EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into
as of September 1, 1998, by and between SPORTSTRAC, INC., a Delaware corporation
("SELLER"), and APPLIED SPORTS TECHNOLOGIES, INC., a Delaware corporation
("BUYER").
R E C I T A L S:
A. Seller is in the business of developing and marketing products designed
to enhance and monitor athletic performance, including, without limitation, The
SportsTrac System, developing software and performing data processing and
analysis services in connection with such products, and developing and marketing
related products and performing related services (the "BUSINESS"); and
B. On the terms and conditions set forth in this Agreement, Buyer desires
to purchase from Seller, and Seller desires to sell to Buyer, substantially all
of the properties, assets, rights and business of Seller, subject to the
assumption by Buyer of certain associated liabilities.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
covenants and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are mutually acknowledged,
the parties agree as follows:
1. DEFINITIONS
1.1. DEFINITIONS. The following terms, when used herein and unless
the context clearly requires otherwise, shall have the following meanings:
"AFFILIATE" shall mean any Person that directly or indirectly controls, is
controlled by or is under common control with the Person in question. As used in
this definition, "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.
"ASSIGNED CONTRACT" shall mean any Contract: (a) under which Seller has or
may acquire any rights; (b) under which Seller has or may become subject to any
obligation or liability; or (c) by which Seller or any of the assets owned or
used by it is or may become bound, in any case except as set forth on SCHEDULE
1.1.
"ASSUMED LIABILITIES" shall have the meaning provided in Section 2.2(a).
"CLOSING" shall have the meaning provided in Section 2.3.
"CLOSING DATE" shall have the meaning provided in Section 2.3.
"CODE" shall mean the Internal Revenue Code of 1986.
"CONTRACT" shall mean any agreement, contract, obligation, promise or
understanding, whether written or oral and whether express or implied.
"EMPLOYEE BENEFIT PLANS" shall have the meaning provided in Section
3.11(i).
"ENVIRONMENTAL LAWS" shall mean all federal, state and local statutes,
regulations, ordinances, rules, regulations and policies, all court orders and
decrees and arbitration awards, and the common law, which pertain to
environmental matters or contamination of any type whatsoever.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974.
"EXCLUDED ASSETS" shall have the meaning provided in Section 2.1.
"EXCLUDED LIABILITIES" shall have the meaning provided in Section 2.2(c).
"FINANCIAL RECORDS" shall have the meaning provided in Section 3.7.
"FINANCIAL STATEMENTS" shall have the meaning provided in Section 3.7.
"GAAP" means generally accepted accounting principles in effect from time
to time in the United States consistently applied through the periods indicated
and from period to period.
"GOVERNMENTAL AUTHORITY" shall mean any court, agency, commission,
department or body of any national, state, provincial, local, municipal or
federal governmental regulatory unit, entity or authority having jurisdiction or
authority over Seller or any of its Business, assets or operations.
"GOVERNMENTAL AUTHORIZATION" shall mean any approval, consent, license,
certificate, permit, franchise, waiver, right, consent, registration, directive
or other authorization of, with or from any Governmental Authority.
"INTELLECTUAL PROPERTY RIGHTS" shall mean, collectively, all of Seller's
right, title and interest to patents, trademarks, copyrights and service marks,
registrations thereof and applications therefor, and licenses or sublicenses
therefor, and trade and business names, including, without limitation, (i) the
registered trademark "The SportsTrac System," (ii) the exclusive sublicense from
NHancement Technologies, Inc. ("NHancement") to market Critical Tracking Task
technology, and (iii) Seller's agreement with NHancement and Systems Technology,
Inc. ("STI") enabling Seller to assume NHancement's rights and obligations under
NHancement's license from STI upon the terms and conditions set forth in such
agreement.
"KNOWLEDGE" shall mean (a) with respect to an individual, such individual
is actually aware of such fact or other matter after reasonable and diligent
inquiry and investigation; and (b) with respect to any other Person (other than
an individual), any individual who is serving as a director, officer, partner,
executor or trustee of such Person (or in any similar capacity) has, or at any
time had, Knowledge of such fact or other matter.
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"LATEST FINANCIAL STATEMENT" shall have the meaning provided in Section
3.7.
"LEASED PREMISES" shall mean Seller's leasehold interest in that parcel of
real property commonly known as 0000 X. Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx,
Xxxxxxxx 00000.
"LEGAL REQUIREMENT" shall mean any federal, national, state, provincial,
local, municipal, foreign, international, multinational, or other administrative
order, constitution, law, ordinance, principle of common law, rule, regulation,
statute, or treaty.
"LIENS" shall mean, collectively, liens, claims, charges, restrictions,
voting trusts or comparable arrangements, options, constructive trusts, pledges,
security interests and other encumbrances.
"LOSS" shall mean any loss, damage, liability, penalty, cost or expense.
"PERSON" shall mean any individual, partnership, joint venture, firm,
corporation, association, limited liability company, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
"PRIVATE PLACEMENT" shall mean the private placement by Buyer of a minimum
of 1,500,000 and a maximum of 3,000,000, shares of its common stock, $0.01 par
value per share, for the gross cash consideration of $1.00 per share.
"PURCHASED ASSETS" shall have the meaning provided in Section 2.1.
"REGISTRATION STATEMENT" shall mean that certain Amendment No. 11 to Form
SB-2 of Seller, as filed with the U.S. Securities and Exchange Commission on
February 6, 1998.
"TAX" shall mean any tax, including levies, duties, charges, canons,
services or charges for use of municipal properties, services, deductions,
withholdings or liabilities imposed by any federal, state, provincial, local or
municipal authority and any other taxes of any nature imposed in any name and
under any form, including social security withholdings and contributions, as
well as any other charges imposed similarly to taxes, including interest,
penalty or addition thereto, whether or not disputed.
"TAX RETURNS" shall mean any return, declaration, report, claim for refund
or information return or statement relating to Taxes, including any schedule or
attachment thereto and any amendment thereof.
1.2. PRINCIPLES OF CONSTRUCTION.
(a) In this Agreement, unless otherwise stated or the context
otherwise requires, the following usages apply: (i) unless otherwise provided
herein, actions permitted, but not required, under this Agreement may be taken
at any time and from time to time in the actor's sole discretion; (ii) in
computing periods from a specified date to a later specified date, the words
"from" and "commencing on" (and the like) mean "from and including," and the
words "to,"
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"until" and "ending on" (and the like) mean "to, but excluding"; (iii) the
captions and headings of sections and schedules appearing in or attached to this
Agreement have been inserted for convenience of reference only and are not a
part of, nor shall they affect any construction or interpretation of this
Agreement or any of its provisions; (iv) unless otherwise specified, indications
of time of day mean Chicago, Illinois time; (v) all references to sections and
schedules are to sections and schedules in or to this Agreement unless otherwise
specified; (vi) references to a statute shall refer to the statute as amended
from time to time and any successor statute, and to all rules and regulations
promulgated under or implementing the statute or successor, as in effect at the
relevant time; (vii) references to a governmental or quasi-governmental agency,
authority or instrumentality shall also refer to a regulatory body that succeeds
to the functions of the agency, authority or instrumentality; (viii) "including"
means "including, but not limited to"; (ix) unless the context requires
otherwise, all words used in this Agreement in the singular number shall extend
to and include the plural, all words in the plural number shall extend to and
include the singular and all words in any gender shall extend to and include all
genders; and (x) any reference to a document or set of documents in this
Agreement, and the rights and obligations of the parties under any such
documents, shall mean such document or documents as amended or otherwise
modified from time to time, and any and all extensions, renewals, substitutions
or replacements thereof.
(b) In the event of any inconsistency between the statements in the
body of this Agreement and those in the schedules, the statements in the body of
this Agreement shall control.
(c) Where any accounting determination or calculation is required to
be made under this Agreement or the schedules hereto, such determination or
calculation (unless otherwise provided) shall be made in accordance with GAAP.
2. BASIC TERMS OF THE TRANSACTION
2.1. PURCHASED ASSETS. At the Closing, subject to the terms and
conditions set forth herein, Seller shall sell, transfer, convey, assign and
deliver to Buyer, and Buyer shall purchase from Seller, for the consideration
hereinafter set forth, all of Seller's right, title and interest in and to the
Business and all of the assets, properties, rights and interests of Seller
related thereto or arising therefrom (collectively, the "PURCHASED ASSETS"),
free and clear of all Liens, including, without limitation, the following:
(a) all equipment, fixtures, improvements and items of personal
property;
(b) all rights of Seller under any Assigned Contracts;
(c) all accounts receivable and notes receivable of Seller;
(d) all books, files and records relating to the Business and
Seller's operations, including property records, production records, service
records, inventory records, purchasing and sales records, computer programs,
customer and vendor lists, history and files,
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correspondence files and records and such other records as Buyer may require in
its conduct of the Business subsequent to the Closing;
(e) all purchase orders, forms, labels, shipment material, catalogs,
brochures, art work, photographs and advertising and marketing material relating
to the Purchased Assets, but not Seller;
(f) the Leased Premises;
(g) all Intellectual Property Rights;
(h) all rights to the corporate name "SportsTrac";
(i) all permits, consents, approval and other authorizations related
to or associated with the Business; and
(j) all cash and cash equivalents, including cash on hand or in bank
accounts, certificates of deposit, commercial paper, marketable securities and
other investments;
provided, however, that the following assets shall be excluded from the
definition of Purchased Assets and shall not be sold, transferred, conveyed,
assigned or transferred to Buyer (collectively, the "EXCLUDED ASSETS"):
(a) the corporate minute books and stock record books of Seller;
(b) all benefits to Seller of this Agreement; and
(c) the tax returns and tax records of Seller and right to tax
refunds, if any.
2.2. PAYMENT OF CASH CONSIDERATION; ASSUMPTION OF LIABILITIES. In
consideration for the Purchased Assets, at the Closing, subject to the terms and
conditions set forth herein, Purchaser (i) shall pay to Seller in cash $5,000.00
and (ii) shall assume and agree to discharge and perform when due, the
liabilities of Seller (and only those liabilities of Seller) which are
enumerated in Section 2.2(a) (the "ASSUMED LIABILITIES"). All claims against and
liabilities and obligations of Seller not specifically assumed by Purchaser
pursuant to Section 2.2(a) or pursuant to the transactions described in Section
7.9 hereof, including the liabilities enumerated in Section 2.2(b), are
collectively referred to herein as the "EXCLUDED LIABILITIES." Seller shall
promptly pay and discharge when due all of the Excluded Liabilities.
(a) Assumed Liabilities. The Assumed Liabilities shall consist of
the following, and only the following liabilities of Seller:
(i) all accrued and unpaid salaries, wages and vacation pay
with respect to those employees of Seller who become employees of
Purchaser immediately after the Closing as of the Closing Date to
the extent incurred in the ordinary course of business;
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(ii) liabilities and obligations of Seller under any Assigned
Contract or Governmental Authorization which is assigned or
transferred to Purchaser pursuant to the provisions hereof (but, in
each such case, only to the extent such liabilities and obligations
relate to performance after the Closing Date); and
(iii) all liabilities and obligations of Seller set forth on
SCHEDULE 2.2.
(b) Excluded Liabilities. Notwithstanding Section 2.2(a) (and
without implication that Purchaser is assuming any liability not expressly
excluded by this Section 2.2(b) and, where applicable, without implication that
any of the following would constitute Assumed Liabilities but for the provisions
of this Section 2.2(b)), the following claims against and liabilities of Seller
are excluded and shall not be assumed or discharged by Purchaser:
(i) trade accounts payable and accrued and unpaid expenses of
Seller not specifically set forth on SCHEDULE 2.2;
(ii) any liabilities to any of Seller's Affiliates;
(iii) any liabilities for legal, accounting, audit and
investment banking fees, brokerage commissions not specifically set
forth on SCHEDULE 2.2, other than such expenses incurred by Seller
in connection with the negotiation and preparation of this Agreement
and the sale of the Purchased Assets to Purchaser and related
transactions;
(iv) any liabilities of Seller for Taxes;
(v) any liability for or related to indebtedness of Seller to
banks, financial institutions or other persons or entities with
respect to borrowed money or otherwise not specifically set forth on
SCHEDULE 2.2;
(vi) any liabilities of Seller to the extent that their
existence or magnitude constitutes or results in a breach of a
representation, warranty or covenant made by Seller to Purchaser
herein;
(vii) any liabilities of Seller under those leases, contracts,
insurance policies, commitments, sales orders, purchaser orders, and
Governmental Authorizations which are not assigned to Purchaser
pursuant to the provisions of this Agreement;
(viii) any liabilities for retrospective or similar insurance
adjustments;
(ix) any liabilities of Seller in connection with or arising
out of the transfer or assignment of any Assigned Contract;
(x) any liabilities of Seller under collective bargaining
agreements pertaining to employees of Seller; any liabilities of
Seller to pay severance benefits to employees of Seller whose
employment is terminated prior to the
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Closing Date or in connection with or following the sale of the
Purchased Assets pursuant to the provisions hereof; or any liability
under any Federal or state civil rights or similar law, or the
so-called "WARN Act," resulting from the termination of employment
of employees;
(xi) product warranty liabilities of Seller with respect to
products shipped on or prior to the Closing Date and products
constituting finished goods inventory as of the Closing Date;
(xii) liabilities with respect to returns or allowances of
products which were sold on or prior to the Closing Date or which
constitute finished goods inventory as of the Closing Date and
liabilities with respect to recalls of products sold prior to the
Closing Date, whether required by a governmental body or otherwise;
(xiii) any claims against or liabilities of Seller for injury
to or death of persons or damage to or destruction of property
(including, without limitation, any workmen's compensation claim)
regardless of when said claim or liability is asserted, including,
without limitation, any claim or liability for consequential or
punitive damages in connection with the foregoing;
(xiv) any liabilities for medical, dental, and disability
(both long-term and short-term) benefits, whether insured or
self-insured, accruing or based upon exposure to conditions, or
aggravation of disabilities or conditions in existence, on or prior
to the Closing Date or for claims incurred or disabilities
commencing on or prior to the Closing Date, and any liability for
the foregoing, regardless of when accrued and regardless of when any
condition existed, which arises by virtue of any employment
relationship at any time with Seller;
(xv) any liability for or with respect to renegotiation of any
contract which is subject to renegotiation;
(xvi) any liabilities arising out of or in connection with any
of Seller's employee welfare and pension benefit (including profit
sharing) plans;
(xvii) any bonus or other compensation payments to Seller's
employees which are owed by reason of the sale of the Purchased
Assets, and any liabilities for salaries, wages, bonuses, vacation
pay and other compensation which are owed to employees of Seller who
do not become employees of Purchaser;
(xviii) any liabilities arising out of or in connection with
any violation of a statute, regulation or directive of a
Governmental Authority;
(xix) any liabilities or obligations with respect to, or
relating to, any Environmental Laws or environmental matters; and
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(xx) without limitation by the specific enumeration of the
foregoing, any liabilities not expressly assumed by Purchaser
pursuant to the provisions of Section 2.2(a).
(c) No Expansion of Third Party Rights. The assumption by Purchaser
of the Assumed Liabilities shall not expand the rights or remedies of any third
party against Purchaser or Seller as compared to the rights and remedies which
such third party would have had against Seller had Purchaser not assumed the
Assumed Liabilities. Without limiting the generality of the preceding sentence,
the assumption by Purchaser of the Assumed Liabilities shall not create any
third party beneficiary rights.
2.3. CLOSING. The closing of the transactions provided for herein
("CLOSING") shall take place at the offices of Barack Xxxxxxxxxx Xxxxxxxxxx
Xxxxxxx & Xxxxxxxxx, at 10:00 a.m. on December 31, 1998 (the "CLOSING DATE"), or
at such other time and place as the parties may mutually agree. Subject to the
provisions of Section 9, failure to consummate the transactions contemplated
hereby on the date and time and at the place determined pursuant to this Section
shall not result in the termination of this Agreement and shall not relieve any
party of any obligation under this Agreement.
2.4. BUYER'S DELIVERIES AT CLOSING. At the Closing, Buyer shall
deliver the following items to Seller:
(a) an assumption agreement providing for the assumption by Buyer of
the Assumed Liabilities, in form reasonably acceptable to Seller;
(b) a certificate executed by the President or any Vice President of
Buyer dated the Closing Date stating that: (i) all of the representations and
warranties of Buyer set forth in this Agreement are true and correct with the
same force and effect as if all of such representations and warranties were made
at the Closing Date, except to the extent such representations and warranties
expressly relate to an earlier date, in which case such representations shall be
true and correct on and as of such earlier date; and (ii) Buyer has performed or
complied with all of the covenants, agreements, obligations and conditions to be
performed or complied with by Buyer under the terms of this Agreement on or
prior to the Closing Date; and
(c) such other instruments and documents as Seller may reasonably
request.
2.5. SELLER'S DELIVERIES AT CLOSING. At the Closing, Seller shall
deliver the following items to Buyer:
(a) a general assignment and xxxx of sale to convey the Purchased
Assets, in form reasonably acceptable to Buyer;
(b) an assignment(s) of the Intellectual Property Rights, in a
form(s) reasonably acceptable to Buyer;
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(c) a certificate executed by the President or any Vice President of
Seller dated the Closing Date stating that: (i) all of the representations and
warranties of Seller set forth in this Agreement are true and correct with the
same force and effect as if all of such representations and warranties were made
at the Closing Date, except to the extent such representations and warranties
expressly relate to an earlier date, in which case such representations shall be
true and correct on and as of such earlier date; and (ii) Seller has performed
or complied with all of the covenants, agreements, obligations and conditions to
be performed or complied with by Seller under the terms of this Agreement on or
prior to the Closing Date;
(d) an amendment to Seller's Certificate of Incorporation whereby
Seller changes its name to a name that is not similar to "SportsTrac" or
"Applied Sports Technologies"; and
(e) such other instruments and documents as Buyer may reasonably
request.
2.6. JOINT DELIVERIES. At the Closing, the parties shall execute and
deliver, or cause to be executed and delivered, to each other, all of the
following:
(a) an assignment and assumption of the lease with respect to the
Leased Premises; and;
(b) all legally required bulk sales notices or transfer tax
declarations concerning the Purchased Assets.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents, warrants and covenants to Buyer as of the date
hereof and as of the Closing Date, which representations, warranties and
covenants are material, are being relied upon by Buyer (notwithstanding any
independent investigations) and shall survive the Closing as provided herein, as
follows. All representations and warranties of Seller are made subject to and
qualified by the information set forth in the Registration Statement.
3.1. ORGANIZATION AND AUTHORITY. Seller is a corporation duly
organized, validly existing and in good standing under the laws of Delaware, has
full power and authority to carry on its business as it is now being conducted
and to own, lease and operate its properties and assets as now owned, leased and
operated, and has full power and authority to take all actions on its part
contemplated to be taken under this Agreement and all other agreements,
instruments and documents referred to herein or contemplated hereby.
3.2. AUTHORIZATION AND ENFORCEABILITY. Seller has full right, power
and authority to enter into, execute and deliver and perform its obligations
under this Agreement and all other agreements, instruments and documents
referred to herein or contemplated hereby to be executed, delivered and
performed by it. This Agreement, and all other agreements, instruments and
documents referred to herein or contemplated hereby and executed by Seller,
constitute valid, binding and enforceable obligations of Seller in accordance
with their respective terms, subject to
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the enforcement of involuntary bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors' rights and to
general equitable principles.
3.3. OWNERSHIP OF PURCHASED ASSETS. Seller has and will convey to
Buyer good, full and marketable title to the Purchased Assets, free and clear of
any Lien.
3.4. NO CONFLICTS. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby by Seller
do not and shall not: (a) conflict with its Certificate of Incorporation or
By-Laws, in each case as amended as of the date hereof, (b) conflict with, or
result in a breach or termination of, or constitute a default (or an event
which, with the giving or due notice or lapse of time, or both, would constitute
a default) or cause or permit the acceleration of the maturity of or give rise
to any right to impose any fees or penalties under, any agreement, commitment,
or other instrument, or any order, judgment or decree, to which Seller is a
party or by which it or any of its assets is bound, (c) result in the creation
or imposition of any Lien upon any of its assets, or (d) constitute a violation
by Seller of any Legal Requirement of any Governmental Authority applicable to
Seller or to any of its assets.
3.5. CONSENTS. No consents, approvals, waivers, variances or
authorizations of, notices to or filings with any Person (including any
Governmental Authority) are necessary in connection with the execution and
delivery by Seller of this Agreement or the consummation by Seller of the
transactions contemplated herein.
3.6. LITIGATION. There are no (a) investigations, audits or reviews
by any Governmental Authority pending against or affecting Seller or any of its
assets, (b) claims, actions, suits or proceedings pending or threatened against
or affecting Seller or any of its assets, at law or in equity, before or by any
Governmental Authority or any third party, and there exists no state of facts
that could reasonably be expected to result in any such claims, actions, suits
or proceedings, or (c) outstanding judgments, orders, injunctions or decrees of
any Governmental Authority or any third party against or affecting Seller or any
of its assets, and Seller has not been a party to, or bound by, any such
judgment, order, injunction or decree.
3.7. FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. All the existing
financial statements of or pertaining to Seller since December 31, 1994 (the
"FINANCIAL STATEMENTS") and the records pertaining thereto (the "FINANCIAL
RECORDS") have been provided to Buyer. All the Financial Statements and
Financial Records are true, complete and correct in all material respects and
the Financial Statements have been prepared in accordance with GAAP (subject, in
the case of unaudited financial statements, to changes resulting from normal
year-end adjustments and to the absence of footnote disclosure), and fairly and
accurately present in all material respects the financial condition of Seller,
its cash flows, assets and liabilities and the results of its operations as at
the respective dates and for the respective periods indicated. The Financial
Statements reflect all known material claims against, and debts and liabilities
of, Seller in accordance with GAAP, as of the dates thereof. Except for claims,
debts and liabilities reflected in the unaudited balance sheet and related
income statements of Seller for the six-month period ended June 30, 1998 (the
"LATEST FINANCIAL STATEMENT"), those expressly disclosed in this Agreement and
those incurred in the ordinary course of business since the date of the Latest
Financial Statement, Seller
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does not have, nor is it subject to, any claims, debts or liabilities (whether
accrued, absolute, direct, indirect, perfected, known, unknown, contingent or
otherwise).
3.8. COMPLIANCE WITH LAWS. Seller has complied with and shall
continue to comply with through the Closing all applicable Legal Requirements
relating to any of its businesses, properties and assets. No event has occurred
or circumstance exists that (with or without notice or lapse of time) may
constitute or result in a violation by Seller of, or a failure on the part of
Seller to comply with, any Legal Requirement.
3.9. GOVERNMENTAL AUTHORIZATIONS. Seller has all Governmental
Authorizations required in connection with the conduct of its business and the
use of its assets, which Governmental Authorizations are valid and in full force
and effect. Seller is in full compliance with all of the terms and requirements
of each Governmental Authorization, and all filings (including applications for
renewal) required to have been made with respect to such Governmental
Authorizations or the renewal thereof have been duly made on a timely basis with
the appropriate Governmental Authorities. No event has occurred or circumstance
exists that may constitute or result directly or indirectly in (with or without
notice or lapse of time), and Seller has not received, at any time since its
formation, any notice or other communication (whether oral or written) from any
Governmental Authority or any other Person regarding: (i) any actual, alleged,
possible or potential violation of or a failure to comply with any term or
requirement of any Governmental Authorization; or (ii) any actual, proposed,
possible or potential revocation, withdrawal, suspension, cancellation or
termination of, or any modification to, any Governmental Authorization.
3.10. TAXES. (a) Seller has timely filed all Tax Returns which are
required to be filed; (b) such Tax Returns are complete, correct and in
accordance with applicable law; (c) Seller has paid all Taxes which have become
due and are imposed by law upon it or any of its property, assets, income,
receipts, imports, payrolls, transactions, capital, net worth or franchises,
other than those not yet due and payable or those being contested in good faith
by appropriate proceedings or for which all applicable statutes of limitation,
if any (including extensions thereof), have expired; (d) no issues, deficiencies
or claims have been asserted or proposed to Seller by any Governmental Authority
in connection with the examination of its Tax Returns which would, if determined
adversely, have an adverse affect on the business, operations or assets of
Seller; (e) no investigation or audit of any Governmental Authority with respect
to Taxes that might give rise to a Lien against any of its assets is in effect
or, to the Knowledge of Seller, has been threatened; and (f) except as otherwise
accrued and adequately reserved for in the books of account and other financial
records and statements of Seller made available to Buyer or its representatives,
no unsatisfied deficiency, delinquency or default for any Taxes that might give
rise to a Lien against any of its assets has been claimed, proposed or assessed
by any Governmental Authority.
3.11. CONTRACTS. Buyer has been supplied by Seller with true,
correct and complete copies of each of the following:
(a) Each lease of real property to which Seller is a party;
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(b) each Assigned Contract that was not entered into in the ordinary
course of business;
(c) each lease, rental, license, installment and conditional sale
agreement and other Assigned Contract affecting the ownership of, leasing of,
title to, use of, or any personal property;
(d) each licensing agreement, sub-licensing agreement or other
Assigned Contract with respect to the Intellectual Property Rights, including
agreements with current or former employees, consultants, or contractors
regarding the appropriation or the non-disclosure of any of the Intellectual
Property Rights;
(e) each joint venture, partnership, and other Assigned Contract
(however named) involving a sharing of profits, losses, costs, or liabilities by
Seller with any other Person;
(f) each Assigned Contract containing covenants that in any way
purport to restrict the business activity of Seller or any director, officer,
employee or shareholder or limit the freedom of Seller or any such person to
engage in any line of business or to compete with any Person;
(g) each Assigned Contract providing for payments to or by any
Person based on sales, purchases, or profits, other than direct payments for
goods;
(h) each employment agreement or arrangement with respect to any
officer, director or employee of Seller;
(i) each profit sharing, group insurance, hospitalization, stock
option, pension, retirement, bonus, deferred compensation, stock bonus, stock
purchase or other employee welfare or benefit agreements, plans or arrangements
established, maintained, sponsored or undertaken by Seller for the benefit of
its officers, directors or employees, and all other agreements, contracts or
arrangements under which pensions, deferred compensation or other retirement
benefits are being paid or may become payable by Seller for the benefit of the
employees of Seller (collectively, the "EMPLOYEE BENEFIT PLANS"), and any
current financial or actuarial reports with respect thereto obtained by or for
the benefit of Seller;
(j) each Assigned Contract for capital expenditures;
(k) each written warranty, guaranty or other similar undertaking
with respect to contractual performance extended by Seller other than in the
ordinary course of business; and
(l) each amendment, supplement and modification (whether oral or
written) in respect of any of the foregoing.
3.12. NO DEFAULTS. Each Assigned Contract provided by Seller to
Buyer or required to be provided by Seller to Buyer pursuant to the terms of
Section 3.11 is in full force and effect and is valid and enforceable in
accordance with its terms. Seller is in full compliance
12
with all material applicable terms and requirements of each Assigned Contract
under which it has or had any obligation or liability or by which it or any of
the assets owned or used by it is or was bound. Each Person other than Seller
that has or had any obligation or liability under any Assigned Contract is in
full compliance with all material applicable terms and requirements of such
Assigned Contract. No event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with, or result in a
violation or breach of, or give Seller or other Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Assigned Contract.
Seller has not given to or received from any other Person, at any time since
January 1, 1998, any notice or other communication (whether oral or written)
regarding any actual, alleged, possible, or potential violation or breach of, or
default under, any Assigned Contract.
3.13. ENVIRONMENTAL LAWS. The properties and facilities owned,
occupied or operated by Seller have been and continue to be owned and operated
in full compliance with all Environmental Laws, and none of such properties or
facilities is contaminated with any hazardous, toxic or polluting substances or
hazardous wastes.
3.14. CUSTOMERS AND SUPPLIERS. Seller has not received any notice or
has any reason to believe that as a result of Seller's anticipated sale of the
Purchased Assets to Buyer hereunder or the negotiation of the terms this
Agreement any customer of Seller has ceased, or shall at any time before or
after the Closing Date cease, to use the products, goods or services of the
business of Seller or has substantially reduced, or shall at any time before or
after the Closing Date substantially reduce, the use of such products, goods or
services at any time. Seller has not received any notice or has any reason to
believe that any supplier of Seller has ceased or shall cease to sell supplies,
inventory and other goods to the business of Seller at any time before or after
the Closing Date on terms and conditions substantially similar to those used in
its current sales to Seller, subject only to general and customary price
increases.
3.15. INSURANCE. Seller has provided Buyer or its counsel with true,
correct and complete copies of all insurance policies, including product and
other liability insurance and fire and extended coverage insurance, true,
correct and complete copies of which policies have been provided to Buyer. Such
policies are in full force and effect on the date hereof and shall remain so in
effect through the Closing (except for any expiring policy which is replaced by
coverage in amounts and of a nature at least as extensive as those in effect on
the date hereof). Seller is not in default under any such policy and has paid
all premiums due and payable with respect to each.
3.16. TITLE TO AND CONDITION OF ASSETS. Seller has provided Buyer or
its counsel with true, correct and complete copies of all of the leases under
which Seller holds a leasehold interest in real estate used in connection with
its business. Seller as lessee has the right under valid and existing leases to
occupy, use, possess and control any and all of the respective property leased
by it. All properties leased under such leases have unqualified access to public
roads and have access to all utilities necessary to conduct the business of
Seller as presently constituted. Seller has good title to, or a valid leasehold
interest in, all assets and properties, whether real or personal, tangible or
intangible, used by Seller, located on its premises or shown on the Latest
Financial Statement, free and clear of all Liens of any kind except: (i) minor
defects and irregularities in title and encumbrances which do not materially
impair the use thereof for the
13
purposes for which they are held, and (ii) as disclosed in the Latest Financial
Statement. The buildings, machinery, equipment and other tangible assets owned
or leased by Seller are structurally sound, are in good operating condition and
repair, and are adequate for the uses to which they are being put, and none of
such buildings, machinery, equipment or assets is in need of maintenance or
repairs except for ordinary, routine maintenance and repairs that are not
material in nature or cost. The buildings, machinery, equipment and other
tangible assets of Seller are sufficient for the continued conduct of the
Business after the Closing in substantially the same manner as conducted prior
to the Closing.
3.17. COMPLIANCE WITH ERISA. Seller does not have and has not had
any liability with respect to, and has not contributed to or had any obligation
to contribute to, including any liability which arises from the controlled group
of companies (within the meaning of Code Sections 414(b) and (c)) of which Buyer
is, or was a member during the six-year period prior to the Closing, any (a)
multiemployer plan as defined in Section 3(37) of ERISA, (b) any employee
benefit plan of the type described in Sections 4063 and 4064 of ERISA or in
Section 413(c) of the Code, or (c) any plan or policy which provides health,
life insurance, accident, severance or other welfare benefits to current or
former employees or retirees, their beneficiaries, spouses of departments, other
than in accordance with Section 4980B of the Code or applicable state
continuation coverage law. During the six years preceding the Closing, no
defined benefit plan has been terminated or its assets transferred out of the
controlled group of companies (with the meaning of Code Sections 414(b) and (c))
of which Buyer is or was a member during such six-year period. Seller has fully
complied with the applicable administrative, reporting and substantive
requirements of ERISA and any other Legal Requirement with respect to each
Employee Benefit Plan.
3.18. ABSENCE OF CERTAIN CHANGES AND EVENTS. Since the date of the
Latest Financial Statement, the business of Seller has been conducted in the
ordinary course and consistent with past practice, and there has not been any:
(a) payment or increase by Seller of any bonuses, salaries or other
compensation to any shareholder, director, officer or (except in the ordinary
course of business) employee or entry into any employment, severance or similar
agreement or contract with any director, officer or employee;
(b) adoption, amendment (except for any amendment necessary to
comply with any Legal Requirement) or termination of, or increase in the
payments to or benefits under, any Employee Benefit Plan;
(c) material damage to or destruction or loss of any asset or
property of Seller, whether or not covered by insurance;
(d) entry into, termination or extension of, or receipt of notice of
termination of any joint venture or similar agreement, or any agreement,
contract or transaction involving a total remaining commitment by or to Seller
of at least $5,000;
(e) material change in any existing lease of real or personal
property;
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(f) sale (other than any sale in the ordinary course of business),
lease or other disposition of any asset or property of Seller or mortgage,
pledge or imposition of any Lien on any material asset or property of Seller
except for tax and other Liens which arise by operation of law and with respect
to which payment is not past due;
(g) incurrence of any obligation or liability (fixed or contingent)
other than in the ordinary course of business;
(h) cancellation or waiver of any claims or rights with a value to
Seller in excess of $5,000;
(i) merger or consolidation with or into any other Person, or
acquisition of any stock, equity interest or business of any other Person;
(j) transaction for the borrowing or lending of monies, other than
in the ordinary course of business;
(k) material change in the accounting methods used by Seller;
(l) other material adverse changes, or actions or omissions of
Seller which could reasonably be expected to result in a material adverse
change, in the financial condition, earnings, operating results, business
condition and prospects, assets, operations, employee relations or customer or
supplier relations of Seller; or
(m) agreement, whether oral or written, by Seller to do any of the
foregoing.
3.19. BROKERAGE COMMISSIONS. None of Seller or any of its agents has
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement.
3.20. AFFILIATED TRANSACTIONS. No officer, director, employee or
stockholder of Seller or any individual related by blood, marriage or adoption
to any such individual or any entity in which any such Person owns any
beneficial interest is a party to any agreement, contract, commitment or
transaction with Seller or has any material interest in any material property
used by Seller.
3.21. EMPLOYEE AND LABOR MATTERS. No key employee or group of
employees of Seller has any plans to terminate his or their employment with
Seller. Seller is currently in compliance in all material respects with all
Legal Requirements regarding the employment of personnel and labor, including
provisions relating to wages, hours, equal opportunity, collective bargaining
and the payment of social security and other Taxes, and Seller has no liability
for any past non-compliance with any of the foregoing.
3.22. INTELLECTUAL PROPERTY RIGHTS. (a) Seller is the owner of or
duly licensed to use each of Intellectual Property Rights and its associated
goodwill and each copy of computer software in Seller's possession; (b) each of
the Intellectual Property Rights, and each registration
15
and application included therein exists, is owned by or licensed to Seller, and
has been maintained in good standing; (c) no other firm, corporation,
association or person claims the right to use in connection with similar or
closely related products or services and in the same geographic area, any xxxx
which is identical to or confusingly similar to any of the trademarks or service
marks included in the Intellectual Property Rights; (d) there exists no claim or
any reason to believe that any third party asserts ownership rights in any of
the Intellectual Property Rights; (e) there exists no claim or any reason to
believe that Seller's use of any of the Intellectual Property Rights infringes
any right of any third party; and (f) no third party is infringing any of
Seller's rights in any of the Intellectual Property Rights.
3.23. NO MATERIAL OMISSIONS. The representations and warranties of
Seller in this Agreement, and all representations, warranties and statements of
Seller contained in any schedule, financial statement, exhibit, list or document
delivered pursuant hereto or in connection herewith, do not omit to state a
material fact necessary in order to make the representations, warranties or
statements contained herein or therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents, warrants and covenants to Seller as of the date
hereof and as of the Closing Date, which representations, warranties and
covenants are material, are being relied upon by Seller (notwithstanding any
independent investigations) and shall survive the Closing as provided herein, as
follows:
4.1. ORGANIZATION AND AUTHORITY. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of Delaware and
has full power and authority to take all actions on its part contemplated to be
taken under this Agreement, in connection with the Private Placement, and all
other agreements, instruments and documents referred to herein or contemplated
hereby.
4.2. ENFORCEABILITY. This Agreement, and all other agreements,
instruments and documents referred to herein or contemplated hereby and executed
by Buyer, constitute valid, binding and enforceable obligations of Buyer in
accordance with their respective terms, subject to the enforcement of
involuntary bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
equitable principles.
4.3. NO CONFLICTS. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby by Buyer
do not and shall not: (a) conflict with the Certificate of Incorporation or
by-laws of Buyer, in each case as amended as of the date hereof, or (b)
constitute a violation by Buyer of any Legal Requirement of any Governmental
Authority applicable to Buyer or its assets.
4.4. CONSENTS. No consents, approvals, waivers, variances or
authorizations of, notices to or filings with any Person (including any
Governmental Authority) are necessary in connection with the execution and
delivery by Buyer of this Agreement or the consummation by
16
Buyer of the transactions contemplated herein except those that have been
obtained by Buyer prior to the date hereof.
5. SELLER'S COVENANTS
Seller hereby covenants to Buyer that:
5.1. ORDINARY COURSE. During the period from the date hereof through
the Closing Date or the earlier termination of this Agreement as provided
herein, Seller shall:
(a) conduct its business only in the usual and ordinary course of
business in accordance with past practices;
(b) maintain all of the Purchased Assets in good operating condition
and repair, ordinary wear and tear (not caused by neglect) and damage by fire or
unavoidable casualty excepted, replace and repair such assets in accordance with
customary industry standards, and maintain policies of insurance upon its assets
and with respect to the conduct of its business in amounts and kinds comparable
to that in effect on the date hereof and pay all premiums on such policies when
due;
(c) file in a timely manner all required filings with all
Governmental Authorities and cause such filings to be true and correct in all
material respects, and use reasonable good faith efforts to maintain all
material Governmental Authorizations;
(d) pay all Taxes and other bills and amounts when due and payable,
unless contesting such Taxes in good faith;
(e) maintain its books, accounts and records in the usual, regular
and ordinary manner, on a basis consistent with prior years and complying with
all Legal Requirements;
(f) comply with all material Legal Requirements affecting the
Business and the Purchased Assets; and
(g) use reasonable good faith efforts to maintain the relations,
agreements, understandings and goodwill with suppliers, customers, landlords,
creditors, employees, agents and others having business relationships with
Seller.
5.2. NEGATIVE COVENANTS. Except as otherwise expressly permitted by
this Agreement, Seller shall not, without the prior written consent of Buyer:
(a) make any payments or distributions to its employees, officers or
directors, except such amounts as constitute currently effective compensation
for services rendered or for reimbursement for ordinary and necessary or
out-of-pocket business expenses;
(b) incur or commit to incur any capital expenditures;
17
(c) prepay any of its material obligations;
(d) incur, assume or guarantee any long-term or short-term
indebtedness;
(e) directly or indirectly, enter into or assume any contract,
agreement, obligation, lease, license or commitment other than in the usual and
ordinary course of business in accordance with past practices;
(f) adopt or amend any Employee Benefit Plan;
(g) increase the compensation payable to any employee;
(h) take any affirmative action, or fail to take any action within
its control, that may result in (A) the bankruptcy, insolvency or reorganization
of Seller, (B) in any way impair Seller's ability to take all actions on its
part contemplated to be taken under this Agreement and all other agreements,
instruments and documents referred to herein or contemplated hereby, (C)
conflict with its Certificate of Incorporation or By-Laws, in each case as
amended as of the date hereof, (D) conflict with, or result in a breach or
termination of, or constitute a default (or an event which, with the giving or
due notice or lapse of time, or both, would constitute a default) or cause or
permit the acceleration of the maturity of or give rise to any right to impose
any fees or penalties under, any agreement, commitment, or other instrument, or
any order, judgment or decree, to which Seller is a party or by which it or any
of its assets is bound, (E) result in the creation or imposition of any Lien
upon any of its assets, or (F) constitute a violation by Seller of any Legal
Requirement of any Governmental Authority applicable to Seller or to any of its
assets;
(i) sell, transfer or otherwise dispose of any material asset or
property except for application of cash in payment of Seller's liabilities in
the usual and ordinary course of business;
(j) amend, terminate or give notice of termination with respect to
any existing agreement to which Seller is a party, or waive any material rights;
(k) enter into any transaction (including, without limitation, the
purchase, sale, lease or exchange of any property or the rendering of services),
directly or indirectly, with any Affiliate of Seller; or
(l) pay, declare or set aside any dividend or other distribution on
its securities of any class or purchase or redeem any of its securities of an
class.
5.3. ADVICE OF CHANGES. Seller shall promptly notify Buyer in
writing if Seller acquires Knowledge of any fact or condition that causes or
constitutes a breach of any of Seller's representations and warranties as of the
date of this Agreement, or if Seller acquires Knowledge of the occurrence after
the date of this Agreement of any fact or condition that would (except as
expressly contemplated by this Agreement) cause or constitute a breach of any
such representation or warranty had such representation or warranty been made as
of the time of occurrence or discovery of such fact or condition. Seller shall
promptly notify Buyer of the
18
occurrence of any breach of any covenant of Seller in this Section 5 or of the
occurrence of any event that may make the satisfaction of the conditions in
Section 7 impossible or unlikely.
5.4. COOPERATION. Seller shall, and shall cause its agents and other
representatives to, fully and promptly and in good faith (a) cooperate and
assist Buyer and its agents and other representatives in connection with any
steps to be taken as part of their obligations hereunder, including in obtaining
such consents and approvals of third Persons (including Governmental
Authorities) necessary to the transactions contemplated hereby, (b) take all
such other actions required pursuant to this Agreement that are necessary to
effectuate the transactions contemplated herein, and (c) furnish Buyer and its
agents and other representatives with such documents or further assurances as
they may reasonably require.
5.5. CHANGE OF CORPORATE NAME. As soon as practicable after the
Closing, Seller shall take all actions reasonably necessary to change its
corporate name such that Buyer will be able to change its corporate name to a
name which includes the word "SportsTrac".
6. BUYER'S COVENANTS
6.1. ADVICE OF CHANGES. Buyer shall promptly notify Seller in
writing if Buyer acquires Knowledge of any fact or condition that causes or
constitutes a breach of any of Buyer's representations and warranties as of the
date of this Agreement, or if Buyer acquires Knowledge of the occurrence after
the date of this Agreement of any fact or condition that would (except as
expressly contemplated by this Agreement) cause or constitute a breach of any
such representation or warranty had such representation or warranty been made as
of the time of occurrence or discovery of such fact or condition. Buyer shall
promptly notify Seller of the occurrence of any breach of any covenant of Buyer
in this Section 6 or of the occurrence of any event that may make the
satisfaction of the conditions in Section 8 impossible or unlikely.
6.2. COOPERATION. Buyer shall, and shall cause its agents and other
representatives to, use good faith and commercially reasonable efforts to (a)
cooperate and assist Seller and its agents and other representatives in
connection with any steps to be taken as part of their obligations hereunder,
including in obtaining such consents and approvals of third Persons (including
Governmental Authorities) necessary to the transactions contemplated hereby, (b)
take all such other actions required pursuant to this Agreement that are
necessary to effectuate the transactions contemplated herein, and (c) furnish
Seller and its agents and other representatives with such documents or further
assurances as they may reasonably require.
7. CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
The obligations of Buyer to consummate the transactions contemplated
herein pursuant to the terms of this Agreement are subject to the satisfaction,
at or prior to the Closing, of each of the conditions of this Section 7. Buyer
may waive any or all of these conditions in whole or in part, but no such waiver
shall constitute a waiver by Buyer of any of its other rights or remedies under
this Agreement. No condition shall be deemed to have been waived by Buyer unless
such waiver is contained in a writing specifically referring to this provision
and signed by Buyer.
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7.1. REPRESENTATIONS AND WARRANTIES OF SELLER. The representations
and warranties of Seller contained in this Agreement shall be true and correct
in all respects at the Closing with the same force and effect as if made at the
Closing.
7.2. COMPLIANCE. Seller shall have performed, complied with and
fulfilled in all respects all of its covenants, agreements, obligations and
conditions required by this Agreement to be performed, complied with or
fulfilled at or prior to the Closing.
7.3. CONSENTS.
(a) All consents and approvals required in the sole opinion of Buyer
from any party to an Assigned Contract to the consummation of the sale of the
Purchased Assets or the other transactions contemplated by this Agreement shall
have been obtained and shall be reasonably satisfactory to Buyer.
(b) All authorizations, consents, orders, declarations and approvals
of, or filings with, or terminations or expirations of waiting periods imposed
by, any Governmental Authority which the failure to obtain, make or occur could,
in the sole opinion of Buyer, have the effect of making any of the transactions
contemplated by this Agreement illegal or adversely affect the Buyer or the
Business, shall have been made or shall have occurred and shall be reasonably
satisfactory to Buyer.
7.4. PROCEEDING. No suit, proceeding or investigation shall have
been commenced or threatened by any Governmental Authority or private person on
any grounds to restrain, enjoin or hinder, or to seek damages on account of, the
consummation of the transaction contemplated hereby.
7.5. NO MATERIAL ADVERSE CHANGE. In the sole discretion of Buyer,
between the date hereof and the Closing, there shall have been no material
adverse change in Seller or its financial condition, assets, operations,
Business or prospects, including any of Seller (i) ceasing to be solvent or (ii)
suffering the appointment of a receiver, trustee, custodian or similar
fiduciary, or (iii) making an assignment for the benefit of creditors, or (iv)
filing any petition or an order for relief under the bankruptcy code, or (v)
having filed against it any petition for an order for relief and either an order
for relief shall be entered against Seller as a result of such petition or such
proceeding shall continue for more than 30 days, or (vi) making any offer of
settlement, extension or composition to its unsecured creditors generally.
7.6. COMPLIANCE WITH APPLICABLE LAWS. Neither the consummation nor
the performance of any of the transactions contemplated hereby shall, directly
or indirectly (with or without notice or lapse of time), contravene, or conflict
with or result in a violation of, or cause Buyer or any of Buyer's affiliates to
suffer any material adverse consequence under: (a) any applicable Legal
Requirement; or (b) any Legal Requirement that has been published, introduced,
or otherwise proposed by or before any Governmental Authority.
7.7. CLOSING DELIVERIES. Seller shall have delivered all of the
instruments and documents described in Section 2.5 and all of the other
instruments and documents described in
20
Section 2.6 shall have been delivered, and the form and substance of all such
deliveries shall be reasonably satisfactory in all respects to Buyer and its
counsel.
7.8. SUBSCRIPTIONS. Buyer shall have received bona fide
subscriptions for the common stock, $0.01 par value per share, of Buyer in the
aggregate amount of not less than $1.5 million, which amount shall be in escrow
and shall be payable to Buyer subject only to the Closing.
7.9. CONVERSIONS. Buyer shall have received bona fide, duly executed
and enforceable agreements from holders of outstanding indebtedness of Seller,
pursuant to which such holders agree to exchange outstanding indebtedness in an
aggregate amount of not less than $2,828,775 for the common stock, $0.01 par
value per share, of Buyer, upon terms and conditions satisfactory to Buyer in
its sole discretion, subject only to the Closing.
7.10. LOAN MODIFICATIONS. Buyer shall have received bona fide, duly
executed and enforceable amendments to (i) the loan documents evidencing a
certain $350,000 loan made by Swiss American Bank ("SAB") to Seller which is
part of the Assumed Liabilities and (ii) the loan documents evidencing a series
of loan aggregating $335,000 made by The Holding Company ("THC") to Seller which
are part of the Assumed Liabilities, which amendments shall (a) extend the
maturity date of such loans to December 31, 2000, (b) establish an interest rate
of 10% per annum, (c) provide that interest shall accrue, but shall not be
payable until the maturity date and (d) grant to the holder of such loans the
right to convert all principal and interest into Common Stock of Buyer on the
basis of one share of Common Stock for each $0.40 of indebtedness.
8. CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
The obligations of Seller to consummate the transactions contemplated
herein pursuant to the terms of this Agreement are subject to the satisfaction,
at or prior to the Closing, of each of the conditions of this Section 8. Seller
may waive any or all of these conditions in whole or in part, but no such waiver
shall constitute a waiver by Seller of any of its other rights or remedies under
this Agreement. No condition shall be deemed to have been waived by Seller
unless such waiver is contained in a writing specifically referring to this
provision and signed by Seller.
8.1. REPRESENTATIONS AND WARRANTIES OF BUYER. The representations
and warranties of Buyer contained in this Agreement shall be true and correct in
all material respects at the Closing with the same force and effect as if made
at the Closing.
8.2. COMPLIANCE. Buyer shall have performed, complied with and
fulfilled in all material respects all of its covenants, agreements, obligations
and conditions required by this Agreement to be performed, complied with or
fulfilled at or prior to the Closing.
8.3. CONSENTS.
(a) All consents and approvals required in the sole opinion of
Seller from any party to an Assigned Contract to the consummation of the sale of
the Purchased Assets or the
21
other transactions contemplated by this Agreement shall have been obtained and
shall be reasonably satisfactory to Seller.
(b) All authorizations, consents, orders, declarations and approvals
of, or filings with, or terminations or expirations of waiting periods imposed
by, any Governmental Authority which the failure to obtain, make or occur could,
in the sole opinion of Seller, have the effect of making any of the transactions
contemplated by this Agreement illegal or adversely affect the Seller or the
Business, shall have been made or shall have occurred and shall be reasonably
satisfactory to Seller.
8.4. PROCEEDING. No suit, proceeding or investigation shall have
been commenced or threatened by any Governmental Authority or private person on
any grounds to restrain, enjoin or hinder, or to seek damages on account of, the
consummation of the transaction contemplated hereby.
8.5. CLOSING DELIVERIES. Buyer shall have delivered all of the
instruments, documents and considerations described in Section 2.4 and all of
the instruments and documents described in Section 2.6 shall have been
delivered, and the form and substance of all such deliveries shall be reasonably
satisfactory in all respects to Seller and its counsel.
9. TERMINATION
9.1. REASONS FOR TERMINATION AND ABANDONMENT. This Agreement may, by
prompt written notice given to the other party prior to the Closing, be
terminated:
(a) by mutual consent of Seller and Buyer;
(b) by either Buyer or Seller if a material inaccuracy, untruth,
failure or other breach of any provision of this Agreement has been committed by
the other party and has not been waived;
(c) by Buyer if any of the conditions in Section 7 has not been
satisfied as of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date;
(d) by Seller if any of the conditions in Section 8 has not been
satisfied of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Seller to comply with
their obligations under this Agreement) and Seller has not waived such condition
on or before the Closing Date; or
(e) by either Buyer or Seller if the Closing has not occurred (other
than through the failure of any party seeking to terminate this Agreement to
comply fully with its obligations under this Agreement) on or before the date
which is 60 days after the date of this Agreement or such later date as the
parties may agree upon in writing.
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9.2. EFFECT OF TERMINATION. Each party's right of termination under
Section 9.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination shall not be an
election of remedies. If this Agreement is terminated pursuant to Section 9.1,
all further obligations of the parties under this Agreement, except for those
obligations specifically designated herein as surviving such termination, shall
terminate.
10. GENERAL PROVISIONS
10.1. EXPENSES. Except as otherwise provided herein, Buyer shall
bear all costs and expenses relating to the transactions contemplated hereby,
including fees and expenses of legal counsel, accountants, consultants or other
representatives for the services used, hired or connected with such
transactions.
10.2. FURTHER ASSURANCES. At the request of any party from time to
time on and after the Closing Date, the other party shall, without further
consideration, execute and/or deliver to or as directed by the requesting party
such documents, and take such actions, as the requesting party may reasonably
request in order to consummate and evidence more effectively the transactions
provided for herein.
10.3. ENTIRE AGREEMENT. This Agreement, together with all of the
other documents referred to herein, supersedes all prior agreements and
constitutes the entire agreement and understanding between the parties with
regard to the subject matter hereof, and there are no other prior or
contemporaneous written or oral agreements, undertakings, promises, warranties,
or covenants respecting such subject matter not expressly set forth or described
herein.
10.4. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
10.5. NOTICES. All notices, requests and other communications
hereunder shall be in writing (which shall include telecopier communication) and
shall be deemed to have been duly given if delivered by hand or by overnight
express delivery service, mailed with first class postage prepaid or telecopied
if confirmed immediately thereafter by also mailing a copy of any notice,
request or other communication by mail with first class postage prepaid:
23
(a) If to Seller to: SportsTrac, Inc.
0000 X. Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxxx
(b) If to Buyer to: Applied Sports Technologies, Inc.
0000 X. Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxxx
or to such other place as any party may designate to the other parties in
writing. Except as otherwise provided herein, all such notices, requests or
other communications shall be effective: (i) if delivered by hand, when
delivered; (ii) if mailed in the manner provided in this paragraph, two business
days after deposit with the United States Postal Service; (iii) if delivered by
overnight express delivery service, on the first business day after deposit with
such service; and (iv) if by telecopier, when telecopied, if also confirmed by
mail in the manner provided in this paragraph.
10.6. MODIFICATION. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by each of the parties
hereto.
10.7. WAIVER. Neither the failure nor any delay by any party in
exercising any right, power or privilege under this Agreement or the documents
referred to in this Agreement shall operate as a waiver of such right, power or
privilege, and no single or partial exercise of any such right, power or
privilege shall preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by applicable law: (a) no claim or right arising out of this
Agreement or the documents referred to in this Agreement can be discharged by
one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party shall be applicable except in the specific instance for which
it is given; and (c) no notice to or demand on one party shall be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
10.8. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
10.9. EXHIBITS AND SCHEDULES. All exhibits and schedules referred to
in and attached to this Agreement are incorporated herein and made a part hereof
by this reference in the same manner as if such exhibits and schedules were set
forth at length in the text hereof. In the event of any inconsistency between
the statements in the body of this Agreement and those in the exhibits and
schedules hereto (other than an exception expressly set forth as such in the
exhibits
24
and schedules with respect to a specifically identified representation or
warranty), the statements in the body of this Agreement shall control.
10.10. SUCCESSORS AND THIRD PARTY BENEFICIARIES. No party may assign
or transfer any of its rights or obligations hereunder except with the prior
written consent of all of the other parties. If assigned in accordance with the
terms hereof, this Agreement shall be binding on, and shall inure to the benefit
of, the parties and their respective successors and assigns. There are no third
party beneficiaries of this Agreement.
10.11. REPRESENTATIONS AND WARRANTIES; SURVIVAL. All representations
and warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, regardless of any
investigation made by or on behalf of any party to this Agreement.
10.12. REMEDIES CUMULATIVE. All remedies of any party hereunder are
cumulative and not alternative, and are in addition to any other remedies
available at law or otherwise, and may be exercised concurrently or
successively.
10.13. GOVERNING LAW. This Agreement and all transactions
contemplated hereby shall be governed, construed and enforced in accordance with
the laws of the State of Illinois without reference to (i) its judicially or
statutorily pronounced rules regarding conflict of laws or choice of law; (ii)
where any instrument is executed or delivered; (iii) where any payment or other
performance required by any such instrument is made or required to be made; (iv)
where any breach of any provision of any such instrument occurs, or any cause of
action otherwise accrues; (v) where any action or other proceeding is instituted
or pending; (vi) the nationality, citizenship, domicile, principal place of
business, or jurisdiction or organization or domestication of any party; (vii)
whether the laws of the forum jurisdiction otherwise would apply the laws of a
jurisdiction other than the State of Illinois; or (viii) any combination of the
foregoing.
25
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SPORTSTRAC, INC.
/s/ Xxxxxxx Xxxxxxx
----------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Chairman of the Board
APPLIED SPORTS TECHNOLOGIES, INC.
/s/ Xxxx Xxxxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Chief Executive Officer
26
EXHIBITS AND SCHEDULES
Schedule 1.1 Excluded Contracts
Schedule 2.2 Assumed Liabilities and Obligations
SCHEDULE 1.1
None
SCHEDULE 2.2
See Attached
March 2, 1999
SportsTrac, Inc.
0000 X. Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx
xxxxxxxxxx.xxx, inc.
0000 X. Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxxx
Gentlemen:
Reference is made to that certain Asset Agreement (the "Agreement") dated
as of September 1, 1998, by and between SPORTSTRAC, INC., a Delaware corporation
("Seller"), and APPLIED SPORTS TECHNOLOGIES, INC., a Delaware corporation n/k/a
xxxxxxxxxx.xxx, inc., a Delaware corporation (the "Company"). All capitalized
terms not defined herein shall have the definitions set forth in the Agreement.
Notwithstanding anything to the contrary contained in the Agreement, the
undersigned agree to the following:
1. "Private Placement" shall mean the private placement by the Company
of a minimum of 250,000 and a maximum of 3,000,000 shares of the
Company's Common Stock, $0.01 par value per share, for the gross
consideration of $1.00 per share.
2. The Company shall assume approximately $3,631,631 in liabilities of
the Seller.
3. The Company will require that holders of at least $2,840,296 of the
Assumed Liabilities agree to accept the Company's Common Stock in
full payment of such liabilities, with between one and four shares
of Common Stock being issued for each $1.00 of Assumed Liabilities.
By executing this letter, the undersigned indicate their agreement to the
foregoing changes.
SPORTSTRAC, INC. xxxxxxxxxx.xxx, inc.
/s/ Xxxxxxx Xxxxxxx /s/ Xxxx Xxxxxxxxx
-------------------------------- --------------------------------
Name: Xxxxxxx Xxxxxxx Name: Xxxx Xxxxxxxxx
Title: Chairman of the Board Title: Chief Executive Officer
