EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
IA GLOBAL, INC.
AND
XXXXXXX.XXX, INC.
DATED AS OF
________ __, 2004
TABLE OF CONTENTS
1. DEFINITIONS..............................................................1
2. PURCHASE AND SALE........................................................6
2.1. Purchase and Sale of Assets.....................................6
2.2. Excluded Assets.................................................8
2.3. Assumed Liabilities.............................................8
2.4. Retained Liabilities............................................9
2.5. Agreement to Purchase..........................................10
2.6. Consideration..................................................10
2.7. Assignment of the Assumed Contracts and Permits................11
3. REPRESENTATIONS AND WARRANTIES OF the coMPANY...........................11
3.1. Organization...................................................11
3.2. Authorization, Execution and Enforceability....................11
3.3. Absence of Restrictions, Conflicts and Required Consents.......11
3.4. Ownership of Assets and Related Matters........................12
3.5. Legal Proceedings..............................................12
3.6. Governmental and Other Authorizations..........................13
3.7. Compliance with Legal Requirements.............................13
3.8. Intellectual Property..........................................13
3.9. Transactions with Affiliates...................................14
3.10. Brokers, Finders and Investment Bankers........................15
3.11. Disclosure.....................................................15
3.12. Disclaimer of Other Representations and Warranties.............15
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.............................15
4.1. Organization...................................................15
4.2. Authorization, Execution and Enforceability....................15
4.3. Absence of Restrictions, Conflicts and Required Consents.......16
4.4. Brokers, Finders and Investment Bankers........................16
4.5. Disclosure of Interests........................................16
5. CERTAIN COVENANTS AND AGREEMENTS........................................16
5.1. Access and Information.........................................16
5.2. Conduct of Business Pending Closing............................17
5.3. Notice; Efforts to Remedy; Reports.............................19
5.4. Taxes..........................................................19
5.5. Supplements to Disclosure Schedules............................19
5.6. Supplements to Disclosure Schedules............................19
5.7. Bankruptcy Filings.............................................20
5.8. Power of Attorney; Right of Endorsement........................20
5.9. Post-Closing Funds.............................................20
5.10. Further Assurances.............................................20
5.11. Public Statements..............................................21
5.12. Governmental Authority, Approvals and Cooperation..............21
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6. CONDITIONS PRECEDENT TO THE CLOSING.....................................22
6.1. Conditions to Each Party's Obligations.........................22
6.2. Conditions to the Obligations of the Company...................23
6.3. Conditions to the Obligations of Purchaser.....................23
7. CLOSING.................................................................25
7.1. Closing Date...................................................25
7.2. Closing Steps..................................................25
8. TERMINATION.............................................................25
8.1. Termination....................................................25
8.2. Effect of Termination..........................................26
9. NOTICES.................................................................27
10. MISCELLANEOUS...........................................................28
10.1. Attachments....................................................28
10.2. Entire Agreement...............................................28
10.3. Disclosure Schedules...........................................28
10.4. Compliance with Bulk Sales Laws................................28
10.5. Enforcement of Agreement.......................................28
10.6. Succession and Assignment......................................29
10.7. Number; Gender.................................................29
10.8. Captions.......................................................29
10.9. Controlling Law; Integration; Amendment; Certain
Construction Rules...........................................29
10.10. Severability...................................................29
10.11. Counterparts; Execution and Delivery of Signature Pages........29
10.12. No Third Party Beneficiary.....................................30
10.13. Waiver.........................................................30
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), is made and entered
into effective this ___ day of ___________, 2004, by and among IA GLOBAL, INC.,
a corporation organized and existing under the laws of the State of Delaware
("Purchaser"), and XXXXXXX.XXX, INC., a corporation organized and existing under
the laws of the State of Delaware (the "Company"). Purchaser and the Company
shall hereinafter be referred to individually as a "Party" and collectively as
the "Parties."
W I T N E S S E T H T H A T :
WHEREAS, the Company engages in, among other things, the business of
providing software that accelerates the transfer of data using the Internet (the
"Business"), as a Debtor-In-Possession in the Chapter 11 case pending in the
United States Bankruptcy Court for the Northern District of Ohio (the "USBC"),
Case No. 03-12179-H (the "Bankruptcy Proceeding");
WHEREAS, the Parties desire to enter into this Agreement pursuant to
which the Company proposes to sell to Purchaser, and Purchaser, through one or
more subsidiaries, proposes to purchase from the Company, substantially all of
the assets used or held for use in, or relating to, the Business, and Purchaser,
through one or more subsidiaries, proposes to assume certain of the liabilities
and obligations of the Company relating to the Business; and
WHEREAS, the Parties wish to make certain other agreements and
undertakings;
NOW, THEREFORE, in consideration of the premises and the mutual
promises and agreements contained herein, the Parties hereto, intending to be
legally bound, hereby agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
following meanings:
"ACCOUNTS RECEIVABLE" shall mean all trade accounts receivable and the
right to payment from customers of the Business, including all trade accounts
receivable representing amounts receivable in respect of goods shipped or
products sold or services rendered to such customers, and all other accounts or
notes receivable and the full benefit of all security interests given or
obtained by the Company for such accounts or notes and all claims, remedies and
other rights related to any of the foregoing.
"AFFILIATE" of any Person (as hereinafter defined) shall mean (i) any
director, officer or employee of such Person, (ii) any direct or indirect holder
of five percent (5%) or more of the outstanding capital stock of such Person,
(iii) any spouse, parent, sibling, or descendant of such Person, (iv) any trust,
partnership, limited partnership or limited liability company, in whole or in
part, for the benefit of, or owned by, such Person or any Person specified in
clauses (i), (ii) or (iii) hereof, and (v) any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by," and "under
common control with") as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person, whether through ownership of voting securities or
by contract or otherwise.
"ANCILLARY DOCUMENTS" shall mean, collectively, the Company Ancillary
Documents (as defined below) and the Purchaser Ancillary Documents (as defined
below).
"BANKRUPTCY CODE" shall mean The United States Bankruptcy Code, 11,
U.S.C.ss.ss.101 ET SEQ.
"BENEFIT PLAN" means, with respect to any Person, each plan, fund,
program, agreement, arrangement or scheme, including each plan, fund, program,
agreement, arrangement or scheme maintained or required to be maintained under
the Legal Requirements of a jurisdiction outside the United States of America,
in each case, that is at any time sponsored or maintained or required to be
sponsored or maintained by such Person or to which such Person makes or has
made, or has or has had an obligation to make, contributions providing for
employee benefits or for the remuneration, direct or indirect, of the employees,
former employees, directors, managers, officers, consultants, independent
contractors, contingent workers or leased employees of such Person or the
dependents of any of them (whether written or oral), including (a) each deferred
compensation, bonus, incentive compensation, pension, retirement, stock
purchase, stock option and other equity compensation plan, "welfare" plan
(within the meaning of Section 3(1) of ERISA, determined without regard to
whether such plan is subject to ERISA), (b) each "pension" plan (within the
meaning of Section 3(2) of ERISA, determined without regard to whether such plan
is subject to ERISA), (c) each severance plan or agreement, health, vacation,
summer hours, supplemental unemployment benefit, hospitalization insurance,
medical, dental or legal plan and (d) each other employee benefit plan, fund,
program, agreement, arrangement or scheme.
"BIDDING PROCEDURES ORDER" shall mean any one or more sets of orders
detailing the order entered or to be entered by the USBC in the Bankruptcy
proceeding establishing bidding procedures in the case known as IN RE:
XXXXXXX.XXX, INC., CASE NO. 03-12179-H, pending in the USBC, for the sale of the
assets of the Company and the Business pursuant to Section 363 of the Bankruptcy
Code.
"BREACH" shall mean any violation or breach of, any misrepresentation
or inaccuracy in, any default under, any conflict with, or any failure to
perform or comply with any representation, warranty, covenant, obligation or
other provision of, or any event which results in Liability (as defined below),
or Encumbrance (as defined below) under this Agreement or any Ancillary
Document, any Contract (as defined below), any Governing Document (as defined
below) or other instrument or any event which with the passing of time or the
giving of notice, or both, would constitute such a violation, breach,
misrepresentation, inaccuracy, default, conflict or failure. When used with
respect to this Agreement or any Ancillary Document, a "Breach" will also be
deemed to include any occurrence or circumstance that is or was inconsistent
with any representation, warranty, covenant, promise, obligation, duty under, or
other provision of, this Agreement or such Ancillary Document, respectively.
"BUSINESS" shall have the meaning set forth in the recitals.
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"BUSINESS DAY" shall mean any day on which banks are not required or
authorized to close in Cleveland, Ohio.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY ANCILLARY DOCUMENT" shall mean each certificate, agreement,
document and instrument executed and delivered by the Company in connection with
the Contemplated Transactions.
"CONSENT" shall mean any consent, approval, ratification, registration,
filing, application, notice, transfer, qualification, waiver or authorization of
any kind of any Person.
"CONTEMPLATED TRANSACTIONS" shall mean such transactions as are
required to be consummated by the Parties hereto pursuant to this Agreement and
the Ancillary Documents.
"CONTRACT" shall mean any contract, agreement, purchase order,
mortgage, promissory note, deed to secure debt, deed of trust, debt instrument,
lease, easement, franchise, lease, license, commitment, arrangement, warranty,
undertaking or understanding to which any Person is a Party or bound or to which
his, her or its property is subject, whether written or oral, and including each
and every amendment, modification or supplement to any of them.
"CUSTOMARY ENFORCEABILITY LIMITATIONS" means bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights generally and
general principles of equity (regardless of whether enforcement is sought or
considered in a Proceeding (as defined below) in equity or at law).
"DISCLOSURE SCHEDULE" shall mean each Schedule (as defined below) which
relates to a representation or warranty herein by any Party hereto.
"ENCUMBRANCE" shall mean any charge, claim, condition, equitable
interest, encumbrance, lien, option, pledge, security interest, mortgage, right
of way, easement, encroachment, servitude, right of first option, right of first
refusal or restriction of any kind, including any restriction on use, voting (in
the case of any security), transfer, receipt of income, or on the exercise of
any other attribute of ownership.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"EXHIBIT" shall mean each written document which is labeled as an
"Exhibit" or which is attached to and referenced in a written document labeled
as an "Exhibit," and which is attached to, or placed underneath or adjacent to,
the executed version of this Agreement.
"FACILITIES" shall mean any real property currently owned, leased,
operated or used by the Company in the conduct of the Business.
"GOVERNING DOCUMENTS" shall mean, (a) with respect to the Company, the
Company's Certificate of Incorporation and Bylaws; (b) with respect to
Purchaser, Purchaser's Certificate of Incorporation and Bylaws; and (c) with
respect to the Company or Purchaser or any other Person (other than an
individual natural person), any other indenture, trust, charter or similar
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document adopted or filed in connection with the creation, formation or
organization of such Person; all securityholders' agreements, voting agreements,
voting trust agreements, joint venture agreements, registration rights
agreements or other agreements or documents relating to the organization,
management or operation of such Person, or relating to the rights, duties and
obligations of the stockholders, members, beneficiaries, trustees, partners or
other Persons having legal or beneficial interests in such aforementioned
Persons; and any amendment or supplement to any of the foregoing.
"GOVERNMENTAL AUTHORIZATION" shall mean any Consent, license,
registration, plan, certificate or permit issued, granted, given or otherwise
made available by or under the authority of any Governmental Body (as defined
below) or pursuant to any Legal Requirement (as defined below).
"GOVERNMENTAL BODY" shall mean, with respect to any Jurisdiction (as
defined below) or combination of Jurisdictions, (i) any federal, state, local,
municipal, foreign or other government; governmental or quasi-governmental
authority of any nature (including any agency, branch, department, board,
commission, court, (including, without limitation, the USBC in this Bankruptcy
Proceeding), tribunal or other entity exercising governmental or
quasi-governmental powers); (ii) any multi-national organization or body; (iii)
any body exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory or taxing authority or power over such
Jurisdiction, with respect to its Persons, properties or otherwise; and (iv) any
official of any of the foregoing.
"INCLUDE" and its derivatives (whether or not capitalized herein)
shall mean by way of example and not by way of exclusion or limitation.
"INTELLECTUAL PROPERTY" means (a) all discoveries, innovations,
inventions and all improvements thereto and all classes and types of patents,
including, without limitation, utility models, utility patents and design
patents, and all patent applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all registered and unregistered trademarks, service
marks, trade dress and logos, including all goodwill associated therewith, and
all applications, registrations, and renewals in connection therewith, (c) all
works of authorship and all copyrights therein, whether such works are published
or unpublished works, and all applications, registrations and renewals in
connection therewith, (d) all trade secrets, know-how, product prototypes, and
all proprietary, technical and non-technical data and information, including,
without limitation, customer lists, supplier lists, pricing and cost
information, business and marketing plans and other confidential business
information, (e) all computer programs and related code and software other than
commercially available "off-the-shelf" software, (f) all domain name
registrations and URL addresses, (G) all other recognizable equivalent
proprietary rights, and (h) all copies and tangible embodiments of the
foregoing, in each case related to and/or used in the Business and in each case
whether arising under the laws of the United States or any other Jurisdiction.
"IRS" shall mean the Internal Revenue Service.
"JURISDICTION" shall mean any nation, state, commonwealth, judicial
circuit, region, county, city, town, village, district or other jurisdiction;
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"KNOWLEDGE" An individual natural person shall be deemed to have
"Knowledge" of a particular fact or other matter if:
(a) Such individual natural person is actually aware of such fact or
other matter; or
(b) A prudent individual natural person in a similar position could be
expected to discover or otherwise become aware of such fact or other matter in
the course of conducting a reasonable investigation regarding the accuracy of
any representations or warranties contained in this Agreement, which
investigation such prudent individual natural person shall be deemed to have
conducted.
A Person (other than an individual natural person) will be deemed to have
"Knowledge" of a particular fact or other matter if any individual natural
person who is serving, or who has at any time served, as a director, officer,
partner, manager, executor or trustee of such Person (or in any similar
capacity) has, or at any time had, Knowledge of such fact or other matter (under
the standards set forth in clauses (a) and/or (b) above). In addition, the
Company shall be deemed to have "Knowledge" of a particular fact or other matter
if Xxx Xxxx, any director, any court-appointed representative or other
duly-authorized representative(s) has Knowledge of such fact or matter under the
standards set forth in clauses (a) and/or (b) above.
"LEGAL REQUIREMENT" shall mean any federal, state, local, municipal,
foreign, international, multinational or other constitution, law, statute, rule,
regulation, ordinance, principle of common law or treaty.
"LIABILITY" shall mean, with respect to any Person, any claim, loss
(including diminution in value), cost, expense, penalty, fine, judgment, damage,
liability, loss of rights, or obligation of such Person of any kind, character
or description, whether known or unknown, absolute or contingent, accrued or
unaccrued, asserted or unasserted, liquidated or unliquidated, secured or
unsecured, joint or several, due or to become due, vested or unvested,
executory, determined, determinable or otherwise and whether or not the same is
required to be accrued on the financial statements of such Person and whether or
not involving a third party claim.
"MATERIAL ADVERSE EFFECT" means any state of facts, event, development,
change or effect that either individually or together with any other state(s) of
fact, event(s), development(s), change(s) or effect(s) has had or could
reasonably be expected to have, a material adverse effect on the assets,
liabilities, financial condition, business or business prospects of the
Business, taken as a whole, or could reasonably be expected to prevent or
materially delay the consummation of the Contemplated Transactions.
"ORDER" shall mean any order, injunction, judgment, decree, ruling,
writ or arbitration award of any Governmental Body or arbitrator.
"ORDINARY COURSE OF BUSINESS" shall mean any action taken by the
Company with respect to the Business if such action is similar in nature, scope
and magnitude to actions customarily taken, without any separate or special
authorization, in the ordinary course of the normal day-to-day operations of
other Persons that are in the same line of business as the Business.
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"PERSON" shall mean any individual natural person and any partnership,
limited liability company, corporation, trust, government agency or governmental
subdivision and any other legal entity.
"PROCEEDING" shall mean any claim, action, arbitration, audit, hearing,
investigation of which the Person making a representation or warranty has
Knowledge, litigation or suit (whether civil, criminal, administrative or
judicial, whether formal or informal, and whether public or private) commenced,
brought, conducted, or heard by or before, any Governmental Body or arbitrator,
or which seeks or requests the issuance of an Order.
"PURCHASER ANCILLARY DOCUMENT" shall mean each certificate, agreement,
document and instrument executed and delivered by the Purchaser in connection
with the Contemplated Transactions.
"SCHEDULE" shall mean each written document which is labeled as a
"Schedule" or which is attached to and referenced in a written document labeled
as a "Schedule," and which is attached to, or placed underneath or adjacent to,
the executed version of this Agreement.
"TAXES" shall mean all taxes, assessments, charges, duties, fees,
levies or other governmental charges (including interest, penalties or additions
associated therewith) including U.S. federal, State, city, county, non-U.S. or
other income, franchise, capital stock, real property, personal property,
tangible, intangible, withholding, FICA, unemployment compensation, disability,
transfer, sales, use, excise, gross receipts, registration, license, stamp,
occupation, premium, windfall profits, environmental, value-added, alternative
or add-on minimum, estimated and all other taxes of any kind for which a Person
may have any Liability imposed by a Governmental Body, whether disputed or not.
"TREASURY REGULATIONS" shall have the meaning ascribed thereto under
applicable law.
"USBC" has the meaning given to it in the Preamble.
"USBC ORDER" shall mean the order of the USBC approving the sale of the
Assets to the Purchaser free and clear of all Encumbrances pursuant to the terms
of this Agreement under Section 363 of the Bankruptcy Code (including finding
that the Purchaser is a good faith purchaser within the meaning of Section
363(m) of the Bankruptcy Code), which Order shall not be stayed at the time of
Closing.
"UNCURED BREACH" shall mean, with respect to any Breach of any
representation, warranty, covenant or agreement in this Agreement, a Breach
which is not cured within ten (10) Business Days following the receipt by the
Breaching Party of notice of such Breach.
2. PURCHASE AND SALE.
2.1. PURCHASE AND SALE OF ASSETS. Subject to the terms and conditions
of this Agreement, at the Closing (as defined below), the Company shall grant,
sell, convey, assign, transfer and deliver to Purchaser or one or more of its
subsidiaries, and Purchaser or one or more of its subsidiaries shall purchase,
acquire and accept from the Company, all of the Company's right, title and
interest in and to (a) the Business, and (b) all of the assets, properties and
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rights of the Company constituting the Business or used or held for use in the
Business, of every kind and description, real, personal and mixed, tangible or
intangible, wherever situated, other than the Excluded Assets (which Business,
assets, properties and rights are hereinafter collectively referred to as the
"Assets"), free and clear of any Encumbrances other than Assumed Liabilities.
Without limiting the foregoing, the Assets shall include the following:
2.1.1. All right, title and interest of the Company in the
Contracts identified on Schedule 3.4.2 (collectively, the "Assumed Contracts");
2.1.2. All Governmental Authorizations and other approvals of
any nature relating to the Business, to the extent transferable;
2.1.3. All equipment, servers, computers, business machines,
tools, vehicles, furniture, furnishings, parts, office and other supplies, and
other tangible personal property used or held for use in the Business, whether
or not carried on the books of the Company (collectively, the "QC Equipment");
2.1.4. All of the QC Intellectual Property (as defined below)
(including goodwill associated therewith), including the QC Intellectual
Property identified on Schedule 3.8;
2.1.5. All computer software (including documentation and
related object and source codes) used or held for use in the Business, including
all of the software identified on Schedule 3.8 (collectively, the "QC
Software");
2.1.6. All files and documents related to the customers,
vendors and strategic partners of the Business, data, correspondence, plans,
files, books and documents, including customer, potential customer and vendor
lists, promotional and marketing materials, sales literature, advertising,
brochures, user manuals, proposals, presentations, analyses, and other business,
personnel, financial and accounting documents and records used or held for use
in the Business, but, in the case of any such materials that apply to businesses
of the Company other than the Business, only the portion of such materials that
relates to the Business;
2.1.7. All Accounts Receivable, notes receivable, advances,
prepaid expenses and credits of the Company related to the Business;
2.1.8. All rights to causes in action, lawsuits, judgments,
claims and demands of any nature available to or being pursued by the Company
with respect to the Business or the ownership, use, function or value of any
Asset, whether arising by way of counterclaim or otherwise; and
2.1.9. All rights in and under all express or implied
guarantees, warranties, representations, covenants, indemnities and similar
rights in favor of the Company relating to the Business or any Asset, and all
rights to proceeds under insurance policies with respect to any Asset or the
Business; and
2.1.10. All other tangible and intangible assets of any kind
or description, wherever located, that are used or held for use in or related to
the Business.
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2.2. EXCLUDED ASSETS. Notwithstanding anything to the contrary
contained in Section 2.1 or elsewhere in this Agreement, the following items
(hereinafter collectively referred to as "Excluded Assets") are not part of the
sale and purchase contemplated hereunder, are excluded from the Assets, and
shall remain the property of the Company after the Closing:
2.2.1. The minute books, stock records and corporate seal of
the Company;
2.2.2. All cash, cash equivalents and bank accounts owned by
the Company as of the Closing Date (as defined below);
2.2.3. The Company's right, title and interest to and in the
Facilities, including the buildings, structures, fixtures and improvements
located thereon, and all Governmental Authorizations relating thereto;
2.2.4. All shares of capital stock or other equity interests
in Affiliates of the Company;
2.2.5. Any Contract which (i) terminates or expires prior to
the Closing Date in accordance with its terms (and such termination is
enforceable under Section 365 of the Bankruptcy Code) or in the Ordinary Course
of Business or (ii) is not an Assumed Contract (each an "Excluded Contract" and
collectively, the "Excluded Contracts");
2.2.6. All personnel records and other records, copies of
which the Company is required by law to retain in its possession;
2.2.7. All claims of the Company for refunds of Taxes and
other governmental charges of whatever nature;
2.2.8. All Benefit Plans maintained or contributed to by the
Company;
2.2.9. All rights of the Company under this Agreement and the
Ancillary Agreements; and
2.2.10. Any assets of the Company held exclusively in
connection with or used exclusively in the operation of any business other than
the Business.
2.3. ASSUMED LIABILITIES. Except as set forth in this Section 2.3,
Purchaser shall not assume any Liabilities of the Company, whether or not
related to the Business or the Assets. As the sole exception to the foregoing,
on the Closing Date, Purchaser or one or more of its subsidiaries shall assume
and agree to discharge only the following specifically enumerated obligations
and liabilities of the Company (collectively, the "Assumed Liabilities"):
2.3.1. Any Liability arising from the operation of the
Business or the ownership, use or operation of any Asset by Purchaser after the
Closing Date.
2.3.2. All obligations under the Assumed Contracts to the
extent such obligations are not required to be performed prior to the date
hereof and accrue (and relate to the Business) subsequent to the Closing Date.
It shall be the responsibility of the Company to cure any default existing under
an Assumed Contract pursuant to Section 365(a) of the Bankruptcy Code as a
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condition to the Closing. The Purchaser shall be obligated to pay any costs and
expenses necessary in connection with providing adequate assurance of future
performance with respect to any of the Assumed Contracts under Section 365(b)(1)
of the Bankruptcy Code.
Notwithstanding the foregoing, Purchaser may, with the consent of the
Company, submit a list of additional Contracts that the Purchaser wishes to have
the Seller assume and have assigned to the Purchaser and that were not
previously the subject of an assumption and assignment motion (the "Additional
Assumed Contracts") within sixty (60) days from the Closing Date. The Company
shall promptly request and diligently pursue the approval of the USBC of the
assumption and assignment of the Additional Assumed Contracts. The Purchaser
shall assist the Company in obtaining such approval. The Company shall make
reasonable efforts to submit the request for USBC authority to assume and assign
such Additional Assumed Contracts within ten (10) Business Days of its receipt
of the request described in the first sentence of this paragraph. The Company's
assumption and assignment to the Purchaser and the Purchaser's assumption on the
terms set forth in this Agreement of all Additional Assumed Contracts will be in
accordance with the Bankruptcy Code, and the requirements of Section 365(b)(1)
of the Bankruptcy Code with respect thereto will be satisfied. Additional
Assumed Contracts for which USBC approval is sought and obtained shall
constitute Assumed Contracts under this Agreement and the parties shall execute
an assignment and assumption agreement with respect thereto. All subject matter
of agreements not so assigned by the Company to the Purchaser shall remain the
property of the Company, and the Company may remove or dispose of such subject
matter as it deems appropriate in its sole and absolute discretion.
Notwithstanding the foregoing, the Purchaser may, at any time prior to the entry
of an order by the USBC authorizing the assumption of any Assumed Contracts or
Additional Assumed Contracts hereunder and the assignment of those contracts to
the Purchaser, withdraw its request for assumption and assignment pursuant
thereto.
2.4. RETAINED LIABILITIES. "Retained Liabilities" shall mean every
Liability of the Company other than the Assumed Liabilities. All of the Retained
Liabilities shall remain the sole responsibility of and shall be retained, paid,
performed and discharged solely by the Company (or as otherwise set forth by the
USBC). Retained Liabilities shall include, without limitation:
2.4.1. Any Liability of the Company under any Assumed Contract
or Additional Assumed Contract arising out of or relating to a Breach of any
warranty made by or a Breach of any obligation of the Company under such Assumed
Contract or Additional Assumed Contract prior to the Closing Date;
2.4.2. Any Liability of the Company for Taxes, including (a)
any Taxes arising as a result of the Company's operation of the Business or
ownership of the Assets prior to the Closing Date, (b) any Taxes that will arise
as a result of the sale of the Assets pursuant to this Agreement and (c) any
deferred Taxes of any nature;
2.4.3. Any Liability of the Company under the Benefit Plans or
relating to payroll, sick leave, pension benefits, employee stock option or
profit-sharing plans, health care plans or benefits, or any other employee plans
or benefits of any kind for the Company's employees or former employees, or
both;
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2.4.4. Any Liability of the Company under any employment,
severance, retention or termination agreement with any employee of the Company
or any of its Affiliates;
2.4.5. Any Liability of the Company arising out of or relating
to any employee grievance, whether or not the affected employees are hired by
Purchaser;
2.4.6. Any Liability of the Company arising out of or
resulting from the Company's non-compliance with any Legal Requirement or Order;
2.4.7. Any Liability of the Company that did not arise out of
the conduct of the Business or that arises under or relates to the Excluded
Assets;
2.4.8. Any Liability of the Company under this Agreement, the
Company Ancillary Documents or any other document executed in connection with
the Contemplated Transactions;
2.4.9. Any Liability of the Company incurred in connection
with the negotiation, preparation and execution of this Agreement and the
Ancillary Documents, including any fees and expenses of counsel, accountants,
brokers, financial advisors or other representatives; and
2.4.10. Any Liability arising from the operation of the
Business or the ownership, use or operation of any Asset by the Company on or
prior to the Closing Date.
2.5. AGREEMENT TO PURCHASE. On the Closing Date, Purchaser or one or
more of its subsidiaries shall purchase the Assets from the Company and assume
the Assumed Liabilities, upon and subject to the terms and conditions of this
Agreement and in reliance on the representations, warranties and covenants of
the Company contained herein.
2.6. CONSIDERATION.
2.6.1. DEPOSIT. Purchaser shall deliver a deposit to the
Company as provided in the Bidding Procedures Order (the "Deposit"), which shall
be held by or at the direction of the USBC pursuant to the terms of the Bidding
Procedures Order.
2.6.2. PURCHASE PRICE. On the terms and subject to the
conditions set forth in this Agreement, in consideration of the transfer of the
Assets and the other undertakings of the Company hereunder, the purchase price
(the "Purchase Price") for the Assets in addition to Purchaser's assumption of
the Assumed Liabilities shall be $700,000. At the Closing, Purchaser shall pay
to the Company cash in an amount equal to the Purchase Price minus the Deposit.
2.6.3. ALLOCATION. The Purchase Price and the Assumed
Liabilities shall be allocated in accordance with Exhibit 2.6.3. After the
Closing, the Parties shall make consistent use of the allocation specified in
Exhibit 2.6.3 for all Tax purposes and in any and all filings, declarations and
reports with the IRS and other relevant taxing authorities in respect thereof,
including the reports required to be filed under Section 1060 of the Code, if
applicable. Purchaser shall prepare and deliver IRS Form 8594 to the Company
within ninety (90) days after the Closing Date, which shall be prepared in a
manner consistent with Exhibit 2.6.3. In any
10
proceeding related to the determination of any Tax, neither Purchaser nor the
Company shall contend or represent that such allocation is not a correct
allocation. Notwithstanding the foregoing, this allocation shall not be binding
on the Company or its creditors in connection with any allocation of value of
the Company's assets for purposes of distributions in the Bankruptcy Proceeding.
2.7. ASSIGNMENT OF THE ASSUMED CONTRACTS AND PERMITS. To the extent
that the assignment of any Assumed Contract or any Permit relating to the
Business or the Assets shall require the consent of any other party and such
consent shall still be required notwithstanding the USBC Order and Sections 363
and 365 of the Bankruptcy Code, this Agreement shall not constitute a contract
to assign the same if any attempted assignment would constitute a breach of such
Assumed Contract or Permit. In such case the Company shall use commercially
reasonable efforts prior to the Closing, and Purchaser shall cooperate where
appropriate, to obtain any consent necessary to any such assignment, PROVIDED,
HOWEVER, that the Company shall not be obligated to incur any out-of-pocket
expenses to secure such consent.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Purchaser as follows:
3.1. ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority (a) to own, lease and operate its
properties, (b) to carry on the Business as now being conducted and (c) to enter
into and perform this Agreement and the Company Ancillary Documents. The Company
is duly qualified to transact business and is in good standing as a foreign
corporation in each such Jurisdiction in which it is doing business.
3.2. AUTHORIZATION, EXECUTION AND ENFORCEABILITY. Subject to the
applicable provisions of the Bankruptcy Code and the approval of this Agreement
by the USBC, the Company has all corporate power to execute and deliver this
Agreement and, upon entry and effectiveness of the USBC Order, will have all
corporate authority necessary to consummate the Contemplated Transactions. This
Agreement has been duly and validly executed and delivered by the Company, and
assuming that this Agreement constitutes a valid and binding agreement of the
Purchaser, and subject to the entry and effectiveness of the USBC Order and any
applicable Bankruptcy Code provision, constitutes a valid and binding agreement
of the Company, enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by Customary Enforceability
Limitations.
3.3. ABSENCE OF RESTRICTIONS, CONFLICTS AND REQUIRED CONSENTS. Except
to the extent excused by or unenforceable as a result of the filing of the
Bankruptcy Proceeding and except for the entry and effectiveness of the USBC
Order, neither the execution and delivery of this Agreement by the Company, the
performance of its obligations hereunder nor the consummation of the
transactions contemplated by this Agreement will (a) conflict with or result in
any breach of any provision of the Company's Certificate of Incorporation or
Bylaws, (b) assuming that all consents, approvals and notices contemplated by
this Agreement have been obtained and all filings described therein have been
made, (i) conflict with or violate any Legal Requirement or Order or other
binding requirements of any Governmental Body applicable to the Company or by
which its properties are bound or affected; or (ii) result in any Breach or
11
violation of or constitute a default (or an event which with or without notice
or lapse of time or both could become a default) or result in the loss of a
material benefit under, or give rise to any right of termination, amendment,
acceleration or cancellation of, or result in the creation of an Encumbrance on
any of the properties or assets of the Company pursuant to any bond, Contract,
permit or other instrument or obligation to which the Company is a party or by
which the Company or any of its properties are bound or affected.
3.4. OWNERSHIP OF ASSETS AND RELATED MATTERS.
3.4.1. ASSETS. The Assets include all assets, tangible and
intangible, of any nature whatsoever, owned and used by the Company, and
necessary and sufficient to conduct the Business as heretofore conducted by the
Company other than (i) the Excluded Assets, (ii) assets disposed of, rejected or
terminated by the Company in accordance with orders entered by the USBC prior to
the date hereof, and (iii) other assets disposed of in the Ordinary Course of
Business. Except for the Licensed Intellectual Property, the Company has good,
marketable and valid title to the Assets. At the Closing, the Purchaser, subject
to the USBC Order, shall acquire all of the Company's right, title and interest
in, to and under (subject to such being assumed and assigned in accordance
herein), all of the Assets, in each case free and clear of Encumbrances other
than the Assumed Liabilities.
3.4.2. ASSUMED CONTRACTS. Schedule 3.4.2 contains a true and
complete list of (i) each material Contract, (ii) each of the Assumed Contracts
and (iii) each Assumed Contract that requires Consent. Except as disclosed on
such Schedule, each Assumed Contract is valid, binding, in full force and
effect, subject to Customary Enforceability Limitations, and there are no
outstanding violations of such Assumed Contracts, and no Proceeding is pending
or, to the Company's Knowledge, threatened with respect to such Assumed
Contracts. Except for the Bankruptcy Proceeding and the financial circumstances
that led to the Bankruptcy Proceeding, no event has occurred which would
constitute a Breach or default (whether with or without notice, lapse of time or
both, could become a default) by the Purchaser under any of the Assumed
Contracts set forth on Schedule 3.4.2.
3.5. LEGAL PROCEEDINGS. Except as set forth on Schedule 3.5 attached
hereto, there are no pending Proceedings relating to or involving the Business,
the Assets or the Assumed Liabilities and, to the Knowledge of the Company, no
such Proceeding is threatened. None of the Proceedings set forth on Schedule
3.5, if finally determined adversely to the Company, could be reasonably
expected, individually or in the aggregate, to have a Material Adverse Effect.
There are no pending Proceedings relating to or involving the Company that could
be reasonably expected, either individually or in the aggregate, to have a
Material Adverse Effect. Other than any Order issued by the USBC in the
Bankruptcy Proceeding, the Company is not subject to any Order of any
Governmental Body related to the Business or that otherwise could be reasonably
expected to have a Material Adverse Effect. The Company is not subject to any
Legal Requirement which is reasonably likely to have a Material Adverse Effect.
No event has occurred or circumstance exists that may (with or without notice or
the passing of time or both) give rise to or serve as the basis for any
Proceeding against or involving or relating to the Business, the Assets or the
Assumed Liabilities that is likely to have a Material Adverse Effect. Except for
the Bankruptcy Proceeding, no Proceeding has been instituted against the Company
before any Governmental Body or by any Person seeking to restrain or prohibit
the execution and delivery of this Agreement or the consummation of the
Contemplated Transactions.
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3.6. GOVERNMENTAL AND OTHER AUTHORIZATIONS. The Company has all
Governmental Authorizations necessary to carry on the Business as it is
currently being conducted, to own or hold under lease the Assets and to perform
all of its obligations under the Assumed Contracts. Schedule 3.6, attached
hereto, sets forth a list of (a) all of the Company's Governmental
Authorizations with respect to the Business, and (b) any Consent, license, plan,
certificate of permit issued, granted or given to the Company by any other
Person or body with respect to any software or process of the Business
(collectively, the "Non-Governmental Authorizations"). Schedule 3.6, attached
hereto, identifies each Governmental Authorization or Non-Governmental
Authorization that requires the consent of or notice to a Governmental Body in
order to assign such Governmental Authorization or Non-Governmental
Authorization to Purchaser in connection with the transactions contemplated by
this Agreement.
3.7. COMPLIANCE WITH LEGAL REQUIREMENTS. Except as disclosed in
Schedule 3.7, attached hereto, the Company is in compliance in all material
respects with all applicable Legal Requirements to which the operation of the
Business is subject. The Company is neither presently charged with, and the
Company has not received any notice (whether written or oral) of, any actual or
alleged violation of any Legal Requirement involving or relating to the
Business, nor under governmental investigation with respect to any such actual
or alleged violation. Other than the Bankruptcy Proceeding, the Company is not
presently a party in an adverse Proceeding involving or relating to the Business
and has not received any notice (whether written or oral) of any threatened
adverse Proceeding involving or relating to the Business, in either case by any
Governmental Body having jurisdiction over the Company or the Business or any
part thereof.
3.8. INTELLECTUAL PROPERTY.
3.8.1. Schedule 3.8.1, attached hereto, (a) sets forth a list
of the Intellectual Property used or intended to be used in the Business and
owned by the Company, including but not limited to any QC Software
(collectively, including the QC Software, the "Proprietary Intellectual
Property"), and (b) sets forth a list of the Intellectual Property used by the
Company pursuant to a license or other right granted by a third party, excluding
any "shrink-wrap" software packages, used or intended to be used in the Business
(the "Licensed Intellectual Property"), and (c) identifies each item of Licensed
Intellectual Property that will require the licensor's Consent to transfer or
assign such item to Purchaser in the Contemplated Transactions. "QC Intellectual
Property" means the Licensed Intellectual Property, together with the
Proprietary Intellectual Property. Prior to the date hereof, the Company made
available to Purchaser copies of all registrations, applications and licenses
for QC Intellectual Property listed in Schedule 3.8.1.
3.8.2. The Company owns, free and clear of all Encumbrances,
or has the right to use, pursuant to valid and enforceable Contracts, all of the
QC Intellectual Property. Except as set forth on Schedule 3.8.2, the Company has
(and Purchaser will have, following the Closing) no need of any patent,
technical documentation, trade secret, trademark, service xxxx, technology,
trade name, domain name, copyright or other Intellectual Property other than the
QC Intellectual Property in order to conduct the Business as heretofore
conducted by it without infringing or violating the rights of any other Person.
Except as set forth on Schedule 3.8.2, the
13
Company has made all filings and recordations required to protect and maintain
its interest in the QC Intellectual Property.
3.8.3. No Proceedings are pending and none, to the Knowledge
of the Company, have been threatened, against the Company by any Person with
respect to the Company's use of any of the QC Intellectual Property in the
operation of the Business as now conducted, or challenging or questioning the
validity or enforceability of any Contract relating to the same. The current use
by the Company of the QC Intellectual Property in the operation of the Business
as now conducted does not infringe or violate the rights of any Person. Schedule
3.8.3, attached hereto, sets forth a list of all Jurisdictions in which the
Company is operating the Business under a trade name, and each Jurisdiction in
which any such trade name is registered.
3.8.4. Except as set forth in Schedule 3.8.4, attached hereto,
the Company is not obligated to make any payments by way of royalties, fees or
otherwise to any owner, licensor, or other claimant to any Intellectual Property
rights for use thereof. Except as set forth on Schedule 3.8.4, the Company has
paid in full all license fees, royalties and other payments due and payable
prior to the date hereof required to be made by the Company pursuant to any
agreement under which the Company licenses the Licensed Intellectual Property.
3.8.5. The Company has not received any communications
alleging that it has Breached any Intellectual Property rights of any Person,
nor, upon due inquiry, is the Company aware of any basis for the foregoing. The
Proprietary Intellectual Property does not infringe upon the Intellectual
Property rights of any Person.
3.8.6. The execution, delivery and performance of this
Agreement will not constitute a Breach of any license or other Contract
involving any QC Intellectual Property, nor will it cause or give a right of
forfeiture or termination of any such QC Intellectual Property.
3.8.7. There is no unauthorized use, infringement, or
misappropriation of any of the QC Intellectual Property by any Person, including
any employee, former employee, independent contractor, or consultant of the
Company. The Company has taken reasonable and practicable steps designed to
safeguard and maintain the secrecy and confidentiality of, and the proprietary
rights in and to the QC Intellectual Property. All officers, directors,
employees and consultants of the Company having access to or developing the QC
Intellectual Property or otherwise performing services, directly or indirectly,
for the Business, have executed and delivered an agreement regarding the
protection of proprietary information of the Company, and a license or
assignment to the Company of all Intellectual Property rights arising from the
services performed by such Persons to the extent not already provided for under
applicable Legal Requirements. The Company does not have Knowledge that any
current or prior officer, employee or consultant of the Company claims or has a
right to claim an ownership interest in any of the QC Intellectual Property as a
result of having been involved in the development or licensing of any such
rights while employed by or consulting to the Company.
3.9. TRANSACTIONS WITH AFFILIATES. Except as set forth in Schedule 3.9,
attached hereto, no Affiliate of the Company has any interest in: (a) any
Contract with the Company relating to the Business ("Affiliate Contract"); (b)
any property (real, personal or mixed), tangible or intangible, used or
currently intended to be used in the Business; or (c) any claim against the
14
Company involving or relating to the Business. No Affiliate is or has been
engaged in any competition with the Company with respect to any line of the
products or services of the Company in any market served by the Company.
3.10. BROKERS, FINDERS AND INVESTMENT BANKERS. The Company has not
employed any broker, finder, investment banker or other intermediary or incurred
(or, upon the Closing hereunder, will incur) any Liability for any investment
banking fees, financial advisory fees, brokerage fees, finder's fees or other
similar fees in connection with the execution of this Agreement or the
consummation of the Contemplated Transactions.
3.11. DISCLOSURE. No representation or warranty or other statement made
by the Company in this Agreement (including the Schedules hereto) or in any
Company Ancillary Document contains any untrue statement of fact or omits to
state a fact required to be stated herein or therein or necessary to make the
statements contained herein or therein not misleading.
3.12. DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES.. EXCEPT AS
EXPRESSLY SET FORTH IN THIS ARTICLE 3, THE COMPANY MAKES NO REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF ANY OF ITS
ASSETS (INCLUDING THE "ASSETS"), LIABILITIES OR OPERATIONS, INCLUDING, WITH
RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, OR
NON-INFRINGEMENT, AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY
EXPRESSLY DISCLAIMED. PURCHASER HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT TO
THE EXTENT SPECIFICALLY SET FORTH IN THIS ARTICLE 3, PURCHASER IS PURCHASING THE
ASSETS ON AN "AS-IS" BASIS. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
THE COMPANY MAKES NO REPRESENTATION OR WARRANTY REGARDING ANY ASSETS OTHER THAN
THE "ASSETS" AND NONE SHALL BE IMPLIED IN LAW OR IN EQUITY.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser hereby represents and warrants to the Company as follows:
4.1. ORGANIZATION. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. Purchaser is
duly qualified to transact business and is in good standing as a foreign
corporation in each jurisdiction where the character of its activities requires
such qualification.
4.2. AUTHORIZATION, EXECUTION AND ENFORCEABILITY. Purchaser has all
corporate power and authority necessary to execute and deliver this Agreement
and to consummate the Contemplated Transactions. The execution and delivery of
this Agreement and the consummation of the Contemplated Transactions have been
duly and validly authorized by all necessary corporate proceedings on the part
of the Purchaser. This Agreement has been duly and validly executed and
delivered by the Purchaser, and, assuming that this Agreement constitutes a
valid and binding agreement of the Company, constitutes a valid and binding
agreement of the Purchaser, enforceable against the Purchaser in accordance with
its terms, except for Customary Enforceability Limitations.
15
4.3. ABSENCE OF RESTRICTIONS, CONFLICTS AND REQUIRED CONSENTS. Neither
the execution and delivery of this Agreement by the Purchaser, the performance
of its obligations hereunder, nor the consummation of the Contemplated
Transactions will (a) conflict with or result in any breach of any provision of
the Purchaser's Certificate of Incorporation or Bylaws, (b) assuming that all
consents, approvals and notices contemplated by this Agreement have been
obtained and all filings described therein have been made, (i) conflict with or
violate any Legal Requirement or Order or other binding requirements of any
Governmental Body applicable to the Purchaser or by which its properties are
bound or affected; or (ii) result in any Breach or violation of or constitute a
default (or an event which with or without notice or lapse of time or both could
become a default) or result in the loss of a material benefit under, or give
rise to any right of termination, amendment, acceleration or cancellation of, or
result in the creation of an Encumbrance on any of the properties or assets of
the Purchaser pursuant to any bond, Contract, permit or other instrument or
obligation to which the Purchaser is a party or by which the Purchaser or any of
its properties are bound or affected.
4.4. BROKERS, FINDERS AND INVESTMENT BANKERS. Neither Purchaser nor any
of its Affiliates has employed any broker, finder, investment banker or other
intermediary or incurred (or, upon the Closing hereunder, will incur) any
Liability for any investment banking fees, financial advisory fees, brokerage
fees, finder's fees or other similar fees in connection with the execution of
this Agreement or the consummation of the Contemplated Transactions.
4.5. DISCLOSURE OF INTERESTS. Schedule 4.5 discloses, to the Knowledge
of the Purchaser, (i) any past or present (or any anticipated future)
relationship between the purchaser or any of its Affiliates, on the one hand,
and any of the Company's present board members, officers, advisers or
professionals, on the other hand, and (ii) any other past or present (or any
anticipated future) relationship of the Purchaser or any of its Affiliates to
the Company.
5. CERTAIN COVENANTS AND AGREEMENTS.
Each of the Parties hereto shall comply with the following covenants
and agreements to the extent applicable to such Party (unless compliance is
hereafter waived in writing in accordance with this Agreement):
5.1. ACCESS AND INFORMATION.
5.1.1. Prior to the Closing, Purchaser may make such
investigation of the Assets, the Assumed Liabilities and the Business as
Purchaser may desire and, upon reasonable notice, the Company shall give to
Purchaser and its counsel, accountants and other representatives reasonable
access, during normal business hours throughout the period prior to the Closing,
to all properties, equipment, Contracts, books and records, and other
information relating to the Business, and the Company shall furnish to Purchaser
and its counsel, accountants and other representatives all copies of documents
and information relating to the Business as such Persons may reasonably request,
PROVIDED, HOWEVER, that (i) any such access shall be conducted in such a manner
so as not to interfere unreasonably with the operation of the Business and shall
be at the expense of the Purchaser, (ii) the Company shall not be required to
take any action which would constitute a waiver of the attorney-client privilege
and (iii) the Company need not supply the Purchaser with any information which
the Company is under a legal obligation not to supply or any information,
16
documents or materials related to customer-specific cost and pricing
information, and (iv) such investigation shall be conducted within the time
parameters set forth in the Bidding procedures Order and the USBC Order.
5.1.2. Between the Closing Date and the later of (x) the third
anniversary of the Closing Date and (y) the date of entry of an order or final
decree of the USBC closing the Bankruptcy Proceeding, or if converted to a case
under Chapter 7 of the Bankruptcy Code, an order of the USBC closing such case,
the Company or its successor-in-interest or their respective representatives
shall have reasonable access to all of the books and records relating to the
operation of the Business and the Assets prior to the Closing Date, including
all information pertaining to the Assumed Contracts, in the possession of the
Purchaser to the extent that such access may be reasonably required by the
Company in connection with the Assumed Liabilities or the Retained Liabilities,
or other matters relating to or affected by the operation of the Business and
the Assets. Such access shall be afforded by the Purchaser upon receipt of
reasonable advance notice and during normal business hours; PROVIDED, HOWEVER,
that (i) any such access shall be conducted in such a manner as not to interfere
unreasonably with the operation of the business of the Purchaser or its
Affiliates, (ii) the Purchaser shall not be required to take any action which
would constitute a waiver of the attorney-client privilege, and (iii) the
Purchaser need not supply the Company with any information which the Purchaser
is under a legal obligation not to supply. The Company shall be solely
responsible for any costs or expenses incurred by it pursuant to this Section
5.1.2.
5.2. CONDUCT OF BUSINESS PENDING CLOSING. From the date of this
Agreement to the date that all of the Assets have been transferred to the
Purchaser (the "Transfer Date"), which date shall in no event be later than five
(5) days following the Closing Date, the Company shall, except as otherwise
expressly required by any Order of the USBC, the Bankruptcy Code, or any Order
or agreement related to the use of cash collateral or postpetition financing, or
except as otherwise expressly contemplated, required or permitted by this
Agreement (including the Exhibits and Schedules hereto) or specifically
consented to in writing in advance by Purchaser, exercise commercially
reasonable efforts, in each case taking into account the Company's status as a
debtor under Chapter 11 of the Bankruptcy Code to do the following:
5.2.1. Carry on the Business in the Ordinary Course of
Business as previously conducted;
5.2.2. Not amend the Governing Documents of the Company in any
way that would have an adverse effect on the Contemplated Transactions;
5.2.3. Use commercially reasonable efforts to preserve intact
the goodwill and business organization of the Business and to maintain the
Company's relationship with the customers and suppliers of the Business so that
those relationships will be preserved after the Closing;
5.2.4. Not sell, lease, transfer or otherwise dispose of any
of the Assets or abandon any of the QC Intellectual Property without first
obtaining the written consent of the Purchaser approving of such action;
5.2.5. Not create or grant any Encumbrance on any of the
Assets whether now owned or hereafter acquired that will not be discharged on or
prior to the Closing Date;
17
5.2.6. Not enter into any transaction relating to the Business
with any Affiliate of the Company other than any such transaction that will be
completely discharged by the Closing Date and could not be reasonably expected
to have a Material Adverse Effect, without first obtaining the written consent
of the Purchaser approving such transaction;
5.2.7. Continue to maintain the operating, promotional and
marketing activities of the Business in accordance with the Company's past
practices;
5.2.8. Maintain all of the Assets in their present condition,
ordinary wear and tear excepted;
5.2.9. Maintain in full force and effect the existing
insurance policies (or comparable replacement policies) covering the Assets in
an amount and scope of coverage greater than or equal to the coverage maintained
as of the date hereof;
5.2.10. Not cancel or compromise any material claim relating
to the Business other than in the Ordinary Course of Business;
5.2.11. Not waive or release any right against any Person
having material value to the Business other than, with respect to rights against
Persons other than Affiliates, releases in exchange for fair value in the
Ordinary Course of Business;
5.2.12. Maintain the books and records of the Business in
accordance with past practices and not revalue any of the Assets (whether
tangible or intangible), or change any of its accounting records or practices,
or change its depreciation or amortization policies or rates;
5.2.13. Perform in all material respects the Company's
obligations, and not engage in any activity which would constitute a Breach,
under any Assumed Contract;
5.2.14. Extend customers of the Business credit, collect the
Accounts Receivable and pay accounts payable and similar obligations of the
Business in the Ordinary Course of Business;
5.2.15. Notify Purchaser of any (i) written governmental
complaints or adjudicatory proceedings, or (ii) investigation or hearings (or
communications indicating that the same may be contemplated) of which the
Company has Knowledge, in each case, in any way relating to the Assets, the
Assumed Liabilities or the Business, and the Company agrees to keep Purchaser
fully informed of such events and permit Purchaser's representatives prompt
access to all materials prepared in connection therewith;
5.2.16. Not transfer, license or permit to lapse any rights to
the use of any of the QC Intellectual Property, other than licenses of the QC
Software in the Ordinary Course of Business, or dispose or disclose any item of
QC Intellectual Property not heretofore a matter of public knowledge to any
Person;
5.2.17. Not take any action, or omit to take any action, which
would cause any of the representations or warranties in Section 3 to be untrue
or incorrect in any respect; and
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5.2.18. Not authorize any of, or commit or agree to take any
of, the foregoing actions that the Company has agreed not to take.
5.3. NOTICE; EFFORTS TO REMEDY; REPORTS. Each Party shall promptly give
Notice to the other Party upon becoming aware of the impending occurrence of any
event which would cause or constitute a Breach of any of the representations,
warranties or covenants of such Party contained in this Agreement and shall use
commercially reasonable efforts to prevent or promptly remedy the same. During
the period from the date of this Agreement to the Closing Date, the Company
shall report to Purchaser on the general status of the ongoing operations of the
Business.
5.4. TAXES.
5.4.1. No Transfer or Stamp Taxes. In accordance with Section
1146(c) of the Bankruptcy Code, the making or delivery of any instrument of
transfer, including the filing of any deed or other document of transfer to
evidence, effectuate or perfect the rights, transfers and interest contemplated
by this Agreement, shall be in contemplation of a plan or plans of
reorganization to be confirmed in the Bankruptcy Proceeding, and as such shall
be free and clear of any and all transfer Tax, stamp Tax or similar Taxes. Such
instruments, orders and agreements transferring the Assets to the Purchaser
shall contain the following endorsement:
"Because this [instrument] has been authorized pursuant to an order of
the United States Bankruptcy Court for the Northern District of Ohio,
in contemplation of a plan of reorganization of XxxxxXxx.xxx, Inc., it
is exempt from transfer taxes, stamp taxes or similar taxes pursuant to
11 U.S.C. ss.1146(c)."
5.4.2. No Withholding. Purchaser shall pay the Purchase Price
free and clear of withholding or deduction for any Taxes.
5.4.3. FIRPTA Certification. The Company shall deliver to the
Purchaser a certification to the extent required under Section 1445 of the Code
in accordance with the Treasury Regulations thereunder.
5.4.4. Allocation of Taxes. Purchaser shall be liable for and
shall be allocated all Taxes in respect of the Assets which accrued after the
Closing Date.
5.5. SUPPLEMENTS TO DISCLOSURE SCHEDULES. From time to time prior to
the Closing Date, the Company and Purchaser will each promptly supplement or
amend the respective Disclosure Schedules attached to this Agreement with
respect to any matter hereafter arising which if existing or occurring at the
date of this Agreement would have been required to be set forth or described in
any such Disclosure Schedule. No supplement or amendment to any such Disclosure
Schedule shall have any effect for the purpose of determining satisfaction of
the conditions set forth in Sections 7.2.1 or 7.2.3 of this Agreement.
5.6. SUBMISSION FOR USBC APPROVAL.
5.6.1. The Company shall promptly provide Purchaser and its
counsel with copies of all notices, filings and Orders of the USBC (and other
19
courts) that the Company has in its possession pertaining to the motion for
approval of any Order related to any of the Contemplated Transactions.
5.6.2. If the USBC Order, the Bidding Procedures Order or any
other Orders of the USBC relating to this Agreement or the Contemplated
Transactions shall be appealed by any Person (or if any petition for certiorari
or motion for reconsideration, amendment, clarification, modification, vacation,
stay, rehearing or reargument shall be filed with respect to the USBC Order or
other such Order), subject to rights otherwise arising from this Agreement, the
Company and Purchaser shall cooperate in taking such steps to prosecute
diligently such appeal, petition or motion, and the Company and Purchaser shall
use their commercially reasonable efforts to obtain an expedited resolution of
any such appeal, petition or motion.
5.7. BANKRUPTCY FILINGS. From and after the date hereof until the
Closing Date, the Company shall endeavor to deliver to Purchaser prior to filing
copies of all pleadings, motions, notices, statements, schedules, applications,
reports and other papers that the Company files in the Bankruptcy Proceeding
that relate to this Agreement or the Ancillary Documents, or in any manner
relate to or affect the Contemplated Transactions.
5.8. POWER OF ATTORNEY; RIGHT OF ENDORSEMENT. Effective as of the
Closing, the Company hereby constitutes and appoints Purchaser and its
successors and assigns the true and lawful attorney of the Company with full
power of substitution, in the name of the Purchaser or the Company, on behalf of
and for the benefit of the Purchaser, (i) to collect all Assets, (ii) to
endorse, without recourse, checks, notes and other instruments attributable to
the Assets, (iii) to defend and compromise all actions, suits or proceedings
with respect to any of the Assets, (iv) to institute and prosecute all
proceedings which the Purchaser may deem proper in order to collect, assert or
enforce any claim, right or title in and to the Assets, (v) to do all such
reasonable acts and things with respect to the Assets as Purchaser may deem
advisable, subject to the consent of the Company, which consent shall not be
unreasonably withheld. The Company agrees that the foregoing powers are coupled
with an interest and shall be irrevocable by the Company directly or indirectly
by the dissolution of the Company or in any other manner. Purchaser shall retain
for its own account any amounts lawfully collected pursuant to the foregoing
powers and the Company shall promptly pay to the Purchaser any amounts received
by the Company after the Closing with respect to the Assets to which Purchaser
may be entitled.
5.9. POST-CLOSING FUNDS. Following the Closing, all amounts, whether in
the form of cash, proceeds, checks, drafts, orders or other instruments for the
payment of money received by the Company with respect to the Business or the
Assets shall immediately upon receipt thereof by the Company be paid over and
delivered in the form received, but with any necessary endorsements or
instruments required for payment to Purchaser, and, until so delivered shall not
be commingled with any other funds or property but shall be held by the Company
upon an express trust for the benefit of the Purchaser.
5.10. FURTHER ASSURANCES.
5.10.1. Subject to the terms and conditions of this Agreement,
each of the parties hereto shall use commercially reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
reasonably necessary, proper or advisable under applicable Legal Requirements to
consummate and make effective the sale of the Assets in accordance with this
20
Agreement, including using commercially reasonable efforts to ensure (i) timely
satisfaction of the conditions precedent to each Party's obligations hereunder
and (ii) that the Assets transferred to the Purchaser comprise all material
assets required for the continued conduct of the Business by the Purchaser as
now being conducted by the Company and its Affiliates other than central
corporate functions performed by the Company on behalf of the Business and its
other businesses. Neither the Company, on the one hand, nor Purchaser, on the
other hand, shall without the prior written consent of the other Party take any
action which would reasonably be expected to prevent or materially impede,
interfere with, or delay the Contemplated Transactions. From time to time, on or
after the Closing Date, the Company shall use reasonable efforts, at Purchaser's
expense, to execute and deliver such documents to Purchaser as the Purchaser may
reasonably request in order to more effectively vest in Purchaser the Company's
title to the Assets. From time to time after the date hereof, Purchaser shall
use reasonable efforts, at the Company's expense, to execute and deliver such
documents to the Company as the Company may reasonably request in order to more
effectively consummate the sale of the Assets and the assumption and assignment
of the Assumed Liabilities and the Assumed Contracts in accordance with this
Agreement.
5.10.2. In the event that any of the Assets shall not have
been conveyed to Purchaser at the Closing, Purchaser and the Company shall use
their respective commercially reasonable efforts to convey such Assets to the
Purchaser as promptly as is practicable after the Closing.
5.11. PUBLIC STATEMENTS. The Company and Purchaser shall consult with
each other prior to issuing any public announcement, statement or other
disclosure with respect to this Agreement or the Contemplated Transactions,
except that the parties may make disclosures with respect to this Agreement and
the Contemplated Transactions to the extent required by law or by the rules or
regulations of any securities exchange or commission.
5.12. GOVERNMENTAL AUTHORITY, APPROVALS AND COOPERATION.
5.12.1. The Company and Purchaser shall each use their
commercially reasonable efforts to cooperate with each other in determining and
making any filings, notifications and requests for approval required to be made
and received prior to the Closing under applicable Legal Requirement
(collectively, the "Regulatory Approvals"). In connection with any Regulatory
Approvals, neither Purchaser nor the Company will, and Purchaser and the Company
will use their commercially reasonable efforts to cause their officers,
directors, partners or other Affiliates not to, take any action which could
reasonably be expected to materially and adversely affect the submission of any
required filings or notifications or the grant of any such approvals.
5.12.2. Each Party hereto (i) shall promptly inform each other
of any communication from any Governmental Body concerning this Agreement, the
transactions contemplated hereby and any filing, notification or request for
approval related thereto and (ii) shall permit the other Party hereto to review
in advance any proposed written communication or information submitted to any
such Governmental Body in response thereto. In addition, neither the Company nor
Purchaser shall agree to participate in any meeting with any Governmental Body
in respect of any filings, investigation or other inquiry with respect to this
21
Agreement, the Contemplated Transactions or any such filing, notification or
request for approval related thereto unless it consults with the other Party
hereto in advance and, to the extent permitted by any such Governmental Body,
gives the other Party hereto the opportunity to attend and participate thereat,
in each case to the maximum extent practicable. Subject to any restrictions
under applicable Legal Requirements, the Company and Purchaser shall furnish
each other, as the case may be, with copies of all correspondence, filings and
communications (and memoranda setting forth the substance thereof) between it
and its Affiliates and their respective representatives on the one hand, and the
Governmental Body or members of its staff on the other hand, with respect to
this Agreement, the Contemplated Transactions (excluding documents and
communications which are subject to preexisting confidentiality agreements and
to the attorney-client privilege or work product doctrine) or any such filing,
notification or request for approval related thereto. The Company and Purchaser
shall also furnish the other Party hereto with such necessary information and
assistance as such other Party and its Affiliates may reasonably request in
connection with its preparation of necessary filings, registration or
submissions of information to the Governmental Body in connection with this
Agreement, the Contemplated Transactions and any such filing, notification or
request for approval related thereto. The Company and Purchaser shall prosecute
all required requests for approval with all necessary diligence and otherwise
use their respective commercially reasonable efforts to obtain the grant thereof
as soon as possible.
6. CONDITIONS PRECEDENT TO THE CLOSING.
6.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective obligations
of the Company and Purchaser to effect the Contemplated Transactions shall be
subject to the satisfaction (or, to the extent permitted by applicable Legal
Requirements, waiver) on or prior to the Closing Date of each of the following
conditions:
6.1.1. No Governmental Body shall have enacted, issued,
promulgated, enforced or entered any Legal Requirement or Order (whether
temporary, preliminary or permanent) which is then in effect and has the effect
of making illegal or in any way preventing or prohibiting the Contemplated
Transactions or imposing any condition thereon materially adverse to the Company
or Purchaser (or any of their Affiliates) or imposing any restraint or
restriction on Purchaser's ability to operate the Business following the
Closing; provided, that the Party burdened by such condition shall have the
right to waive this condition precedent in respect of such adverse condition
without the Consent of any Party not burdened by such conditions.
6.1.2. Each Governmental Authorization necessary to consummate
the Contemplated Transactions in form and substance reasonably satisfactory to
the Company and Purchaser shall have been obtained from the applicable
Governmental Body; provided, that the provisions of this Section 6.1.2 shall not
be available to any Party whose failure to fulfill its obligations pursuant to
Section 5.12 have been the cause of, or have resulted in, such failure to obtain
such Governmental Authorization.
6.1.3. No Proceeding by any Governmental Body or other Person
shall have been instituted and shall be pending on the Closing Date, which (i)
questions the validity or legality of any of the Contemplated Transactions; (ii)
seeks material damages against Purchaser
22
(or its Affiliates) or the Company, or (iii) imposes any restraint or
restriction on Purchaser's ability to operate the Business following the
Closing.
6.1.4. The USBC Order shall have been entered by the USBC, and
shall become a final Order.
6.2. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of
the Company to effect the Contemplated Transactions shall be subject to the
satisfaction on or prior to the Closing Date of each of the following conditions
unless waived by the Company:
6.2.1. (a) Each of the representations and warranties of
Purchaser set forth in Section 4 that is not qualified by "materiality" or
"Material Adverse Effect" shall be true and correct in all material respects,
without regard to whether Purchaser has, had or hereafter acquires Knowledge
that any such representation or warranty is not true or correct, as of the date
hereof and as of the Closing Date, as though made again on the Closing Date
(except to the extent such representations and warranties expressly relate to a
specific date other than the date of this Agreement in which case such
representations and warranties shall be true and correct in all material
respects as of such date); provided, that no representation or warranty shall
fail to be true and correct in all material respects for the purposes of this
Section 6.2.1 solely as a result of changes in the Business, properties, assets
or Liabilities of Purchaser which are expressly required, permitted or
contemplated by this Agreement; and (b) each of the representations and
warranties set forth in Section 4 that is qualified by "materiality" or
"Material Adverse Effect" shall be true and correct in all respects, without
regard to whether Purchaser has, had or hereafter acquires Knowledge that any
such representation or warranty is not true or correct, as of the date hereof
and as of the Closing Date, as though made again on the Closing Date (except to
the extent such representations and warranties expressly relate to a specific
date other than the date of this Agreement in which case such representations
and warranties shall be true and correct in all respects as of such date);
provided, that no representation or warranty shall fail to be true and correct
for the purposes of this Section 6.2.1 solely as a result of changes in the
Business, properties, assets or Liabilities of Purchaser which are expressly
required, permitted or contemplated by this Agreement.
6.2.2. Purchaser shall have performed in all material respects
all covenants and agreements required to be performed by Purchaser under this
Agreement at or prior to the Closing Date.
6.2.3. Purchaser shall have delivered or caused to be
delivered (and if applicable, shall execute or cause to be executed) the
documents, certificates and instruments required to be delivered or caused to be
delivered by Purchaser at the Closing pursuant to Section 7.2.
6.3. CONDITIONS TO THE OBLIGATIONS OF PURCHASER. The obligations of
Purchaser to effect the Contemplated Transactions shall be subject to the
satisfaction on or prior to the Closing Date of each of the following conditions
unless waived by Purchaser:
6.3.1. (a) Each of the representations and warranties of the
Company set forth in Section 3 that is not qualified by "materiality" or
"Material Adverse Effect" shall be true and correct in all material respects,
without regard to whether the Company has, had or hereafter acquires Knowledge
23
that any such representation or warranty is not true or correct, as of the date
hereof and as of the Closing Date, as though made again on the Closing Date
(except to the extent such representations and warranties expressly relate to a
specific date other than the date of this Agreement, in which case such
representations and warranties shall be true and correct in all material
respects as of such date); provided, that no representation or warranty shall
fail to be true and correct in all material respects for the purposes of this
Section 6.3.1, solely as a result of changes in the Business, the assets or the
Liabilities of the Company which are expressly required, permitted or
contemplated by this Agreement, and (b) each of the representations and
warranties of the Company set forth in Section 3 that is qualified by
"materiality" or "Material Adverse Effect" shall be true and correct in all
respects, without regard to whether the Company has, had or hereafter acquires
Knowledge that any such representation or warranty is not true or correct, as of
the date hereof and as of the Closing Date, as though made again on the Closing
Date (except to the extent such representations and warranties expressly relate
to a specific date other than the date of this Agreement in which case such
representations and warranties shall be true and correct in all respects as of
such date); provided, that no representation or warranty shall fail to be true
and correct for the purposes of this Section 6.3.1 solely as a result of changes
in the Business, the assets or the Liabilities of the Company which are
expressly required, permitted or contemplated by this Agreement.
6.3.2. The Company shall have performed in all material
respects all covenants and agreements required to be performed by it under this
Agreement at or prior to the Closing Date.
6.3.3. The required consents and approvals identified or
required to be identified on Schedules 3.3, 3.4.2 and 3.6 shall have been
obtained, in form and substance and otherwise reasonably satisfactory to
Purchaser, without any conditions (on the Company, Purchaser or any of their
Affiliates), changes, modifications, or additions to the underlying Assumed
Contract or Governmental Authorization for which consent or approval was sought
other than those of an immaterial or ministerial nature and, with respect to the
consents and approvals relating to the Governmental and Non-Governmental
Authorizations listed on Schedule 3.6, attached hereto, Purchaser shall be
reasonably satisfied that such authorizations shall not be impaired by the
consummation of the Contemplated Transactions or the ownership of the Assets or
operation of the Business by Purchaser following the Closing.
6.3.4. Between the date of this Agreement and the Closing
Date, no Material Adverse Effect shall have occurred.
6.3.5. The Company shall have delivered to Purchaser
satisfactory evidence that any and all Encumbrances affecting the Assets (other
than Assumed Liabilities) have been released.
6.3.6. The documents, certificates, instruments and opinions
required to be delivered or caused to be delivered at the Closing pursuant to
Section 7.2 shall have been delivered.
6.3.7. The USBC Order shall have been entered by the USBC and
shall have become a final and non-appealable Order.
24
7. CLOSING.
7.1. CLOSING DATE. The closing of the Contemplated Transactions (the
"Closing") shall take place at the offices of Xxxxxx & Xxxxxx LLP, 0000 Xxxxxx
Xxxxxxxxx, Xxxxx 000, XxXxxx, Xxxxxxxx 00000 or such location acceptable to
Purchaser. The Closing shall occur within five (5) Business Days following the
satisfaction or waiver of the conditions set forth in Section 6, or on such
other date as the Parties may agree (such date, the "Closing Date")
7.2. CLOSING STEPS. The following actions shall be taken, in the
following order:
7.2.1. DELIVERY OF THE XXXX OF SALE. The Company shall execute
and deliver to Purchaser a xxxx of sale for all of the Assets which are tangible
personal property in substantially the form of Exhibit 7.2.1, attached hereto
and substance acceptable to Purchaser.
7.2.2. DELIVERY OF THE ASSIGNMENT AND ASSUMPTION AGREEMENT.
The Company and Purchaser shall each execute and deliver to the other an
acceptable assignment of all of the Assets which are intangible personal
property, which assignment shall also contain Purchaser's undertaking and
assumption of the Assumed Liabilities (the "Assignment and Assumption
Agreement").
7.2.3. DELIVERY OF INTELLECTUAL PROPERTY ASSIGNMENT. The
Company shall execute and deliver to Purchaser acceptable assignments of all QC
Intellectual Property assets, copyrights, marks and patents.
7.2.4. DELIVERY OF MISCELLANEOUS TRANSFER DOCUMENTS. The
Company shall execute and deliver to Purchaser such other deeds, bills of sale,
assignments, certificates of title, documents and other instruments of transfer
and conveyance as may reasonably be requested by Purchaser in connection with
the transfer of the Assets to Purchaser, each in form and substance reasonably
satisfactory to Purchaser and its legal counsel.
7.2.5. PAYMENT OF PURCHASE PRICE. Purchaser shall pay to the
Company cash in an amount equal to the Purchase Price minus the Deposit by wire
transfer of immediately available U.S. funds in accordance with instructions
provided by the USBC.
7.2.6. EXECUTION OF GENERAL RELEASE. The Company shall execute
and deliver a general release in form and substance acceptable to Purchaser.
7.2.7. DELIVERY OF OTHER ANCILLARY DOCUMENTS. The Company
shall execute and deliver all Company Ancillary Documents not otherwise
identified in this Section 7.2 and Purchaser shall execute and deliver all other
Purchaser Ancillary Documents not otherwise identified in this Section 7.2.
8. TERMINATION.
8.1. TERMINATION. This Agreement may be terminated at any time prior to
the Closing, under the provisions of any of the following sub-sections of this
Section 8.1 which are applicable:
8.1.1. By mutual written agreement of Purchaser and the
Company;
25
8.1.2. By the Company by Notice to Purchaser, if Purchaser is
in Uncured Breach in any material respect of any of its representations,
warranties, covenants or agreements contained in this Agreement;
8.1.3. By Purchaser, by Notice to the Company if the Company
is in Uncured Breach in any material respect of any of its representations,
warranties, covenants or agreements contained in this Agreement;
8.1.4. By either the Company on the one hand, or Purchaser, on
the other hand, by Notice to the other, if a Governmental Body or any other
Person shall have entered an Order holding, or if a Governmental Body or any
other Person shall have initiated a Proceeding seeking to deem any portion of
this Agreement unenforceable or to prohibit or adversely affect the Contemplated
Transactions; or
8.1.5. By the Purchaser, if the USBC Order has not been
entered by the USBC by May 17, 2004, PROVIDED that the Purchaser shall not be
entitled to terminate this Agreement pursuant to this Section 8.1.5 if the
failure to obtain the USBC Order within such time period results primarily from
Purchaser's breach of any representation, warranty, covenant or agreement
contained in this Agreement;
8.1.6. By the Purchaser (i) if the USBC Order has not become a
final and non-appealable Order within fifteen (15) days after the date the USBC
Order is entered by the USBC or (ii) if on or before May 17, 2004, the
Bankruptcy Proceeding is dismissed or converted to Chapter 7 of the Bankruptcy
Code or a trustee is appointed for the Company and does not expressly consent to
and assume the Company's obligations under this Agreement;
8.1.7. By either the Company on the one hand, or Purchaser, on
the other hand, by Notice to Purchaser, or to the Company, as applicable, if for
any reason the Closing has not occurred on or before May 31, 2004 (the
"Termination Date");
The Termination Date may be extended by agreement of each of the Parties hereto.
8.2. EFFECT OF TERMINATION. Except as provided in this Section 8.2, in
the event of termination of this Agreement pursuant to this Section 8, this
Agreement shall forthwith become void, and there shall be no Liability on the
part of any Party or its respective Affiliates, except for the obligations under
Sections 5,8 and 9, all of which shall survive any such termination, and any
such liability imposed pursuant to the Bidding Procedures Order of the USBC.
Termination of this Agreement pursuant to this Section 8.2 shall occur without
further order of the USBC or any of the other parties hereto. Upon termination,
all filings, applications and other submissions made pursuant to this Agreement,
to the extent practicable, shall be withdrawn from the agency or other Person to
which they were made. Notwithstanding the foregoing, nothing contained herein
shall relieve any Party from Liability for any Breach of any covenant or
agreement in this Agreement by such Party occurring prior to the termination of
this Agreement.
26
9. NOTICES.
All notices, communications and deliveries required or permitted
hereunder ("Notices") shall be made in writing signed by the Party making the
same, shall specify the Section hereunder pursuant to which the same is given or
being made, and shall be delivered personally or sent by telecopy transmission,
registered or certified mail, or by any internationally recognized overnight
delivery service (with postage and other fees prepaid) as follows:
To Purchaser: IA Global, Inc.
Attn.: Xxxx Xxxxx
000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a required, simultaneous IA Global, Inc.
copy transmitted in like Attn.: Xxxx Xxxxxxx
manner to: 000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Telephone No.: 000-00 000 00 00 00
Facsimile No.: 011-61 8 9481 8449
with a required, simultaneous Xxxxxx & Xxxxxx LLP
copy transmitted in like Attn.: Xxxxx X. Xxxxx, Esq.
manner to: 0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
XxXxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
and Vorys, Xxxxx, Xxxxxxx and Xxxxx, LLP
Attn: Xxxx X. Xxxxxxx, Esq.
0000 Xxxx 0xx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Telephone No.: (000)000-0000
Facsimile No.: (000) 000-0000
To the Company: XxxxXxx.xxx, Inc.
Attn.: Xx. Xxx Xxxx
000 Xxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
27
with a required, simultaneous Xxxxxxx Xxxx, Esq.
copy transmitted in like 00000 Xxxxxxxxx Xxxx., Xxx. 000
manner to: Xxxxxxxx Xxxxx, XX 00000
Telephone No.: ______________
Facsimile No.: _______________
or to such other representative or at such other address of a Party of which a
Party hereto may hereafter give Notice to the other Party in writing. Notices
shall be effective upon the date of delivery or refusal of delivery, if given by
personal delivery, registered, certified or express mail or courier delivery, or
upon transmission by facsimile transmission, if (i) the addressee confirms by
telephone or electronic means that the facsimile transmission in question was
received in legible form or (ii) responds to the communication in the facsimile
transmission in question without indicating that it was not received in legible
form.
10. MISCELLANEOUS.
10.1. ATTACHMENTS. All Schedules attached hereto are hereby
incorporated into this Agreement and are hereby made a part hereof as if set out
in full in this Agreement.
10.2. ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties hereto
and supersedes any prior understandings, agreements, or representations by or
among the Parties hereto, written or oral, to the extent they related in any way
to the subject matter hereof. Notwithstanding the foregoing, this Agreement
shall not supersede any other Contracts between or among the Parties hereto
entered into on or after the date hereof, whether or not relating in any way to
the subject matter hereof.
10.3. DISCLOSURE SCHEDULES. The statements in the Disclosure Schedules
relate only to the representations and warranties in the Section of the
Agreement to which they expressly relate and not to any other representation or
warranty in this Agreement. In the event of any inconsistency between the
statements in this Agreement and those in the Disclosure Schedules (other than
an exception expressly set forth as such in the Disclosure Schedules with
respect to a specifically identified representation or warranty), the statements
in this Agreement will control.
10.4. COMPLIANCE WITH BULK SALES LAWS. The Parties hereby waive
compliance by the Parties with the bulk sales laws and any other similar laws in
any applicable jurisdiction in respect of the transactions contemplated by this
Agreement.
10.5. ENFORCEMENT OF AGREEMENT. The Parties hereto acknowledge and
agree that each other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms and that any Breach of this Agreement by any Party could not be adequately
compensated by monetary damages. Accordingly, the Parties agree that, in
addition to any other right or remedy to which a Party may be entitled, at law
or in equity, it shall be entitled to enforce any provision of this Agreement by
a decree of specific performance and to temporary, preliminary and permanent
injunctive relief to prevent Breaches or threatened Breaches of the provisions
of this Agreement, without posting any bond or other undertaking.
28
10.6. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Parties hereto; PROVIDED, HOWEVER, that Purchaser may (i)
assign any or all of its rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases Purchaser nonetheless shall
remain responsible for the performance of all of its obligations hereunder).
10.7. NUMBER; GENDER. Whenever the context so requires, the singular
number shall include the plural and the plural shall include the singular, and
the gender of any pronoun shall include the other gender.
10.8. CAPTIONS. The Section, Subsection and other titles and captions
contained in this Agreement, the Schedules and the Exhibits to this Agreement,
and any table of contents contained in this Agreement, are inserted herein only
as a matter of convenience of reference, shall not be deemed part of this
Agreement and shall in no way define, limit, extend or describe the scope of
this Agreement or the intent of any provision hereof. Unless otherwise specified
to the contrary, all references to Sections are references to Sections of this
Agreement, and all references to Schedules and Exhibits are references to
Schedules and Exhibits to this Agreement.
10.9. CONTROLLING LAW; INTEGRATION; AMENDMENT; CERTAIN CONSTRUCTION
RULES. This Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to
such jurisdiction's choice of law rules. This Agreement may not be amended,
modified or supplemented except by a written agreement of the Parties. No
provision of this Agreement shall be construed against or interpreted to the
disadvantage of any Party hereto by any Governmental Body by reason of such
Party's or such Person's counsel having or being deemed to have structured or
drafted such provision. Except as otherwise expressly provided herein, all
representations and warranties contained herein shall be deemed to have been
made as of the date hereof.
10.10. SEVERABILITY. Any provision hereof which is prohibited or
unenforceable in any Jurisdiction will, as to such Jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
Jurisdiction will not invalidate or render unenforceable such provision in any
other Jurisdiction. To the extent permitted by law, the Parties hereto waive any
provision of law which renders any such provision prohibited or unenforceable in
any respect.
10.11. COUNTERPARTS; EXECUTION AND DELIVERY OF SIGNATURE PAGES. This
Agreement may be executed in multiple counterparts and by the Parties hereto on
separate counterparts which, taken together, shall constitute one binding
agreement. This Agreement shall also be deemed duly executed, delivered and in
full force and effect if (a) each of the Parties hereto has properly executed a
signature page to this Agreement, designated as such (a "Signature Page") on
which such Party's signature is called for, and (b) each Party has transmitted
such executed Signature Page by facsimile transmission or courier service to
each of the other Parties to this Agreement. Each Party to this Agreement
undertakes to the other Parties that, in the event such Party executes this
Agreement by means of executing and transmitting by facsimile transmission a
Signature Page, such Party shall forthwith after such execution send by courier
29
service to the other Parties to this Agreement a copy of the Signature Page
hand-signed by such Party, provided, however, that any failure to dispatch such
Signature Page by courier as aforesaid shall not affect the validity and
enforceability of this Agreement, and it shall be deemed to be in full force and
effect.
10.12. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any Person
other than the Parties hereto and their successors or permitted assigns, any
rights, remedies, obligations or Liabilities under or by reason of this
Agreement, or result in any Person's being deemed a third party beneficiary of
this Agreement.
10.13. WAIVER. Any agreement on the part of a Party hereto to any
extension or waiver of any obligation of any other Party hereunder shall be
valid only if set forth in an instrument in writing signed on behalf of the
Party entitled to enforce the obligation. A waiver by one Party of the
performance of any covenant, agreement, obligation, condition, representation or
warranty shall not be construed as a waiver of any other covenant, agreement,
obligation, condition, representation or warranty or as a waiver by any other
Party. A waiver by any Party of the performance of any act shall not constitute
a waiver of the performance of any other act or an identical act required to be
performed at a later time.
[SIGNATURES BEGIN ON FOLLOWING PAGE]
30
SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
IN WITNESS WHEREOF, each of the Parties hereto has executed this
Agreement as of the date and year first above written.
IA GLOBAL, INC.
By: /s/ Xxxx Xxxxxxxxxx
---------------------------------
Name: Xxxx Xxxxxxxxxx
Title: Chief Executive Officer
XXXXXXX.XXX, INC.
By: Xx. Xxx Xxxx
-------------------
Name: Xx. Xxx Xxxx
Title: CEO
XXXXXXX.XXX, INC.
SCHEDULE 3.4.2
ASSUMED CONTRACTS
The following is a list of contracts assumed as part of the Asset Purchase
Agreement:
License Agreements with Internet Service Providers
POSTAL
COMPANY NAME XXXXXXX0 XXXXXXX0 XXXX XXXXX CODE
------------ -------- -------- ---- ----- ------
AA Service Provider LLC 00 Xxxxxx Xxxxx Xxxx Xxxxx 0 Xxxxx Xxxxxxxxx XX 00000
AASP X.X. Xxx 000 Xxxxxxxx XX 00000
Bargaintech 0000 Xxxxxxx Xx Xxxxxxx XX 00000
Xxxxxxxxx.xxx 000 Xxxxxxxx Xxx Xxxxxxx XX XX 00000
BrightNet 00 Xxxx Xxxxxx Xxxxxxxxxx XX 00000
Street
Cape Lookout Internet 0000 Xxxxxxxx Xxxxxx Xxxxx 000 Xxxxxxxx Xxxx XX 00000
Services
Carrolls Web X X Xxx 0000 Xxxxxx XX 00000
CCS Internet 00000 Xxxxxxxx Xxxx. Xxxxxx XX 00000
Clovernet 0000 Xxxxx 0xx xx. Xxxxxxxxx XX 00000
ComNet, Inc. X X Xxx 0000 00000 Xxxxxx Xxxxxxxxxx XX 00000
Road 25A
CoreComm 0000 X. Xxxxxxxx Xx. #000 Xxxx Xxxxxxx XX 00000
CWNet 000 Xxxx Xxxxxx Xxxxx X Xxxxxxxxxx XX 00000
Cyber Lodge Internet 000 X. Xxxx Xxxxxxxx Xxxxx XX 00000
Services
eGIX 00000 X. Xxxxxxxx Xxxxx 000 Xxxxxx XX 00000
EXP Data Recall 000 Xxxxx 00xx Xxxxxxxx XX 00000
Street
Galaxy Internet Services 000 Xxxxxxx Xx. Xxxxx 000X Xxxxxx XX 00000
GalaxyNet Internet 000 XX Xxxxxx Xxxx. Xxxxx X-000 Xxx Xxxxxx XX 00000-0000
GCNET X.X Xxx 000 XxXxxxx XX 00000
GreaTrax LLC 0000 Xxxxxxxxx Xx Xxxxxxx XX 00000
ImagineNet 00000 Xxxxxx Xxxxx Xxxxxxxx XX 00000
Road
Indian Creek Internet Xxx 0000 Xxxxxxx XX 00000
Internet Access Plus 000X Xxxxxxxxx Xx. XX 00000
Internet Professionals, 000 X. Xxxxx Xx. Xxxxxxxx XX 00000
LLC
iServ 0000-00xx Xxxxxx Xxxxx Xxxxxx XX 00000
S.E.
IA Global, Inc 000 Xxxxxxx Xxxx. Xxxxx 000 Xxxxxxxxxx XX 00000
Jasmine Internet Co., LTD 000 Xxx 0, Xxxxxxxxxxxx Xx, Xxxxxxx Xxxxxxxxxx 00000
Sub-district
KIT USA XX Xxx 0000 Xxxxxx XX 00000
Magic-Net Inc 000 Xxxx Xxxxx Xxxxx XX 00000
Street
Mango Services LLC 000 Xxx Xxx Xxxxx 000 Xxxxxxxxxx XX 00000
Brunswick Road
Xxxxxxx.xxx 0000 Xxxxx Xxxxxx Xxxxxxx XX 00000
Xxxxx.xxx 000 Xxxxxx Xxxxxx Xxxxx XX 00000
Attleborough
Net2roam Limited 00 Xxxxxxx Xxxxx Xxxxxx X0 0XX
NetAccess, INC. 0000 Xxxxx 000 Xxxxxxxxx XX 00000
Pittsford-Xxxxxx
Road
Omega Communications Xxx Xxxxxx Xxxxxx #0 Xxxxxxxxxxx XX 00000-0000
Sarver's Output Services XXX Xxx 000X Xxxxxxxxx XX 00000
Stargate 23 / Precision 000 X. Xxxx Xxxxxx Xxxxxx XX 00000
Services Group
SuperPA Net 000 Xxxxxxxxxxxx Xx Xxxxxxxxxx XX 00000
XX Choice Inc. 00000 Xxxx Xx. Xxxxx 000 Xxxxxxx XX 00000
Veroom LLC XX Xxx 000 Xx. Xxxxxx XX 00000
Xxxxxxx.Xxx 0000 Xxxx 0000 Xxxxx Xxxxx 0 Xxxxx XX 00000
WTS Online 000 Xxxx Xxxxxxxx XxxxxXxxx XX 00000
Other Contracts
1. Contribution Agreement, dated as of July 14, 1999, by and among
XxxxXXX.xxx, Inc., SKL Technology Ventures, LLC and Innovative
Computing Group, Inc.
2. Multimedia License Agreement, dated as of July 14, 1999, by and between
XxxxXXX.xxx, Inc. and Innovative Computing Group, Inc.
XXXXXXX.XXX, INC.
SCHEDULE 3.5
LEGAL PROCEEDINGS
The following is a list of legal proceedings pending against XxxxXXX.xxx, Inc.:
1. US Department of Labor v. XxxxXXX.xxx, Inc.
Case No. 2003-LCA -19
Office of Administrative Law Judges
2. Xxxx X. Xxxxx v. Xxxxxxx.xxx, Inc.
Cuyahoga County Court of Common Pleas
Case No. CV-02-489257
(Stayed by pending bankruptcy action.)
XXXXXXX.XXX, INC.
SCHEDULE 3.6
GOVERNMENTAL OR OTHER AUTHORIZATIONS
The following is a list of all of the Company's Governmental Authorizations with
respect to the Business, and any Consent, license, plan, certificate or permit
issued, granted or given to the Company by any other Person or body with respect
to any software or process of the Business:
None.
XXXXXXX.XXX, INC.
SCHEDULE 3.7
COMPLIANCE WITH LEGAL REQUIREMENTS
The Company is in compliance in all material respects with all applicable Legal
Requirements to which the operation of the Business is subject, except for the
following:
The Company has been unable to meet most of its payment obligations, including
payments to various taxing authorities. As a result, it is in violation of the
legal obligation to make those payments and in some cases the related reporting
obligations. In addition, other issues, like back wages, remain unpaid and could
be in violation of various labor laws and regulations, not limited to wage and
hour violations and the requirements of employing foreign workers. The Company
believes the only legal requirements it is in violation of relate to its
inability to make payments, and to the best of its knowledge and belief, there
are no other violations of legal requirements.
XXXXXXX.XXX, INC.
SCHEDULE 3.8.1
INTELLECTUAL PROPERTY
The following is a list of the Intellectual Property used or intended to be used
in the Business and owned by the Company, including any QC Software, a list of
the Intellectual Property used by the Company pursuant to a license or other
right granted by a third party, excluding any "shrink-wrap" software packages,
used or intended to be used in the Business, and identifies each item of
Licensed Intellectual Property that will require the licensor's Consent to
transfer or assign such item to Purchaser in the Contemplated Transactions:
Products:
1. iNet Accelerator
2. Messaging Optimizer
3. Miliki Dial Up
4. Lemon Blue (Alpha version)
5. Perfect View (Alpha version)
6. Thin Client (Alpha version)
Patents:
US PATENTS (DATE) TITLE INVENTORS ASSIGNEE
----------------- ----- --------- --------
6,567,781 Method and apparatus for Xxxxxxxx X. Xxxx XxxxXXX.xxx, Inc.
(May 20, 2003) compressing audio data using a
dynamical system having a
multi-state dynamical rule set
and associated transform basis
function
6,456,744 Method and apparatus for video Xxxxxxxx X. Xxxx XxxxXXX.xxx, Inc.
(Sept 24, 2002) compression using sequential
frame cellular automata transforms
6,449,658 Method and apparatus for Xxxxxxxx X.Xxxx, XxxxXXX.xxx, Inc.
(Sept 10, 2002) accelerating data through Xxxxx Xxxxx,
communication networks Xxxxxxx Tsuryk
6,400,766 Method and apparatus for digital Xxxxxxxx X. Xxxx XxxxXXX.xxx, Inc.
(June 4, 2002) video compression using
three-dimensional cellular
automata transforms
6,393,154 Method and apparatus for digital Xxxxxxxx X. Xxxx XxxxXXX.xxx, Inc.
(May 21, 2002) image compression using a
dynamical system
6,363,350 Method and apparatus for digital Xxxxxxxx X. Xxxx XxxxXXX.xxx, Inc.
(March 26, 2002) audio generation and coding using
a dynamical system
6,330,283 Method and apparatus for video Xxxxxxxx X. Xxxx XxxxXXX.xxx, Inc.
(Dec 11, 2001) compression using multi-state
dynamical predictive systems
XXXXXXX.XXX, INC.
SCHEDULE 3.8.2
INTELLECTUAL PROPERTY OF OTHERS
The following is a list of any patent, technical documentation, trade secret,
trademark, service xxxx, technology, trade name, domain name, copyright or other
Intellectual Property other than the QC Intellectual Property necessary to
conduct the Business as heretofore conducted by the Company without infringing
or violating the rights of any other Person:
1. LZW License
2. SourceGear SourceOffSite
3. Microsoft SourceSave
4. Kakadu Software
5. LEADTOOLS Imaging Pro
6. Rational PureCoverage for Windows
7. Rational Quantify for Windows
8. Microsoft Visual Studio
9. Eclipse (Java Development)
XXXXXXX.XXX, INC.
SCHEDULE 3.8.3
JURISDICTIONS
The following is a list of all Jurisdictions in which the Company is operating
the Business under a trade name, and each Jurisdiction in which any such trade
name is registered:
1. Ohio
2. Delaware
XXXXXXX.XXX, INC.
SCHEDULE 3.8.4
PAYMENTS WITH RESPECT TO INTELLECTUAL PROPERTY
The Company (a) is not obligated to make any payments by way of royalties, fees
or otherwise to any owner, licensor, or other claimant to any Intellectual
Property rights for use thereof and (b) the Company has paid in full all license
fees, royalties and other payments due and payable prior to the date hereof
required to be made by the Company pursuant to any agreement under which the
Company licenses the Licensed Intellectual Property, except as follows:
Quikcat has sold copies of the Miliki Super Compressor and Choshuku software
products without obtaining the permission of Innovative Computing Group, Inc.
("ICG"). These products are owned by ICG. ICG has requested that Quikcat cease
and desist from further sales of the Miliki Super Compressor and Choshuku
products. Quikcat will comply with that request.
The Company has not paid the required royalties under the LZW license.
XXXXXXX.XXX, INC.
SCHEDULE 3.9
TRANSACTIONS WITH AFFILIATES
The following is a list of: (a) any Contract with the Company and an Affiliate
relating to the Business ("Affiliate Contract"); (b) any property of an
Affiliate (real, personal or mixed), tangible or intangible, used or currently
intended to be used in the Business; or (c) any claim of an Affiliate against
the Company involving or relating to the Business:
1. Miliki and Choshuku are implementations of the QuikCAT technology within
"a stand alone computer configuration" and are owned by Innovative
Computing Group, Inc. as are all other implementations of the QuikCAT
technology that can be used in stand alone computer configurations.
2. "AudioCAT Applications" are owned 50% by Innovative Computing Group, Inc.
3. Implementation of any QuikCAT technology in the hardware for portable
wireless multimedia devices is licensed to Innovative Computing Group,
Inc. under the Multimedia License.
XXXXXXX.XXX, INC.
SCHEDULE 4.5
DISCLOSURE OF INTERESTS
The following is a list of (i) any past or present (or any anticipated future)
relationship between the purchaser or any of its Affiliates, on the one hand,
and any of the Company's present board members, officers, advisers or
professionals, on the other hand, and (ii) any other past or present (or any
anticipated future) relationship:
The Purchaser has entered into a non-binding letter of intent with Innovative
Computing Group, Inc. and Xx. Xxxxxxxx X. Xxxx. Under this letter of intent, it
is contemplated that certain technology owned by Innovative Computing Group,
Inc. will be acquired by the Purchaser and Xx. Xxxx will be employed by the
Purchaser or its designee.
XXXXXXX.XXX, INC.
EXHIBIT 2.6.3
ALLOCATION OF PURCHASE PRICE
The following is the allocation of the Purchase Price, subject to adjustment at
the date of closing for changes in carrying values:
Class I Assets - None
Class II Assets - None
Class III Assets - None
Class IV Assets - None
Class V Assets - $75,497 (Accounts Receivable)
Class VI Assets - $0
Class VII Assets - $624,503
