SUBSCRIPTION AGREEMENT
This SUBSCRIPTION AGREEMENT, dated as of March ____, 2000 (this
"Agreement"), is made and entered into by and between AskTheRobot, LLC, a New
York limited liability company (the "Company"), and Liberty Group Services, LLC,
a Delaware limited liability company ("Liberty").
RECITALS:
A. Liberty wishes to subscribe for Preferred Membership Interests of the
Company (the "Preferred Interests") which will contain the rights, preferences
and designations contained in the Letter of Intent dated March __, 2000 by and
between the Company and Liberty (the "LOI") and which will represent a Liberty
beneficially and of record owning 51% equity interest in the Company on a
fully-diluted basis for Liberty on the Closing Date (as defined below).
B. Liberty desires to purchase from the Company, and the Company is
willing to sell to Liberty, the Preferred Interests on the terms and subject to
the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties and covenants contained in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
SUBSCRIPTION; CLOSING; CONTRIBUTION AMOUNT
1.1 Subscription; Closing of the Subscription.
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(a) Subject to the terms and conditions hereinafter set forth, upon the
consummation of the transactions contemplated by this Agreement (the
"Closing"), the Company shall issue to Liberty, and Liberty shall purchase from
the Company, the Preferred Interests, representing 51% of the membership
interests in the Company on a fully-diluted basis, in exchange for the payment
to the Company of the Contribution Amount (as defined in Section 1.2(b)).
(b) The Closing will take place at the offices of Xxxxxxx, Xxxxxxxxx LLP, Xxx
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 a.m., local time, on the
business day (the "Closing Date") immediately following satisfaction or waiver
of the conditions set forth in Sections 4.1 and 4.2, or at such other time or
on such other date as the Company and Liberty may mutually agree upon in
writing. It is anticipated that the Closing Date shall occur simultaneous with
the execution of this Agreement.
1.2 Contribution Amount.
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(a) The amount to be paid for the Preferred Interests to be issued on
the Closing Date to Liberty shall be as follows: (i) a cash payment in the
amount of $175,000; (ii) if, and only if, the Company achieves the
milestones indicated on Schedule I attached hereto ("Milestones"), the cash
payments indicated on Schedule I on each of June 13, 2000, September 13,
2000, December 13, 2000, March 13, 2000 and June 13, 2000 (each such date
hereinafter being referred to as a "Performance Measurement Date"); and
(iii) if, and only if, the Company achieves the specified Milestones on
each of the Performance Measurement Dates, Liberty shall cause Liberty
Group Holdings, Inc., a Delaware company ("LGHI"), to issue to the Company
the number of shares of common stock of LGHI (the "Common Stock") indicated
on Schedule I at the greater of (a) $3.00 per share of Common Stock and (b)
the market value per share of Common Stock on the date of the Performance
Measurement Date.
(b) Notwithstanding anything contained herein to the contrary, if a
Milestone is not met by a Performance Measurement Date, no such additional
cash payment and no shares of Common Stock shall be due to the Company for
the Preferred Interests. The amounts to be paid by Liberty pursuant to
Section 1.2(a) shall hereinafter be referred to as the "Contribution
Amount".
1.3 Certain Transactions to be Effected at the Closing.
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Subject in each case to the terms and conditions contained in this
Agreement, the following actions shall be taken at or prior to the Closing
Date:
(a) Liberty shall deliver, or cause to be delivered, to the
Company the following:
(i) One Hundred Seventy-Five Thousand U.S Dollars ($175,000),
payable in cash by wire transfer in immediately available Federal
funds to an account to be designated by the Company; and
(ii) an executed counterpart signature page to the Operating
Agreement of the Company dated as of the Closing Date (the
"Operating Agreement").
(b) The Company shall deliver, or cause to be delivered, to
Liberty the following:
(i) executed counterpart signature pages to the Operating
Agreement from the Company and the current members of the Company;
(ii) executed counterpart signature page to the
Management Agreement ("Management Agreement"), duly executed by
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the Company;
(iii) an Employment Agreement by and between the Company
and each of Xxxxxxx Xxxxx ("MV") and Xxxxxxx Xxxxxx ("DC"),
satisfactory in form and substance to Liberty;
(iv) a true and complete copy of the resolutions duly and
validly adopted by members of the Company evidencing its
authorization of the execution and delivery of this Agreement, the
Management Agreement and the consummation of the transactions
contemplated hereby; and
(v) any other documents requested by Liberty or its
counsel.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF LIBERTY
Representations and Warranties of Liberty. Liberty hereby represents
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and warrants to the Company the following:
2.1 Authority. Liberty is a limited liability company duly organized and
validly existing under the laws of its jurisdiction of organization. Liberty has
the absolute and unrestricted right, power, authority and capacity to execute
and deliver this Agreement, the Operating Agreement, the Management Agreement
and all other documents and instruments contemplated herein and therein
(collectively, the "Transaction Documents"), to carry out its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby.
Each of the Transaction Documents has been duly executed and delivered by each
of Liberty and, assuming due authorization, execution and delivery by the
Company, each of the Transaction Documents constitutes a legal, valid and
binding obligation of Liberty, enforceable against Liberty in accordance with
its terms.
2.2 No Default. The execution, delivery and performance of the Transaction
Documents by Liberty does not and will not give rise to, or result in any breach
or default of any provision of any law, regulation, agreement, commitment,
ruling, judgement or order to which it is a party or by which it or its assets
are bound, including without limitation, under any of its charter documents.
2.3 Claims; Litigation. No actions, suits, claims, litigation, arbitration
proceedings, administrative proceedings or investigations are pending or, to
Liberty's knowledge, threatened against Liberty, which could adversely affect
the consummation of the transaction contemplated by this Agreement.
2.4 Investment Representations and Warranties.
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(a) Liberty understands that the offering and sale of the Preferred
Interests is intended to be exempt from registration under the Securities Act of
1933, as amended (the "Securities Act"), by virtue of Section 4(2) of the
Securities Act and the provisions of Regulation D promulgated thereunder and
that the Company's reliance on such exemption is predicated upon, among other
things, the bona fide nature of Liberty's investment intent expressed herein.
(b) Liberty believes it has received all the information, records and
books it considers necessary or appropriate for deciding whether to purchase the
Preferred Interests.
(c) Liberty has had a reasonable opportunity to ask questions and receive
answers from all persons acting on behalf of the Company concerning the Company
and the Preferred Interests, and all such questions have been answered to the
full satisfaction of Liberty. Nothing contained in Section 2.4(b) and (c) in any
way derogates from the representations and warranties of the Company made herein
or Liberty's reliance thereon.
(d) Liberty is not subscribing for the Preferred Interests as a result of
or subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio, or presented at any seminar or meeting, or any solicitation
of a subscription by a person other than a member or agent of the Company.
(e) Liberty has such knowledge and experience in financial, tax and
business matters so as to enable it to utilize the information made available it
to evaluate the merits and risks of an investment in the Company, and to make an
informed investment decision with respect thereto.
(f) Liberty will not sell or otherwise transfer any of the Preferred
Interests without registration under the Securities Act or applicable state
securities laws, or pursuant to an exemption therefrom. The Preferred Interests
have not been registered under the Securities Act or under the securities laws
of any states. Liberty represents that (i) it is purchasing the Preferred
Interests for its own account, for investment and not with an intention to
resell or distribute the Preferred Interests, (ii) it is aware that there is
currently no market for the Preferred Interests and (iii) an exemption from the
registration requirements of the Securities Act pursuant to Rule 144 promulgated
thereunder is not presently available.
(g) Liberty recognizes that an investment in the Company involves
substantial risks, including loss of the entire amount of such investment, and
has taken full cognizance of, and understands all of the risks related to, the
purchase of the Preferred Interests.
(h) Liberty has no agreement or arrangement with any person or entity to
sell, transfer or pledge the Preferred Interests, and Liberty is the sole party
in interest with regard to the Preferred Interests.
(i) Liberty has substantial experience in making investment decisions of
this type and is aware of the fundamental risks and financial hazards of
purchasing the Preferred Interests hereby subscribed for and acknowledges that
an investment in the Company should be considered only by a sophisticated
investor financially able to maintain such investor's investment and pay taxes
with respect thereto from other sources, and who can afford to lose all or a
substantial part of such investment.
(j) Liberty agrees that the Preferred Interests will not be sold,
transferred or otherwise disposed of without complying with the Securities Act
and any applicable state securities law.
(k) Liberty acknowledges and agrees that any and all projections or
analyses delivered to it by the Company, the members or employees of the Company
or its respective agents or representatives should not be construed or relied
upon as an indication of the Company's future or anticipated financial
performance, provided that the Company has no knowledge that the assumptions
underlying such projections or analyses are untrue as of the date hereof.
2.5 Brokers. No broker, investment banker, financial advisor or other
person or entity is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based on arrangements made by or on behalf of Liberty, other
than the payment to be made to Xxx Xxxxxx, who shall be entitled to a commission
from the Company.
2.6 Disclosure. Neither this Agreement nor any certificates, instruments
or other documents delivered or to be delivered by Liberty or its
representatives to the Company and its representatives in connection with this
Agreement or the transactions contemplated hereby, contains any untrue statement
of a fact or omits to state a fact required to be contained herein or therein or
necessary in order to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Representations and Warranties of the Company. The Company hereby
represents and warrants to Liberty the following:
3.1 Authority. The Company is a limited liability company duly organized
and validly existing under the laws of the State of New York. The Company has
the absolute and unrestricted right, power, authority and capacity to execute
and deliver the Transaction Documents, to carry out its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby, subject
only to the adoption of the Operating Agreement and to create the Preferred
Interests. All acts and proceedings required to be taken by the Company for the
authorization, execution, delivery and performance of the Transaction Documents
will have been lawfully and validly taken prior to the Closing Date. This
Agreement has been duly executed and delivered by the Company and, assuming due
authorization, execution and delivery by Liberty, this Agreement constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
3.2 No Default. The execution, delivery and performance of the Transaction
Documents by the Company does not and will not (x) require any consent,
approval, authorization, exemption of or filing with any third party, including,
without limitation, its members or any governmental authority, (y) conflict with
or violate any provision of either (i) the charter documents, subject to the
second sentence contained in Section 3.1 above, or (ii) any law, rule,
regulation, order, writ, judgement, injunction, decree, determination or award
applicable to the Company, or (z) result in any breach of, or constitute a
default (or event which the giving of notice or lapse of time, or both, would
become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of any lien or
encumbrance pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument to which the
Company is a party or by which it or any of its assets are bound or affected.
The Company is not subject to any restriction of any kind or character which
adversely affects in any way its business, properties, assets or prospects or
which prohibits the Company from entering into the Transaction Documents or
would prevent or restrict its performance of or compliance with all or any part
of the Transaction Documents or the consummation of the transactions
contemplated hereby or thereby.
3.3 Claims; Litigation. No actions, suits, claims, litigation, arbitration
proceedings, administrative proceedings or investigations are pending or, to the
Company's knowledge, threatened against the Company or any of its members or
employees (in their capacity as such), nor is the Company aware that there is
any basis for any of the foregoing. The foregoing includes, to the Company's
best knowledge, without limiting its generality, actions pending or threatened
involving the prior employment of any of the Company's employees or use by any
of them in connection with the Company's business of any information, property
or techniques allegedly proprietary to any of their former employers. The
Company is not a part to or subject to the provisions of any order, writ,
injunction, judgment, decree of any court or governmental agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or that the Company intends to initiate.
3.4 Capitalization. The current outstanding membership interests in the
Company and all outstanding subscriptions, options, employee options, warrants
and all other subscription agreements of the Company are set forth on Schedule
3.4 attached hereto. There are no outstanding options, warrants, rights to
subscribe to, calls or commitments of any character (including, without
limitation, registration rights) relating to, or securities or rights
convertible into, or exercisable for, interests of the Company, or contracts,
commitments or arrangements obligating the Company to issue additional
membership interests or options, warrants or rights to purchase or acquire any
membership interests in the Company. There are no outstanding contractual
obligations of the Company to repurchase, redeem, or otherwise acquire any
equity interests or any other security, instrument or right to acquire any
equity interest in the Company or to provide funds to, or make any investment
(in the form of a loan, capital contribution or otherwise) in the Company or any
other person or entity. There are no agreements or understandings with respect
to the voting, sale, transfer, preemptive rights, rights of first refusal,
rights of first offer, proxy or registration of any interests and option
agreements thereunder of the Company. The Company does not own any share capital
or other equity interest in any company or other entity, and is not a
participant in any partnership or joint venture. The Company is not a party to
any voting agreements, nor do any voting agreements exist among any of Company's
members.
The Company agrees and acknowledges that any shares of Common Stock
which it may receive shall be subject to a 2-year lock-up agreement, in the form
of Exhibit A attached hereto.
3.5 Indebtedness. The Company has no liabilities, debts or obligations,
whether accrued, absolute or contingent, other than as indicated on Schedule 3.5
attached hereto. Except as set forth in Schedule 3.5, the Company has not (i)
declared or paid any dividends, or authorized or made any distribution upon or
with respect to any class or series of its interests, (ii) incurred any material
indebtedness for money borrowed or any other material liabilities, (iii) made
any loans or advances to any person, or given a guarantee for any obligation of
any person, or (iv) sold, exchanged or otherwise disposed of any of its assets
or rights, other than the sale of its inventory in the ordinary course of
business.
3.6 Agreements. Schedule 3.6 attached hereto contains a true and complete
list of all contracts and agreements to which the Company is a party or by which
its properties are bound, including, without limitation, all employee
confidentiality and assignment agreements. Each of said agreements is, to the
best of the Company's knowledge, in full force and effect, and neither the
Company nor any other party thereto is in breach thereof. The Company has
delivered true and complete copies of each said agreement, including all
exhibits and amendments thereto, to the Liberty prior to the date hereof. Except
as set forth in Schedule 3.6, there are no agreements, understandings,
instruments, contracts, proposed transactions, judgments, orders or decrees to
which the Company is a party or, to the best of its knowledge, by which it is
bound, including, without limitation, agreements, understandings or proposed
transactions between the Company, and any of its officers, directors, members,
affiliates, or any affiliate thereof.
3.7 Insurance. The Company has no insurance policies in effect. Promptly
after the date hereof the Company will consider obtaining insurance policies by
insurers of recognized responsibility insuring the Company and its properties
and business against such losses and risks as determined.
3.8 Employees; Employee Benefit Plans. Other than the employment
agreements listed on Schedule 3.6, there are no employment, consulting,
severance or indemnification contracts or agreements between the Company, on the
one hand, and any other person, member, manager, director, officer or other
employee of the Company, on the other hand. The Company does not have any
deferred compensation or other bonus or other incentive compensation, stock
purchase, stock option and other equity compensation plan, program, agreement or
arrangement; severance or termination pay, medical, surgical, hospitalization,
life insurance and other welfare plan, fund or program (within the meaning of
Section 3(1) of Employee Retirement Income Security Act of 1974, as amended),
other than as contemplated by the employment agreements listed on Schedule 3.6.
3.9 Intellectual Property. All copyrights, licenses, patents, trademarks,
service marks, trade names, and applications, licenses and rights with respect
to the foregoing owned or used by the Company are listed on Schedule 3.9
attached hereto (all of said assets, along with the technology used by the
Company, shall hereinafter be collectively referred to as the "Intellectual
Property"). The Company owns or has the right to use, free and clear of all
liens, claims and restrictions, the Intellectual Property used in the conduct of
its business without infringing upon or violating any right of any other party,
and except as described in Schedule 3.9, the Company is not obligated or under
any liability whatsoever to make any payments by way of royalties, fees or
otherwise to any owner or licensee of, or other claimant to, with respect to the
use of the Intellectual Property. Any and all Intellectual Property developed by
any employee or consultant of the Company while in the employ of the Company
shall be the sole property of the Company, and shall not belong to any third
party, including, without limitation, the members of the Company. The Company
hereby represents that the members of the Company have no personal right
whatsoever directly or indirectly in the Company's technologies. The Company has
taken security measures to protect the secrecy, confidentiality and value of the
Intellectual Property, which measures are reasonable and customary in the
industry in which the Company operates. The Company has no knowledge of any
communications alleging that the Company has violated, or by conducting its
business as proposed, would violate, any of the patents, trademarks, service
marks, trade names or copyrights or trade secrets or other proprietary rights of
any other person or entity, nor is the Company aware of any infringement of the
foregoing rights by others. The Company hereby represents that neither the
execution nor delivery of this Agreement, nor the carrying on of the Company's
business by the employees of the Company, or the conduct of the Company's
business, will conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which it, or, to the best knowledge of the Company, any of its
employees, is now obligated. Each employee and/or consultant of the Company has
executed and delivered a Confidentiality and Assignment Agreement as indicated
on Schedule 3.6. to the Company, copies of which have previously been provided
to Liberty.
3.10 Title to Property; Leases. The Company has good and marketable title
to all of the properties, both real and personal, tangible and intangible, that
it purports to own, and except for properties held under valid and existing
leases, such properties are not subject to any mortgage, pledge, lien, security
interest, conditional sale agreement, encumbrance or charge, except statutory
routine liens securing liabilities not yet due and payable and minor liens,
encumbrances, restrictions, exceptions, limitations and other imperfections
which do not materially detract from the value of the specific assets affected
or the present use of such assets. All leases under which the Company is lessee
of any real or personal property (a list of which is attached hereto as Schedule
3.10) are valid, enforceable and effective in accordance with their respective
terms, and there is not under any such lease any existing or claimed default by
the Company or event or condition which with notice or lapse of time or both
would constitute a default by the Company.
3.11 Taxes. The Company has filed all tax returns (federal, state and
local) required to be filed by it. All taxes shown to be due and payable on such
returns, any assessments imposed thereon, and to the Company's knowledge, all
other taxes due and payable for all periods prior to the Closing Date have been
paid or will be paid prior to the time they become delinquent. The Company has
no knowledge of any liability of any tax to be imposed upon its properties or
assets as of the date of this Agreement that is not adequately provided for.
3.12 Securities Laws. Assuming the accuracy of the representations and
warranties of Liberty set forth in Section 2.4 of this Agreement, the offer,
issuance and sale of the Preferred Interests in accordance with the terms hereof
are and will be exempt from the registration and prospectus delivery
requirements of the Securities Act.
3.13 Related Party Transactions. Except as provided in Schedule
3.13, the Company has not entered into any transactions with any of the members
of the Company or their respective affiliates. Without detracting from the
foregoing, except as provided in Schedule 3.13, the Company is not indebted to
any of the members of the Company or their respective affiliates.
3.14 Financial Statements. 3.16 The Company's financial statements
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are attached hereto as Schedule 3.14. Since July 1, 1999, there has been no
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adverse material effect to the Company's business or financial condition.
3.15 Labor Agreements and Actions. To the Company's best knowledge, the
Company is not bound by or subject to any written or oral, express or implied,
contract, commitment or arrangement with any labor union, and, to the Company's
best knowledge, no labor union has requested to represent any of the employees,
representatives or agents of the Company. There is no strike or other labor
dispute involving the Company pending, or to the best knowledge of the Company's
threatened, which could have a material adverse effect on the Company nor is the
Company aware of any labor organization activity involving its employees.
3.16 Brokers. No broker, investment banker, financial advisor or other
person or entity is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based on arrangements made by or on behalf of the Company,
other than to Xxx Xxxxxx, who shall be entitled to a payment from the Company of
5% of the Capital Contribution upon payment thereof, 4% of the second $1 million
of the Capital Contribution, etc.
3.18 Disclosure. Neither this Agreement nor any certificates, instruments
or other documents delivered or to be delivered by the Company or its
representatives to Liberty and its representatives in connection with this
Agreement or the transactions contemplated hereby, contains any untrue statement
of a material fact or omits to state a material fact required to be contained
herein or therein or necessary in order to make the statements herein or
therein, in light of the circumstances in which they were made, not misleading
other than where such untrue statement or omission would not have a material
adverse effect on the business, assets, operations, prospects or financial or
other condition of the Company. The Company has fully provided Liberty with all
information requested by them and all other information which the Company
believes is reasonably necessary to enable Liberty to decide whether or not to
purchase the interests in the Company.
3.19 Spidermaze. The Company was initially incorporated as a New York
corporation under the name "Xxxxxxxxxx.xxx, Inc." ("Spidermaze"). All the issued
and outstanding shares of Spidermaze have been duly converted into the issued
and outstanding membership interests of the Company prior to the date hereof. By
virtue of the merger of Spidermaze and the Company which occurred on January 24,
2000, all the assets, rights, liabilities and obligations of Spidermaze became
the assets, rights, liabilities and obligations of the Company. All references
in this Article III shall automatically be deemed to include Spidermaze, the
predecessor-in-interest to the Company. Accordingly, all the representations and
warranties contained herein shall be true, correct and accurate with respect to
Spidermaze.
ARTICLE IV
CONDITIONS TO CLOSING
4.1 Conditions to the Obligation of Liberty to Close. The obligation of
Liberty to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Closing Date of each of the
following conditions, any one or more of which may be waived by both Liberty:
(a) Accuracy of Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true and accurate
in all material respects on and as of the Closing Date, with the same force and
effect as if made on the Closing Date.
(b) Performance of Covenants. The Company shall have performed and
complied in all respects with all covenants, obligations and agreements to be
performed or complied with by the Company on or before the Closing Date pursuant
to this Agreement, including, but not limited to, the delivery of the documents
indicated in Section 1.3(b).
(c) Consents. All required consents, approvals, permits, orders and
authorizations of, and any filings, registrations or qualifications required
with, any governmental agency or other person, with respect to the transactions
contemplated by this Agreement, including without limitation, the approval of
the Board of Directors of Liberty and the adoption of the Operating Agreement,
and shall be in full force and effect.
(d) No Proceedings or Litigation. No provision of any applicable law,
statute, rule, regulation or ordinance and no judgment, injunction, order or
decree applicable to the Company shall prohibit the consummation of the
transactions contemplated by this Agreement in accordance with its terms.
(e) Proceedings and Documents. All corporate and other proceedings and actions
taken in connection with the transactions contemplated by this Agreement and
all certificates, opinions, agreements, instruments and documents mentioned
herein or necessary for the consummation of the transaction contemplated
hereby, including, without limitation, the terms and provisions of the
Operating Agreement and the Schedules provided herein, shall be satisfactory in
form and substance to Liberty and its counsel.
(f) Due Diligence Investigation. Liberty shall have completed its
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due diligence investigation of the Company, its operations, business, and any
other matters, to its sole and absolute discretion.
4.2 Conditions to the Obligation of the Company to Close. The obligation
of the Company to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment, at or prior to the Closing Date of each of
the following conditions, any one or more of which may be waived by the Company:
(a) Accuracy of Representations and Warranties. The representations and
warranties of Liberty contained in this Agreement shall be true and accurate in
all material respects on and as of the Closing Date, with the same force and
effect as if made on the Closing Date.
(b) Performance of Covenants. Liberty shall have performed and complied in
all respects with all covenants, obligations and agreements to be performed or
complied with by it on or before the Closing Date pursuant to this Agreement.
(c) Consents. All required consents, approvals, permits, orders and
authorizations of, and any filings, registrations or qualifications required
with, any governmental agency or other person, with respect to the transactions
contemplated by this Agreement shall have been obtained by Liberty and shall be
in full force and effect.
(d) No Proceedings or Litigation. No provision of any applicable law,
statute, rule, regulation or ordinance and no judgment, injunction, order or
decree applicable to Liberty shall prohibit the consummation of the transactions
contemplated by this Agreement in accordance with its terms.
(e) Proceedings and Documents. All corporate and other proceedings and
actions taken in connection with the transactions contemplated by this Agreement
and all certificates, opinions, agreements, instruments and documents mentioned
herein or necessary for the consummation of the transaction contemplated hereby
shall be satisfactory in form and substance to the Company and its counsel.
ARTICLE V
INDEMNIFICATION
5.1 Indemnification by Liberty. The Company and its members, manager, officers,
employees, agents, affiliates, consultants, representatives and their
respective successors and assigns shall be indemnified and held harmless by
Liberty at all times from and after the Closing Date against and in respect of
damages, losses, liabilities, taxes and deficiencies and penalties and interest
thereon and costs and expenses (collectively, "Damages") resulting from any
misrepresentation, breach of warranty or nonfulfillment of any covenant or
agreement on the part of Liberty, and actions, suits, proceedings, claims,
demands, assessments, judgments, costs, losses, liabilities and reasonable
attorney's fees and other expenses incident to the foregoing.
5.2 Indemnification by the Company. Liberty and its respective members,
managers, directors, officers, stockholders, employees, agents, affiliates,
consultants, representatives and their respective successors and assigns shall
be indemnified and held harmless by the Company, MV and DC at all times from and
after the Closing Date against and in respect of Damages resulting from any
misrepresentation, breach of warranty or nonfulfillment of any covenant or
agreement on the part of the Company, and actions, suits, proceedings, claims,
demands, assessments, judgments, costs, losses, liabilities and reasonable
attorney's fees and other expenses incident to any of the foregoing.
5.3 Limitations. Notwithstanding any provision contained in this Agreement
to the contrary, (i) Liberty shall not have any liability for indemnification
hereunder, and the Company shall not make any claims against Liberty for
breaches of representations, warranties, covenants and agreements under this
Agreement, until the dollar amount of all Damages under such claims shall equal
Fifty Thousand Dollars ($50,000) (the "Deductible Amount"); and if claims for
Damages exceed the Deductible Amount, Liberty shall only be liable for such
claims for Damages in excess of the Deductible Amount; and (ii) the aggregate
liability for any and all breaches of any representations, warranties, covenants
or agreements claimed or imposed against Liberty shall not exceed the respective
Contribution Amount paid by Liberty.
5.4 Notice to the Indemnitor. As a condition precedent to any
indemnification under this Article V, promptly after the assertion of any claim
or action by a third party or occurrence of any event which may give rise to a
claim or action for indemnification from an indemnitor (the "Indemnitor") under
this Article V, an indemnified party (the "Indemnified Party") shall notify the
Indemnitor in writing of such claim or action, and in such writing the
Indemnified Party shall describe in reasonable detail the facts and
circumstances with respect to the subject matter of such claim or action and the
basis on which indemnification is sought pursuant to this Agreement. The failure
to provide such notice shall not release the Indemnitor from any of its
obligations under this Article V except to the extent the Indemnitor is
materially prejudiced by such failure and shall not relieve the Indemnitor from
any obligation that it may have to an Indemnified Party otherwise than under
this Article V.
5.5 Rights of Parties to Settle or Defend. The Indemnitor shall have the
right to direct, through counsel of its own choosing, the defense or settlement
of any claim or proceeding at its own expense pursuant to which the Indemnified
Party is seeking indemnification pursuant to this Agreement. If the Indemnitor
elects to assume the defense of any such claim or proceeding, the Indemnified
Party may participate in such defense, but in such case the expenses of the
Indemnified Party shall be paid by the Indemnified Party. The Indemnified Party
shall provide the Indemnitor with access to its records and personnel relating
to any such claim, assertion, event or proceeding during normal business hours
and shall otherwise cooperate with the Indemnitor in the defense or settlement
thereof. If the Indemnitor elects to direct the defense of any such claim or
proceeding, the Indemnified Party shall not pay, or permit to be paid, any part
of any claim or demand arising from such asserted liability, unless the
Indemnitor consents in writing to such payment or unless the Indemnitor, subject
to the last sentence of this Section 5.5, withdraws from the defense of such
asserted liability, or unless a final judgment from which no appeal may be taken
by or on behalf of the Indemnitor is entered against the Indemnified Party for
such liability. The Indemnitor, if it shall assume the defense or settlement of
such claim, shall not effect any settlement of such claim which does not provide
for a complete release of liability of the Indemnified Party without the written
consent of the Indemnified Party, which consent shall not be unreasonably
withheld or delayed. If the Indemnitor shall fail to defend, or if, after
commencing or undertaking any such defense, the Indemnitor fails to prosecute or
withdraws from such defense, the Indemnified Party shall have the right to
undertake the defense or settlement thereof, at the Indemnitor's expense.
5.6 Costs of Disputed Indemnification Obligations. In the event of a
dispute between an Indemnitor and an Indemnified Party over the obligation to
provide indemnification for a specific claim, and it is finally determined by a
court of competent jurisdiction (or other resolution agreed to in writing by the
Indemnitor and Indemnified Party) that (i) the Indemnitor was obligated to
provide such indemnification, then the Indemnitor shall bear all costs and
expenses, including reasonable attorney's fees, of resolving such dispute or
(ii) the Indemnitor was not obligated to provide such indemnification, then the
Indemnified Party shall bear all costs and expenses, including reasonable
attorney's fees, of resolving such dispute.
ARTICLE VI
MISCELLANEOUS
6.1 Terms of the Preferred Interests. The rights, preferences and
designations of the Preferred Interests to be contained in the Operating
Agreement shall be those rights, preferences and designations which are set
forth in the LOI.
6.2 Use of Proceeds. The Company agrees to use the Contribution Amount for
working capital and its operations, advertising and market penetration of its
products, all in accordance with the provisions of the Operating Agreement.
6.3 Amendment. This Agreement may not be amended except by an instrument
in writing signed on behalf of the party against whom such amendment is sought
to be enforced.
6.4 Fees and Expenses. Each party hereto will pay its own expenses
incident to preparing, entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby, provided, however, that
all reasonable and customary fees, due diligence expenses and the expenses of
Xxxxxxx, Xxxxxxxxx LLP, legal counsel to Liberty, shall be paid by the Company
at the Closing, up to a maximum of all such fees and expenses in an amount not
to exceed thirty-five thousand dollars ($15,000).
6.5 Extension; Waiver. Any agreement on the part of a party to waive any
provision of this Agreement, or to extend the time for any performance
hereunder, will be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise will not constitute a waiver of
such rights.
6.6 Entire Agreement; Third-Party Beneficiaries. Other than as provided in
the LOI, this Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to such matters. The members of the Company will be third party
beneficiaries of any rights or remedies provided by this Agreement. Except as
otherwise provided in this Section 6.6, this Agreement is not intended to confer
upon any person other than the parties hereto any rights or remedies.
6.7 Governing Law. This Agreement will be governed by, and construed in
accordance with, the laws of the State of New York, regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.
6.8 Notices. Any notice required to be given hereunder will be sufficient
if in writing and sent by facsimile transmission and by courier service (with
proof of service), hand delivery or certified or registered mail (return receipt
requested and first-class postage prepaid), addressed as follows:
--------------------------------------------------------------
If to Company, MV or DC:
AskTheRobot, LLC
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
--------------------------------------------------------------
If to Liberty:
Liberty Group Services, LLC
c/o Liberty Group Holdings, Inc.
00 00xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxx, President
Fax No.: 000-000-0000
with a copy to:
Xxxxxxx, Xxxxxxxxx LLP
Xxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxx, Esq.
Fax No.: 000-000-0000
--------------------------------------------------------------
or to such other address as any party may specify by written notice so given,
and such notice will be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
6.9 Further Assurances. From and after the date of this Agreement, upon
the request of Liberty or the Company, the other party or parties will execute
and deliver such instruments, documents and other writings as may be reasonably
necessary or desirable to confirm and carry out and to effectuate fully the
intent and purposes of this Agreement.
6.10 Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
6.11 Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same instrument and
will become effective when one or more counterparts have been signed by each
party and delivered to the other parties.
6.12 Headings. The descriptive headings contained herein are for
convenience and reference only and will not affect in any way the meaning or
interpretation of this Agreement.
[Remainder of Page Intentionally Omitted; Signature Pages to Follow]
IN WITNESS WHEREOF, each of the parties hereto has caused this
Subscription Agreement to be signed as of the day and year first written above.
ASKTHEROBOT, LLC
By:___________________________
Name: Xxxxxxx Xxxxx
By:___________________________
Name: Xxxxxxx Xxxxxx
LIBERTY GROUP SERVICES, LLC
By: Liberty Group Holdings, Inc.,
its Manager
By: ________________________
Name: Xxxxx Xxxx
Title: President
