ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the AAgreement@) is entered into as of
April __, 2000 by and among NATIONAL SWEEPSTAKES SHOW, INC., a Delaware
corporation (ABuyer@), and SWEEPSTAKES ENTERTAINMENT CORPORATION, a Delaware
corporation (ASeller@), and Xxxxxxxx X.
Xxxxxx , the stockholder owning 100% of the capital stock of Seller (the
"Shareholder")
WHEREAS, Seller is the owner of The National Sweepstakes Show, which is
an Internet talk show, all rights to the book The History of Sweepstakes, an
electronic based newsletter known as Sweepstakes News, and other related assets,
which are generally described in this Agreement and on Schedule 1.1(a) attached
hereto and incorporated herein (the AAcquired Assets@);
WHEREAS, Buyer desires to purchase the Acquired Assets, and Seller
desires to sell such Acquired Assets, under the terms and conditions of this
Agreement;
NOW, THEREFORE, in consideration of the premises and mutual promises
and covenants herein contained, the Parties hereby stipulate and agree as
follows:
SECTION 1
PURCHASE AND SALE OF ACQUIRED ASSETS
1.1 Acquired Assets. On the Closing Date, in accordance with this
Agreement, Seller shall sell, transfer, assign and convey, and Buyer will
purchase, the Acquired Assets, such Acquired Assets to include, without
limitation:
-1-
(A) Any and all names, logos, slogans, colors, common law rights, state
registrations, federal registrations, whether owned or not, on primary or
secondary registrations, in the United States and worldwide, of, for, or
relating to the following: The National Sweepstakes Show; Sweepstakes News;
the book The History of Sweepstakes News; all National
----------------------------- ----------------
------------------------------- -------- Sweepstakes Show radio tapes
(which includes at least 38 tapes); and each and all of those Acquired
Assets ----------------- specifically described on Schedule 1.1(a) attached
hereto and incorporated herein by reference; together with all copyright
powers, rights, and benefits relating to the foregoing, including, but not
limited to, the right to produce, sell, modify, distribute, license, and
copy in full or in part those items described above, including without
limitation, all vendor and distribution agreements (including, without
limitation, all vendor agreements with Xxxxxx Book Company and with Xxxxx &
Xxxxxx) and all ISBN numbers; all related trademarks, trade names, service
marks, logos, marketing concepts, and trade dress of the foregoing; all
rights, including copyright and other intellectual property rights, in the
foregoing and in all advertising, instructional, or technical documents,
whether printed or computerized, relating to the foregoing; legal title and
ownership or assignment of any and all Internet properties, including, but
not limited to, domain names, domain addresses, unique URL=s, and service
agreements relating to the foregoing, including, without limitation, all
rights in and to the web sites xxx.xxxxxxxxxxxxxxx.xxx and
xxx.xxxxxxxxxxxxxxxxxxxxxxx.xxx; all telephone, facsimile or telecopy
numbers previously ----------------------- -------------------------------
and currently used in connection with the Acquired Assets; any and all
inventions, conceptions, improvements, enhancements, derivatives, or
modifications to any of the foregoing made by Seller or its agents within
six (6) months from and after Closing; all rights to enforce and/or
recover, for infringement or other legal claims, past, present, or future,
against any third party, and any and all rights to apply for, acquire, or
retain the benefit of any patentable subject matter derived from or
relating to the foregoing.
(B) To the extent transferable by the Seller, all federal, state and local
permits, authorizations, certificates, approvals, registrations, variances,
exemptions, franchises, rights of other kind and character which are
required by law with respect to the operations and business of the Acquired
Assets as it is now being conducted;
(C) All agreements, contracts, understandings, plans, obligations, commitments
and other documents which are material to and/or utilized by the Seller in
its operations and business of the Acquired Assets including, but not
limited to, all of those listed and described on the attached Schedule
1.1(c) (the "Acquired Contracts");
(D) All backlog of orders for sponsorship fees, book orders, direct response,
subscriptions, and orders for the products or services offered by the
Acquired Assets or sold by the Seller which are (i) accepted by the Seller
in the ordinary course of business prior to the Closing or (ii) listed on
the attached Schedule 1.1(d) and, in each case, not invoiced or shipped or
cancelled prior to the Closing (the "Backlog Orders"), and all accounts
receivable, notes receivable and other receivables, as well as all other
rights of the Seller to payment for sponsorship fees, book orders, direct
response, subscriptions, and orders for the products or services offered by
the Acquired Assets, as of March 31, 2000, including without limitation
those which are not evidenced by instruments or chattel paper, whether or
not they have been earned by performance or have been written off or
reserved against as a bad debt or doubtful account in any financial
statements of the Seller; together with all instruments and all documents
of title representing any of the foregoing, and all rights, title, security
and guarantees in favor of the Seller with respect to any of the foregoing,
including without limitation, any right of stoppage in transit (the
"Receivables");
(E) All right, title and interest of the Seller in and to all deposits, prepaid
expenses (including without limitation prepaid insurance, maintenance and
rent, and all security deposits underlying leases), and other current
assets associated with the Acquired Assets;
(F) All insurance proceeds and insurance claims of the Seller, relating to all
or any part of the Acquired Assets and, to the extent transferable by the
Seller, the benefit of and the right to enforce the covenants and
warranties, if any, which the Seller is entitled to enforce with respect to
the Acquired Assets;
(G) All books, records, papers and instruments of whatever nature and wherever
located which (i) relate to and/or are utilized in the operations or
business of the Acquired Assets, or (ii) are required or necessary in order
for the Buyer to conduct the operations and business of the Acquired Assets
from and after the Closing in the manner in which it is presently being
conducted, including, without limitation, accounting and financial records,
maintenance and production records, operations and management reports,
personnel and labor relations records, customer lists, sales records and
other customer data relating to the operations and business of the Acquired
Assets;
(H) All other or additional privileges, rights, claims, causes of action,
interests, properties, options and assets associated with the Acquired
Assets of every kind and description and wherever located which are used or
intended for use in connection with, or which are necessary to the
continued conduct of, the operations and business of the Acquired Assets as
presently being conducted.
1.2 Excluded Assets. Buyer is not acquiring, and Seller is not
selling, those assets set forth on Schedule 1.2 (the "Excluded Assets").
1.3 Purchase Price. In consideration of the sale, assignment, and
delivery of the Acquired Assets, the Buyer shall pay to Seller
and Seller shall receive, subject to the terms of this
Agreement, the following consideration:
(A) the transfer by Buyer to Seller of 150,000 shares of Common
Stock, $.01 par value, of JV Web, Inc. (The AJV Web Common
Stock@), which 150,000 shares have previously been transferred
to Seller as a deposit and which shall be applied to the
Purchase Price;
(B) the transfer by Buyer to Seller of 500,000 shares of JV Web
Common Stock (150,000 of which Seller is directing Purchaser
to issue directly to Xxxx Xxxxxx in payment for services
provided by Xxxx Xxxxxx to Seller). At Closing, the Buyer
shall provide to Seller and Xxxxxx, respectively, a copy of a
letter from Buyer to American Stock Transfer & Trust Company
requesting the transfer of such shares to Seller pursuant to
Registration Statement No. 333-43379. The certificates
representing such shares shall be delivered to Seller and to
Xxxx Xxxxxx within five (5) days of the execution of this
Agreement;
(C) subject to the terms and conditions set forth below, the
transfer by Buyer to Seller of 800,000 shares of JV Web Common
Stock, such shares to be delivered at Closing to American
Stock Transfer and Trust, as Escrow Agent, pursuant to that
certain Escrow Agreement attached hereto as Exhibit AA@, such
shares to be released from escrow as follows and as more fully
described in the Escrow Agreement:
(1) 250,000 shares shall be released upon the occurrence
of all of the following: (i) the websites
xxx.xxxxxxxxxxxxxxx.xxx and
xxx.xxxxxxxxxxxxxxxxxxxxxxx.xxx become fully
functional and operational, such that the business of
the Acquired Assets is capable of generating revenues
; (ii) the radio program The National Sweepstakes
becomes fully functional and operational and capable
of generating revenues with no legal impediments
prohibiting the operations of such program ; and
(iii) all trademark copyright, and patent filings and
registrations relating to the Acquired Assets have
been made and declared effective by all applicable
governmental and regulatory authorities;
(2) 250,000 shares shall be released to Seller and 50,000
shares shall be released to Xxxxxx when the business
of the Acquired Assets achieves $1,000,000 in
annualized Revenues for one full calendar quarter;
(3) 250,000 shares shall be released when the business of
the Acquired Assets achieves $2,000,000 in annualized
Revenues for one full calendar quarter. For purposes
of this Agreement, ARevenues@ shall mean and refer to
net invoiced sales, which shall be the net delivered
price from sales (less any off invoice allowances,
free goods, or discounts off the invoice) sales
receipts, net of sales tax and shipping costs, net of
all customary allowances and discounts, including but
not limited to Afree goods,@ Abill backs,@ and Aoff
invoice allowances,@ and net of a resonable reserve
for bad debts as determined by the Buyer in good
faith in accordance with GAAP;
(D) the Buyer shall also issue, as part of the Purchase Price,
1,000,000 shares of Common Stock, $.01 par value, of Buyer,
which shares shall be subject to that certain Shareholders=
Agreement attached hereto as Exhibit AB@ and incorporated
herein by reference. 400,000 of such shares of Buyer shall be
placed at Closing into escrow with the Escrow Agent to serve
as a fund from which claims for indemnification may be made
under Section 8 hereof. The parties agree that such 400,000
shares of Buyer shall be released from escrow two (2) years
from and after the Closing Date, provided such shares are not
subject to a claim for indemnification;
(E) For purposes of this Agreement and for purposes of determining
the value of claims for indemnification made against the
shares placed into the escrow account, the parties agree
that the value of each share of JV Web Common Stock placed
into escrow and the value of each share of Buyer Common Stock
placed into escrow shall be the greater of: (i)$.75 per share;
and (ii) the average daily closing price of the JV Web
Common Stock in the primary market or exchange on which the
JV Web Common Stock is then publicly traded during the thirty
day period immediately prior to the date any such claim for
indemnification is made against the Seller. The parties
further agree that in the event there has been no claim for
indemnification against the 400,000 shares of Buyer Common
Stock placed into escrow by the expiration of two (2) years
from and after the Closing Date, then such 400,000 shares of
Buyer Common Stock shall be released out of escrow to Seller.
1.4 Taxes. Buyer shall not be responsible for a tax of any kind
related to any period prior to the Closing Date or arising
by virtue of this transaction.
1.5 Assumed Liabilities. Buyer shall not assume or be bound by any
duties, responsibilities, obligations or liabilities, known or unknown,
contingent or otherwise, of Seller of any kind whatsoever unless expressly
assumed hereunder. Buyer shall assume or agree to pay only the following debts,
liabilities and obligations of the Seller, and none other: the Acquired
Contracts. In addition, Buyer is transferring to Seller 15,000 shares of JV Web
Common Stock in connection with this transaction to pay for Seller=s closing
costs (provided, however, that Buyer by doing so shall not be further obligated
to pay any of Seller=s closing costs).
1.6 Liabilities Not Assumed. Except as otherwise expressly provided in
Section 1.5, Buyer does not assume, agree to pay, perform or discharge or
otherwise have any responsibility for any liability or obligation of Seller,
fixed or contingent, and whether arising or to be performed prior to, on or
after the Closing. Without in any way limiting the generality of the foregoing,
Buyer does not assume, and Seller shall pay, perform and discharge:
(A) any liability or obligation relating to the Excluded Assets;
(B) any liability or obligation resulting from or arising out of
claims based on the service, work performed, product
manufactured or distributed, in whole or in part, by Seller,
arising out of any act, omission, event, occurrence or
circumstance that existed on or before Closing, or relating to
any service, work performed or product manufactured before
Closing;
(C) any federal, state, local or foreign income, sales, real or
personal property or other taxes, assessments, fees, levies,
imposts, duties, deductions or other charges of any nature
whatsoever (including without limitation interest and
penalties) imposed by any law, rule or regulation
(collectively, the "Taxes") which are attributable or related
to the Acquired Assets or the operations and business of the
Seller for any periods ending on or before the Closing, or
which may be applicable because of the Seller's sale of its
business or any of the Acquired Assets to the Buyer
(collectively, the "Tax Obligations");
(D) any liability based on any obligations owing to or incurred
prior to the Closing Date to any of Seller's employees (which
term when used in this Section 1.6 shall include any such
employee's dependents, heirs, successors and assigns), whether
or not working, retired, laid off or deceased as of the
Closing Date, including but not limited to employee-employer
discrimination claims, any worker's compensation laws of any
state, any employment security laws or similar laws of any
state;
(E) any other liability or obligation except to the extent expressly
set forth in Section 1.5.
1.7 Procedures before Closing. The parties shall cooperate fully in an
orderly transition of the Acquired Assets and shall establish mutually agreeable
procedures: (i) to appropriately effect the transfer of the Acquired Assets
(including the Acquired Contracts) and the assumption of the assumed liabilities
specifically assumed pursuant to Section 1.5; and (ii) to allocate costs,
expenses, and revenues as of the Closing Date.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF SEC AND SHAREHOLDER
2.1 General. Seller and the Shareholder, jointly and severally,
represent and warrant to Buyer that the representations and warranties set out
in this Section 2 are true and correct as of the date of this Agreement and will
be true and correct through the Closing as if made on and as of the Closing
Date, and shall survive the Closing Date.
2.2 Corporate Standing; Subsidiaries. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation with the power to own its respective assets
and carry on its business as presently conducted. Seller is duly qualified to do
business and is in good standing in each state or other jurisdiction where such
qualification is required. Seller does not own, directly or indirectly, any
interest or investment (whether equity or debt) in any corporation, partnership,
business, trust or other entity.
2.3 Authority. Seller and Shareholder has the power and authority to
execute, deliver and perform this Agreement and all other instruments and
documents required or contemplated to be executed, delivered and performed by it
under this Agreement. Such execution, delivery and performance (i) have been
duly authorized by all necessary action of Seller's Board of Directors and
shareholders, (ii) do not and will not require the approval of any Person whose
approval has not been obtained (except normal customary approval of parties to
contracts, leases, etc., if any, that are to be assumed by Buyer), (iii) do not
and will not contravene the Certificate of Incorporation or Bylaws of Seller,
(iv) except as disclosed on Schedule 2.3, do not and will not contravene,
conflict with, result in a violation (or any occurrence which by notice or
passage of time or both would constitute a violation) of, or entitle any party
to terminate, accelerate or declare a default with respect to, any contract,
mortgage, franchise, deed of trust, lease, license or agreement of Seller, or
any rule, regulation, order, writ or decree applicable to Seller, (v) do not and
will not result in the creation or imposition of any lien, charge, encumbrance
or claim of any nature whatsoever upon any of the Acquired Assets, and (vi) will
not result in the violation of any Laws.
2.4 Valid and Binding Obligations. This Agreement and each of the
documents and instruments to be executed by Seller and delivered to Buyer
pursuant to this Agreement when so delivered will constitute their respective
legal, valid and binding obligations enforceable in accordance with each such
Agreement's document's and instrument's respective terms.
2.5 Income Statements. Seller shall deliver such income or revenue
statements relating to the Acquired Assets as are available and such shall be
attached hereto as Schedule 2.5. Seller represents and warrants that the
Acquired Assets have generated at least $600,000 in Revenues for the calendar
year 1995.
2.6 Liabilities. Schedule 2.6 is a list, as of March 31, 2000, of all
liabilities associated with the Acquired Assets or necessary to operate the
Acquired Assets as currently conducted, of any nature, character and
description, whether accrued, absolute, contingent, unliquidated, or otherwise,
whether due or to become due, together with, in the case of those liabilities
which are not fixed, an estimate of the maximum amount which may be payable.
Except as set forth on Schedule 2.6, the Seller has not and will not have any
liabilities or obligations of any nature, whether accrued, absolute, contingent
or otherwise, associated with the Acquired Assets or necessary to operate the
Acquired Assets as currently conducted. Except as set forth in Schedule 2.6,
there is no oral or written guarantee, assurance or other credit maintenance
arrangement by the Seller of any obligation of any person or entity for the
borrowing of money, for the payment of any monetary obligation of any nature
whatsoever (whether due or to become due), or for the performance of any
obligation of any nature whatsoever or otherwise, as it relates to the operation
of the Acquired Assets.
2.7 Patents, Trademarks, Copyrights, etc.
(a) "Proprietary Rights" shall mean all of the items owned by or
licensed to the Seller for the Acquired Assets, and any and
all corresponding rights that, now or prior to Closing, may
be secured by the Seller throughout the world: (i) patents,
patent applications, patent disclosures and inventions
(whether or not patentable and whether or not reduced to
practice) and any reissue, continuation, continuation-in-
part, division, revision, extension or reexamination
thereof; (ii) trademarks, service marks, trade dress, logos,
trade names and corporate names together with all goodwill
associated therewith, copyrights registered or unregistered
and copyrightable works and mask works; (iii) all
registrations, applications and renewals for any of the
foregoing; (iv) trade secrets and confidential information
(including, without limitation, ideas, formulae, compositions,
know-how, manufacturing and production processes and
techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data,
financial, business and marketing plans, and customer and
supplier lists and related information); (v) computer software
and software systems (including, without limitation, data,
databases and related documentation); (vi) all Internet
properties, including, but not limited to, domain names,
addresses, unique URL's and service agreements; (vii) other
proprietary rights; (viii) licenses or other agreements to or
from third parties regarding the foregoing; and (ix) all
copies and tangible embodiments of the foregoing (in whatever
form or medium), in each case including, without limitation,
the items set forth on Schedule 1.1(a).
(b) Schedule 1.1(a) sets forth a complete and correct list of: (i)
all patented or registered Proprietary Rights and all pending
patent applications or other applications for registration of
Proprietary rights owned, filed or used by the Seller, (ii)
all trade names and unregistered trademarks used by the
Seller, (iii) all unregistered copyrights, mask works, and
computer software owned or used by the Seller, and (iv) all
licenses or similar agreements or arrangements to which the
Seller is a party either as licensee or licensor for the
Proprietary Rights.
(c) Except as set forth in Schedule 1.1(a), (i) the Seller owns and possesses
all right, title and interest in and to, or has a valid and enforceable
right to use, each of the Proprietary Rights free and clear of all liens,
and no claim by any third party contesting the validity, enforceability,
use or ownership of any of the Proprietary Rights has been made, is
currently outstanding or to Sellers= knowledge is threatened, (ii) the
Proprietary Rights comprise all proprietary rights necessary for the
operation of the business of the Seller as currently conducted, and as
currently proposed to be conducted, (iii) the loss or expiration of any
Proprietary Right or related group of Proprietary Rights has not and would
not result in a material adverse affect on the Seller, and no such loss or
expiration is threatened or pending, (iv) the Seller has not received any
notices of, nor is the Seller aware of any facts which indicate a
likelihood of, any infringement or misappropriation by, or conflict with,
any third party with respect to any Proprietary Right including, without
limitation, any demand or request that the Seller license rights from a
third party, (v) the Seller has not infringed, misappropriated or otherwise
conflicted with any proprietary rights of any third parties and the Sellers
are not aware of any infringement, misappropriation or conflict which shall
occur as a result of the continued operation of the Seller=s business as
currently conducted or as currently proposed to be conducted, and (vi) the
Proprietary Rights owned or licensed to the Seller have not been infringed,
misappropriated or conflicted by any third party. In addition, Seller has
and is passing on to Buyer all rights to use the name and trademark
Sweepstakes News for radio and television use and the name and trademark
National Sweepstakes Show for newspaper and magazine use. In addition,
Seller represents that Buyer may use the National Sweepstakes Show radio
tapes, the newspaper supplements for Sweepstakes News and all articles
written by Seller or on its behalf as a guide for further use and Buyer can
copy the format of all of the foregoing. The Seller and Shareholder further
represent and warrant that the trademarks Sweepstakes News and National
Sweepstakes Show are not subject to bankruptcy court proceedings involving
Enternet Entertainment or otherwise subject to any other bankruptcy
proceedings.
(d) All of the Proprietary Rights are or shall be owned by, or
licensed to, the Seller at the time of the Closing. The
transactions contemplated by this Agreement shall have no
adverse effect on the Seller=s right, title and interest in
and to any of the Proprietary Rights. The Seller has not
disclosed any of their trade secrets or confidential
information existing at the date of this Agreement to any
third party other than pursuant to a written confidentiality
agreement. The Seller has taken all other commercially
reasonable actions to maintain and protect the Proprietary
Rights and shall continue to maintain and protect those rights
prior to the Closing so as to not adversely affect the
validity or enforcement of such Proprietary Rights.
(e) At the time of Closing, Purchaser will be entitled to all
income, royalties, damages and payments relating to any of the
Proprietary Rights due or payable to the Seller at the Closing
or thereafter, including, without limitation, damages and
payments for past, present or future infringements or
misappropriations of any Proprietary Rights, and the right to
xxx and recover for past infringements or misappropriations of
any Proprietary Rights.
2.8 Material Contracts. Schedule 2.8 is an accurate list, as of the
date hereof, of all contracts, agreements, and understandings to which the
Seller is a party or by which it or any of its property is bound with respect to
the Acquired Assets (each a AMaterial Agreement@). Schedule 2.8 does not include
those insurance policies listed on Schedule 2.11 or those employment agreements
listed on Schedule 2.12, but does include all other contracts, agreements, and
understandings to which the Seller is a party including, but not limited to,
joint venture or partnership agreements, contracts with municipalities and labor
organizations, loan agreements, lease agreements, pension agreements, bonds,
mortgages, liens, pledges, guaranties or other security agreements,
noncompetition agreements, license or royalty agreements, agreements with
respect to investing funds, contracts relating to the distribution, marketing or
sales of its services or products, and warranty agreements with respect to its
services or products, and Sellers have delivered true copies of such agreements
to Purchaser. Except to the extent set forth on Schedule 2.8, the Seller and all
other respective parties thereto have complied with all material commitments and
obligations under all such contracts and agreements and there are not any
pending unresolved claims of which the Seller has received notice.
2.9 Material Customers. Schedule 2.9 is a true and complete list of all
of the sponsorship fees, direct response fees, book sales orders, radio show
sponsorships, subscribers and other customers of the Seller associated with the
Acquired Assets during the 12-month period ended on March 31, 2000, each of
which accounts for the respective dollar amount of sales set forth opposite
their respective names on Schedule 2.9. Except as set forth on Schedule 2.9,
none of such customers have been lost and the Seller has not received any notice
that there will be any loss of any of such customers or any substantial decrease
in sales to any of such customers.
2.10 Title and Condition of Property. The Seller has good and
marketable title to the Acquired Assets, subject to no mortgage, pledge, lien,
conditional sales agreement, encumbrance or charge, except for liens reflected
on Schedule 2.10 as securing specified liabilities (with respect to which no
default exists) and except for statutory liens for taxes not yet due or
delinquent. There are no claims against the Seller and Sellers are not aware of
any facts or circumstances which could reasonably be expected to lead to any
claims, which would if determined adversely to the Seller result in a lien
against any of the Acquired Assets.
2.11 Insurance. Schedule 2.11 is a true and complete list, as of the
date hereof, of all insurance policies carried by the Seller on the Acquired
Assets (with a notation as to the status of premiums paid or payable thereon,
specifying the insurer, the amount of coverage, the deductible amount, the type
of insurance, the policy number, the cash surrender value, the owner, the
beneficiary, the loss payee, and all pending claims thereunder). The Seller has
not been refused any insurance by any insurance carrier to which it has applied
for insurance during the past three years because of unacceptable risk.
2.12 Employee Arrangements. Schedule 2.12 is a true and complete list
showing all employees and independent contractors of Seller that are necessary
for the operation of the Acquired Assets and their rate of compensation (and the
portions thereof attributable to salary, commissions and bonuses, respectively)
as of the date of this Agreement, and showing all employment contracts and
compensation arrangements and benefit plans and classifications of employees
covered thereby as of the date of this Agreement. Seller has provided Purchaser
true and complete copies of all of the Seller=s employment contracts and
compensation arrangements with its employees, and all non-compete agreements
with employees, and a copy of the Seller=s current major medical and employee
health plans. Seller has provided Purchaser true and complete copies of all such
contracts with such independent contractors. Except as disclosed in Schedule
2.12, there are no controversies pending or threatened between the Seller and
any employee, former employee or job applicant of the Seller or any association
or any group of current or former employees of the Seller, and the general
relationship between the Seller and their employees is good. Seller has no
reason to believe that any salesman or other key employee is currently intending
to leave or will leave upon consummation of this Agreement. Except as set forth
on Schedule 2.12, the Seller is not a party to and has not been a party to any
employment agreements, collective bargaining and labor agreements relating to
the operation of the Acquired Assets. The Seller has complied with all laws
applicable to it relating to the employment of labor, including any provisions
relating to wages, hours, collective bargaining and the payment of social
security and other taxes.
2.13 Bank or Other Accounts. Schedule 2.13 is a list showing as of the
date of this Agreement (i) the name of each institution in which the Seller has
funds, certificates representing deposits, accounts, safe deposit boxes or
securities, (ii) the names in which the funds, certificates, boxes or securities
are held and (iii) the names of each person authorized to draw thereon or have
access thereto.
2.14 Tax Matters. Except as specifically disclosed on Schedule 2.14,
the Seller has duly and timely filed all income, excise, corporate, franchise,
property, sales, payroll, withholding and other tax returns and reports required
to be filed by it as of the date hereof by the United States of America or any
state or any political subdivision thereof and has paid or established adequate
reserves for all taxes (including penalties and interest) which have or may
become due pursuant to such returns and any assessments which have been received
by it or otherwise. All such tax returns or reports fairly reflect the taxes of
the Seller for the periods covered thereby. The Seller is not delinquent in the
payment of any tax, assessment or governmental charge, there is no tax
deficiency or delinquency asserted against the Seller and there is no unpaid
assessment, proposal for additional taxes, deficiency or delinquency in the
payment of any of the taxes of the Seller that could be asserted by any taxing
authority, nor of any material violation of any federal, state, local or foreign
tax law. No Internal Revenue Service audit of the Seller is pending or to the
knowledge of the Seller threatened, and the results of any completed audits are
properly reflected in the Seller=s financial statements. The Seller has not
granted any extension to any taxing authority of the limitation period during
which any tax liability may be asserted. The Seller has committed no knowing or
willful violation of any federal, state, local or foreign tax laws. All monies
required to be withheld by the Seller from employees or collected from customers
for income taxes, social security and unemployment insurance taxes and sales,
excise and use taxes, and the portion of any such taxes to be paid by the Seller
to governmental agencies, have been collected or withheld and either paid to the
respective governmental agencies or set aside in accounts for such purpose, or
such monies have been approved, reserved against and entered upon the books of
the Seller. Except as set forth on Schedule 2.14, there are no disputes as to
taxes of any nature payable by the Seller. Sellers have delivered to Purchaser
on or before the date of this Agreement true and complete copies of all the
federal and state tax returns of the Seller for each of the years ended December
31, 1996, through December 31, 1998. The Seller is not and has not been subject
to any, (if any), local or foreign tax return requirements. Seller represents
and warrants that there are no tax liens or judgment liens on any of the
Acquired Assets or any Proprietary Rights of Seller.
2.15 No Defaults under Contracts. All contracts, agreements, plans,
leases, licenses, certificates, insurance policies, permits and franchise
agreements listed in any schedule provided to Purchaser hereunder are valid and
in full force and effect, except to the extent disclosed in any schedule hereto.
Except as set forth in Schedule 2.15, the Seller has not breached any material
provision of, nor is in default in any material respect under the terms of, any
such contract, agreement, lease, license, or permit, and the Seller is not in
default in any material respect as to its performance on any such contracts.
2.16 Litigation, Defaults under Laws, etc. Except as set forth in
Schedule 2.16, the Seller has complied with and is not in default under, any
law, rule, permit, regulation, ordinance, order, writ, injunction or court
decree applicable to it. Except as set forth in Schedule 2.16, the Seller is not
subject to any order, ruling, decree or judgment, having continuing effect, of
any court, arbitrator or governmental agency or instrumentality. Except as set
forth in Schedule 2.16, there are no claims, actions, suits, arbitrations,
investigations, disputes or other proceedings against the Seller, pending or
threatened; and Sellers have no knowledge of any factual basis existing that
could reasonably be expected to result in any such claim, action, suit,
arbitration, investigation, dispute or other proceeding.
2.17 No Consents Required. Except as set forth on Schedule 2.17, no
consents are required by the Seller in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
herein, or to avoid or prevent any acceleration of maturity or performance
under, or any default or breach of, or any material adverse effect with respect
to any indebtedness, contract, right, franchise, permit or other privilege to
which the Seller is a party or by which any of their assets are bound.
2.18 Brokers and Finders. Except for Xxxx Xxxxxx, the services for
which Seller is solely responsible and for which Seller is directing Purchaser
to issue 200,000 shares of JV Web Common Stock to Xxxx Xxxxxx at Closing, no
broker or finder has acted directly or indirectly for the Seller in connection
with this Agreement or the transactions contemplated hereby, and no other broker
or finder is entitled to any brokerage or finder's fee or other commission in
respect thereof based in any way on agreements, arrangements or understandings
made by or on behalf of the Seller, and if any broker or finder retained by
Seller attempts to make a claim for any such fees, Seller shall be solely
responsible.
2.19 Absence of Changes. Except as disclosed by Seller in this
Agreement or in any Schedule to this Agreement, since December 31, 1999, there
has been no material adverse change in the business, results of operations,
prospects, financial condition or liabilities (accrued, absolute, contingent or
otherwise), related to the Acquired Assets.
2.20 Product Warranties. There is no existing claim against or
liability of the Seller on account of product, service, or sales warranties
related to the Acquired Assets, and, the Seller has no knowledge of any basis
for any such claim on account of defective products heretofore manufactured,
licensed, sold or rented which is not fully covered by insurance.
2.21 Year 2000 Compliance. The Acquired Assets and the associated
business systems are Year 2000 Compliant. AYear 2000 Compliant@ means that the
information technology and all business, telecommunications, machinery,
equipment and operational systems (the ASystems@): (i) will correctly and
unambiguously process date information at all times, including as the year 2000
is approached and reached; and (ii) will not suffer any abends, aborts, improper
operation or other interruptions in operation as a result of the approach or
reaching of any particular date or the improper processing of any date.
AProcessing@ of date information includes, but is not limited to, accepting
input of dates without ambiguity, outputting all dates in an unambiguous form,
and performing calculations, comparisons or operations or taking actions or
making decisions using dates, portions of dates, or time periods. The concept of
Year 2000 Compliance includes all issues relating to the handling of dates or
time periods, including the processing of the leap year that will occur in the
year 2000. In the case of products with which the parties provide that the
System shall perform as a larger system, then the expression AYear 2000
Compliant@ means that the larger system shall be Year 2000 Compliant.
2.22 Investment Representation. The Seller has no intention of selling
the JV Web Common Stock or any interest therein in violation of the federal
securities laws or any applicable state securities laws. Prior to the date of
this Agreement, Seller and Shareholder have reviewed all information provided to
it by JV Web and Buyer and has had the opportunity to ask questions of and
receive answers from representatives of JV Web and Buyer concerning JV Web,
Buyer and the JV Web Common Stock and to obtain certain additional information
requested of JV Web or Buyer.
2.23 Disclosure. No representation or warranty by Seller and
Shareholder in this Agreement, nor in any exhibit or schedule delivered
herewith, nor any statement or certificate furnished or to be furnished by or on
behalf of Seller or Shareholder pursuant to this Agreement or in connection with
the consummation of the transactions herein contemplated, contains, or will
contain, any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements herein and therein not
misleading. Notwithstanding any investigation made at any time by or on behalf
of Purchaser, and notwithstanding any actual or implied knowledge or notice of
any facts or circumstances which Purchaser may have as a result of such
investigation or otherwise, Seller and Shareholder by his or her execution and
delivery of this Agreement acknowledges that the accuracy of such
representations, warranties, schedules, exhibits, statements and certificates
have been relied upon by Purchaser in entering into and in performing and
observing the obligations pursuant to this Agreement.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF BUYER
3.1 General. Buyer represents and warrants to Seller that the
representations and warranties set out in this Section 3 are true and correct as
of the date of this Agreement and will be true and correct through the Closing
as if made on and as of the Closing Date, and shall survive the Closing Date.
3.2 Corporate Standing. Buyer is a corporation, duly organized, validly
existing and in good standing under the Laws of the State of Delaware with the
power to own its respective assets and carry on its business as presently
conducted. Buyer is duly qualified to do business and is in good standing in the
State of Delaware and each state or other jurisdiction where such qualification
is required.
3.3 Authority. Buyer has the power and authority to execute, deliver
and perform this Agreement and all other instruments and documents required or
contemplated to be executed, delivered and performed by it under this Agreement.
Such execution, delivery and performance (i) have been duly authorized by all
necessary action, (ii) do not and will not require the approval of any Person
whose approval has not been obtained, (iii) do not and will not contravene the
Certificate of Incorporation or Bylaws of Buyer, (iv) do not and will not
contravene, conflict with, result in a violation (or any occurrence which by
notice or passage of time or both would constitute a violation) of, or entitle
any party to terminate, accelerate or declare a default with respect to any
contract of Buyer, and (v) will not result in the violation of any Laws.
3.4 Valid and Binding Obligations. This Agreement and each of the
documents and instruments to be executed by Buyer and delivered to Seller
pursuant to this Agreement when so delivered will constitute its legal, valid
and binding obligations, enforceable in accordance with each such Agreement's,
document's and instrument's respective terms.
3.5 Full Disclosure. None of the representations and warranties made by
Buyer or made in any certificate or memorandum furnished or to be furnished by
Buyer, or on its behalf, contain or will contain any untrue statement of
material fact, or to Buyer's best knowledge, omits any material fact, the
omission of which would be misleading. Any item disclosed by Buyer in this
Agreement or its Schedules shall be deemed to be disclosed only in connection
with the specific representation to which it is specifically referenced.
3.6 Finders' Fees. Neither the Buyer nor any of the officers,
directors or employees of either employed any broker or finder or incurred any
liability for any brokerage fee, commission or finders' fee in connection
with any of the transactions contemplated hereby.
3.7 JV Web Shares. The JV Web Common Stock issued to Seller pursuant to
this transaction are being issued to Seller pursuant to a shelf registration
statement (the ARegistration Statement@) on Form S-B2 (Commission File No.
333-43379), covering among other things, not less than the number of shares of
JV Web Common Stock comprising the JV Web Common Stock, which has been declared
effective by the Securities Exchange Commission (the ACommission@). Neither the
Commission nor any other regulatory authority has issued any order preventing or
suspending the effectiveness or use of the Registration Statement and no
proceedings for a stop order preventing or suspending the effectiveness or use
of the Registration Statement have been instituted or are pending. . JV Web has
filed all reports currently required to be filed by it under the Securities Act
and the Securities Exchange Act of 1934, or any rules or regulations thereunder.
SECTION 4
NONCOMPETITION AGREEMENT
4.1 Prohibition Against Certain Activities. In consideration of the
purchase of Seller's business, each of Seller and the Shareholder hereby
covenant and agree to not, directly or indirectly, either for its own benefit or
for the benefit of any other person, without the prior written consent of the
Buyer, compete with the Buyer (and for purposes of this Section 5, ABuyer@ shall
include all of Buyer's affiliated entities, including, without limitation, JV
Web, Inc.) in any geographic area in which it does business for a period
terminating on the later to occur of: (i) five (5) years beginning on the
Closing Date, or (ii) the time at which the Seller or Shareholder ceases to be,
directly or indirectly, a shareholder of Buyer, including without limitation any
of the following acts, which acts shall be considered violations of this Section
5:
(a) Engaging in any manner in the sweepstakes industry, including
without limitation, owning, participating in, or otherwise
have an interest in any show or program similar to The
National Sweepstakes Show, distributing any newspaper,
magazine or written supplements similar to Sweepstakes News,
or otherwise being engaged in the sweepstakes industry from an
industry or entertainment perspective ;
(b) Canvas, solicit, accept or perform any type of work similar
to that conducted by the Seller for any customer of Seller
or customer of Buyer;
(c) Request or advise any customer of the Seller or Buyer to
withdraw, curtail or cancel any of its business with the
Seller or Buyer;
(d) Assist any person in soliciting any customer of the
Seller or Buyer for the performance of any type of work
performed by the Seller or Buyer;
(e) Induce or attempt to influence any employee of the Seller or
Buyer to terminate his or her employment with the Seller
or Buyer;
(f) Disclose or communicate to any other person, firm, or
corporation the names of any customers of the Seller or Buyer
or other knowledge of the operations and business of the
Seller or Buyer, or otherwise disclose or reveal any
Confidential Information;
(g) Employ or cause to be employed any individual employed by
the Seller prior to the Closing or by the Buyer at any time
during the term of this Agreement;
(h) Overtly do or perform any act that is designed or intended
to materially and adversely affect the goodwill or
operation and business of the Seller or Buyer; or
(i) Request, advise or attempt to influence any person which is a
source of materials, supplies, personnel, services, funds or
information for the Seller or Buyer to withdraw, cancel or
curtail the sale or furnishing of such items to the Buyer.
4.2 Acknowledgement of Need for Covenants. Insofar as the
covenants set out in this Section 4 are concerned, the Seller
and Shareholder specifically acknowledges and agrees as
follows:
(a) The covenants are reasonable and necessary to protect the
goodwill and the operations and business of the Buyer.
(b) The time duration of the covenants are reasonable and
necessary to protect the goodwill and the operations and
business of the Buyer.
(c) The geographical area limitations of the covenants are
reasonable and necessary to protect the goodwill and the
operations and business of the Buyer.
(d) The covenants are not oppressive to the Seller or Shareholder
and do not impose a greater restraint than is necessary to
protect the goodwill and the operations and business of the
Buyer.
4.3 Damages. In the event any party hereto violates any of the
covenants set out in this Section 4, the Buyer shall suffer irreparable damage
and shall be entitled to full injunctive relief or such other relief against
such party as may be provided by law or in equity together with such damages as
may be provided at law or in equity. The Buyer shall be entitled as a matter of
right to specific performance of the requirements of this Section 4 or to
temporary or permanent injunctive relief against any breach of any provision of
this Section 4. The breaching party will be responsible for all court costs and
reasonable attorneys' fees incurred by the Buyer if it obtains specific
performance of, or any injunction against violation of, the requirements of this
Section 4, provided such actions are pursued by the Buyer in good faith.
4.4 Judicial Modification. It is the express intention of the Buyer and
the Seller and Shareholder to comply with all laws which may be applicable to
the covenants contained in this Section 4. Therefore, the Buyer and the Seller
and Shareholder have attempted to limit the Seller's right to compete only to
the extent necessary to protect (i) the Buyer from unfair competition, and (ii)
the Buyer's goodwill and its operations and business. The Buyer and the Seller
and Shareholder recognize, however, that reasonable people may differ in making
such a determination. Consequently, it is hereby specifically agreed that, in
the event that any covenant contained in this Section 4 shall be determined by
any court or other constituted legal authority to be effective in any particular
area or jurisdiction only if such covenant is modified to limit its duration or
scope, such covenant may be reformed or modified by the judgment or order of
such court or authority to reflect a lawful and enforceable duration or scope.
Such covenant shall automatically be deemed to be amended and modified with
respect to that particular area or jurisdiction so as to comply with the
judgment or order of such court or authority and, as to all other areas and
jurisdictions covered by this Agreement, the terms and provisions hereof shall
remain in full force and effect as originally written.
4.5 Void or Unenforceable. In the event any covenants contained in this
Section 4 shall be held by any court or other constituted legal authority to be
void or otherwise unenforceable in any particular area or jurisdiction
notwithstanding the operation of this Section 4, such covenant automatically
shall be deemed to be amended so as to eliminate therefrom that particular area
or jurisdiction as to which such covenant is so held void or otherwise
enforceable and, as to all other areas and jurisdictions covered by this Section
4, the terms and provisions hereof shall remain in full force and effect as
originally written.
4.6 Confidential Information. As used in this Section 4, the term
"Confidential Information" shall mean information of any kind, nature or
description which is disclosed to, discovered by or otherwise known to a person
by reason of such person's employment and/or association, whether past, present
or future, with another person and/or its affiliates, which information is not
generally known in the businesses in which the latter person and/or its
affiliates were or are engaged. Such information includes but is not limited to
ideas, discoveries, inventions, techniques, methods, practices, processes,
formulas, technical information, data, information concerning products, goods,
services and manufacturing methods, customers, customer requirements, marketing
methods and plans, vendor information, pricing information, marketing
information, as well as any other information regarding a person's methods of
conducting its business, whether patentable or not, and whether implemented or
not.
4.7 Waivers. No waiver of compliance with any term, provision or
condition hereof shall be effective unless evidenced by an instrument in writing
duly executed by the party hereto sought to be charged with such waiver. No
waiver of any breach of any term or provision of this Section 4 shall be deemed
to be a waiver of any preceding or succeeding breach of the same or any other
term or provision. No extension of time for or consent to the performance of any
obligation or act shall be deemed to be an extension of the time for or consent
to the performance of any other obligation or act.
SECTION 5
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer with respect to the purchase of the Acquired
Assets at the Closing are subject to the satisfaction of the following
conditions, which may be waived in whole or in part by Buyer in writing to the
extent permitted by Law:
5.1 Representations and Warranties Correct. Each representation and
warranty of Seller and Shareholder made in or pursuant to this Agreement and any
related document or instrument which has a financial effect on Buyer or the
Acquired Assets, shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date, with the same force and
effect as though made at and as of the Closing Date.
5.2 Covenants Performed. Seller and Shareholder shall have performed
and satisfied all covenants and conditions required to be performed or satisfied
by them at or prior to the Closing Date pursuant to this Agreement and any
document or instrument executed in connection with this Agreement.
5.3 Closing Certificate. Buyer shall have received on the Closing Date
a certificate or certificates, in form and substance reasonably satisfactory to
Buyer, from appropriate officers of Seller, certifying the matters set forth in
Sections 5.1 and 5.2 of this Agreement, and certifying that (i) attached to such
certificate or certificates are true and correct copies of the Certificate of
Incorporation and Bylaws of Seller and (ii) the incumbency of each officer
executing this Agreement and all documents and instruments executed in
connection therewith.
5.4 Absence of Litigation; No Material Adverse Change. No Proceeding
shall have been instituted on or prior to Closing Date seeking to enjoin,
restrain, invalidate, prohibit, avoid, set aside or render illegal in whole or
in part the consummation of the transactions contemplated by this Agreement, or
to obtain substantial damages in connection therewith. In addition, there shall
be no material adverse changes in the Acquired Assets since December 31, 1999.
5.5 Governmental Approvals. All required governmental filings
shall have been made and all requisite governmental approvals for the
consummation of the transactions contemplated by this Agreement shall have been
received.
5.6 Obligations Discharged. All indebtedness of Seller described and
all liabilities, duties and obligations of Seller contingent or otherwise,
arising from or with respect to the period prior to the Closing relating to the
Acquired Assets, other than those expressly to be assumed by Buyer under the
terms of this Agreement, shall have been satisfied or discharged by Seller, or
provision for their satisfaction and discharge shall have been made, and
evidence thereof shall have been provided to Buyer, all at or before the Closing
and to Buyer's satisfaction.
5.7 Corporate Approval. The execution and delivery of this Agreement by
Seller, and the performance of its covenants and obligations under it, shall
have been duly authorized by all necessary corporate and shareholder approval,
and Buyer shall have received copies of all resolutions pertaining to that
authorization with respect to Seller, certified by the Secretary of Seller.
5.8 Consents. All necessary agreements, consents and approvals of any
parties to the consummation by Seller of the transactions contemplated by this
Agreement, or otherwise pertaining to the matters covered by it shall have been
received and completed on terms satisfactory to Buyer.
5.9 Due Diligence. The completion of Buyer's due diligence
examination of the Seller to Buyer's satisfaction in its sole and absolute
discretion.
5.10 Delivery of Closing Documents. The Seller shall have transferred
the Acquired Assets and delivered the closing documents specified in Section 7.2
to the Buyer at the Closing, including the Escrow Agreement and the
Shareholders= Agreement.
5.11 Acceptance by Buyer's Counsel. The form and substance of all
legal matters contemplated by this Agreement and all documents delivered under
this Agreement shall be reasonably satisfactory to counsel for Buyer.
SECTION 6
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller with respect to the sale of the Acquired
Assets at the Closing are subject to the satisfaction of the following
conditions, which may be waived in whole or in part by Seller in writing to the
extent permitted by Law:
6.1 Representations and Warranties Correct. Each representation and
warranty of Buyer made in or pursuant to this Agreement and any related document
or instrument shall be true and correct in all respects as of the date of this
Agreement and as of the Closing Date, with the same force and effect as though
made at and as of the Closing Date.
6.2 Covenants Performed. Buyer shall have performed and satisfied all
covenants and conditions required to be performed or satisfied by them on or
prior to the Closing Date pursuant to this Agreement and any document or
instrument executed in connection with this Agreement.
6.3 Closing Certificate. Seller shall have received on the Closing Date
a certificate or certificates, in form and substance reasonably satisfactory to
Seller, from appropriate officers of Buyer confirming the matters set forth in
Sections 6.1 and 6.2 of this Agreement and certifying that (i) attached to such
certificate or certificates are true and correct copies of the certificates of
incorporation and bylaws of Buyer and (ii) the incumbency of each officer
executing this Agreement and all documents and instruments executed in
connection therewith.
6.4 Absence of Litigation. No Proceeding shall have been instituted on
or prior to the Closing Date seeking to enjoin, restrain, invalidate, prohibit,
avoid, set aside or render illegal in whole or in part the consummation of the
transactions contemplated by this Agreement, or to obtain substantial damages in
connection therewith.
6.5 Governmental Approvals. All required governmental filings
shall have been made and all requisite governmental approvals for the
consummation of the transactions contemplated by this Agreement shall have beenr
received.
6.6 Consents. All required consents and approvals of any parties to the
consummation by Buyer of the transactions contemplated by this Agreement shall
have been received.
6.7 Corporate Approval. The execution and delivery of this Agreement by
Buyer, and the performance of its covenants and obligations under it, shall have
been duly authorized by all necessary corporate action, and Seller shall have
received copies of all resolutions pertaining to that authorization with respect
to Buyer, certified by the Secretary of Buyer.
6.8 Payments of Purchase Price and Delivery of Closing Documents. The
Buyer shall have paid the Purchase Price to the Seller and delivered or caused
to be delivered all closing documents specified in Section 7.3 to the Seller at
the Closing, including the Escrow Agreement and Shareholders= Agreement.
SECTION 7
CLOSING
7.1 Closing and Effective Date. Closing of the transactions provided
for in this Agreement (the "Closing") shall take place on April __, 2000 or at
such other later date as the parties may agree upon in writing (the "Closing
Date"). The closing shall take place at the offices of Xxxx & Sudan, L.L.P. in
Houston, Texas, or by courier delivery of all required documents, or at such
other place as the parties may agree upon in writing.
7.2 Delivery by Seller at the Closing. At the Closing, Seller
shall deliver to Buyer (or shall ensure is delivered):
(a) Bills of sale, instruments of transfer, assignment and
conveyance, and other instruments in form and substance
reasonably required and satisfactory to Buyer and Buyer's
counsel and sufficient to convey, transfer and assign to Buyer
and effectively vest in Buyer all right, title and interest in
the Acquired Assets, together with possession of the Acquired
Assets;
(b) The certificate or certificates referred to in Section 5.3;
(c) All consents, approvals, authorizations or orders obtained by
Seller;
(d) Certified copies of the resolutions, duly adopted by the Board
of Directors of Seller and by the stockholders of Seller, that
shall be in full force and effect on the Closing Date,
authorizing the execution, delivery and performance of this
Agreement and all instruments and documents contemplated by
this Agreement;
(e) Simultaneously with the consummation of the transfer as
contemplated herein, Seller, through its officers, agents and
employees, will put Buyer into full possession and enjoyment
of all Acquired Assets;
(f) All books and records, memoranda, data and other documents
related to the Acquired Assets;
(g) Such other instruments and documents relating to the
transactions contemplated by this Agreement as may reasonably
be requested by the Buyer;
(h) Consents and assignments to the vendors agreements executed
by Xxxxxx Book Company and Xxxxx & Xxxxxx, in form
acceptable to Buyer;
(i) The executed Escrow Agreement and Shareholders= Agreement.
7.3 Delivery by Buyer at the Closing. At the Closing, Buyer shall
deliver (or cause to be delivered) to Seller:
(a) (i) To Seller, a copy of the letter to American Stock Transfer
& Trust instructing it to issue to Seller and Xxxxxx
certificates representing 500,000 shares of JV Web Common
Stock, and the delivery to Seller of certificates representing
600,000 shares of Buyer Common Stock; (ii) to the Escrow
Agent, 800,000 shares of JV Web Common Stock and 400,000
shares of Buyer Common Stock, to be held pursuant to the terms
of the Escrow Agreement;
(b) The certificate or certificates referred to in Section 6.3;
(c) All consents, approvals, authorizations or orders obtained by
Buyer;
(d) Certified copies of the resolutions duly adopted by the Board
of Directors of Buyer, authorizing the execution, delivery and
performance of this Agreement and all instruments and
documents contemplated by this Agreement;
(e) Such other instruments and documents relating to the
transactions contemplated by this Agreement as may reasonably
be requested by Seller; and
(f) The executed Escrow Agreement and Shareholders= Agreement.
SECTION 8
INDEMNIFICATION
8.1 Indemnification by Seller and its Shareholder. Seller and the
Shareholder, jointly and severally, shall indemnify, defend and hold harmless
Buyer, its parent company JV Web, Inc., its affiliates, successors, and assigns,
against and in respect of any and all claims, costs, damages, losses, costs,
expenses, obligations, liabilities, recoveries, suits, causes of action, and
deficiencies, including interest, penalties, reasonable attorneys' fees, and all
response and restitution costs, that it shall incur or suffer, which arise,
result from or relate to: (i) any breach of, or failure by Seller or the
Shareholders to perform, any of its or their representations, warranties,
covenants or agreements in this Agreement or in any schedule, certificate,
exhibit or other instrument furnished or to be furnished by or on behalf of the
Seller under this Agreement, including, without limitation, the representations,
warranties, and covenants of Seller in Section 2.7 hereof; (ii) any and all
debts, liabilities or obligations of Seller, of or relating to the Acquired
Assets or effecting the Buyer's use of the Acquired Assets, whether direct or
indirect, fixed, contingent or otherwise, which exist at or as of the date of
the Closing hereunder or which arise after the Closing but which are based upon
or arise from any act, omission, transaction, circumstance, sale of goods or
services, state of facts or other condition which occurred or existed on or
before the date of the Closing, whether or not then known, due or payable,
except to the extent expressly assumed by Buyer pursuant to the terms of this
Agreement; (iii) any claims or actions by any shareholder or former shareholder
of Seller alleging rights of dissent, appraisal, or the payment of fair value
for such person's shares in Seller , whether or not such shareholder or former
shareholder is entitled to any such rights under law; (iv) any debt, obligation,
or liability related to any Excluded Asset; and (v) all actions, suits,
proceedings, demands, assessments, judgments, damages, losses, costs, and
expenses (including reasonable attorneys' fees) incident to any of the
foregoing.
8.2 Indemnification by Buyer. Buyer shall indemnify Seller and hold
Seller harmless against and in respect of any and all claims, costs, damages,
losses, costs, expenses, obligations, liabilities, recoveries, suits, causes of
action, and deficiencies, including interest, penalties and reasonable
attorneys' fees, that it shall incur or suffer, which arise, result from or
relate to: (i) any breach of, or failure by the other to perform, any of its
representations, warranties, covenants or agreements in this Agreement or in any
schedule, certificate, exhibit or other instrument furnished or to be furnished
by or on behalf of the Buyer under this Agreement; and (ii) any liabilities or
obligations arising from Buyer's operation of the Acquired Assets after Closing
that do not arise from Seller's indemnification obligations set forth in Section
8.1.
8.3 Third-Party Claims. Indemnified Party shall give the Indemnifying
Party written notice within thirty (30) days of receiving written notice of any
loss for which the Indemnified Party is entitled to indemnification pursuant to
this Section 8 (an "Indemnifiable Claim") resulting from the assertion of
liability by third parties. The Indemnifying Party shall have thirty (30) days
after receipt of notice to (i) cooperate in its defense or (ii) assume its
defense with experienced counsel, satisfactory to the Indemnified Party. If,
within thirty (30) days of receipt of notice of an Indemnifiable Claim, the
Indemnifying Party fails to cooperate or assume such defense, the Indemnified
Party shall have the right to undertake the defense, compromise or settlement of
such Indemnifiable Claim on behalf of and for the account and risk of the
Indemnifying Party.
8.4 Other Claims. Indemnified Party shall give Indemnifying Party
written notice of any Indemnifiable Claim other than an Indemnifiable Claim
resulting from the assertion of liability by third parties. Indemnifying Party
shall have thirty (30) days following receipt of such notice to remedy the
inaccuracy, breach or misrepresentation on which the Indemnifiable Claim is
based.
8.5 Escrow. The parties hereto have agreed that 800,000 shares of JV
Web Common Stock and 400,000 shares of Common Stock of Buyer (the "Escrowed
Shares") will be held in escrow with the Escrow Agent and will be held subject
to the terms of this Section 8.5, Section 1.3, and the Escrow Agreement in
substantially the same form as attached hereto as Exhibit AA,@ and shall serve
as a fund from which an Indemnifiable Claim to which Buyer is entitled may be
paid. In addition to all other rights Buyer may have at law, in equity, or under
this Agreement, any amounts for which Buyer is entitled to indemnification under
this Section 8 may be paid from such Escrowed Shares. If Seller contests Buyer's
right to such Indemnifiable Claim, and such dispute cannot be settled within 30
days of Seller's receipt of notice of the claim, then any such suit, action or
proceeding must be brought in Xxxxxx County, Texas or in a United States federal
court encompassing that geographic area. For purposes of this Agreement and for
purposes of determining the value of claims for indemnification made against the
shares placed into the escrow account, the parties agree that the value of each
share of JV Web Common Stock placed into escrow and the value of each share of
Buyer Common Stock placed into escrow shall be the greater of: (i) $.75 per
share; and (ii) the average daily closing price of the JV Web Common Stock in
the primary market or exchange on which the JV Web Common Stock is then publicly
traded during the thirty day period immediately prior to the date any such claim
for indemnification is made against the Seller. The parties further agree that
in the event there has been no claim for indemnification against the 400,000
shares of Buyer Common Stock placed into escrow by the expiration of two (2)
years from and after the Closing Date, then such 400,000 shares of Buyer Common
Stock shall be released out of escrow to Seller.
8.6 Limits on Indemnification. The parties hereto agree that in no
event will theliability of Seller for indemnification under this Section 8
(including any claim for fraud) exceed the value of the Escrowed Shares and
the additional 600,000 shares of Buyer Common Stock, provided, however,
that (i) shares released from Escrow shall no longer be subject to claims for
indemnification hereunder; and (ii) any successor in interest to the Escrowed
Shares or the Buyer Common Stock shall take such shares subject to the
indemnification rights of Purchaser under this Section 8. For purposes of
determining the value of the purchase price of the Acquired Assets, the parties
agree that the value of each share of JV Web Common Stock issued as part of the
purchase price and the value of each share of Buyer Common Stock issued as
part of the purchase price shall be the greater of: (i) $.75 per share; and
(ii) the average daily closing price of the JV Web Common Stock in the primary
market or exchange on which the JV Web Common Stock is then publicly traded
during the thirty day period immediately prior to the date any such claim for
indemnification is made against the Seller.
SECTION 9
POST-CLOSING COVENANTS
9.1 Transaction Taxes. In the event any other taxes arise
as a result of the transactions contemplated by this Agreement, they will be
the responsibility of Seller.
9.2 Other Taxes. In regard to all other taxes (including, as
applicable, federal, state, and local taxes) relating to the Acquired Assets,
Buyer shall be responsible only for those taxes which accrue for periods after
the Closing Date. Seller shall be responsible for the payment of all taxes and
the filing of all returns and reports which are required as a result of Seller's
operations.
9.3 Records. Buyer will maintain any and all records transferred to it
and allow Seller reasonable access for normal and customary business reasons to
such records, during normal business hours. Prior to destroying any such
records, Buyer shall notify Seller and allow Seller to obtain those records at
Seller's cost and expense.
9.4 Further Assurances. Seller shall execute, acknowledge and deliver,
at or at any time after the Closing, at no expense to Buyer, all such
assignments, transfers, consents, instruments and other documents as Buyer may
reasonably request to vest in Buyer, and to protect and assure Buyer's right,
title and interest in, and enjoyment of, the Acquired Assets, and Buyer shall
execute, acknowledge, and deliver, at or at any time after the Closing, at no
expense to Seller, all assumption agreements necessary to effect the assumption
of the assumed liabilities specifically assumed under Section 1.5 hereof. It is
specifically agreed that Seller and Shareholder will assist Buyer at such time
as shall be required to transfer any federal trademark registrations from the
Supplemental Register to the Primary Register and to assist in any other filings
to vest full title in and to the Acquired Assets in Buyer.
SECTION 10
REMEDIES
10.1 Specific Performance. Seller and Buyer each agree to the
remedy of specific performance in addition to all other remedies provided by
law.
10.2 Costs. If any legal action or other proceeding is brought for the
enforcement of this Agreement, or because of an alleged dispute, breach, default
or misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing Party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in that action or proceeding, in
addition to any other relief to which it or they may be entitled.
10.3 Termination. Either Party may on the Closing Date terminate this
Agreement if (i) any condition precedent to such Party's performance shall not
have been satisfied as of the Closing Date, or (ii) the Closing fails to occur
on or before the Closing Date through no fault of the terminating party, unless
a later date is mutually agreed to by Seller and Buyer in writing on or before
the Closing Date. If the termination of this Agreement by Buyer is based on the
fact that there has been a material misrepresentation or breach of warranty or
covenant of the Seller set forth herein, Buyer shall be entitled to any remedies
available at law or in equity.
10.4 Termination Notice. If either Buyer on the one hand, or Seller on
the other hand, in addition to any other remedy available to it, terminate this
Agreement pursuant to 10.3 above on the Closing Date, it shall give notice of
termination ("Termination Notice") of this Agreement. The Termination Notice
shall specify with particularly the default or defaults on which it is based.
The Termination Notice shall be effective when given.
10.5 Remedies Cumulative. The rights and remedies granted herein
are cumulative and not exclusive of any other right or remedy granted herein or
provided by Law.
SECTION 11
MISCELLANEOUS
11.1 Modification of Agreement. This Agreement may be amended or
modified only in writing signed by all of the Parties.
11.2 Notices. All notices and communications shall be in writing and
shall be sufficiently given if delivered in person or mailed by certified mail
or registered mail, return receipt requested, postage prepaid, addressed as
follows:
To Seller:
Sweepstakes Entertainment Corporation
000 Xxxxxxxx Xxxxx
Xxx Xxxxxxxx, Xxxxxxx 00000
To Shareholder :
c/o Xxxxxxxx X. Xxxxxx
000 Xxxxxxxx Xxxxx
Xxx Xxxxxxxx, Xxxxxxx 00000
To Buyer:
National Sweepstakes Show, Inc.
c/o Xxxx X. Xxxxx
0000 Xxxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
with a copy to:
Xxxxxx X. Xxxxxxx
Xxxx & Sudan, L.L.P.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Any party at any time by notice to the other party may designate
additional or different addresses for subsequent notices or communications. If a
notice or communication is mailed in the manner provided above, it is duly given
when mailed by first class mail, postage prepaid, addressed as provided above,
whether or not the addressee receives it.
11.3 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not invalidate or affect the enforceability of
any other provision of this Agreement.
11.4 Entire Agreement. This Agreement sets forth the entire
agreement among the parties with respect to the subject matter hereof.
11.5 Waiver. No delay in the exercise of any right under this
Agreement shall waive such right.
11.6 Governing Law. The laws of the State of Texas shall govern
this Agreement, excluding any such laws directing the application of the
laws of another jurisdiction.
11.7 Headings. Headings in this Agreement are for the convenience
only and shall not affect the interpretation of this Agreement.
11.8 Schedules and Exhibits. All Schedules and Exhibits attached
to this Agreement are hereby incorporated in and made a part of this Agreement.
11.9 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall have the force and effect of an original, and
all of which shall constitute one and the same agreement.
11.10 Rights of Parties. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the Parties and their respective successors
and as signs, nor is anything in this Agreement intended to relieve or discharge
the obligation or liability of any third persons to any Party to this Agreement,
nor shall any provision give any third person any right of subrogation or action
over against any Party to this Agreement.
11.11 Public Notices. Prior to the Closing, no public notices of this
Agreement, save and except any required by applicable Laws, shall be made by
Buyer or Seller. All public notices prior to closing must be mutually agreed
upon by Buyer and Seller.
11.12 Expenses. Except as specifically set forth in Section 11.3,
Buyer, Seller and the Stockholders shall each be responsible for their own
expenses in connection with this transaction, including but not limited to legal
expenses and out-of-pocket costs.
11.13 Assignment. This Agreement and the rights of SEC and the
Shareholders hereunder may not be assigned (except by operation of law) and
shall be binding upon and shall inure to the benefit of the parties hereto, the
successors and assigns of SEC and the heirs and legal representatives of the
Shareholders. This Agreement and the rights of Buyer hereunder may be assigned
by Buyer to the parent corporation of Buyer or to a wholly owned subsidiary of
such parent corporation.
SECTION 12
DEFINITIONS
12.1 Specific Definitions. As used herein the following terms
shall have the meanings as defined below:
Affiliate shall mean any Person which is an "affiliate" within the
meaning of the Regulations promulgated under the Securities Act of 1933, as such
Regulations and Act are amended and in effect on the date in question.
Material Adverse Event or Material Adverse Effect shall mean (i) any
change, development or effect (individually or in the aggregate) in the general
affairs, management, business, results of operations, condition (financial or
otherwise), assets, liabilities or prospects (whether or not the result thereof
would be covered by insurance) which would be material and adverse to the
Acquired Assets, after giving effect to the transactions which are the subject
of this Agreement, or (ii) any fact or development that would (individually or
in the aggregate) after giving effect to the transactions which are the subject
of this Agreement, impair the Seller's ability to perform on a timely basis any
material obligations it has under this Agreement. Loss or damage shall not be
considered to be material and adverse to the Seller unless the aggregate total
of all losses or damages exceeds $5,000.
Person shall mean an individual, partnership, joint venture,
corporation, bank, trust, unincorporated organization or governmental body.
Proceeding means any action, suit, claim, investigation, review or
other proceeding, at law or in equity, before any federal, state, municipal or
other governmental court, department, commission, board, bureau, agency or other
instrumentality.
12.2 Accounting Terms. As used herein, the term GAAP shall mean
Generally Accepted Accounting Principles, applied on a consistent basis, (a) as
set forth in the opinions of the Accounting Principles Board of the American
Institute of Certified Public Accountants ("AICPA") and/or statements of the
Financial Accounting Standards Boards which are applicable in the circumstances
as of the date in question, and (b) which were not inconsistent with such
opinions and statements, as set forth in other AICPA publications and guidelines
and/or which otherwise arise by custom for the particular industry; and the
requisite that such principles be applied on a consistent basis means that the
accounting principles in a current period are comparable in all material
respects to those applied in a preceding period. All accounting and financial
terms used in this Agreement and the compliance with each covenant contained in
this Agreement relates to financial matters to be determined in accordance with
GAAP, except to the extent that a deviation therefrom is expressly stated in
this Agreement.
12.3 Other terms. Other terms may be defined elsewhere in the text of
this Agreement and shall have the meaning indicated throughout this Agreement.
12.4 Other Definitional Provisions.
(a) The words "hereof", "herein", and "hereunder" and words of
similar import, when used in this Agreement shall refer to
this Agreement as a whole and not to any particular
provision of this Agreement.
(b) The terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
EXECUTED in multiple counterparts as of the date first written above.
NATIONAL SWEEPSTAKES SHOW, INC.
("Buyer")
By:_________________________________
Xxxx X. Xxxxx, President
("Seller")
SWEEPSTAKES ENTERTAINMENT
CORPORATION
By:_________________________________
Xxxxxxxx X. Xxxxxx, President
------------------------------------
Xxxxxxxx X. Xxxxxx, Individually
Xxxx Xxxxxx hereby executes this Agreement solely for the purposes of
agreeing to the provisions of Section 1.3 and Section 8 hereof as they relate to
shares of JV Web Common Stock to be placed into Escrow.
------------------------------------
Xxxx Xxxxxx
M:\XXX\WP\658\JVWEB.DOC
LIST OF SCHEDULES
1.1(a) Acquired Assets
1.1(c) Acquired Contracts
1.1(d) Backlog Orders and Accounts Receivables as of March 31, 2000
1.2 Excluded Assets
2.5 Income Statements
2.6 List of Liabilities relating to Acquired Assets
2.8 Material Contracts relating to Acquired Assets
2.9 Customers, Subscribers, Sponsorship Fees, Direct Orders, etc.
2.10 List of any liens, encumbrances, etc. on Acquired Assets
2.11 Insurance on Acquired Assets
2.12 Employees and Independent Contractors
2.13 Bank Accounts
2.14 Tax Matters
2.15 Defaults under Contracts
2.16 Any litigation, disputes, etc.
2.17 Any consents required
LIST OF EXHIBITS
Exhibit AA@ - - Escrow Agreement
Exhibit AB@ - - Shareholders= Agreement
