ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made as of this 21st
day of July, 2000, by and between Wire One Technologies, Inc., a Delaware
corporation ("Buyer"), 2CONFER L.L.C., a Delaware limited liability company
("Seller"), and the members of Seller listed on the signature pages hereto (the
"Members") (Seller and the Members are sometimes each referred to as a "Seller
Party", and collectively as "Seller Parties").
R E C I T A L S:
Buyer desires to purchase, and Seller desires to sell, substantially all
of Seller's assets, properties and rights in the business and operations of
Seller, including, but not limited to, all trademarks, copyrights, web site
software, the "xxx.0XXXXXX.xxx" web site on the World Wide Web and, subject to
certain limitations set forth in this Agreement and the Schedules hereto, all of
the fixed assets and intellectual property used in, or necessary for the
operation of, such site as heretofore operated (collectively, the "Business"),
as herein described.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises, agreements, representations, warranties, and covenants herein
contained, the parties hereby agree as follows:
SECTION 1
Closing
1.1. Closing Date. The closing (the "Closing") of the transactions
contemplated hereby shall be held at the offices of counsel to Buyer, Xxxxxxxx &
Xxxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 on July 21,
2000 or such other date as may be mutually agreed upon by the parties (the
"Closing Date").
1.2. Sale of Assets. At the Closing, Seller shall sell to Buyer, free and
clear of all security interests, encumbrances, restrictions on transfer, or
adverse claims, and Buyer shall buy from Seller, all of Seller's right, title
and interest in the assets used in, or necessary for the operation of, the
Business (the "Assets") that are not Excluded Assets (as defined herein),
including, without limitation, the following:
(a) all notes and other accounts receivable, including all other
negotiable instruments and rights to receive payment generated in the conduct of
the Business;
(b) all cash, cash equivalents, bank accounts and deposits;
(c) all furniture, fixtures, equipment, office supplies and other
tangible property;
1
(d) all real property and all leasehold interests created by all
leases of real property under which Seller is a lessee or lessor;
(e) all lists of content contributors to Seller;
(f) the 2CONFER web site, currently accessible via the URL
"xxx.0XXXXXX.xxx" and all content contained therein;
(g) all of the hardware relating to or used in connection with the
Business, any related documentation and user materials, and Seller's rights
under all related warranties;
(h) all of the software (including all prior versions thereof), in
object and source formats, relating to or used in connection with the Business,
including: (i) all inventories of computer program code (in all media) for said
software; (ii) any related documentation and user materials; and (iii) Seller's
rights under all related warranties;
(i) Seller's entire right, title and interest to the third party
software licensed by Seller relating to or used in connection with the Business,
including any related documentation and user materials, and Seller's rights
under all related warranties;
(j) all of the technical data and know-how, including, without
limitation, research, product plans, markets, developments, inventions,
discoveries, processes, formulas, algorithms, technology, designs, drawings, and
business strategies, used in and material to, or necessary for the operation of,
the Business;
(k) all of the trademarks, service marks, and trade names (including
registrations, licenses, and applications to register pertaining thereto) used
to identify the Business and/or its goods or services;
(l) all patents and copyrights (including registrations, licenses,
and applications to register pertaining thereto), and all other intellectual
property rights, trade secrets, and other proprietary information, processes,
and formulas used in the Business;
(m) all goodwill of the Business as a going concern; all goodwill
associated with the trademarks, service marks and trade names relating to or
used in connection with the Business; the names 2CONFER L.L.C.,
"xxx.0XXXXXX.xxx," the domain name "0XXXXXX.xxx"; and the URL address
"xxx.0XXXXXX.xxx";
(n) Seller's entire right, title and interest in, to and under all
contracts, agreements, licenses, permits (other than Seller's postal permit),
arrangements, permissions and other commitments and arrangements, oral or
written, with any person or entity (including legal authorities) with respect to
the Business;
(o) all rights of Seller under express or implied warranties from
suppliers or contractors with respect to the Assets;
(p) all claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind arising out of the Assets or the
Business;
2
(q) all existing business and marketing records of the Business,
including accounting and operating records, asset ledgers, inventory records,
budgets, databases, customer lists, event calendars, employment and consulting
agreements, supplier lists, information and data respecting leased or owned
equipment, files, books, correspondence and mailing lists, creative, promotional
and advertising materials and brochures, and other business records;
(r) all media, including without limitation disks, tapes and CDs,
and other tangible property necessary for the transfer of the Assets from Seller
to Buyer pursuant to the terms and conditions of this Agreement; and
(s) all demonstration equipment inventory.
Without limitation of the foregoing, or the definition of "Assets"
contained herein, Schedule 1.2 hereto sets forth a description of specific
Assets which are being transferred pursuant to this Agreement.
1.3. Xxxx of Sale. The sale and delivery of the Assets shall be effected
by a Xxxx of Sale, Assignment and Assumption Agreement in substantially the form
of Exhibit A (the "Xxxx of Sale") and such endorsements, assignments, licenses,
drafts, checks and other instruments of transfer and conveyance, agreements, and
documents in form described herein or reasonably acceptable to Buyer, including,
but not limited to, signed transfer instructions to transfer ownership of the
domain name "0XXXXXX.xxx" and the URL address "xxx.0XXXXXX.xxx" from Seller to
Buyer.
1.4. No Other Liabilities or Obligations Assumed. Except with respect to
the assumed liabilities (the "Assumed Liabilities") set forth on Schedule 1.4,
which Assumed Liabilities Buyer hereby assumes, Buyer shall not assume or be
liable for any liabilities or obligations of Seller, whether the same are direct
or indirect, fixed, contingent or otherwise, known or unknown, whether arising
under an agreement or contract or otherwise. Seller shall, and hereby covenants
to Buyer that it will as of the date of the Closing or when due, satisfy all of
its liabilities or obligations that are not Assumed Liabilities.
1.5. Purchase Price; Payment.
(a) Purchase Price. The aggregate purchase price for the Assets (the
"Purchase Price") shall be Eight Hundred Thousand Dollars ($800,000), payable as
follows:
(i) at the Closing, Buyer shall deliver to Seller 78.75% of
the Purchase Price, consisting of (A) Three Hundred Seventy-five Thousand
Dollars ($375,000) in cash and (B) Twenty-eight Thousand Four Hundred
Twenty-two (28,422) shares of Buyer's common stock (the "Stock") (with the
number of shares to be determined by taking the average of the last
reported per share sale price of the Stock on the Nasdaq National Market
during the ten (10) trading days immediately preceding the Closing Date
and dividing such average price into Two Hundred Fifty-five Thousand
Dollars ($255,000)); and
(ii) at the Closing, Buyer shall deliver to Xxxxxx Xxxxxx, as
escrow agent (the "Escrow Agent"), 21.25% of the Purchase Price (the
"Escrowed Amount"),
3
consisting of One Hundred Twenty-five Thousand Dollars ($125,000) in cash
and Five Thousand Sixteen (5,016) shares of Stock (with the number of
shares to be determined by taking the average of the last reported per
share sale price of the Stock on the Nasdaq National Market during the ten
(10) trading days immediately preceding the Closing Date and dividing such
average into Forty-five Thousand Dollars ($45,000)), to be held in escrow
pursuant to the terms of the Escrow Agreement ("Escrow Agreement")
attached hereto as Exhibit B. Five Thousand Dollars ($5,000) of the
Escrowed Amount shall be released promptly to Seller after Seller provides
to Buyer written evidence that the assignment to Buyer of the office lease
between Mutare, as Tenant, and Teacher's Insurance and Annuity Association
of America, dated October 2, 1995, as set forth on Schedule 2.10(a)(3)(b),
has been effected. An additional Forty-five Thousand Dollars ($45,000) of
the Escrowed Amount shall be released to Seller promptly after Seller
provides to Buyer written evidence that the assignment to Buyer of the
office lease between Seller, as Tenant, and 49 Xxxxxxxxx Corp., dated
February 23, 1999, as set forth on Schedule 2.10(a)(3)(c), has been
effected.
(b) Piggyback Registration Rights.
(i) Buyer shall notify the Members in writing at least thirty
(30) days prior to filing any registration statement under the Securities
Act of 1933, as amended (the "Securities Act") for purposes of effecting a
public offering of securities of Buyer (including, but not limited to,
registration statements relating to secondary offerings of securities of
Buyer, but excluding registration statements relating to employee benefit
plans or with respect to corporate reorganization or other transactions
under Rule 145 of the Securities Act) and will afford each Member an
opportunity to include in such registration statement all or any part of
the Stock held by such Member. Each Member desiring to include in any such
registration statement all or any part of such Member's Stock shall within
twenty (20) days after receipt of the above-described notice from Buyer,
so notify Buyer in writing, and in such notice shall inform Buyer of the
number of shares of Stock such Member wishes to include in such
registration statement.
(ii) If the registration is for a firm commitment underwritten
registered public offering, Buyer shall so advise the Members as a part of
the written notice given pursuant to subsection 1.5(c)(i) above. In such
event, the right of any Member to registration shall be conditioned upon
the Member's participation in such underwriting and the inclusion of such
Member's Stock in the underwriting to the extent provided herein. All
Members proposing to distribute their securities through such underwriting
shall (together with Buyer and the other holders distributing their
securities through such underwriting) enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for the
underwriting by Buyer. Notwithstanding any other provision of this
subsection 1.5(c), if the managing underwriter determines that marketing
factors require a limitation of the number of shares to be underwritten,
the managing underwriter may limit the number of shares to be included in
the registration and underwriting. The number of shares of Stock held by
the Members to be included in such offering shall be reduced to zero
before any reduction in any securities to be offered by Buyer on its own
behalf. Buyer shall so advise the Members, and the number of shares of
Stock held by the Members that may be included in the registration and
4
underwriting shall be allocated among the Members and any other selling
shareholders on a pro rata basis. If any Member disapproves of the terms
of any such underwriting, he may elect to withdraw therefrom by written
notice to Buyer and the managing underwriter prior to the execution of the
applicable underwriting agreement by the Member. Any shares of Stock
excluded or withdrawn from such underwriting shall be withdrawn from such
registration.
(iii) All expenses incurred in connection with a registration
pursuant to this subsection 1.5(c) (excluding underwriters' and brokers'
discounts and commissions relating to shares sold by the Members),
including, without limitation, all federal and "blue sky" registration,
filing and qualification fees, printers' and accounting fees, and fees and
disbursements of counsel for the Buyer and of one counsel to the Members,
shall be borne by the Buyer.
(iv) In connection with any registration statement under this
Section 1.5(c) in which the Members are participating, Buyer agrees to
indemnify, to the extent permitted by law, each of the Members against all
losses, claims, damages, liabilities and expenses caused by any untrue
statement of material fact contained in any registration statement,
prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein
not misleading, except insofar as the same are caused by or contained in
any information furnished in writing to Buyer by such Member expressly for
use therein or by such Member's failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements
thereto after Buyer has furnished such Member with a sufficient number of
copies of the same.
(v) In connection with any registration statement under this
Section 1.5(c) in which a Member is participating, each such Member shall
furnish to Buyer in writing such information and affidavits as Buyer
reasonably requests for use in connection with any such registration
statement or prospectus and, to the extent permitted by law, shall
indemnify Buyer, its directors and officers and each person who controls
Buyer (within the meaning of the Securities Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue or
alleged untrue statement of material fact contained in the registration
statement, prospectus or preliminary prospectus or any amendment thereof
or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement
or omission is contained in any information or affidavit so furnished in
writing by such Member; provided that the obligation to indemnify shall be
individual, not joint and several, for each Member and shall be limited to
the net amount of proceeds received by such Member from the sale of
securities pursuant to such registration statement.
(vi) Any person entitled to indemnification hereunder shall
(i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification (provided that the failure to
give prompt notice shall not impair any person's right to indemnification
hereunder to the extent such failure has not prejudiced the indemnifying
party) and (ii) unless in such indemnified party's reasonable
5
judgment a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying
party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party who is not be subject to any liability for any
settlement made by the indemnified party without its consent (but such
consent shall not be unreasonably withheld). An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim shall not
be obligated to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim.
(c) Allocation. Promptly (no later than 60 days after the Closing
Date) following the Closing Date, Buyer, subject to the approval of Seller,
shall prepare and finalize a schedule setting forth an allocation of the
Purchase Price among the Assets (the "Allocation Schedule"). Each party agrees
to report the transactions contemplated hereby for federal income tax and all
other tax purposes (including, without limitation, for purposes of Section 1060
of the Internal Revenue Code of 1986, as amended (the "Code")) in a manner
consistent with the Allocation Schedule, and in accordance with all applicable
rules and regulations, and to take no position inconsistent with the allocation
set forth therein in any administrative or judicial examination or other
proceeding. Each of Buyer and Seller shall timely file the appropriate forms in
accordance with the requirements of Section 1060 of the Code and this Section.
The parties acknowledge that none of the Purchase Price is for the office
leases, and all office leases shall be valued at zero dollars ($0) in the
Allocation Schedule.
1.6. Method of Payment. Except as otherwise expressly provided herein, all
payments from one party to another under this Agreement shall be made by wire
transfer in United States dollars to an account designated in writing by the
party to receive such payment.
1.7. Excluded Assets. Anything to the contrary notwithstanding, the Assets
shall not include any of the following rights, properties or assets (the
"Excluded Assets"):
(a) This Agreement or any of the other Transaction Documents, or any
right, title or interest of Seller or any of the Members hereunder or
thereunder;
(b) Any cash or Stock included in the Purchase Price;
(c) Any inventory of Seller of any kind or description, wherever
located, except for all demonstration equipment inventory as described in
Section 1.2(s);
(d) Any rights of Seller or any of the Members to tax refunds or any
accrued prepaid taxes;
(e) Any records relating to the internal governance of Seller;
(f) Any insurance policies of Seller or any right, title or interest
of Seller or any of the Members thereunder, including any prepaid insurance
premiums; or
6
(g) Any Licenses of Seller, as set forth on Schedule 2.7.
SECTION 2
Representations and Warranties of Seller and the Members
Seller and the Members hereby, jointly and severally, represent and
warrant to Buyer as follows, except as set forth on the Schedules hereto
numbered to correspond to the sections below:
2.1. Organization and Standing. Seller is a limited liability company duly
organized and validly existing under, and by virtue of, the laws of the State of
Delaware and is in good standing under such laws. Seller has all requisite
limited liability company power to own and operate its properties and assets and
to carry on its business as currently conducted and as proposed to be conducted.
Seller is duly qualified or licensed to do business and is in good standing as a
foreign limited liability company in each jurisdiction in which it conducts
business, except for those jurisdictions where the failure to so qualify would
not have a material adverse effect on Seller.
2.2. Power. Seller and the Members have all requisite limited liability
company power and authority to execute and deliver this Agreement and each of
the other documents to be executed in connection herewith (this Agreement and
such other documents being referred to as the "Transaction Documents") to which
they are a party and to carry out and perform their obligations under the terms
of this Agreement and the other Transaction Documents to which they are a party.
Delivery of the Xxxx of Sale and other instruments of transfer contemplated by
Section 1.3 will transfer to Buyer all of Seller's right, title and interest in
the Assets, free and clear of any lien, encumbrance, adverse claim, or
restriction on transfer, except such liens, encumbrances, adverse claims, or
restrictions on transfer as set forth on Schedule 2.2. This Agreement
constitutes, and the other Transaction Documents to which Seller and the Members
are a party will each constitute, the valid and binding obligations of Seller
and the Members, enforceable in accordance with their terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws and by general
principles of equity.
2.3. No Conflict. Seller is not in violation of its Certificate of
Formation or Limited Liability Company Agreement. Seller is not in violation in
any material respect of any term or provision of any agreement to which it is a
party and which is related to the Business or the Assets. The execution,
delivery and performance of this Agreement and each of the other Transaction
Documents to which Seller and the Members are a party have not resulted and will
not result in, nor will consummation of the transactions contemplated hereby or
thereby result in, any violation of, or conflict with, or constitute a default
under, any of the foregoing charter documents or any agreements, or result in
the creation of any lien, encumbrance, or charge upon any of the Assets, or the
acceleration of maturity of any obligation of Seller or right of any third
party, except for any such violation, conflict, default, lien, encumbrance,
charge or acceleration that could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise) of the Business or the Assets, or Seller's and the
Members' ability to consummate the transactions contemplated hereunder or under
the
7
other Transaction Documents; and there exists no such violation or default that
does or could reasonably be expected to materially adversely affect the Business
or the Assets or the ability of Seller and the Members to consummate their
obligations hereunder or under the other Transaction Documents to which they are
a party.
2.4. Governmental Consents, etc. No consent, approval or authorization of
or designation, declaration, or filing with any governmental, regulatory or
administrative body, agency or authority, or any court or judicial authority
(each, an "Authority") on the part of Seller or the Members is required in
connection with the valid execution and delivery by them of this Agreement or
any other Transaction Document or the consummation by them of the transactions
contemplated hereby or thereby. The execution, delivery, and performance of this
Agreement and each other Transaction Document by Seller and the Members, and the
consummation of the transactions contemplated hereby or thereby by them, do not
require consent, approval, or authorization under any material agreement to
which Seller or the Members are a party or by which their properties or assets
are bound or affected.
2.5. Seller's Financial Condition.
(a) Except as set forth on Schedule 2.5, as of the date hereof,
Seller has no direct or indirect indebtedness, liabilities, claims, losses,
damages, deficiencies, obligations or responsibilities, liquidated or
unliquidated, accrued, absolute, contingent, or otherwise which in any way
encumber the Assets.
(b) Since January 1, 2000, Seller has not:
(i) suffered any change, event or condition that, individually
or in the aggregate, has had or could reasonably be expected to have a
material adverse effect upon the Business or Seller's and the Members'
ability to consummate the transactions contemplated herein;
(ii) entered into any transaction, contract or commitment
individually involving payments in excess of $10,000 (other than this
Agreement or disclosed in Schedule 2.5) relating to the Business in any
manner; or
(iii) incurred or paid any liability or obligation not in the
ordinary course of business, inconsistent with past custom and practice
including as to quantity and frequency.
2.6. Tax Matters. Seller has, within the times and in the manner
prescribed by law, filed all required tax returns, including sales and use tax
returns, has paid or provided for all taxes, including sales and use tax owed by
Seller, with respect to the Business, (whether or not shown on any tax return to
be due and owing by it), has paid or provided for all deficiencies or other
assessments of taxes, interest or penalties owed by it, and all such tax returns
were correct and complete in all material respects. No taxing authority has
asserted, or will successfully assert, any claim for the assessment of any
additional taxes of any nature with respect to any periods covered by any such
tax returns; and all taxes or other charges required to be withheld or collected
by Seller, with respect to the Business, have been duly withheld or collected
and, to the
8
extent required, have been paid to the proper taxing Authority or properly
segregated or deposited as required by law.
2.7. Compliance and Laws. Seller has in all material respects complied
with, and is now in all material respects in compliance with, all laws, rules,
regulations, orders, judgments and decrees of all Authorities applicable to the
Business. Seller possesses each franchise, license, permit, authorization,
certification, consent, variance, permission, order or approval of or from any
Authority, and has filed all filings, notices or recordings with any Authority
(collectively, "Licenses") material to, or necessary for the conduct of, the
Business and is now and, has at all times in the past been in material
compliance with each thereof. Each such License is identified on Schedule 2.7.
No proceeding or other action is pending or, to the best knowledge of Seller and
the Members threatened, to revoke, amend, or limit any License, and Seller and
the Members have no basis to believe that any such proceeding or action would
result from the consummation of the transactions contemplated hereby or by the
Transaction Documents, or that any such License would not be renewed in the
ordinary course.
2.8. Litigation. There is no pending or, to the best knowledge of Seller
and the Members threatened, adverse claim, dispute, governmental investigation,
suit, action, arbitration, legal, administrative or other proceeding of any
nature, domestic or foreign, criminal or civil, at law or in equity, by or
against or otherwise affecting the Business or the Assets.
2.9. Tangible Property. Except as set forth on Schedule 2.9, Seller has
good and marketable title to each item of tangible personal property that is an
Asset, free and clear of all liens and other encumbrances, and, with immaterial
exceptions, each such item of tangible personal property is in good operating
condition and repair, useable in the ordinary course of business. Schedule 2.9
contains a complete and accurate list setting forth a description of each item
of tangible property that is an Asset, and describes the nature of Seller's
interest in any property listed thereon that is not owned entirely by Seller
free and clear of security interests or other encumbrances.
2.10. Agreements. Schedule 2.10 sets forth a true and complete list of all
agreements that involve payments to or by the Seller in excess of $5,000
individually or $15,000 in the aggregate, including, without limitation, all
sales orders taken but not fulfilled by Seller as of June 30, 2000 (the
"Backlog" of orders to be fulfilled by Buyer after June 30, 2000), commitments,
including guarantees of any indebtedness, or instruments binding Seller as of
the Closing Date with respect to the Business or the Assets, and all powers of
attorney. True and complete copies of each such agreement, commitment or
instrument have been delivered to Buyer.
(a) (i) to the best knowledge of Seller, each such agreement is the
valid and binding obligation of the other contracting party, enforceable
in all material respects in accordance with its terms against the other
contracting party, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium
or other similar laws and by general principles of equity, and is in full
force and effect;
9
(ii) Seller has fulfilled all material obligations required to
have been performed by it prior to the date hereof with respect to each
such agreement, and there is no reason to believe that the other
contracting party will not be able to fulfill all of its or his
obligations when due in respect thereof;
(iii) to the best knowledge of Seller, no other contracting
party to any such agreement is now in breach thereof, and there are not
now, nor have there been in the twelve (12) month period prior to the date
hereof, any material disputes between Seller and any other contracting
party; and
(iv) Seller is not a party to, or bound by, any agreement or
commitment that (1) restricts the conduct of the Business anywhere in the
world or (2) contains any unusual or burdensome provisions that could
reasonably be expected to have a material adverse effect upon the
condition (financial or otherwise) of the Business or the Assets.
(b) Schedule 2.10(b) sets forth a true and complete list of each
proposed agreement, commitment, arrangement, or other understanding under
current discussion between Seller and any third party that would, or reasonably
could be expected to, be required to be disclosed pursuant to any provision of
this Agreement, if same had been executed prior to and remained in effect as of
the date hereof. A copy of the most recent draft of each such agreement and all
other documents evidencing the current state of such discussions are set forth
in Schedule 2.10(b).
2.11. Advertisers and Customers. Schedule 2.11 is a true and complete list
of the advertisers and customers with whom Seller has done business within six
(6) months prior to the Closing Date. The relationships of Seller with the
persons listed in Schedule 2.11 are good commercial working relationships, and
no such person has canceled or otherwise terminated, or threatened to cancel or
terminate, its relationship with Seller, or decreased or limited materially, or
threatened to decrease or limit materially, its business done with Seller, and
there is no reason to believe that any such person would not continue its
business relationship with Buyer following the Closing on substantially the same
terms as such person has heretofore done business with Seller. Schedule 2.11
lists each outstanding purchase order (or correspondence with respect to a
proposed purchase order) of Seller with respect to the Business that is
individually in excess of $10,000, identifying in each case the vendor,
supplier, contractor or inventor and the items being purchased and stating the
quantity and price thereof. At the Closing, Seller shall deliver to Buyer the
records set forth in Schedule 1.2.
2.12. Brokers or Finders. Neither Seller nor any Member has incurred, or
will incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this Agreement
or any transaction contemplated hereby. Seller and the Members shall indemnify
and hold Buyer harmless with respect to any claim by any broker, agent, or
finder claiming to have acted on behalf of Seller or the Members, respecting the
subject matter hereof.
2.13. Intellectual Property.
10
(a) Seller owns, Buyer shall receive at Closing, and the Seller's
intellectual property includes, all patents, trademarks, service marks, trade
names, and copyrights (including registrations, licenses, and applications
pertaining thereto) and all other intellectual property rights, software (in
object and source code formats), trade secrets, and other proprietary
information, processes, and formulas used in, or necessary for the operation of
the Business. Schedule 1.2 sets forth all registered trademarks and service
marks, all reserved trade names, all registered copyrights, and all filed patent
applications and issued patents used in or necessary for the operation of the
Business.
(b) Schedule 2.13(b) sets forth the form and placement of the
proprietary legends and copyright notices displayed in or on the 2CONFER web
site, or any software programs set forth in Schedule 1.2. In no instance has the
eligibility of such software programs for protection under applicable copyright
law been forfeited to the public domain.
(c) Seller has promulgated and used best efforts to protect the
trade secrets of the Business. There has been no material unauthorized
disclosure of any trade secrets of the Business by any person or entity. The
source code and system documentation relating to any software programs set forth
in Schedule 1.2 have at all times been maintained in confidence and have been
disclosed by Seller only on a confidential basis and only to employees,
consultants, vendors, suppliers and customers having "a need to know" the
contents thereof.
(d) All personnel, including employees, agents, consultants, and
contractors, who have contributed to or participated in the conception and
development of Seller's proprietary software programs, technical documentation,
or intellectual property with respect to the Business, either (1) have been
party to a "work-for-hire" arrangement or agreement with Seller, in accordance
with applicable federal and state law, that by its terms accords to Seller
ownership of all tangible and intangible property thereby arising, or (2) have
executed appropriate instruments of assignment in favor of Seller as assignee
that by their terms convey to Seller ownership of all tangible and intangible
property thereby arising.
(e) No intellectual property right or other claims have been
asserted by any person or entity to the use of any Asset, and Seller is not
aware of any valid basis for any such claim. To the knowledge of Seller, the use
of any Asset by Seller does not infringe on the intellectual property rights or
other rights of any person or entity.
(f) As of the Closing Date, all intellectual property purchased by
Buyer pursuant to this Agreement is and shall be useable in the same form as on
the Closing Date, under the same circumstances as on the Closing Date, and in
the ordinary course of the Business as such business actually has been operated
prior to the Closing Date.
(g) Except as set forth on Schedule 2.13(g), Seller has good and
marketable title to each intangible Asset, including, but not limited to, each
item of intellectual property used in and material to, or necessary for the
operation of, the Business, free and clear of all liens and other encumbrances.
Seller is the sole and rightful owner of all right, title and interest in and to
each intangible Asset, and has the unrestricted right to market, license and
otherwise exploit each intangible Asset.
11
2.14. Intentionally Omitted.
2.15. Third Party Components, Rights, etc.
(a) Seller has validly and effectively obtained the right and
license to use the third-party programs set forth in Schedule 1.2 and, with
respect to such third-party programs, such other rights and licenses as provided
for under the agreements set forth in Schedule 1.2, Seller has the right to
assign and transfer to Buyer the foregoing rights and licenses.
(b) Seller has not granted, transferred, or assigned any right,
title or interest in or to any Asset to any person or entity. There are no
contracts, agreements, licenses, and other commitments and arrangements in
effect with respect to the marketing, distribution, licensing, or promotion of
any material Asset by any independent salesperson, distributor, sublicensor, or
other remarketer or sales organization, except as set forth on Schedule 2.10.
2.16. Insurance. Seller currently maintains the insurance policies set
forth on Schedule 2.16, which policies are in full force and effect and are
sufficient in amount (subject to reasonable deductibles) to allow Seller to
replace any of its properties that might be damaged or destroyed.
2.17. Year 2000. The computer systems and software owned by Seller and
currently used in the Business are able to accurately process, without loss of
functionality or performance, date data, including but not limited to
calculating, comparing and sequencing from, into and between the twentieth
century (through year 1999), the year 2000 and the twenty-first century,
including leap year calculations.
2.18. Environmental and Safety Laws. To the knowledge of Seller and the
Members, (i) Seller is not in violation in any material respect of any
applicable law relating to the environment or occupational health and safety,
and (ii) no material expenditures are or will be required by Seller in order to
comply with any such existing law.
2.19. Seller Financial Statements. Seller has delivered to Buyer Seller's
unaudited balance sheets as of December 31, 1999, 1998 and 1997, and related
unaudited statements of income, cash flow and members' equity for the fiscal
years then ended (the "Year-End Financials") and (ii) Seller's unaudited balance
sheet as of June 30, 2000, and related unaudited statements of income, cash flow
and shareholders' equity for the six months then ended (the "Interim
Financials"). The Year-End Financials and the Interim Financials are correct in
all material respects and have been prepared in accordance with GAAP (except
that the Interim Financials and Year-End Financials do not contain all footnotes
and other presentation items that may be required by GAAP). The Year-End
Financials and Interim Financials present fairly in all material respects the
financial condition, operating results and cash flows of Seller as of the dates
and during the periods indicated therein, subject, in the case of the Interim
Financials, to normal year-end adjustments, which will not be material in amount
or significance.
2.20. No Undisclosed Liabilities. Except as set forth on the Schedules to
this Agreement, Seller has no liability, indebtedness, obligation, expense,
claim, deficiency, guaranty or endorsement of any type, whether accrued,
absolute, contingent, matured, unmatured or other (whether or not required to be
reflected in financial statements in accordance with GAAP),
12
which individually or in the aggregate (i) has not been reflected in or reserved
against in the Seller's balance sheet as of June 30, 2000 (the "Current Balance
Sheet"), or (ii) has not arisen in the ordinary course of business consistent
with past practices prior to June 30, 2000, in either case which amounts exceed
Ten Thousand Dollars ($10,000) in the aggregate; provided, however, all
liabilities for accrued but unpaid vacation or time off for Seller's employees
or other benefits or liabilities payable to such employees upon termination of
employment as of June 30, 2000 were accrued and reflected on the Current Balance
Sheet and, in any event, total severance benefits payable to Seller's employees
and former employees upon termination of employment as of the Closing Date shall
not exceed Ten Thousand Dollars ($10,000).
2.21. Loans, Notes, Cash Accounts Receivable and Accounts Payable. Seller
has provided Buyer with an accurate and complete breakdown and aging of all
accounts receivable, notes receivable and other receivables of Seller as of June
30, 2000 (the "Balance Sheet Date.") All receivables (a) have arisen only from
bona fide transactions in the ordinary course of business consistent with past
practice, (b) represent valid obligations, and (c) are current and are expected
to be collectible in the aggregate face amounts thereof without any counterclaim
or set-off when due, except to the extent of the normal allowance for doubtful
accounts with respect to accounts receivable that are computed in a manner
consistent with GAAP and as reflected in the balance sheet or with respect to
receivables arising subsequent to the Balance Sheet Date, the books and records
of Seller, and (d) are owned by Seller free of all Liens, except as set forth on
Schedule 2.21. No discount or allowance from any account receivable of Seller as
of the Closing Date has been made or agreed to (other than customary payment
discounts in the ordinary course of business consistent with past practice), and
no such account receivable represents xxxxxxxx prior to actual shipment of goods
or provision of services. Accounts payable of Seller reflected on the Current
Balance Sheet arose and all accounts payable of Seller arising after the Balance
Sheet Date have arisen, from bona fide transactions. Seller has paid all costs
and obligations customarily paid by Seller through the Closing Date in
accordance with Seller's past practice. For purposes of this Agreement, "Lien"
means, with respect to any property or asset, any mortgage, lien, pledge,
charge, security interest, encumbrance or other adverse claim of any kind in
respect of such property or asset. For the purposes of this Agreement, a Person
shall be deemed to own subject to a Lien any property or asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset. For purposes of this Agreement, "Person"
means an individual, corporation, partnership, association, trust or other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.
2.22. Interested Party Transactions. Neither the Members nor any manager
of Seller (nor, to the actual knowledge of Seller and the Members, any ancestor,
sibling, descendant or spouse of any of such persons, or any trust, partnership
or corporation in which any of such persons has or has had an interest), has or
has had, directly or indirectly, (i) an interest in any entity that furnished or
sold, or furnishes or sells, services, products or technology that Seller
furnishes or sells, or proposes to furnish or sell, or (ii) any interest in any
entity that purchases from or sells or furnishes to Seller, any goods or
services, or (iii) a beneficial interest in any agreements of Seller; provided,
that ownership of no more than one percent (1%) of the outstanding voting stock
of a publicly traded corporation shall not be deemed to be an "interest in any
entity" for purposes of this Section 2.22.
13
2.23. Minute Books. The minutes of Seller made available to counsel for
Buyer are the only minutes of Seller and contain summaries, accurate in all
material respects, of all meetings of the Members and managers of Seller, or
actions by written consent, since the time of organization of Seller.
2.24. Complete Copies of Materials. Seller and the Members have delivered
or made available true and complete copies of each document (or summaries of
same) that has been requested specifically in writing by Buyer or its counsel.
2.25. Disclosure. No representation or warranty made by Seller, nor any
statement made in the Schedules to this Agreement or certificate furnished by
Seller pursuant to this Agreement contains or will contain, any untrue statement
of a material fact or omits or will omit to state any material fact necessary in
order to make the statements contained herein or therein not misleading.
2.26. Interest, Participation Rights and Ownership Position. Seller and
the Members have no interest, participation rights, or ownership position in any
corporation, partnership, joint venture, co-marketing arrangement, or similar
enterprise or undertaking relating to the Business.
2.27. Assets. Except for the Excluded Assets, the Assets are all of the
assets, properties, goodwill, and rights of every nature, kind and description,
whether tangible or intangible, real, personal or mixed, wherever located, used
in and material to, or necessary for the operation of, the Business.
2.28. Investment Representations.
(a) Restricted Securities. Seller and the Members understand that
the shares of Stock delivered to Seller by Buyer are characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired from Buyer in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may be resold
without registration under the Securities Act only in certain limited
circumstances. In addition, Seller and the Members represent that they are
familiar with Rule 144 under the Securities Act, as presently in effect, and
understand the resale limitations imposed thereby and by the Securities Act.
(b) Investment Experience. Seller and the Members acknowledge that
they are able to protect their own interests, can bear the economic risk of
their investment in Buyer, and have such knowledge and experience in financial
or business matters that they are capable of evaluating the merits and risks of
the investment in the Stock.
(c) Legends. It is understood that the certificate(s) evidencing the
Stock shall bear the following legend:
"The shares represented by this certificate have been acquired for
investment and have not been registered under the Securities Act of 1933, as
amended. Such shares may not be sold or transferred in the absence of such
registration or unless the Corporation receives an opinion of counsel reasonably
acceptable to it stating that such sale or transfer is exempt from the
registration and prospectus delivery requirements of such act."
14
2.29. General. No representation or warranty made herein or in any
agreement, Schedule, exhibit or document delivered pursuant hereto contains any
material misstatement of any fact or omits to state anything necessary to make
any material statement made herein or therein not misleading.
SECTION 3
Representations and Warranties of Buyer
Buyer represents and warrants to Seller and the Members as follows, except
as set forth on the Schedules numbered to correspond to the sections below:
3.1. Organization and Standing. Buyer is a corporation duly organized and
validly existing under, and by virtue of, the laws of the State of Delaware and
is in good standing under such laws. Buyer has all requisite corporate power to
own and operate its properties and assets and to carry on its business as
currently conducted and as proposed to be conducted. Buyer is duly qualified or
licensed to do business and is in good standing as a foreign corporation in each
jurisdiction in which it conducts business, except for those jurisdictions where
the failure to so qualify would not have a material adverse effect on Buyer.
3.2. Requisite Power. Buyer has all requisite corporate power to execute
and deliver this Agreement and the other Transaction Documents to which it is a
party and to carry out and perform its obligations under the terms of this
Agreement and the other Transaction Documents to which it is a party.
3.3. Authorization. All action on the part of Buyer necessary for the
authorization, execution, delivery and performance of this Agreement and the
other Transaction Documents to which it is a party has been taken and remains in
full force and effect. This Agreement constitutes, and the other Transaction
Documents to which Buyer is a party will each constitute, the valid and binding
obligation of Buyer enforceable against Buyer in accordance with its terms.
3.4. No Conflict. The execution, delivery, and performance of this
Agreement and each of the other Transaction Documents to which it is a party by
Buyer has not resulted and will not result in, nor will consummation of the
transactions contemplated hereby or thereby result in, any material violation
of, or conflict with, or constitute a default under, any of its charter
documents or material agreements; and there exists no such violation or default
that does or could reasonably be expected to materially and adversely affect the
ability of Buyer to consummate its obligations hereunder.
3.5. Governmental Consents, etc. No consent, approval or authorization of
or designation, declaration, or filing with any Authority on the part of Buyer
is required in connection with the valid execution and delivery of this
Agreement or any Transaction Document to which it is a party or the consummation
of the transactions contemplated thereby or thereby.
3.6. Brokers or Finders. Buyer has not incurred, and will not incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar
15
charges in connection with this Agreement or any transaction contemplated
hereby. Buyer shall indemnify and hold Seller and the Members harmless with
respect to any claim by any broker, agent or finder claiming to have acted on
behalf of Buyer respecting the subject matter hereof.
3.7. Stock. When the stock certificates representing the shares to be
delivered at the Closing as part of the Purchase Price are delivered to Seller
and the Escrow Agent, such shares of Stock will be duly authorized, validly
issued and fully paid and nonassessable.
SECTION 4
Closing Conditions and Documents
4.1. Conditions to Buyer's Obligations. The obligations of Buyer under
this Agreement are subject to the fulfillment on or before the Closing of each
of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Seller and the Members contained in Section 2 of this Agreement
shall be true on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date.
(b) Performance. Seller and the Members shall have performed and
complied in all material respects with all agreements, obligations and
conditions contained in this Agreement that are required to be performed or
complied with by them on or before Closing.
(c) Proceedings and Documents. All limited liability company and
other proceedings in connection with the transactions contemplated at the
Closing and all documents incident thereto shall be reasonably satisfactory in
form and substance to Buyer's counsel.
(d) Transaction Documents. The other Transaction Documents shall
have been duly executed and delivered by Seller and the Members.
(e) Payoff Letters. Seller shall have delivered to Buyer payoff
letters from Royal American Bank in connection with Seller's obligations to
Royal American Bank.
4.2. Conditions to Seller's Obligations. The obligations of Seller under
this Agreement are subject to the fulfillment on or before the Closing Date of
each of the following conditions by such party:
(a) Representations and Warranties. The representations and
warranties of Buyer contained in Section 3 of this Agreement shall be true on
and as of the Closing Date with the same effect as though such representations
and warranties had been made on and as of the Closing Date.
(b) Performance. Buyer shall have performed and complied in all
material respects with all agreements, obligations and conditions contained in
this Agreement that are required to be performed or complied with by it on or
before Closing.
16
(c) Payment of Purchase Price. Buyer shall have paid the Purchase
Price as specified in Section 1.5(a).
(d) Transaction Documents. The other Transaction Documents shall
have been duly executed and delivered by Buyer.
4.3. Seller Deliveries. Simultaneously with the Closing of the
transactions contemplated by this Agreement, the following documents shall be
executed and/or delivered by Seller and/or the Members to Buyer:
(a) the Xxxx of Sale, and such other instruments of assignment as
Buyer and its counsel reasonably shall have requested prior to the Closing Date
for the sale, transfer and conveyance and assignment of the Assets to Buyer;
(b) the Escrow Agreement;
(c) a certificate, dated the Closing Date, of the manager of Seller:
(i) attaching resolutions of the members and managers of Seller in connection
with the authorization and approval of the execution, delivery and performance
by Seller of this Agreement and the other Transaction Documents to which Seller
is a party, certified as being in full force and effect as of the Closing Date;
(ii) attaching a copy, certified by the manager as true and complete, of
Seller's Limited Liability Company Agreement, as amended to the Closing Date;
(iii) setting forth the incumbency of the officers of Seller who have executed
and delivered this Agreement and each of the other Transaction Documents to
which Seller is a party, including therein a signature specimen of each such
officer; and (iv) attaching a copy, certified by the manager as true and
complete, of Seller's Certificate of Formation, as amended to the Closing Date;
(d) a good standing certificate with respect to Seller from the
Secretary of State of the State of Delaware;
(e) all materials and documentation set forth in Section 1.2; and
(f) an opinion of counsel to Seller addressed to Buyer and covering
such matters as Buyer shall reasonably request, in substantially the form of
Exhibit C hereto.
4.4. Buyer Deliveries. Simultaneously with the Closing of the transactions
contemplated by this Agreement, the following documents shall be executed and/or
delivered by Buyer to Seller:
(a) the Xxxx of Sale;
(b) the Escrow Agreement; and
(c) the stock certificate representing the shares of Stock being
issued to Seller as part of the Purchase Price pursuant to Section 1.5(a)(i).
17
SECTION 5
Covenants
5.1. Post-Closing Covenants.
(a) From and after the Closing, Seller and the Members shall, at
Buyer's expense, execute all such instruments or documents and take all such
other actions as Buyer may reasonably request to effectuate the transactions
contemplated hereby, including, without limitation (i) inventorying and listing
of the Assets, (ii) obtaining of any necessary or advisable consents not
required by Buyer prior to Closing in connection with the transactions
contemplated hereby (including consents to assignment of contract rights and
obligations as Buyer may reasonably request), (iii) filing of tax returns,
including, without limitation, the filing of sales and use tax returns and
notices as any party hereto may reasonably require; and (iv) cooperating with
Buyer to facilitate the transition of Business customers, developers, content
contributors and advertisers to Buyer.
(b) Xxxxxx X. Xxxxxx and Mutare, Inc. shall jointly and severally,
and the other Members listed on the signature pages hereto shall severally but
not jointly, defend and hold harmless Buyer, its officers, directors, employees,
partners, members, shareholders, affiliates (and their officers, directors,
employees, members, partners and shareholders), and agents (collectively, the
"Buyer Indemnified Parties") from and against any action, loss, liability,
damage, claim, fine, penalty, lien or expense, including legal costs, reasonable
attorneys' fees, and expenses, (collectively, "Loss") to the extent the same
arises out of (i) any breach by Seller or the Members of any representation,
warranty, agreement, or covenant made by Seller or the Members herein or in any
Transaction Document, (ii) Seller's failure to comply with any bulk sales or
similar law, except to the extent such failure involves an Assumed Liability,
(iii) except to the extent such tax is an Assumed Liability, any tax, including
use or sales tax, for which Seller or the Members or any of Seller's directors
or officers is or may be liable in respect of the conduct of the Business prior
to the Closing, (iv) any claim arising out of or in connection with the conduct
of the Business on or prior to the Closing Date alleging that all, or any
portion of, the Business infringes any intellectual property right or other
interest of any person or entity, and (v) any obligation of Seller or the
Members relating to the period prior to the Closing Date, whether the claim
relating to such obligation arises before or after the Closing, excluding
obligations with respect to Assumed Liabilities except to the extent that any
such obligation or Assumed Liability arose from or was the result of any facts
or circumstances, the existence of which constitutes a breach of a
representation or warranty made by Seller or the Members hereunder. Each Buyer
Indemnified Party will give prompt notice to Seller and the Members of any claim
or condition to which the foregoing indemnification covenant relates. At its
election, Seller or the Members may control the defense of such claim, at its
expense, but shall not settle any such claim without the consent of the
respective Buyer Indemnified Party or Parties. If shares of Stock issued as part
of the Purchase Price are used to satisfy the obligations of Seller and the
Members under this Section 1.5(b), such shares shall be valued at the average of
the last reported per share sale price of the Stock on the Nasdaq National
Market during the ten (10) trading days immediately preceding the Closing Date.
18
(c) Buyer shall preserve and retain the corporate, accounting, tax,
legal and other records of the Business that shall come into Buyer's possession
as a result of the transactions contemplated hereby for a period of not less
than five (5) years from the Closing Date and give reasonable access to Seller
and the Members, and Seller's officers, auditors, counsel, and other
representatives for the purpose of preparing or defending tax returns or for
other reasonable business purposes.
(d) The amount of any Loss for which indemnification is provided
under this Section 5 shall be net of any amounts recovered or recoverable by
Buyer under insurance policies with respect to such loss and shall be (i)
increased to take account of any net tax cost incurred by Buyer arising from the
receipt of indemnity payments hereunder (grossed up for such increase) and (ii)
reduced to take account of any net tax benefit realized by Buyer arising from
the incurrence or payment of any such Loss. In computing the amount of any such
tax cost or tax benefit, Buyer shall be deemed to recognize all other items of
income, gain, loss, deduction or credit before recognizing any item arising from
the receipt of any indemnity payment hereunder or the incurrence or payment of
any indemnified Loss.
(e) Seller and the Members shall not be liable to Buyer under this
Section 5.1 until the aggregate amount of Losses shall exceed $10,000, and then
only for any amounts in excess thereof. The aggregate amount of Losses for which
Seller and the Members shall be liable to Buyer under this Section 5.1 or
otherwise in excess of the Escrowed Amount shall not exceed Four Hundred
Thousand Dollars ($400,000).
(f) From and after the Closing, Seller and the Members shall execute
all such instruments or documents and take all such other actions as Buyer may
reasonably request to transfer the domain name "0XXXXXX.xxx", the URL address
"xxx.0XXXXXX.xxx", the address for the 2CONFER web site and all of such web
site's content, from Seller to Buyer.
(g) From and after the Closing, if Seller or any Member becomes
aware of any Asset in their possession that was not delivered to Buyer at
Closing, including but not limited to any Asset described in Section 1.2, Seller
and any such Member shall have the obligation to promptly notify Buyer of any
such Asset, and to deliver any such Asset to Buyer in accordance with Buyer's
reasonable instructions.
(h) From and after the date which is sixty (60) days after the
Closing Date, Seller shall, upon the written request of Buyer, immediately
destroy or erase all of Seller's copies of the Assets set forth in Schedule 1.2
and, upon Buyer's request, promptly confirm destruction of same by signing and
returning to Buyer an "affidavit of destruction" acceptable to Buyer; provided,
however, that Seller shall be entitled to retain a copy of those specific
records, and only those specific records, that contain information (i) that is
not related to the Business, (ii) that is neither confidential or privileged, or
(iii) for which Seller has a reasonable need to retain.
(i) For a period of one year from the Closing Date, Seller shall
not, without Buyer's prior written consent, directly or indirectly, (A) solicit
the employment of any key employee, officer or senior manager of Buyer or (B)
hire any key employee, officer or senior manager whose employment with Buyer has
ceased within 90 days of such solicitation or hire; provided, however, that this
subparagraph (i) shall not prevent advertisements, solicitations,
19
position listings or notices of employment opportunities that are published or
made available to members of the public or hiring of personnel responding
thereto.
(j) For a period of four (4) years from the Closing Date, Seller and
the Members shall not, directly or indirectly, for purposes competitive with the
Business, call on, solicit, or take away for Seller or for any other person or
entity any person or entity who or which was a customer of Buyer on the Closing
Date.
(k) From and after the Closing, Seller shall use its best efforts to
obtain promptly landlord consents and to perform all other actions necessary to
effect the assignment to Buyer of the office leases set forth on Schedule 2.10
(the "Leases"). In the event Seller fails to effect the assignment of any of the
Leases to Buyer, Seller will be liable for (i) reasonable moving expenses of
Buyer and (ii) any increase in rent payments above those currently contemplated
by the Leases, provided that, with respect to each Lease, any liability for such
increase in rent payments shall not exceed 10% of the current rent payments for
the remaining term of each Lease.
(l) Buyer shall fully cooperate with Seller for purposes of enabling
Seller to obtain the landlord consents and other third party consents necessary
to assign and transfer office leases and other agreements and commitments to
Buyer to the extent such consents have not been obtained by Closing.
SECTION 6
Miscellaneous
6.1. Governing Law. This Agreement shall be governed in all respects by
the laws of the State of New York, without giving effect to any choice or
conflict of law provision or rule (whether of the State of New York or any other
jurisdiction that would cause the application of the laws of any jurisdiction
other that the State of New York).
6.2. Survival. The representations and warranties made herein shall
survive any investigation made by the parties and the Closing of the
transactions contemplated hereby for a period of two (2) years after the Closing
Date, except that Seller's representations and warranties with respect to title
and tax matters shall survive for the period of any applicable statute of
limitations. Except as expressly provided otherwise herein, the covenants and
agreements made herein shall survive the Closing of the transactions
contemplated hereby.
6.3. Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
No party may assign any of its rights or obligations hereunder without the
express written consent of the other party hereto, which consent may not be
unreasonably withheld; provided, however, any party may assign any and all of
its rights and interests hereunder to one or more of its affiliates and
designate one or more of its affiliates to perform its obligations hereunder;
provided, however, that such party remains liable for full and total performance
of its obligations hereunder.
20
6.4. Notices. Any notices authorized to be given hereunder shall be in
writing and deemed given, if delivered personally or by overnight courier, on
the date of delivery, if a Business Day, or if not a Business Day, on the first
Business Day following delivery, or if mailed, three days after mailing by
registered or certified mail, return receipt requested, and in each case,
addressed, as follows:
If to Buyer:
Wire One Technologies, Inc.
000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: President
Facsimile: (000) 000-0000
and a copy to:
Xxxxxxx X. X. Xxxxxxx, Esq.
Xxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
If to Seller Parties or Sellers' Representative (as defined
below):
2CONFER L.L.C.
0000 Xxxx Xxxxxxx Xxxx
Xxxxx 0000
Xxxxxxx Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
and a copy to:
Xxxxx X. Xxxx
Xxxxxx Xxxxx Xxxxxxxxxx & Xxxx
1800 Three First National Plaza
00 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
or if delivered by telecopier, on a Business Day before 4:00 PM local time of
addressee, on transmission confirmed electronically, or if at any other time or
day on the first Business Day succeeding transmission confirmed electronically,
to the facsimile numbers provided above, or to such other address or telecopy
number as any party shall specify to the other, pursuant to the foregoing notice
provisions.
21
6.5. Waiver; Amendments. This Agreement, and the Transaction Documents,
(i) set forth the entire agreement of the parties respecting the subject matter
hereof, (ii) supersede any prior and contemporaneous understandings, agreements,
or representations by or among the parties, written or oral, to the extent they
related in any way to the subject matter hereof, and (iii) may not be amended
orally, and no right or obligation of any party may be altered, except as
expressly set forth in a writing signed by such party.
6.6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall for all purposes be deemed an original, and
all such counterparts shall together constitute but one document.
6.7. Expenses. Each party shall bear its own expenses incurred with
respect to the preparation of this Agreement and the other Transaction Documents
and the consummation of the transactions contemplated hereby.
6.8. Arbitration.
(a) If at any time there shall be a dispute arising out of or
relating to any provision of this Agreement, any Transaction Document or any
agreement contemplated hereby or thereby, such dispute shall be submitted for
binding and final determination by arbitration in accordance with the
regulations then obtaining of the American Arbitration Association. Judgment
upon the award rendered by the arbitrator(s) resulting from such arbitration
shall be in writing, and shall be final and binding upon all involved parties.
The site of any arbitration shall be within New York City, New York. The award
may be confirmed and enforced in any court of competent jurisdiction. The
parties hereby agree that any federal or state court sitting in the County of
New York in the State of New York is a court of competent jurisdiction. This
paragraph does not limit in any way a party's right to seek injunctive relief in
any state or federal court sitting in the County of New York in the State of New
York (jurisdictional, venue and inconvenient forum objections to which are
hereby waived by both parties), including recovery of fees and costs.
(b) This arbitration clause shall survive the termination of this
Agreement and any other Transaction Document and the consummation of the
transactions contemplated hereby and thereby.
6.9. Waiver of Jury Trial; Exemplary Damages. THE PARTIES HERETO HEREBY
WAIVE THEIR RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY DISPUTE ARISING UNDER
THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT. No party shall be awarded
punitive or other exemplary damages respecting any dispute arising under this
Agreement or any other Transaction Document contemplated hereby.
6.10. Appointment of Representative.
(a) Powers of Attorney. Each Seller Party irrevocably constitutes
and appoints Xxxxxx X. Xxxxxx (the "Sellers' Representative") as such Seller
Party's true and lawful agent, proxy, and attorney-in-fact and authorizes the
Sellers' Representative to act for such Seller Party and in such Seller Party's
name, place, and stead, in any and all capacities to do and perform every act
and thing required or permitted to be done in connection with the transactions
22
contemplated by this Agreement and any other Transaction Document, as fully to
all intents and purposes as such person might or could do in person, including,
without limitation, the power to:
(i) receive all notices required to be delivered to such
Seller Party under this Agreement, including, without limitation, any
notice of a claim for which indemnification is sought under Section 5
hereof;
(ii) take any and all action on behalf of such Seller Party
from time to time as the Sellers' Representative may deem necessary or
desirable to defend, pursue, resolve, and/or settle claims under this
Agreement, including, without limitation, claims for indemnification under
Section 5 hereof; and
(iii) engage and employ agents and representatives (including
accountants, legal counsel, and other professionals) and incur such other
expenses as he deems necessary or prudent in connection with the
administration of the foregoing.
Each Seller Party grants unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing necessary or desirable
to be done in connection with the transactions contemplated by this Agreement
and any other Transaction Document, as fully to all intents and purposes as such
Seller Party might or could do in person, hereby ratifying and confirming all
that the Sellers' Representative may lawfully do or cause to be done by virtue
hereof. Each Seller Party, by executing this Agreement, agrees that such agency,
proxy, and power of attorney are coupled with an interest, and are therefore
irrevocable without the consent of the Sellers' Representative and shall survive
the death, incapacity, or bankruptcy of such Seller Party to the extent
permitted by applicable law. Each Seller Party acknowledges and agrees that,
upon execution of this Agreement, any delivery by the Sellers' Representative of
any waiver, amendment, agreement, opinion, certificate, or other documents
executed by the Sellers' Representative or any decisions made by the Sellers'
Representative pursuant to this Section 6.10 shall bind such Seller Party with
respect to such documents or decision as fully as if such Seller Party had
executed and delivered such documents or made such decisions.
(b) Not Liable. The Sellers' Representative shall not have, by
reason of this Agreement, a fiduciary relationship in respect of any Seller
Party, except in respect of amounts received on behalf of such Seller Party. The
Sellers' Representative shall not be liable to any Seller Party for any action
taken or omitted by him or any agent employed by him hereunder or under any
other Transaction Document, or in connection therewith, except that the Sellers'
Representative shall not be relieved of any liability imposed by law for gross
negligence or willful misconduct. The Sellers' Representative shall not be
liable to the Seller Parties for any apportionment or distribution of payments
made by him in good faith and, if any such apportionment or distribution is
subsequently determined to have been made in error the sole recourse of any
Seller Party to whom payment was due, but not made, shall be to recover from the
other Seller Parties any payment in excess of the amount to which they are
determined to have been entitled. The Sellers' Representative, in such capacity,
shall not be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions, or conditions of this Agreement or
any other Transaction Document.
23
(c) Replacement of the Sellers' Representative. Upon the death,
disability, or incapacity of the initial Sellers' Representative appointed
pursuant to Section 6.10(a) above, each Seller Party acknowledges and agrees
that such Sellers' Representative's executor, guardian, or legal representative,
as the case may be, shall (in consultation with the Members) appoint a
replacement reasonably believed by such person to be capable of carrying out the
duties and performing the obligations of the Sellers' Representative hereunder
within thirty (30) days. In the event that the Sellers' Representative resigns
for any reason, the Sellers' Representative shall (in consultation with the
Seller Parties) select another representative to fill such vacancy. Any
substituted representative shall be deemed the Sellers' Representative for all
purposes of this Agreement and any other Transaction Document.
(d) Actions of the Sellers' Representative; Liability of the
Sellers' Representative. Each Seller Party agrees that Buyer shall be entitled
to rely on any action taken by the Sellers' Representative, on behalf of the
Seller Parties, pursuant to Section 6.10(a) above (each, an "Authorized
Action"), and that each Authorized Action shall be binding on each Seller Party
as fully as if such Seller Party had taken such Authorized Action. Buyer agrees
that the Sellers' Representative shall have no liability to Buyer for any
Authorized Action, except to the extent that such Authorized Action is found by
a final order of a court of competent jurisdiction to have constituted fraud or
willful misconduct. The Seller Parties hereby release and discharge Buyer from
and against any liability arising out of or in connection with the Sellers'
Representative's failure to distribute any amounts received by the Sellers'
Representative on Seller Parties' behalf to the Seller Parties.
6.11. Business Day. When used in this Agreement, the term "Business Day"
shall mean a day other than a Saturday, Sunday or a day on which commercial
banks in New York City are generally closed for business.
[The remainder of this page is intentionally left blank.]
24
IN WITNESS WHEREOF, the undersigned have executed this Asset Purchase
Agreement as of the date first written above.
BUYER:
WIRE ONE TECHNOLOGIES, INC.
By: /s/ Xxxxxxx Xxxxx
---------------------------------------------
Name: Xxxxxxx Xxxxx
Title: President and Chief Executive Officer
SELLER:
2CONFER L.L.C.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Manager
MEMBERS:
Mutare, Inc.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
/s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxx Xxxxxx
------------------------------------------------
Xxxx Xxxxxx
/s/ Xxxxx Xxxxxxxxxxxx
------------------------------------------------
Xxxxx Xxxxxxxxxxxx
/s/ Xxxx Xxxxxxx
------------------------------------------------
Xxxx Xxxxxxx
S-1
