Agreement, each party will use its best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary or desirable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement. Seller and Buyer
each agree to execute and deliver such other documents, certificates, agreements
and other writings and to take such other actions as may be necessary or
desirable in order to consummate or implement expeditiously the transactions
contemplated by this Agreement and to vest in Buyer title to the Purchased
Assets as provided herein.
(b) Seller and the Seller Shareholders hereby constitute and appoint,
effective as of the Closing Date, Buyer and its successors and assigns as the
true and lawful attorney of Seller and the Seller Shareholders with full power
of substitution in the name of Buyer or in the name of Seller or the Seller
Shareholders (i) to collect for the account of Buyer any items of Purchased
Assets and (ii) to institute and prosecute all proceedings, at Buyer's sole cost
and expense, which Buyer may in its sole discretion deem proper in order to
assert or enforce any right, title or interest in, to or under the Purchased
Assets, and to defend or compromise any and all actions, suits or proceedings in
respect of the Purchased Assets. Buyer shall be entitled to retain for its
account any amounts collected pursuant to the foregoing powers, including any
amounts payable as interest in respect thereof.
5.02 Certain Filings. Seller and Buyer shall cooperate with one another and
shall use all reasonable efforts and take all reasonable steps to obtain all
consents, approvals, waivers or
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other documents from any third parties, including any governmental authorities,
and make all filings, registrations and other notifications, as may be required
to consummate the transactions contemplated by this Agreement and, in taking
such actions or making any such filings, furnishing information required in
connection therewith and seeking timely to obtain any such actions, consents,
approvals or waivers.
5.03 Confidentiality. The parties hereto shall comply with, and shall cause
their respective Representatives to comply with, all of their respective
obligations under the Confidentiality Agreement with respect to the information
disclosed pursuant to this Agreement. In addition to the foregoing, the parties
shall not disclose any term of this Agreement without the express written
consent of the other party except as required by law or applicable securities
regulations and except to their professional advisors.
5.04 Nonsolicitation by Seller and Seller Shareholders.
(a) Seller and the Seller Shareholders each agree that (other than in their
capacities as employees of the Buyer) they will not, independently or together,
directly or indirectly, for a period of three (3) years following the Closing
Date, (i) solicit or induce the employment or services of any Transferred
Employee or any employee of Buyer or enter into any contractual arrangement with
any such person without the prior written consent of Buyer, other than in
connection with general solicitations to the public or (ii) call on or solicit
any of the customers or suppliers of the Business in connection with any product
or service that is competitive with the products or services of the Business on
the Closing Date, or make known the names and addresses of such customers or
suppliers or any information relating in any manner to the Business, the
Purchased Assets or the Company's relationships with such customers or
suppliers. Seller and Seller Shareholders agree that a violation of this Section
5.02 will cause irreparable injury to Buyer, and Buyer shall be entitled, in
addition to any other rights and remedies it may have at law or in equity, to an
injunction enjoining and restraining Buyer from doing or continuing to do any
such violation and any other violations or threatened violations of this
Section.
(b) The Seller and the Seller Shareholders acknowledge and agree that the
covenants set forth in this Section 5.04 are reasonable and valid in scope and
in all other respects. If any of such covenants is found to be invalid or
unenforceable by a final determination of a court of competent jurisdiction (i)
the remaining terms and provisions hereof shall be unimpaired and (ii) the
invalid or unenforceable term or provision shall be deemed replaced by a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision. In the event that,
notwithstanding the first sentence of this paragraph (b), any of the provisions
of this Section relating to scope of the covenants contained therein or the
nature of the business restricted thereby shall be declared by a court of
competent jurisdiction to exceed the maximum restrictiveness such court deems
enforceable, such provision shall be deemed to be replaced herein by the maximum
restriction deemed enforceable by such court.
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5.05 Noncompetition by Seller and Seller Shareholders.
(a) Seller and Seller Shareholders hereby agree that (other than in their
capacities as employees of the Buyer) they will not, independently or together,
directly or indirectly, anywhere in the world or in any language during and for
a period of three (3) years after the Closing Date whether as principal, agent,
stockholder, consultant, partner, employee, member, or in any other capacity
whatsoever, participate in, engage in, or be in any manner associated with the
operation, management, development, publishing, marketing, distribution,
creation, licensing or sale of any business, product or venture that (i)
competes with the Business or the Purchased Assets as they exist on the date of
the Closing or (ii) is likely to injure the value or prospects of the Business
or the Purchased Assets anywhere in the world. Seller and Seller Shareholders
agree that a violation of this Section 5.02 will cause irreparable injury to
Buyer, and Buyer shall be entitled, in addition to any other rights and remedies
it may have at law or in equity, to an injunction enjoining and restraining
Buyer from doing or continuing to do any such violation and any other violations
or threatened violations of this Section.
(b) The Seller and the Seller Shareholders acknowledge and agree that the
covenants set forth in this Section 5.05 are reasonable and valid in scope and
in all other respects. If any of such covenants is found to be invalid or
unenforceable by a final determination of a court of competent jurisdiction (i)
the remaining terms and provisions hereof shall be unimpaired and (ii) the
invalid or unenforceable term or provision shall be deemed replaced by a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision. In the event that,
notwithstanding the first sentence of this paragraph (b), any of the provisions
of this Section relating to scope of the covenants contained therein or the
nature of the business restricted thereby shall be declared by a court of
competent jurisdiction to exceed the maximum restrictiveness such court deems
enforceable, such provision shall be deemed to be replaced herein by the maximum
restriction deemed enforceable by such court.
(c) Notwithstanding the terms of Section 5.05(a), and provided RMS is not
employed by Buyer or its Affiliate, RMS shall not be deemed to be in violation
thereof based upon RMS working as a photographer. Notwithstanding the terms of
Section 5.05(a), and provided EG is not employed by Buyer or its Affiliate, EG
shall not be deemed to be in violation thereof based upon EG working as a
production manager.
5.06 Public Announcements. Neither the Seller or Seller Shareholders nor
the Buyer shall issue a press release or make any other public statement about
this Agreement or the transactions contemplated by this Agreement without the
other party's prior written consent except as may be required by law or by the
rules of any securities exchange or the Nasdaq National Market.
5.07 Change in Name. On or before the Closing Date, Seller shall amend its
certificate of incorporation and take all other actions necessary to change its
name to one sufficiently dissimilar to Seller's present name, in Buyer's
judgment, to avoid confusion by removing the word "Xxxxxxxx" therefrom.
5.08 Bulk Sales. Upon Buyer's request, Seller shall provide the Buyer with
any clearance certificates, exemption certificates or similar documents
requested in writing by Buyer which may be required by any governmental
authority with respect to any so-called "bulk sales,"
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successor liability or similar laws (including any isolated, occasional or
casual sales exemption, resale exemption or similar sales or use Tax exemptions)
related to Taxes in order (i) to relieve the Buyer of any obligation to withhold
any portion of the Purchase Price, (ii) to hold the Buyer harmless from any
sales, use, recording, transfer or other similar liability for Taxes in
connection with the transactions contemplated by this Agreement, and (iii) to
prevent a Lien for Taxes from attaching to any of the Purchased Assets either
before or after the Closing Date
5.09 Transition Services and Agreements.
(a) Use of Leased Real Property. For a period of 120 days after the Closing
Date, the Seller shall permit the Buyer, free of charge, to use in manner
consistent with the Seller's past practices the Seller's offices located in
Luxembourg and Canada, which offices are the subject, respectively, of that
certain Lease Contract with Business Center Steinsel and that certain Office
Lease by and between Kinglip Holdings Inc. and Xxxxxxxx Photofile, Ltd. During
such period, the Seller shall continue to pay the rent on such premises when due
and shall not, without the prior written consent of the Buyer which consent
shall not be unreasonably withheld, waive, amend, terminate or otherwise modify
any term or provision of such leases unless such waiver, modification, amendment
or termination is effective after the applicable 120 day period.
(b) Use of Equipment. For a period of 60 days after the Closing Date, the
Seller shall permit the Buyer to use, free of charge, the equipment that is the
subject of that certain Equipment Lease Agreement by and between the Seller and
Toshiba America Information Systems and that certain Lease No. 001-006195911-001
by and between Seller and Dell Financial Services, L.P., and the Seller shall
continue to pay the amounts owing under such equipment leases and to otherwise
comply with the terms thereof. During such period, without the prior written
consent of the Buyer which consent shall not be unreasonably withheld, the
Seller shall not waive, amend, terminate or otherwise modify any term or
provision of either such equipment lease unless such waiver, modification,
amendment or termination is effective after the applicable 60 day period..
(c) Merchant Accounts. For a period of 60 days after the Closing Date, the
Seller shall maintain, consistent with past practice, the merchant accounts
maintained pursuant to that certain Merchant Services Bankcard Agreement by and
among the Seller, Xxxxx Fargo Bank N.A., Xxxxx Fargo Merchant Services LLC and
First Data Merchant Services Corporation, and the related Summary of Terms and
Agreement, and any other merchant accounts maintained by the Seller immediately
prior to the Closing Date.
(d) Remittance of Amounts Collected. After the Closing Date and not less
than weekly, Seller shall remit to Buyer any and all Receivables or other
amounts collected by or paid to the Seller (net of amounts payable by Seller
under such agreements) on or after the Closing Date that are rightfully due and
payable to the Buyer by virtue of the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements.
(e) Distributor Agreements. Buyer hereby covenants and agrees to perform
the obligations of the Seller under that certain Licensing Agreement by and
between Getty Images, Inc. and the Seller and that certain Agency Agreement by
and between the Seller and
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Xxxxx.xxx Holdings (Jersey) Limited until, with respect to each such agreement,
the earlier of (i) the effective date of the assignment of such agreement to the
Buyer with the consent of the counterparty thereto and (ii) the date that is 30
days after the Closing Date. For so long as the Buyer is performing the
obligations of the Seller under either such agreement, without the prior written
consent of the Buyer which consent shall not be unreasonably withheld, the
Seller shall not waive, amend, terminate or otherwise modify any term or
provision of such agreement unless such waiver, modification, amendment or
termination is effective after the expiration of such period. The Seller shall
promptly remit to the Buyer any and all payments made to the Seller pursuant to
such agreements.
(f) Offices for Seller. For a period of 120 days after the Closing Date,
Buyer shall provide to Seller, free of charge, full-time use of up to three
private offices at Seller's former, and Buyer's current, Mountainside, New
Jersey address.
(g) Reimbursement of Post-Closing Credit Card Charges. Buyer shall,
promptly upon presentation of reasonable evidence thereof, reimburse any Seller
Shareholder who incurs any charges on his or her personal credit cards for any
legitimate expenses of the Business after Closing that are incurred pursuant to
agreements made prior to Closing. Buyer shall use its reasonable best efforts to
promptly provide such vendors with credit cards to which such expenses may be
charged in replacement of the credit cards of Seller Shareholders.
ARTICLE VI
EMPLOYEE BENEFITS
6.01 Employees and Offers of Employment.
(a) On or immediately following the Closing Date, but effective as of the
Closing, Buyer shall make offers of employment to the employees listed on
Schedule 3.15(a) (each such person, upon accepting an offer of employment from
Buyer, a "Transferred Employee"). Each such offer shall include (i) base salary
or base wages which are the same as was in effect immediately prior to the
Closing Date and (ii) employee benefits (other than as set forth in clause (i))
which are the same as those provided to similarly situated employees of Buyer
and its Affiliates. Nothing in this Agreement shall limit the right of Buyer to
terminate the employment of any Transferred Employee following the Closing Date.
(b) As of the first day following the Closing Date, all Transferred
Employees shall be permitted to participate in the plans, programs and
arrangements of Buyer and its Affiliates relating to compensation and employee
benefits (each, a "Buyer Plan") on the same terms as similarly situated
employees of Buyers and its Affiliates.
(c) Effective as of the Closing, Buyer shall credit each Transferred
Employee with the number of vacation and sick days accrued and not used as of
the Closing by such Transferred Employee.
(d) To the extent that any Buyer Plan that provides medical, dental, health
or other, similar benefits becomes applicable to any Transferred Employee, Buyer
shall waive, or cause to be waived, any waiting periods, pre-existing condition
exclusions and actively-at-work
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requirements to the extent met under the applicable Employee Plan or Benefit
Arrangement as of the Closing and, as to the plan year in which the Closing Date
occurs, shall provide that any expenses incurred under the applicable Employee
Plan or Benefit Arrangement on or before the date such Buyer Plan became
applicable to such Transferred Employee or such Transferred Employee's covered
dependents shall be taken into account for purposes of satisfying applicable
deductible, coinsurance and maximum out-of-pocket provisions under the such
Buyer Plan.
(e) The Buyer shall have sole responsibility for "continuation coverage"
benefits provided under the Buyer's group health plans to all Transferred
Employees, and "qualified beneficiaries" of Transferred Employees, with respect
to any "qualifying event" which occurs on or after the Closing Date. Sellers
shall have sole responsibility for "continuation coverage" benefits provided
under Sellers' group health plans to all Seller employees and former employees,
and "qualified beneficiaries" of such employees, with respect to any "qualifying
event" which occurs prior to the Closing Date and to all Seller employees who do
not become Transferred Employees, and their "qualified beneficiaries," with
respect to any "qualifying event" which occurs prior to, on and after the
Closing Date, including any "qualifying event" which results from any such
Seller employee's loss of employment on the Closing Date. The terms
"continuation coverage," "qualified beneficiaries" and "qualifying event" shall
have the meaning ascribed to them under Section 4980B of the Code and Sections
601-608 of ERISA ("COBRA").
ARTICLE VII
Tax Matters
7.01 Sales Tax. Buyer shall be solely responsible for paying any sales, use
or similar Taxes related to the sale of the Purchased Assets under this
Agreement.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
8.01 Survival. The covenants, agreements, representations and warranties of
the parties hereto contained in this Agreement or in any certificate or other
writing delivered pursuant hereto or in connection herewith shall survive the
Closing for a period of two (2) years. Notwithstanding the preceding sentence,
any covenant, agreement, representation or warranty in respect of which
indemnity may be sought under Section 8.02 shall survive the time at which it
would otherwise terminate pursuant to the preceding sentence, if notice of the
inaccuracy or breach thereof giving rise to such right to indemnity shall have
been given to the party against whom such indemnity may be sought prior to such
time.
8.02 Indemnification.
(a) Seller shall indemnify Buyer and its Affiliates, officers, directors,
employees and agents against, and agrees to hold each of them harmless from, any
and all damages, claims, debts, actions, assessments, judgments, losses,
liabilities, fines, fees, penalties and expense (including, without limitation,
reasonable expenses of investigation and reasonable
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attorneys' fees and expenses in connection with any action, suit or proceeding)
(collectively, "Losses") incurred or suffered by any of them arising out of:
(i) any misrepresentation or breach of representation and warranty,
covenant or agreement made or to be performed by Seller or the Seller
Shareholders pursuant to this Agreement or the Ancillary Agreements;
(ii) the failure of Seller to assume full responsibility for any
Excluded Liability and failure to pay and discharge when due any Excluded
Liability.
(b) Buyer shall indemnify Seller and its Affiliates and its officers,
directors, employees and agents against, and agrees to hold each of them
harmless from, any and all Losses incurred or suffered by such parties arising
out of:
(i) any misrepresentation or breach of representation and warranty,
covenant or agreement made or to be performed by Buyer pursuant to this
Agreement or the Ancillary Agreements; and
(ii) the failure of Buyer to assume full responsibility for any
Assumed Liability and failure to pay and discharge when due any Assumed
Liability.
(c) Notwithstanding anything in this Agreement to the contrary, neither
Buyer nor Seller shall be liable under this Article VIII unless and until the
aggregate Losses (without giving effect to any materiality, material adverse
effect or Material Adverse Effect qualifications or materiality exceptions
contained in any provision of this Agreement) to the Indemnified Persons
incurred or suffered by them resulting from, relating to or constituting any
misrepresentation or breach of warranty contained in this Agreement or the
Ancillary Agreements exceed $325,000, and thereafter such liability shall be for
the entire amount of such Losses from dollar one. Except with respect to claims
based on fraud or willful misconduct or the Buyer's obligation to pay the
Purchase Price, the obligations under or in any way related to this Agreement
including, without limitation, the indemnification obligations for all Losses
resulting from, relating to or constituting any misrepresentation, breach of
warranty or failure to perform any covenant or agreement of Seller or Buyer, as
applicable, shall be limited to an aggregate amount equal to $6,255,000 (the
"Liability Cap").
(d) The Seller Shareholders (other than EG as it relates to all Losses and
other than Xxxxxxxx X. Xxxxxx ("MB") as it related to Losses resulting from
fraud or willful misconduct), individually and not jointly and severally and
only to the extent of their percentage stock ownership in Seller multiplied by
the total Losses limited to a maximum of their percentage stock ownership in
Seller multiplied by the Liability Cap, shall indemnify Buyer and its
Affiliates, officers, directors, employees and agents against, and agrees to
hold each of them harmless from, any and all Losses for which such persons are
entitled to indemnification from the Company pursuant to Section 8.02(a) and
Section 8.02(c) (subject to the limitations set forth above); provided, however,
that no Seller Shareholder shall have any liability under this Section 8.02(d)
until such time as the aggregate amount of all claims for indemnity under this
Agreement exceeds the amount then held in escrow by the Escrow Agent, and in
which case only to the extent of such excess. As and when MB's liability is
limited pursuant to this subsection (d), the
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Seller Shareholders other than EG shall be liable to Buyer for the amount for
which MB would have been liable absent such limitation in proportion to their
percentage stock ownership in Seller.
8.03 Third Party Claims. A party entitled to indemnification under this
Article VIII (the "Indemnified Person") shall give prompt written notification
to the Person obligated to provide such indemnification (the "Indemnifying
Person") of the commencement of any action, suit or proceeding relating to a
third party claim for which indemnification pursuant to this Article VIII may be
sought; provided, however, that no delay on the part of the Indemnified Person
in notifying the Indemnifying Person shall relieve the Indemnifying Person from
any liability or obligation under this Article VIII except to the extent of any
damage or liability caused solely by or arising out of such delay. Within 20
days after delivery of such notification, the Indemnifying Person may, upon
written notice thereof to the Indemnified Person, assume control of the defense
of such action, suit or proceeding with counsel reasonably satisfactory to the
Indemnified Person, provided (i) the Indemnifying Person acknowledges in writing
to the Indemnified Person that the Indemnifying Person shall indemnify the
Indemnified Person with respect to all elements of such action, suit or
proceeding and any damages, fines, costs or other liabilities that may be
assessed against the Indemnified Person in connection with such action, suit or
proceeding, and (ii) the third party seeks monetary damages only. If the
Indemnifying Person does not so assume control of such defense, the Indemnified
Person shall control such defense. The party not controlling such defense may
participate therein at its own expense; provided, that if the Indemnifying
Person assumes control of such defense and the Indemnified Person is advised by
counsel in writing that the Indemnifying Person and the Indemnified Person may
have conflicting interests or different defenses available with respect to such
action, suit or proceeding, the reasonable fees and expenses of counsel to the
Indemnified Person shall be considered "Losses" for purposes of this Agreement.
The party controlling such defense shall keep the other party advised of the
status of such action, suit or proceeding and the defense thereof and shall
consider in good faith recommendations made by the other party with respect
thereto. An Indemnified Person shall not agree to any settlement of such action,
suit or proceeding without the prior written consent of the Indemnifying Person,
which shall not be unreasonably withheld or delayed. The Indemnifying Person
shall not agree to any settlement or the entry of a judgment in any action, suit
or proceeding without the prior written consent of the Indemnified Person, which
shall not be unreasonably withheld (it being understood that it is reasonable to
withhold such consent if, among other things, the settlement or the entry of a
judgment (A) lacks a complete release of the Indemnified Person for all
liability with respect thereto or (B) imposes any liability or obligation on the
Indemnified Person).
8.04 Certain Additional Provisions Relating to Indemnification.
(a) The indemnification provided for in this Article VIII shall not be the
exclusive remedy of any party hereto for any breach of the covenants,
agreements, representations and warranties set forth herein, and any such party
may seek equitable remedies, including specific performance and injunctive
relief, in addition to monetary damages in order to obtain or secure the
benefits and rights granted under this Agreement.
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(b) All payments by an Indemnifying Person under this Article VIII shall be
treated as an adjustment to the Purchase Price for all foreign, federal, state
and local income tax purposes.
(c) The indemnification provided for in this Article VIII shall survive any
investigation at any time made by or on behalf of any party hereto or any
knowledge or information that any party hereto may have.
(d) Notwithstanding anything in this Agreement to the contrary, none of the
parties hereto shall seek or be liable for punitive or consequential damages
including, without limitation, loss of business reputation or opportunity,
relating to any breach or alleged breach of this Agreement or any Ancillary
Agreement.
ARTICLE IX
MISCELLANEOUS
9.01 Notices. All notices, requests and other communications to either
party hereunder shall be in writing and shall be given by personal delivery or
overnight mail (with receipt therefor) or by certified mail, return receipt
requested,
if to Buyer, to:
Jupitermedia Corporation
00 Xxx Xxxxx Xxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: President
if to Seller or Seller Shareholders, to:
Xxxxxxxx, Inc.
c/o Xxxx Xxxxxxx
00 Xxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
with copies to:
Xxxx X'Xxxxxx
000 Xxxxxx Xxxx
Xxx Xxxxxxxx, XX 00000-0000
and
Xxxxx X. Xxxxxx, Esq.
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000,
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and shall be deemed given on the date of personal delivery, the date
after delivery to a reputable national overnight carrier or five (5)
days after mailing via certified mail, return receipt requested.
9.02 Amendments; No Waivers.
(a) Any provisions of this Agreement may be amended or waived if, and only
if, such amendment or waiver is in writing and signed, in the case of an
amendment, by Buyer and Seller and, in the case of any representation or
covenant binding on the Seller Shareholders, the Seller Shareholders, or in the
case of a waiver, by the party against whom the waiver is to be effective.
(b) No failure or delay by either party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
9.03 Expenses. Except as otherwise provided herein, all costs and expenses
incurred in connection with this Agreement shall be paid by the party incurring
such cost or expense.
9.04 Successors and Assigns. Except as otherwise provided in this
Agreement, no party hereto shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other party
hereto and any such attempted assignment without such prior written consent
shall be void and of no force and effect. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
9.05 Governing Law. This Agreement shall be construed in accordance with
and governed by the law of the State of New York, without regard to the
conflicts of law rules of such state. The parties expressly consent to the
exclusive personal jurisdiction of and venue in the courts located in the city
and state of New York.
9.06 Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by the other party hereto.
9.07 Entire Agreement. This Agreement, the Ancillary Agreements and the
Confidentiality Agreement constitute the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements,
understandings and negotiations, both written and oral, between the parties with
respect to the subject matter of this Agreement. No representation, inducement,
promise, understanding, condition or warranty not set forth herein has been made
or relied upon by either party hereto. None of this Agreement, the Ancillary
Agreements or the Confidentiality Agreement is intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder.
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9.08 Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
9.09 Incorporation of Exhibits and Schedules. The Exhibits and Schedules
referred to in this Agreement are incorporated herein and made a part hereof.
9.10 Sophistication of Parties. Each of the parties (i) is sophisticated in
negotiating business transactions, (ii) is represented by counsel, (iii) has
reviewed each of the provisions in this Agreement carefully and (iv) has
negotiated or has had full opportunity to negotiate the terms of this Agreement,
specifically including, but not limited to, Section 9.07 above.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
JUPITERMEDIA CORPORATION
By: /s/ Xxxxxxxxxxx X. Xxxxxxx
----------------------------
Name: Xxxxxxxxxxx X. Xxxxxxx
Title: President and Chief
Operating Officer
XXXXXXXX, INC.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chairman
Seller Shareholders:
/s/ Xxxxx Xxxxxxx
-------------------------
Xxxxx Xxxxxxx
/s/ Xxxxxxxx Xxxxxx
-------------------------
Xxxxxxxx Xxxxxx
/s/ Xxxx Xxxxxxx
-------------------------
Xxxx Xxxxxxx
/s/ Xxxxxxx Xxxxxxx
-------------------------
Xxxxxxx Xxxxxxx
/s/ Xxxxxx Xxxxxxx
-------------------------
Xxxxxx Xxxxxxx
