ASSET PURCHASE AGREEMENT
Exhibit
10.1
THIS
ASSET PURCHASE AGREEMENT (the
“Agreement”)
is
made and entered into as of November 2, 2006 among ANSWERS
CORPORATION,
a
Delaware corporation (“Buyer”),
XXXXXXXXXXX.XXX,
INC.,
a New
York corporation (“Seller”)
and
XXXXX
XXXXXXX
(“Shareholder”;
Seller
and Shareholder collectively referred to as the “Selling
Parties”).
WHEREAS,
Seller
is engaged in, among other things, the business of operating web properties
that
cultivate and facilitate the growth of frequently asked questions through
an
organic process of end-users asking and answering each other's questions,
including, among others, xxx.xxxxxxx.xxx
and
xxx.xxxxxxxxxxx.xxx
(the
“Business”);
and
WHEREAS,
Seller
desires to sell, and Buyer desires to purchase and acquire all of the
Transferred Assets (as hereinafter defined) including, without limitation,
all
intellectual property of and contractual rights of the Seller associated
therewith.
NOW,
THEREFORE,
in
consideration of the mutual benefits to be derived from this Agreement and
the
representations, warranties, covenants, agreements, conditions and promises
contained herein and therein, the parties hereto hereby agree as follows.
Capitalized
terms used in this Agreement and not otherwise defined herein shall have
the
meanings ascribed to such terms as set forth on Exhibit
A attached
hereto and made a part hereof.
1. PURCHASE
AND SALE OF ASSETS.
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1.1.
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Transferred
Assets.
Other than Excluded Assets (as defined in Section 1.2 below), Seller
hereby sells, transfers, assigns, and delivers free from all Encumbrances
(other than those set forth in Section 5.1(e) of the Seller Disclosure
Schedule) to Buyer, and Buyer hereby purchases, acquires, and accepts
from
Seller, the right, title, and interest in and to the properties
and assets
of Seller listed on Schedule
1.1
attached hereto and made a part hereof, all in accordance with
the
provisions set forth in this Agreement (the “Transferred
Assets”).
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1.2.
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Excluded
Assets.
Notwithstanding anything to the contrary contained in this Agreement,
the
parties agree that Seller is not selling, assigning, transferring,
conveying, or delivering (nor does Seller have any obligation to
assign,
transfer, convey or deliver) to Buyer, and the Transferred Assets
shall
not include, any assets that are not Transferred Assets (the “Excluded
Assets”).
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2. EXCLUDED
LIABILITIES.
All
liabilities of Seller are referred to herein as “Excluded
Liabilities”.
As
between Seller and Buyer, Seller shall be solely responsible for and pay
any and
all debts, losses, damages, obligations, liens, assessments, judgments, fines,
disposal, and other costs and expenses, liabilities, and claims, including,
without limitation, interest, penalties, and fees of counsel and experts,
as the
same are incurred, of every kind or nature whatsoever (all the foregoing
being a
“Claim”
or
the
“Claims”),
made
by or owed to any person to the extent any of the foregoing relates to (i)
the
Excluded Assets, or (ii) the Excluded Liabilities, including, without
limitation, liabilities arising from or in connection with the Transferred
Assets, arising in connection with or on the basis of events, acts, omissions,
occurring or existing prior to or on the Closing Date. All responsibility
with
respect to the Excluded Liabilities shall remain with Seller.
3. PURCHASE
PRICE.
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3.1.
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The
aggregate purchase price payable to Seller for the Transferred
Assets is
Two Million U.S. Dollars (U.S. $2,000,000) in cash, due and payable
on the
Closing Date by wire transfer of immediately available funds to
such bank
account as Seller shall direct in writing (the “Purchase
Price”).
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3.2.
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Seller
shall pay any and all municipal, county, state and federal sales
and
documentary transfer taxes, impositions, liens, leases, assessments,
sales
and similar charges or taxes if any, incurred by Buyer, Seller
or
Shareholder in connection with the transaction contemplated by
this
Agreement. Each party shall in a timely manner sign and swear to
any
return, certificate, questionnaire, or affidavit as to matters
within its
knowledge required in connection with the payment of any such tax.
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3.3.
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The
Purchase Price shall be allocated among the Transferred Assets
in the
manner required by Treasury Regulation §1.1060-1T as mutually agreed upon
between the Seller and Buyer (the “Allocation”).
Buyer shall deliver its determination with respect to the Allocation
within thirty (30) days after the Closing Date. The parties agree
that:
except as otherwise required by law (i) the Allocation shall be
binding on
the parties for all federal, state, local and foreign tax purposes,
and
(ii) the parties shall file with its respective federal income
tax returns
consistent IRS
Forms 8594 -
Asset Acquisition Statements under Section 1060, including any
required
IRS forms, Schedules, or amendments thereto, which shall reflect
the
allocation set forth in the Allocation pursuant to this Section
3.3.
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4. CLOSING; POST-CLOSING.
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4.1.
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The
closing of the transactions contemplated hereunder (the “Closing”)
will take place on the date hereof, unless another date is agreed
to in
writing by the parties (the “Closing
Date”).
The Closing shall take place at Buyer's offices located at 000
Xxxx
00xx
Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx, unless another place is
agreed to
in writing by the parties.
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4.2.
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After
the Closing, as reasonably requested by Buyer, Seller shall provide
reasonable assistance to the Buyer and its accountants and attorneys
in
connection with the preparation of financial reports and tax returns
of
Buyer as they relate to the Transferred Assets. Selling Parties
shall be
reimbursed for all expenses and costs incurred by them in providing
such
assistance. Selling Parties will not be required to provide any
assistance
or disclose any information with respect to matters taken adverse
to the
interests or which may be taken adversely to the interests of the
Selling
Parties.
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4.3.
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The
Selling Parties shall, from time to time, at Closing or at any
time
thereafter, do or procure the doing of all such acts and/or execute
or
procure the execution of all such documents, in a form reasonably
satisfactory to Buyer, as Buyer may reasonably consider necessary
for
giving full effect to this Agreement and securing to Buyer the
full
benefit of the rights, powers, and remedies conferred upon Buyer
in this
Agreement.
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4.4.
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Seller
shall promptly, but no later than 10 business days after the Closing
Date,
transfer or deliver to Buyer any of the Transferred Assets delivered
to,
or retained or received by, Seller after the Closing
Date.
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4.5.
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Immediately
following the Closing, Seller shall cooperate and comply with any
and all
strategies, policies and steps reasonably necessary, appropriate
or
desirable, related to Buyer's communications and interactions with
contributors to and supervisors of the community known as the “Wiki
Answers Community” (the “Community”)
for the purpose of preserving the community aspects of the web
property
known as xxx.xxxxxxx.xxx
and xxx.xxxxxxxxxxx.xxx
(the “FAQ
Farm Websites”)
and ensuring the continuity of active Community participation by
Internet
users,
including, but not limited to, those steps as set forth on Exhibit
B
attached hereto.
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4.6.
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Immediately
following the Closing, Seller undertakes to complete the required
documentation in order to complete and execute the assignment of
ownership
to Buyer of the domain names, registered trademarks, trademark
applications and the databases that are part of the Transferred
Assets.
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4.7.
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Each
Selling Party shall cooperate with Buyer and, at Buyer’s request, each
Selling Party shall remit to Buyer all revenues collected from
the
operation of the Business provided by or on behalf of Buyer after
the
Closing Date.
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4.8.
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Seller
shall deliver to Buyer a file of all databases that are part of
the
Transferred Assets in the form and media reasonably requested by
Buyer at
or prior to the Closing.
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5. REPRESENTATIONS
AND WARRANTIES.
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5.1.
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Representations
and Warranties of Seller and Shareholder.
Except as otherwise set forth in the disclosure schedule delivered
by
Seller to Buyer concurrently with the execution of this Agreement
(the
“Seller
Disclosure Schedule”),
Seller and Shareholder jointly and severally represent and warrant
to
Buyer as follows:
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(a)
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Organization;
Good Standing; Qualification and Power.
Seller is a corporation, duly organized, validly existing, and
in good
standing under the laws of the State of New York. Seller has full
corporate power and authority to transfer the Transferred Assets
to Buyer,
to carry on the Business as now conducted, and possesses all governmental
and other permits, licenses, and other authorizations to own, lease,
or
operate its assets and properties as now owned, leased, and operated
and
to carry on the Business as presently conducted, except where the
failure
to procure such permits, licenses, and other authorizations such
would not
reasonably be expected to have a Material Adverse Effect on Seller.
Seller
is duly qualified and in good standing to do business in those
jurisdictions listed in Section 5.1(a) of the Seller Disclosure
Schedule,
being all of the jurisdictions in which the failure to be so qualified
and
in good standing could reasonably be expected to have a Material
Adverse
Effect on Seller.
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(b)
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Due
Authority.
All corporate action on the part of Seller, its directors, officers
and
shareholders necessary for the authorization, execution, delivery,
and
performance of this Agreement and any Related Agreements (as defined
in
Section 6 below), if applicable, has been taken prior to the Closing.
Neither the execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby will: (i) conflict with
or violate
any law, ordinance, or regulation or any decree or order of any
court or
administrative or other governmental body that is either applicable
to,
binding upon, or enforceable against Seller; or (ii) except where
consent
is required and obtained, result in any breach of or default under
any
mortgage, lease, promissory note, contract, purchase order, indenture,
trust, or other instrument or written agreement which is either
binding
upon or enforceable against Seller or Shareholder.
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(c)
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Financial
Information; Operational Results - Material Adverse Change.
As of the dates and for the periods indicated thereon, the financial
information included in Section 5.1(c)(i) of the Seller Disclosure
Schedule (“Financial
Information”),
(i) is correct and complete in all material respects; (ii) is compiled
in
accordance with the books and records of Seller; and (iii) fairly
presents
the results of operations of the Business. Since September 30,
2006, and
as of the date hereof, there has not been any Material Adverse
Change in
the financial condition, results of operations, Transferred Assets,
liabilities or business condition of Seller or the Business, except
for
changes arising as a result of general economic conditions, conditions
affecting Seller’s industry generally or changes arising as a result of
the public announcement of the transaction subject to this Agreement.
The
FAQ Farm Websites (A) have collectively accumulated to date no
less than
250,000 unique questions, no less than 400,000 unique edits/answers,
and
no less than 200,000 pages that are indexed in Google; and (B)
as of
October 23, 2006, have collectively attracted no less than 100,000
registered users known as “FAQ Farmers” and are supervised by no less than
25 supervising editors known as “FAQ Farm Supervisors.”
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(d)
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Tax
Matters.
Except as set forth in Section 5.1(d) of the Seller Disclosure
Schedule,
(i) Seller has paid or adequately provided for any and all taxes,
license
fees, or other governmental charges levied, assessed, or imposed
upon any
of the Transferred Assets and the Business; (ii) Seller has filed
all tax
returns and reports required by federal, state, and local tax authorities,
and such returns are correct, true and complete; and (iii) Seller
is not
involved in any dispute with any tax authority nor has it received
any
notice of any deficiency, audit, or other indication of deficiency
from
any tax authority with respect to the Business.
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(e)
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Title
to the Transferred Assets.
Except as set forth in Section 5.1(e) of the Seller Disclosure
Schedule,
Seller has good, valid, and marketable title to or a valid, transferable
license to use, all Transferred Assets, personal, tangible and
intangible.
At the Closing, none of the Transferred Assets will be subject
to any
Encumbrance (other than rights retained by any licensor of intellectual
property to the Seller) or charge of any kind.
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(f)
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Intellectual
Property.
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i.
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Section
5.1(f)(i) of the Seller Disclosure Schedule contains a true and
complete
list of all of Seller’s patents, patent applications, registered
copyrights, copyright applications, registered trademarks and trademark
applications relating to or used in the Business. The Transferred
Assets
include all Intellectual Property Rights or licenses thereto owned
or used
by Seller necessary to administer, develop, use, and maintain the
Business
as currently being conducted. All statements and representations
made by
Seller in any pending Intellectual Property Rights applications,
filings
or registrations were true in all material respects as of the time
they
were made. Except as set forth in Section 5.1(f)(i) of the Seller
Disclosure Schedule, no registered Intellectual Property Right
owned by
Seller and used in the Business has lapsed, expired or been abandoned
or
canceled, or is subject to any injunction, judgment, order, decree
or
ruling or is subject to any pending or, to the knowledge of Seller,
threatened oppositions, cancellations, interferences or other proceedings
in any country.
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ii.
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Seller
has developed and is the owner of all rights, title, and interests
in, or
has obtained the right to use, all of the Intellectual Property
Rights
comprising the Transferred Assets (the “Transferred
Intellectual Property Rights”).
Except as set forth on Section 5.1(f)(ii) of the Seller Disclosure
Schedule, neither Selling Party has granted any license of or right
to use
any item of the Transferred Intellectual Property Rights. Other
than this
Agreement and the other agreements contemplated hereby, there is
no
agreement, decree, arbitral award, or other provision or contingency
that
obligates either Seller or Shareholder to grant licenses in current
or
future Intellectual Property Rights to be developed by Seller or
Shareholder related in any way to the Transferred Assets other
than as set
forth in Section 5.1(f)(ii)(A) of the Seller Disclosure Schedule.
Section
5.1(f)(ii)(B) of the Seller Disclosure Schedule specifically sets
forth a
true, complete, and correct list of all Third Party Licenses. To
Seller’s
knowledge, Seller has the right to use the Third Party Licenses
in the
Business as currently conducted. Except as set forth on Section
5.1(f)(ii)
of the Seller Disclosure Schedule, to Seller’s knowledge, the Third Party
Licenses are in full force and effect and Seller has made any and
all
payments required through the date hereof in connection with its
rights to
use the Third Party Licenses.
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iii.
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To
the knowledge of the Selling Parties, none of the Transferred Intellectual
Property Rights are being infringed by any third party. To the
knowledge
of the Selling Parties, with respect to the Transferred Assets,
Seller is
not infringing, nor has it received any notice that it is infringing,
on
any Intellectual Property Rights of any third party and no claim
is
pending or has been made to such effect. With
respect to questions and answers submitted by persons not affiliated
with
Seller or Shareholder to the XxxXxxx.xxx or Xxxxxxxxxxx.xxx Websites,
the
Seller’s and Shareholder’s knowledge of infringement for the purposes of
this Section 5.1(f)(iii) will be limited to their actual
knowledge.
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iv.
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Except
as set forth in Section 5.1(f)(iv) of the Seller Disclosure Schedule,
all
current and past officers, employees, and consultants of Seller
who have
been involved in the development, operation and/or maintenance
of the
Transferred Assets, but specifically excluding persons contributing
questions, answers or other discussion and commentary to the websites
associated with the Business, have executed and delivered to and
in favor
of Seller an agreement regarding the protection of confidential
and
proprietary information and the assignment to Seller of all Intellectual
Property Rights arising from the services performed for Seller
by such
persons (collectively, the “Confidentiality
Agreements”).
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v.
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Except
as set forth in Section 5.1(f)(v) of the Seller Disclosure Schedule,
all
works that were created, prepared, or delivered by consultants,
independent contractors, or other third parties for or on behalf
of Seller
and/or Shareholder, but specifically excluding content on the websites
associated with the Business that are produced by persons contributing
questions, answers or other discussion and commentary on the websites
associated with the Business; (A) are and shall constitute “works made for
hire” specially ordered or commissioned by Seller within the meaning
of
United States' copyright law, or (B) all right, title, and interest
therein (including any materials and elements created, prepared
or
delivered by such parties in connection therewith) have been assigned
to
Seller. No current or former shareholder, employee, consultant,
or
independent contractor of Seller has any rights (other than unwaivable
moral rights) in or to any of the Transferred Intellectual Property
Rights.
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vi.
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All
Technology included within the Transferred Assets (the “Transferred
Technology”)
are free from any material defect, bug, virus, time bomb, Trojan
horse,
backdoor, or programming, design, or documentation error and all
such
Technology operates and runs in a reasonable manner, except in
each case
as would not materially and adversely affect the performance of
the
Transferred Technology as currently used by Seller in conducting
the
Business.
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vii.
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Seller
does not, and has not, collected personally identifiable information
from
users of its websites, except in a manner disclosed in a privacy
statement
prominently displayed on such sites. Seller has reasonably adequate
security measures in place to protect the customer information
it receives
through such sites from illegal use by third parties or use by
third
parties in a manner that violates the rights of privacy of its
users.
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viii.
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The
Terms of Use associated with the FAQ Farm Websites have been displayed
substantially as set forth on Section 5.1(g) of the Seller Disclosure
Schedule since November 5, 2003.
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(g)
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Section
5.1(g) of the Seller Disclosure Schedule sets forth a true and
complete
list of all material written or oral agreements and other instruments
relating to the Business or the Transferred Assets to which Seller
and/or
Shareholder is a party (the “Material
Agreements”).
Each Material Agreement (A) is the legal, valid and binding obligation
of
Seller and, to the knowledge of each Selling Party, the legal,
valid, and
binding obligation of each other party thereto, in each case enforceable
in accordance with its terms, (B) is in full force and effect,
and (C) to
the knowledge of each Selling Party, except as set forth in Section
5.1(g)
of the Seller Disclosure Schedule, the other party or parties thereto
is
or are not in material default thereunder.
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For
purposes of this Section and Section 5.1(h) below, the term “material”
shall mean and refer to those agreements, contracts, instruments
or
arrangements (as applicable) that involve payments or expenditures
by or
to Seller, or otherwise have an annual, aggregate value of at least
U.S.$
5,000.
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(h)
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No
Defaults.
Seller has in all material respects performed all the obligations
required
to be performed by it to date and is not in default or alleged
to be in
default under (i) its corporate documents or (ii) any material
agreement,
lease, license, contract, commitment, instrument or obligation
to which
Seller is a party or by which any of its properties, assets, or
rights are
or may be bound or affected and, to the knowledge of each Selling
Party,
there exists no event, condition, or occurrence that, with or without
due
notice or lapse of time, or both, would constitute such a default
by it of
any of the foregoing.
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(i)
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Litigation.
There are no claims, actions, suits, or proceedings pending by
or against,
or otherwise affecting any of the Selling Parties, the Transferred
Assets,
or the Business, and to Seller’s knowledge, there are no claims, actions,
suits, proceeding, or investigations threatened by or against,
or
otherwise affecting any of the Selling Parties, the Transferred
Assets, or
the Business.
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(j)
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Compliance.
Seller has in the past duly materially complied and is presently
duly
materially complying with all applicable laws, whether statutory
or
otherwise, rules, regulations, orders, ordinances, and judgments
and
decrees of all governmental authorities (federal, state, local
or
otherwise) (collectively, “Laws”),
as well as their own rules, policies, and procedures relating to
privacy,
data protection, and the collection and use of personal information
collected, used, or held for use by Seller in the conduct of the
Business.
None of the Selling Parties has received any notice of, or notice
of any
investigation of, a possible violation of any applicable Laws,
any other
requirement relating to or affecting the Business, or Seller’s own rules,
policies, and procedures.
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(k)
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Employees.
Seller employs a total of one (1) employee, who is Shareholder.
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(l)
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Insurance.
Seller has not been refused any insurance, nor has its coverage
been
limited, by any insurance carrier to which it has applied for insurance
or
with which it has carried insurance during the last five
years.
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(m)
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Brokers.
Seller has not, nor have any of its officers, shareholders, or
employees
employed any broker or finder or incurred any liability for any
brokerage
fees, commissions, or finders' fees in connection with the transactions
contemplated hereby.
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(n)
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Other
Names.
Except as set forth on Section 5.1(n) of the Seller Disclosure
Schedule,
the Business has not been conducted under any corporate, trade,
or
fictitious name.
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(o)
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Powers
of Attorney.
With respect to the Transferred Assets, there are no outstanding
powers of
attorney executed on behalf of either of the Selling
Parties
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5.2.
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Representations
and Warranties of Shareholder.
Shareholder represents and warrants to Buyer as
follows:
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(a)
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Title;
Absence of Certain Agreements.
Shareholder is the lawful and record and beneficial owner of, and
has good
and marketable title to, all of the issued and outstanding shares
of
Seller, with the full power and authority to vote such shares.
There are
no agreements or understandings with respect to the voting of such
shares
or any other matter relating to the equity interest of Seller.
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(b)
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Authority
- General.
Shareholder has taken all acts necessary for the authorization,
execution,
delivery, and performance of this Agreement any Related Agreements,
if
applicable, prior to the Closing. Neither the execution and delivery
of
this Agreement nor the consummation of the transactions contemplated
hereby will: (i) conflict with or violate any Laws that is either
applicable to, binding upon, or enforceable against Shareholder;
or (ii)
except where consent is required and obtained, result in any breach
of or
default under any mortgage, lease, promissory note, contract, purchase
order, indenture, trust, or other instrument or written agreement
which is
either binding upon or enforceable against Shareholder.
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(c)
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Brokers.
Shareholder has not employed any broker or finder or incurred any
liability for any brokerage fees, commissions, or finders' fees
in
connection with the transactions contemplated hereby.
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(d)
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Representation
by Legal Counsel.
Shareholder has been advised by legal counsel in connection with
the
negotiation, execution and delivery of this Agreement and the Related
Agreements and the performance of the transactions contemplated
hereby and
thereby.
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5.3.
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Representations
and Warranties of Buyer.Except
as otherwise disclosed in any Buyer’s disclosures and filings made with
the Securities and Exchange Commission prior to the date hereof,
Buyer
represents and warrants to Seller and Shareholder as follows:
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(a)
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Organization;
Good Standing; Qualification and Power.
Buyer (i) is a corporation duly organized, validly existing and
in good
standing under the laws of the State of Delaware, and (ii) has
all
requisite corporate power and authority to own, lease and operate
its
properties and assets and to carry on its business as now being
conducted,
to enter into this Agreement and each of the Related Agreements
to which
it is a party, to perform its obligations hereunder and there under
and to
consummate the transactions contemplated hereby and thereby.
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(b)
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Authority.
All corporate action on the part of Buyer, its directors, and shareholders
necessary for the authorization, execution, delivery, and performance
of
this Agreement and the Related Agreements and the consummation
of the
transactions contemplated hereby has been taken prior to the Closing.
Neither the execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby will: (i) conflict with
or violate
any law, ordinance, or regulation or any decree or order of any
court or
administrative or other governmental body that is either applicable
to,
binding upon, or enforceable against Buyer; or (ii) except where
consent
is required and obtained, result in any breach of or default under
any
material mortgage, lease, promissory note, contract, purchase order,
indenture, trust, or other instrument or written agreement which
is either
binding upon or enforceable against Buyer.
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(p)
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Financial
Information.
The Buyer has made all necessary filings with the United States
Securities
Exchange Commission. The financial reports contained in the periodic
reports filed by the Buyer with the United States Securities and
Exchange
Commission (i) were as of the date thereof, correct and complete
in all
material respects; (ii) compiled in accordance with the books and
records
of Buyer; and (iii) fairly present the financial condition and
results of
operations of the Business as of the dates thereof.
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(c)
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Brokers.
Neither Buyer, nor any of its officers, directors or employees
have
employed any broker or finder or incurred any liability for any
brokerage
fees, commissions or finders' fees in connection with the transactions
contemplated hereby.
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6. RELATED
AGREEMENTS.
At
the
Closing, the following agreements (collectively referred to as the “Related
Agreements”)
will
be executed and delivered by the respective parties thereto:
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6.1.
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Non-Competition
Covenant .
Shareholder is entering into a Non-Competition Covenant with Buyer,
effective as of the Closing Date, in the form of Exhibit
C
attached hereto.
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6.2.
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Employment
Agreement.
Buyer is entering into an Employment Agreement with Shareholder,
substantially in the form attached hereto as Exhibit
D
(the “Employment
Agreement”),
pursuant to which Shareholder will become an employee of Buyer,
at the
discretion of Buyer.
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7. CONDUCT
AND TRANSACTIONS PRIOR TO CLOSING DATE; ADDITIONAL
AGREEMENTS.
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7.1.
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Legal
Conditions to Transactions.
Each party hereto shall use its reasonable best efforts to comply
promptly
with all legal requirements that may be imposed on such party with
respect
to the transactions contemplated hereunder and will take all action
necessary to cooperate with and furnish information to the other
party in
connection with any such requirements imposed upon such other party
in
connection with the transactions contemplated hereunder. Each party
hereto
shall take all reasonable actions necessary (a) to obtain (and
will take
all reasonable actions necessary to promptly cooperate with the
other
party in obtaining) any consent, authorization, order or approval
of, or
any exemption by, any Governmental Authority, or other third party,
required to be obtained or made by such party (or by the other
parties) in
connection with the taking of any action contemplated by this Agreement,
(b) to defend, lift, rescind or mitigate the effect of any lawsuit,
order,
injunction or other action adversely affecting the ability of such
party
to consummate the transactions contemplated hereby and (c) to fulfill
all
conditions precedent applicable to such party pursuant to this
Agreement.
|
|
7.2.
|
Consents.
Each party hereto shall use its reasonable best efforts, and the
other
parties shall cooperate with such efforts, to obtain any consents
and
approvals of, or effect the notification of or filing with, each
person or
authority, whether private or governmental, whose consent or approval
is
required in order to permit the consummation of the transactions
contemplated hereby and to enable Buyer to utilize and exploit
the
Transferred Assets as presently done by Seller.
|
|
7.3.
|
Efforts
to Consummate.
Subject to the terms and conditions herein provided, the parties
hereto
shall use their reasonable best efforts to do or cause to be done
all such
acts and things as may be necessary, proper or advisable, consistent
with
all applicable Laws, to consummate and make effective the transactions
contemplated hereby and to satisfy or cause to be satisfied all
conditions
precedent that are set forth in Section 8 as soon as reasonably
practicable.
|
8
|
7.4.
|
Notice
of Breach.
Each party hereto shall notify the other parties in writing upon
the
occurrence of any act, event, circumstance or thing that would
cause or
result in a representation or warranty hereunder being untrue at
the
Closing, the failure of a closing condition to be achieved at the
Closing,
or any other breach or violation hereof or default hereunder, within
a
reasonable time period following any such event.
|
|
7.5.
|
Support
of Transaction by Shareholder.
Shareholder shall use its reasonable efforts to cause (i) Seller
to duly
observe and perform its obligations under this Agreement, and (ii)
any
third-party consultants and/or contractors providing services to
Seller,
to support the transactions contemplated hereunder by continuing
the
availability of such services on the same terms and conditions,
unless
instructed otherwise by Buyer at its sole discretion.
|
|
7.6.
|
Confidentiality
Agreement.
The Parties agree to continue to be bound by that certain Confidentiality
and Non-Disclosure Agreement dated September 7, 2006. Notwithstanding
anything to the contrary contained in such agreement, the provisions
thereof shall continue in effect until the third anniversary of
the
Closing Date.
|
8. CONDITIONS
PRECEDENT.
|
8.1.
|
Conditions
to Obligations of Buyer.
The obligations of Buyer to perform this Agreement is subject to
the
satisfaction of the following conditions unless waived (to the
extent such
conditions can be waived) by Buyer at the Closing:
|
|
(a)
|
Representations
and Warranties of Seller.
The representations and warranties of Seller and Shareholder set
forth in
Section 5.1 and 5.2 hereof shall be true and correct as of the
Closing
Date (except to the extent any such representation or warranty
expressly
speaks as of an earlier date, which representations and warranties
shall
be true and correct as of such date in the same manner as specified
above).
|
|
(b)
|
Performance
of Obligations of Seller and of Shareholder.
Seller and Shareholder shall have performed in all material respects
the
obligations required to be performed by each of them under this
Agreement
prior to or as of the Closing Date.
|
|
(c)
|
Consents
and Approvals.
Duly executed copies of all consents and approvals contemplated
by this
Agreement or the Seller Disclosure Schedule, in form and substance
satisfactory to Buyer, shall have been delivered by Seller.
|
|
(d)
|
Related
Agreements.
Each of the Related Agreements shall be in full force and effect
as of the
Closing Date and become effective in accordance with the respective
terms
thereof, and the actions required to be taken thereunder by the
parties
thereto immediately prior to the Closing Date shall have been taken,
and
each person or entity who or which is required or contemplated
by the
parties hereto to be a party to any Related Agreement who or which
did not
theretofore enter into such Related Agreement shall execute and
deliver
such Related Agreement.
|
|
8.2.
|
Conditions
to Obligations of Seller.
The obligations of Seller and Shareholder to perform this Agreement
and
the Related Agreements to which they are a party are subject to
the
satisfaction of the following conditions unless waived (to the
extent such
conditions can be waived) by Seller:
|
|
(a)
|
Representations
and Warranties of Buyer.
The representations and warranties of Buyer set forth in Section
5.3
hereof shall be true and correct as of the Closing Date as though
made on
and as of the Closing Date (except to the extent any such representation
or warranty expressly speaks as of an earlier date, which representations
and warranties shall be true and correct as of such date in the
same
manner as specified above).
|
9
|
(b)
|
Performance
of Obligations of Buyer.
Buyer shall have performed in all material respects its obligations
required to be performed by it under this Agreement prior to or
as of the
Closing Date.
|
|
(c)
|
Related
Agreements.
Each of the Related Agreements shall be in full force and effect
as of the
Closing Date and become effective in accordance with the respective
terms
thereof and the actions required to be taken thereunder by the
parties
thereto immediately prior to the Closing Date shall have been taken,
and
each person or entity who or which is required or contemplated
by the
parties hereto to be a party to any Related Agreement who or which
did not
theretofore enter into such Related Agreement shall execute and
deliver
such Related Agreement.
|
|
(d)
|
Purchase
Price.
The delivery of the Purchase Price in the manner and otherwise
in
accordance with Section 3 above.
|
9. INDEMNIFICATION.
|
9.1.
|
Basket/Threshold.
In no event shall Selling Parties, on the one hand, or Buyer, on
the other
hand, be liable for any breach of their respective representations,
warranties, covenants and agreements included or provided for herein
or in
any Schedule, Exhibit or certificate or other document delivered
pursuant
to this Agreement (excluding the Employment Agreement) in any amount
greater than $1,500,000 (the “Cap”),
excluding Reasonable Court Costs (as defined in Section 9.3 below),
if
any. Neither the Selling Parties nor the Buyer will have any liability
for
Damages related to any breach of the representations, warranties,
covenants and agreements included or provided for herein or in
any
Schedule or certificate or other document delivered pursuant to
this
Agreement unless and until the aggregate Damages claimed under
this
Section 9 exceeds $25,000.
|
|
The
term “Damages”
shall mean any and all losses, claims, liabilities, costs, expenses
(including reasonable attorneys', accountants' and experts' fees)
sustained, suffered or incurred by any Indemnified Party (as defined
in
Section 9.2(a) below) arising from or in connection with any such
matter
that is the subject of indemnification under Section 9.2
hereof.
|
|
|
9.2.
|
Indemnification.
|
|
(a)
|
For
a period commencing on the Closing Date and ending one (1) year
thereafter, subject to Section 9.1, Seller or Shareholder, jointly
and
severally, on the one hand, or Buyer, on the other hand (the “Indemnifying
Party”),
shall indemnify and hold harmless respectively, Buyer, on the one
hand, or
Seller or Shareholder, on the other hand, as the case may be (the
“Indemnified
Party”),
against and in respect of Damages sustained or incurred by such
Indemnified Party or any of their respective subsidiaries, officers,
directors, members, partners, agents and representatives arising
out of
any breach of the Indemnifying Party’s representations, warranties,
covenants and/or agreements set forth in this Agreement.
|
|
(b)
|
Following
the Closing, the indemnity provided herein as it relates to this
Agreement
and the transactions contemplated by this Agreement shall be the
sole and
exclusive remedy of the parties hereto, their Affiliates, successors
and
assigns with respect to any and all claims for Damages sustained
or
incurred arising out of this Agreement. Payments to Buyer, as the
case may
be, hereunder in respect of any Damages shall be deducted from
the
Cap.
|
10
|
9.3.
|
Methods
of Asserting Claims, Etc.
All claims by any Indemnified Party under Section 9.2(a) above
shall be
asserted and resolved as set forth in this Section 9.3. If any
written
claim or demand for which an Indemnifying Party could be liable
to any
Indemnified Party hereunder is asserted against or sought to be
collected
from any Indemnified Party by a third party (a “Third
Party Claim”),
such Indemnified Party shall promptly notify the Indemnifying Party
of
such claim or demand and the amount or the estimated amount thereof
to the
extent then feasible (which estimate shall not in any manner prejudice
the
right of the Indemnified Party to indemnification to the fullest
extent
provided hereunder) (the “Third
Party Claim Notice”)
and in the event that an Indemnified Party shall assert a claim
for
indemnity under this Article 9, not including a Third Party Claim,
the
Indemnified Party shall notify the Indemnifying Party promptly
following
its discovery of the facts or circumstances giving rise thereto
(together
with a Third Party Claim Notice, a “Claim
Notice”);
provided that the failure to notify on the part of the Indemnified
Party
in the manner set forth herein shall not foreclose any rights otherwise
available to such Indemnified Party hereunder, except to the extent
that
the Indemnifying Party is prejudiced by such failure to notify.
The
Indemnifying Party shall have thirty (30) days from the receipt
of the
Claim Notice or Third Party Claim Notice, as the case may be, (except
that
such period shall be decreased to a time ten (10) days before a
scheduled
appearance date in a litigation matter) (the “Notice
Period”)
to notify the Indemnified Party (i) whether or not the Indemnifying
Party
disputes the liability of the Indemnifying Party to the Indemnified
Party
hereunder with respect to such claim or demand and (ii) whether
or not it
desires to defend the Indemnified Party against such claim or demand.
If
the Indemnifying Party notifies the Indemnified Party within the
Notice
Period that it desires to defend the Indemnified Party against
such claim
or demand, (i) the Indemnifying Party shall have the right to defend
the
Indemnified Party by appropriate proceedings and by counsel reasonably
acceptable to the Indemnified Party; and (ii) if any Indemnified
Party
desires to participate in, but not control, any such defense or
settlement
it may do so at its sole cost and expense. If an Indemnifying Party
has
liability for indemnification under Section 9.2(a) above and either
(x)
notifies the Indemnified Party within the Notice Period that it
will not
defend the Indemnified Party against such claim or demand or (y)
does not
respond to any such notice within the Notice Period, the applicable
Indemnified Party or Parties, as the case may be, may defend such
claim or
demand and require the Indemnifying Party to reimburse such Indemnified
Party or Parties on a current basis for reasonable expenses of
investigation, reasonable attorneys' fees, and reasonable out-of-pocket
expenses incurred in defending against such claim or demand (collectively,
“Reasonable
Court Costs”)
and the Indemnifying Party shall be bound by the result obtained
with
respect thereto. The Indemnifying Party shall not settle a claim
or demand
without (a) the consent of the Indemnified Party, which consent
shall not
be unreasonably withheld or delayed, or (b) an unconditional release
of
the Indemnified Party from all liability arising out of such claim
or
demand.
|
|
9.4.
|
Computation
of Damages Subject to Indemnification. The
actual amount of any Damages for which indemnification is provided
pursuant to this Article 9 shall be computed net of any net insurance
proceeds received by the Indemnified Party in connection with such
Damages. For purposes of this subsection, the term “net
insurance proceeds”
shall mean the insurance proceeds received by the Indemnified Party
less
the amount of any premiums paid directly in respect thereof and
any
retrospective premium adjustments or reimbursement obligations
relating
thereto and less any increase in premiums directly attributable
thereto.
|
10. MISCELLANEOUS.
|
10.1.
|
Expenses.
Each party hereto shall bear its own fees and expenses in connection
with
the transactions contemplated hereby.
|
|
10.2.
|
Descriptive
Headings.
Descriptive headings are for convenience only and shall not control
or
affect the meaning or construction of any provision of this Agreement.
|
11
|
10.3.
|
Public
Announcements.
The parties hereto agree that, to the maximum extent feasible,
but
subject, in the case of Buyer, to its public disclosure and, as
to all
parties, other legal and regulatory obligations, they shall advise
and
confer with each other prior to the issuance (and provide copies
to the
other party prior to issuance) of any public announcements, reports,
statements or releases pertaining to the transactions contemplated
hereunder.
|
|
10.4.
|
Notices.
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally
or
sent by nationally-recognized overnight courier or by registered
or
certified mail, postage prepaid, return receipt requested, or by
facsimile, with confirmation as provided above addressed as follows:
|
(a)
if to
Buyer, to:
Answers
Corporation
000
Xxxx
00xx
Xxxxxx
(Xxxxx 0000)
Xxx
Xxxx,
XX 00000
Attention:
Xxxxxx X. Xxxxxxxxxxx, CEO
Telephone:
000-000-0000
Telecopier:
000-000-0000
with
a
copy (not constituting notice) to:
Answers
Corporation
Xxxxxxxxx
Xxxxxxxxxx Xxxx (Xxx Xxxxx)
Xxxxxxxxx
00000 Xxxxxx
Attention:
In-House Counsel
Telephone:
000-0-000-0000
Telecopier:
972-2-649-5001
(b)
if to
Seller, to:
Xxxxxxxxxxx.xxx,
Inc.
00
Xxxxxxxxxxx Xxxx
Xxxxxx-xx-Xxxxxx,
XX 00000
Attention:
Xxxxx Xxxxxxx
Telephone:
(000) 000-0000
Telecopier:
(000) 000-0000
with
a
copy (not constituting notice) to:
Xxxxx
& XxXxxxxx, LLP
000
Xxxx
Xxxxxxxx Xxxxx
Xxxxx
0000
Xxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxxxx X. Xxxxxxxx
Telephone:
000-000-0000
Telecopier:
000-000-0000
12
(c)
if to
Shareholder, to
Xxxxx
Xxxxxxx
00
Xxxxxxxxxxx Xxxx
Xxxxxx-xx-Xxxxxx,
XX 00000
Telephone:
(000) 000-0000
Telecopier:
(000) 000-0000
All
such
notices or communications shall be deemed to be received (i) in the case
of
personal delivery or facsimile, on the date of such delivery, (ii) in the
case
of nationally-recognized overnight courier, on the next Business Day after
the
date when sent and (iii) in the case of mailing, on the third Business Day
following the date on which the piece of mail containing such communication
was
posted.
|
10.5.
|
Counterparts.
This Agreement may be executed in any number of counterparts by
original
or facsimile signature, each such counterpart shall be an original
instrument, and all such counterparts together shall constitute
one and
the same agreement.
|
|
10.6.
|
Benefits
of Agreement.
All the terms and provisions of this Agreement shall be binding
upon and
inure to the benefit of the parties hereto and their respective
successors
and permitted assigns.
|
|
10.7.
|
Amendment,
Modification and Waiver.
This Agreement shall not be altered or otherwise amended except
pursuant
to an instrument in writing signed by (i) Buyer, (ii) Seller and
(iii) the
Partners; provided, however, that any party to this Agreement may
waive
any obligation owed to it by any other party under this Agreement.
The
waiver by any party hereto of a breach of any provision of this
Agreement
shall not operate or be construed as a waiver of any subsequent
breach.
|
|
10.8.
|
Severability.
If any term or other provision of this Agreement is invalid, illegal
or
incapable of being enforced by any rule of law or public policy,
all other
conditions and provisions of this Agreement shall nevertheless
remain in
full force and effect so long as the economic or legal substance
of the
transactions contemplated hereby is not affected in any manner
adverse to
any party. Upon such determination that any term or other provision
is
invalid, illegal or incapable of being enforced, the parties hereto
shall
negotiate in good faith to modify this Agreement so as to effect
the
original intent of the parties as closely as possible in an acceptable
manner to the end that the transactions contemplated hereby are
fulfilled
to the greatest extent possible.
|
|
10.9.
|
Further
Assurances.
Each party agrees to cooperate fully with the other parties and
to execute
such further instruments, documents and agreements and to give
such
further written assurances as may be reasonably requested by any
other
party to evidence and reflect the transactions described herein
and
contemplated hereby and to carry into effect the intents and purposes
of
this Agreement.
|
|
10.10.
|
Governing
Law; Consent to Jurisdiction; Waivers.
This Agreement shall be governed by and construed in accordance
with the
laws of the State of New York applicable to contracts made and
to be
performed wholly therein (without regard to principles of conflicts
of
laws). Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of (a) the Supreme Court of the State of New York,
New York
County, and (b) the United States District Court for the Southern
District
of New York, for the purposes of any dispute arising out of this
Agreement
or any Related Agreement or any transaction contemplated hereby
or
thereby.
|
13
|
10.11.
|
Waiver
of Jury Trial.
Each of the parties hereto irrevocably and unconditionally waives
trial by
jury in any Action relating to this Agreement, the Related Agreements
or
any transaction contemplated hereby or thereby, and for any counterclaim
with respect thereto.
|
|
10.12.
|
Entire
Agreement.
This Agreement (including Seller Disclosure Schedule and the Exhibits
attached hereto), the Related Agreements and the other writings
referred
to herein contain the entire agreement among the parties hereto
with
respect to the transactions contemplated hereby and supersede all
prior or
contemporaneous agreements or understandings, written or oral,
among the
parties with respect thereto.
|
IN
WITNESS WHEREOF, each of the parties hereto has caused this Asset Purchase
Agreement to be executed on its behalf as of the day and year first above
written.
| ANSWERS CORPORATION | |
| By: /s/ Xxxxxx X. Xxxxxxxxxxx | |
| ________________________ | |
| Name: Xxxxxx X. Xxxxxxxxxxx | |
| Title: Chief Executive Officer | |
|
XXXXXXXXXXX.XXX,
INC.
|
|
|
By:
/s/ Xxxxx Xxxxxxx
|
|
|
___________________
|
|
| Name: Xxxxx Xxxxxxx | |
| Title: President | |
|
SHAREHOLDER:
|
|
|
/s/
Xxxxx Xxxxxxx
|
|
|
_______________________
|
|
|
XXXXX
XXXXXXX
|
|
14
SCHEDULE
1.1
TRANSFERRED
ASSETS
| (a) |
All
of the domain names and uniform resource locators (“URLs”)
set forth below and all rights therein (all
of the foregoing collectively, the “Transferred
Domain Names”):
|
|
i.
|
XXXxxxx.xxx,
|
|
ii.
|
XxxxXxxxxxx.xxx,
|
|
iii.
|
XxxxXxxx.xxx,
|
|
iv.
|
XXX0.xxx,
|
|
v.
|
XXX-Xxxx.xxx,
|
|
vi.
|
XXXxxxxxx.xxx,
|
|
vii.
|
XXXxxxxxxx.xxx,
|
|
viii.
|
Xxxxxxxx-Xxxxxx.xxx,
|
|
ix.
|
XxxxxxxxxXxxx.xxx,
|
|
x.
|
XxxxxxxxXxxx.xxx,
|
|
xi.
|
XxxxxxxxXxxx.xxx,
|
|
xii.
|
XxxxXxxxxx.xxx,
|
|
xiii.
|
XxxxXxx.xxx,
|
|
xiv.
|
XxxxXxx.xxx,
|
|
xv.
|
XxxxXXX.xxx,
|
|
xvi.
|
XxxxXXXx.xxx,
|
|
xvii.
|
XxxxXXXx.xxx,
|
|
xviii.
|
XxxxXxxxxxxx.xxx
|
|
xix.
|
XxxxXxxxxxxx.xxx,
|
|
xx.
|
XxxxXxxxxxxxx.xxx,
|
|
xxi.
|
XxxxxxXxxxxxxxx.xxx;
|
|
(b)
|
all
databases and content (including questions and answers that are
“works for
hire”) associated with and/or included in the Transferred Domain Names
and
any Intellectual Property Rights (as defined in Exhibit A of the
Agreement) arising out of or associated with the Transferred Domain
Names
and all such databases and content;
|
|
(c)
|
all
of the trademarks, trade names, service marks and other marks (including
brand names, product names, logos, and slogans) and applications
therefore
related to the Business set forth below and all rights therein
(all of the
foregoing collectively, the “Transferred
Marks”):
|
|
i.
|
“FAQ
Farm”
|
|
ii.
|
“Question
and Answer Co-op”
|
|
iii.
|
“Wiki
Answers”;
|
|
(d)
|
all
of the Technology (as defined in Exhibit A of the Agreement) owned
by
Seller and necessary for the conduct of, or primarily used in or
held for
use for, the Business as specifically set forth
below:
|
|
i.
|
customized
version of the GNU General Public Licensed MediaWiki software permitting
the incorporation of user-generated-content into the FAQ Farm Websites,
which includes the following
features:
|
|
1.
|
Automatic
redirection and merging of duplicate questions.
|
|
2.
|
Ability
to merge duplicate questions that do slip through, without losing
any
history or data.
|
|
3.
|
Systems
for placing and moving questions within over 1,100 “FAQ”
topics.
|
|
4.
|
Ranking
of questions within FAQs.
|
|
5.
|
A
“trust point” system for voting on community members.
|
|
ii.
custom-written code including:
|
|
|
1.
|
A
question-asking process that helps users improve and place their
questions.
|
|
2.
|
Systems
for updating users with new questions they can answer.
|
|
3.
|
Code
for building reference pages that credit top
contributors.
|
|
4.
|
Code
for managing forbidden words and a local spell-check
dictionary.
|
| iii Any Intellectual Property Rights of Seller arising out of or associated with (i) through (ii) above. | |
|
(e)
|
all
equipment and tangible personal property owned or leased by Seller
including, without limitation, equipment and tangible personal
property,
office equipment, telephones, facsimile machines, desks, tables,
chairs,
and file cabinets listed below (collectively, “Equipment”):
|
|
NONE
|
|
|
(f)
|
the
brochures, literature, advertising and promotional materials, catalogues,
photographs, display materials, media materials, packaging materials,
and
other similar items that have been produced by or for Seller listed
below:
|
|
NONE
|
|
|
(g)
|
the
goodwill of Seller in connection with the Business and the exclusive
right
to represent itself as carrying on the Business in succession to
Seller.
|
EXHIBIT
A
DEFINITIONS
“Affiliate”,
as to
any entity, means any entity, directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with such
entity.
“Encumbrances”
shall
mean and include security interests, mortgages, liens, pledges, guarantees,
charges, easements, reservations, restrictions, clouds, equities, rights
of way,
options, rights of first refusal, claims of adverse ownership, and all other
encumbrances, whether or not relating to the extension of credit or the
borrowing of money.
“Intellectual
Property Rights”
shall
mean any or all statutory and/or common law rights throughout the world in,
arising out of, or associated with the following: (i) all patents and
applications therefore and all reissues, divisions, renewals, extensions,
provisionals, continuations, and continuations-in-part thereof (collectively,
“Patents”); (ii) all inventions (whether patentable or not), invention
disclosures, and improvements, all trade secrets, proprietary information,
and
know-how (collectively, “Trade Secrets”); (iii) all works of authorship,
copyrights, and mask works, and copyright and mask work registrations and
applications, including moral rights (“Copyrights”); (iv) all trade names,
logos, trademarks, and service marks, domain names and trademark and service
xxxx registrations and applications (collectively, “Trademarks”); and (v) all
goodwill associated with any of the foregoing.
“knowledge”
and
like phrases shall mean and include the knowledge, after reasonable inquiry
under the applicable circumstances, of Shareholder.
“Material
Adverse Effect”
or
“Material
Adverse Change”
means
any change, event, inaccuracy, violation, circumstance, or effect, individually
or in the aggregate, that has or is reasonably likely to have a material
adverse
effect on the business, assets (including intangible assets), operations,
results of operations, properties, or financial condition of the party and
its
subsidiaries taken as a whole.
“Open
Source Material”
means,
collectively, all software or other material that is distributed as “free
software”, “open source software” or under a similar licensing or distribution
model, including but not limited to the GNU Free Documentation License (GFDL)
and other GNU licenses, Mozilla Public License (MPL), the Sun Community Source
License (SCSL), and the Apache License.
“Technology”
means
any or all of the following used in the operation of the Business: (i) works
of
authorship including, without limitation, computer programs, source code,
and
executable code, whether embodied in the software, firmware or otherwise,
documentation, systems, designs, files, net lists, records, and data; (ii)
tools, methods, and processes; (iii) databases, data compilations, data
collections, and technical data; (iv) Uniform Resource Locators, Web site
addresses, and domain names; and (v) all instantiations of the foregoing
in any
form and embodied in any media.
“Third
Party License”
means
all licenses, agreements, obligations, or other commitments under which Seller
or Shareholder is granted a right to incorporate any Intellectual Property
Rights or Technology into the Transferred Technology (including, but not
limited
to, licenses to Open Source Materials), but the granting party retains one
or
more rights to use such item.
