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Exhibit 10.3
EXECUTION COPY
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT ("Agreement") dated as of June 18, 1999,
between Eclipse Digital Imaging, Inc., a South Dakota corporation ("Seller") and
Andover Advanced Technologies, Inc., a Massachusetts corporation ("Purchaser").
Seller and Purchaser are sometimes individually or collectively referred to as
"Party" or "Parties."
WHEREAS, Seller desires to sell and transfer to Purchaser, and Purchaser
desires to acquire from Seller, subject to the terms and conditions of this
Agreement, substantially all of the assets of the Seller's business (the
"Business").
NOW, THEREFORE, in consideration of the promises and the mutual covenants
set forth in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
"Assumption Agreement" means the Assumption Agreement dated as of the
Closing Date, in the form of EXHIBIT B.
"Xxxx of Sale" means the Xxxx of Sale of Seller, dated as of the Closing
Date, in the form of EXHIBIT C.
"Closing" and "Closing Date" are defined in Section 3.1.
"Court Order" means any judgement, decree, injunction, order, writ, award,
determination or ruling of any Governmental Entity or arbitrator.
"Excluded Assets" is defined in Section 2.5.
"Governmental Entity" means any court, administrative agency or commission
or other governmental authority or instrumentality, domestic or foreign.
"Governmental Rule" is defined in Section 4.3.
"Intellectual Property" means any and all art work and animations, patents,
patent applications, copyrights, trademarks, applications for trademark
registration, service marks, applications for service xxxx registration,
proprietary information and data, source code, confidential information and
data, trade secrets, all other recognizable intellectual property rights,
inventions, creations, technical documentation, protectable subject matter, and
all claims and rights to the foregoing.
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"Lien" means any mortgage, claim, charge, lien, security interest,
easement, right of way, pledge, restriction or other encumbrance.
"Person" means any individual, corporation, partnership, joint venture,
trust, business, association or other entity.
"Taxes" means all Federal, state, local and foreign taxes, charges, fees,
levies and other assessments, including any income, alternative or add-on
minimum tax, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, withholding, payroll, employment, excise, stamp, property,
environmental or other tax, together with all interest, penalties and additions
with respect thereto.
"Third Party Intellectual Property" means any and all software (in any
form), databases or other Intellectual Property owned by a third party, licensed
to Seller and utilized in the business of the Seller, including any software
used in or included in the use of the Acquired Assets.
ARTICLE II
PURCHASE AND SALE OF ACQUIRED ASSETS
2.1 PURCHASE AND SALE. Upon the terms and subject to the conditions of
this Agreement, the Seller will sell, transfer, convey, assign and deliver to
the Purchaser, and the Purchaser will purchase, as a going concern, from the
Seller, at the Closing, all of the businesses, assets, properties, goodwill and
rights of the Seller, of every nature, kind and description, tangible and
intangible, real, personal or mixed, wheresoever located and whether or not
carried or reflected on the books and records of the Seller, including, without
limitation, (i) Ad art work and animations; (ii) the web site described in
EXHIBIT A (the "Website"), and all proprietary rights therein, including all
patent, copyright and trade secret rights, all patent applications, if any,
relating thereto, and all technical information, documents, data, content,
designs, prototypes and software relating to the Website; (iii) all rights to
commercialize the Website in any manner; (iv) any domain names and trademarks
listed on EXHIBIT A, together with the goodwill symbolized by such domain names
and trademarks, and all registrations or applications for registration thereof;
(v) all materials required to operate the Website in the same manner that it is
currently being operated; (vi) all right, title and interest in and to the use
of Seller's corporate or entity names and any derivatives or combinations
thereof; (vii) logos, trademarks, trademark registrations and trademark
applications or registrations thereof, including the goodwill associated
therewith; (viii) the goodwill of the Seller's business; (ix) copyrights,
copyright applications and copyright registrations, patents and patent
applications; rights under or pursuant to licenses by or to the Seller; (x)
development and prototype hardware, software, processes, formula, trade secrets,
inventories and royalties, including all rights to xxx for past infringements;
leaseholds and other interests in land, inventory (accumulated costs of jobs and
supplies), equipment, machinery, furniture, fixtures, motor vehicles and
supplies; (xi) accounts receivables; (xii) prepaid expenses; (xiii) insurance
policies, contracts, purchase orders, customers, lists of customers and
suppliers, sales representative agreements, and all favorable business
relationships, causes of action, judgments, claims and demands of whatever
nature; (xiv)
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telephone, telefax and telex numbers, including all listings in all telephone
books and directories; (xv) files, papers and records relating to the Seller's
businesses and assets; and all of the Seller's assets with only such
dispositions of such assets as shall have occurred in the ordinary course of
Seller's business between the date thereof and the Closing and which are
permitted by the terms hereof (the foregoing are sometimes collectively called
the "Assets").
2.2 PURCHASE PRICE. Upon the terms and subject to the conditions contained
in this Agreement, and in consideration of the sale, assignment, transfer and
delivery of the Assets, Purchaser will deliver to the Seller the consideration
in the amounts and at the times specified in Schedule 1 attached hereto and
incorporated herein (the "Purchase Price").
2.3 DELIVERY OF ASSETS. At the Closing, the Seller will deliver to the
Purchaser such bills of sale, endorsements, assignments, deeds and other good
and sufficient instruments of conveyance and transfer, in form and substance
reasonably satisfactory to the Purchaser and its counsel, as will be required to
vest in the Purchaser title to the Assets, including without limitation:
(a) bills of sale executed by the Seller vesting in the Purchaser
good and marketable title to all of the Assets;
(b) appropriate endorsements and assignments of the contracts,
licenses, agreements, permits, plans, commitments and other binding arrangements
included in the Assets;
(c) all data relating to the Assets, property, goodwill and business
included in the Seller' business; and
(d) all copies of the source code and object code and all
documentation relating thereto for all computer software programs included in
the Assets.
The Seller will take all other actions necessary to put the Purchaser in actual
possession and operating control of the Assets.
2.4 ASSUMED OBLIGATIONS. Upon satisfaction of all conditions to the
obligations of the parties contained herein (other than such conditions as have
been made in accordance with the terms hereof), the Purchaser will assume those
liabilities of the Seller which relate to the Assets (the "Assumed Liabilities")
specifically set forth on Exhibit 2.4 attached hereto. The Seller expressly
understands and agrees that, except for the Assumed Liabilities, the Purchaser
has not agreed to pay, will not be required to assume and will have no liability
or obligation, direct or indirect, absolute or contingent, for the liabilities
of the Seller or any respective affiliates or associates, whether known or
unknown and whether existing as of the Closing or arising thereafter, which
liabilities will remain the sole responsibility of, and will be satisfied by,
the Seller (the "Retained Liabilities").
2.5 EXCLUDED ASSETS. Notwithstanding the foregoing, the Seller will not
sell, transfer, convey, assign or deliver to the Purchaser, and the Purchaser
will not purchase from the Seller, the following assets (collectively, the
"Excluded Assets"):
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(a) the consideration delivered to the Seller pursuant to this
Agreement for the Assets;
(b) the minute books (and any documents related to the Seller's
organization or foreign qualification contained in such minute books), corporate
seal and corporate records;
(c) stock or other interests representing the ownership of the
Seller;
(d) all documentation pertaining to any liability of the Seller not
assumed by Purchaser; and
(e) the assets, if any, specifically described on Exhibit 2.5 hereto.
2.6 PURCHASE PRICE ALLOCATION. The Purchase Price will be allocated among
the Assets in the manner required by Section 1060 of the Internal Revenue Code
of 1986, as amended to date. In making such allocation, the allocations set
forth in Schedule 2.6 attached hereto will apply. In preparing Schedule 2.6, the
Purchaser and the Seller will negotiate in good faith the values of the Assets
and the resulting allocation of the Purchase Price among the various Assets; it
being understood that such determination will be binding on the Purchaser only
for the purposes of U.S. Federal, state and local taxation. The Purchaser and
the Seller (or the beneficial owners of the Seller, if applicable) will file all
Tax Returns and tax reports (including IRS Form 8594) in accordance with and
based upon such allocation and will take no position in any return, proceeding
or audit which is inconsistent with such allocation.
ARTICLE III
THE CLOSING
3.1 CLOSING DATE. The consummation of the sale and transfer of the Assets
as contemplated in this Agreement shall take place at the offices of Xxxxxxxx,
Xxxxxxx & Xxxxxxx, A Professional Corporation located at 000 Xxxxxxx Xxxxxx,
Xxxxxx, XX 00000 on June 28, 1999 at 10:00 a.m., or at such other time, date and
place as shall be fixed by agreement among the Parties (the "Closing", such date
of the Closing being the "Closing Date").
3.2 EXECUTION AND DELIVERY OF DOCUMENTS BY SELLER. At the Closing, Seller
shall execute and deliver to Purchaser: (a) the Xxxx of Sale; (b) the Assumption
Agreement; and (c) such other documents as Purchaser or its counsel may
reasonably request to demonstrate compliance with the provisions set forth in
this Agreement.
3.3 EXECUTION AND DELIVERY OF DOCUMENTS BY PURCHASER. At the Closing,
Purchaser shall: (a) execute and deliver to Seller the Assumption Agreement; and
(b) deliver the Purchase Price as provided on Schedule 1 attached hereto.
ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants as of the date hereof to and for the
benefit of Purchaser as follows:
4.1 ORGANIZATION, STANDING AND POWER. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
South Dakota, and has the requisite power and authority to own, operate and
transfer its properties. Seller is qualified or registered to do business and is
in good standing in each state in which property is owned or operated if
registration or qualification is required.
4.2 AUTHORITY AND ENFORCEABILITY OF AGREEMENT. Seller has the full
corporate power and authority to enter into and execute this Agreement and any
ancillary agreements to which it is a Party and to carry out the transactions
contemplated hereby in accordance with its terms. There are no outstanding
contracts, demands, commitments or other agreements or arrangements under which
Seller is or may become obligated to sell, transfer or assign any of the Assets
to any party other than to Purchaser, nor has Seller made any representations or
entered into any contracts, commitments or other agreements with third parties
which purport to bind or obligate Purchaser in any manner. The execution,
delivery and performance of this Agreement and all of the transactions required
hereunder to be performed by Seller have been duly and validly authorized and
approved by all necessary corporate and stockholder action. This Agreement has
been duly and validly executed and delivered on behalf of Seller by duly
authorized officers. This Agreement constitutes the valid and legally binding
obligation, subject to general equity principles, of Seller, enforceable in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the rights of creditors
generally.
4.3 NO VIOLATION. The execution, delivery and performance of this
Agreement by Seller does not, and the consummation of the transactions
contemplated hereby and the compliance with the terms hereof will not: (a)
violate any law, judgement, order, decree, statute, ordinance, rule or
regulation applicable to it ("Governmental Rule"); (b) conflict with any
provision of Seller's Certificate or Articles of Incorporation or Bylaws; or (c)
require any consent, approval, order or authorization of, or the registration,
declaration or filing with, any Governmental Entity or other entity or Person.
4.4 CAPITALIZATION. Schedule 4.4 hereto sets forth the record and
beneficial ownership of the shares of capital stock of Seller. All of the issued
and outstanding shares of capital stock of Seller are duly authorized, validly
issued, and are without, and were not issued in violation of, preemptive rights,
and are owned free and clear of any lien, security interest, pledge, charge,
claim, option, right to acquire, restriction on transfer or encumbrance of any
nature whatsoever. There are no outstanding rights to purchase or acquire any
capital stock of the Seller or any securities convertible into or exchangeable
for such capital stock and there are no contracts, commitments, understandings,
arrangements or restrictions by which the Seller is bound to issue or to acquire
any additional securities or other rights to purchase or acquire any capital
stock of the Seller.
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4.5 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on Schedule
4.5 attached hereto, other than in the ordinary course of business, the Seller
does not have any debt, liability or obligation, known or unknown, secured or
unsecured, whether accrued, absolute, contingent, unasserted or otherwise, of
any nature whatsoever, including without limitation any foreign or domestic tax
liabilities or deferred tax liabilities incurred in respect of or measured by
the Seller's income, or any other debts, liabilities or obligations relating to
or arising out of any act, omission, transaction, circumstance, sale of goods or
services, state of facts or other condition which occurred or existed on or
before the date hereof, whether or not known, due or payable (collectively
"Liability").
4.6 ABSENCE OF CHANGES. Except as set forth on Section 4.6 attached
hereto, since December 31, 1998, the Seller has owned and operated the Assets in
the ordinary course of business and consistent with past practice. Without
limiting the generality of the foregoing, subject to the foregoing exceptions:
(a) the Seller has not suffered any material loss, damage,
destruction of property or the Assets or other casualty to property or the
Assets (whether or not covered by insurance); and
(b) the Seller has not suffered any loss of officers, directors,
partners, employees, dealers, distributors, independent contractors,
customers or suppliers which had or may reasonably be expected to result in
a material adverse effect on the Business or the Seller.
4.7 TITLE TO AND CONDITION OF ASSETS. The Seller has good and marketable
title to all of the Assets, free and clear of any mortgage, pledge, lien,
security interest, conditional or installment sales agreement, encumbrance,
claim, easement, right of way, tenancy, covenant, encroachment, restriction or
charge of any kind of nature (whether or not of record) (collectively, "Liens").
The Seller has full right and power to, and at the Closing will, deliver to the
Purchaser good title to all of the Assets, free and clear of any Liens. The
Assets are in good operating condition and repair, normal wear and tear
excepted, and fit for the intended purposes thereof, and no material
maintenance, replacement or repair has been deferred or neglected.
4.8 LITIGATION. There are no actions, suits, claims, demands or
proceedings pending or, to the knowledge of Seller, threatened against or by
Seller relating directly to the Assets or the Business in any court or before
any arbitrator, private alternative dispute resolution system or governmental
agency, nor has Seller been charged with, nor, to the knowledge of Seller, is it
under investigation with respect to any charge concerning any violation of any
provision of any federal, state or other applicable law, rule, regulation,
ordinance, order, decree or governmental restriction with respect to the
Business or the Assets. There are no unsatisfied judgments against Seller or any
consent decrees, writs, restraining orders, or preliminary or permanent
injunctions to which any of the Assets are subject.
4.9 INTELLECTUAL PROPERTY RIGHTS.
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(a) Section 4.9 of the Disclosure Schedule contains a listing of all (i)
patents, patent applications (collectively the "Patents"), (ii) copyrights (the
"Copyrights"), (iii) tradenames, registered and common law trademarks, trademark
applications (the "Trademarks"), (iv) service marks, service xxxx applications
(the "Service Marks"), (v) computer programs and other computer software, trade
secrets, plans and specifications, inventions, know-how, technology, proprietary
processes and formulae (the "Trade Secrets"), and (vi) art work and animations
necessary or used in connection with the conduct of the Business by the Seller
(the Patents, Copyrights, Trademarks, Service Marks and Trade Secrets are
collectively referred to as "Intellectual Property Rights"). The Intellectual
Property Rights are sufficient to conduct the Business as presently conducted
and as proposed to be conducted.
(b) The Seller owns, has the unrestricted right to use and has sole and
exclusive possession of and has good and valid title to, or sufficient license
or other rights to, all of the Intellectual Property Rights, free and clear of
all Liens. Except as set forth on Schedule 4.9 attached hereto, no Person other
than Seller owns, has any rights in, or claims any ownership of, any of the
Intellectual Property Rights. The use of all Intellectual Property Rights
necessary or required for the conduct of the business of the Seller with respect
to the Acquired Assets as presently conducted and as proposed to be conducted
does not and will not infringe or violate any trade secrets, plans and
specifications, patents, copyrights, tradenames, registered and common law
trademarks, trademark applications, service marks, service xxxx applications,
computer programs and other computer software, inventions, know-how, technology,
proprietary processes and formulae or other intellectual property rights of any
other person or entity (the "Third Party Intellectual Property Rights"). The
Seller is not using any confidential information or trade secrets of others.
(c) All Intellectual Property Rights which are registered are in
compliance with formal legal requirements (including the payment of filing,
examination and maintenance fees and proofs of working or use), are valid,
enforceable and subsisting and are not subject to any maintenance fees or taxes
or actions falling due within 90 days after the Closing Date. All Patents are
valid, enforceable and subsisting and no Patents have been or are now involved
in any interference, reissue, reexamination, opposition, declaratory judgment or
other invalidating proceeding, nor, to the Seller's knowledge is any such action
threatened with respect to any of the Patents. No application for a potentially
infringing patent has been filed and no potentially infringing patent has been
issued. No Trademarks have been or are involved in any opposition, invalidation
or cancellation proceeding and, there is no basis for the commencement of any
such proceeding. The Trademarks are valid and enforceable and no person holds
any infringing or potentially infringing trademark and, to the Seller'
knowledge, no application for any infringing or potentially infringing trademark
has been made.
(d) A copy of all documentation relating to the Trade Secrets have been
furnished to the Purchaser. Such documentation is current, accurate, complete in
all material respects and in sufficient detail and content to explain all
material aspects of the Trade Secrets and to allow its full and proper use
without reliance on the memory of others. To the Seller's knowledge, the Trade
Secrets are not part of the public domain or literature nor have they been used,
divulged or appropriated for the benefit of any person or entity other than the
Seller or to the detriment of the
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Seller. The Seller has taken reasonable measures and precautions to protect the
secrecy, confidentiality and value of the Trade Secrets.
(e) All agreements relating to licenses of Intellectual Property Rights
granted by or to the Seller are set forth on Schedule 4.9 attached hereto. All
such licenses are in good standing, valid and effective in accordance with their
respective terms and there is not, under any of such licenses, any existing
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default, or would constitute a basis for a claim of
force majeure or other claim of excusable delay or non-performance), in each
case by either the Seller or by any other party thereto. There are no
outstanding and, to the Seller's knowledge, no threatened disputes or
disagreements with respect to any such agreement.
(f) The Seller is not obligated whatsoever to make any payments by way of
royalties, fees or otherwise to any owner of, licensor of, or other claimant to,
any Intellectual Property Rights or Third Party Intellectual Property Rights.
(g) Except as set forth on Schedule 4.9 attached hereto, to the Seller's
knowledge, the software, hardware and firmware which comprise the Acquired
Assets, as well as the software, hardware and firmware used by the Seller's
suppliers, vendors and customers is Year 2000 Compliant. The term "Year 2000
Compliant" as used in the preceding sentence, means that no operational,
financial, data transmission, communication or process is materially affected or
materially interrupted by dates prior to, during or after the Year 2000, and in
particular, without prejudice to the generality of the foregoing that: (i) no
value for current date will cause any interruption in operation; (ii) all
manipulation of time related data will produce the required results for all
valid date values prior to, during and after the Year 2000; (iii) if the date
elements in interfaces and data storage specify the century, they will permit
specifying the correct century either explicitly or by unambiguous algorithms or
inferencing rules; and where any date element is represented without a century,
the correct century shall be unambiguous for all manipulations involving that
element; and (iv) Year 2000 must be recognized as a leap year.
(h) Neither Seller nor, to the Seller's knowledge, any of the employees of
Seller are in violation of any non-competition, non-disclosure or other similar
agreements which would prohibit (i) Seller from entering into or consummating
the transactions contemplated hereby or (ii) any employee of Seller from
becoming an employee of Purchaser.
4.10 COMPLIANCE WITH LAWS. The assets, properties, Business and operations
of the Seller, are and have been in compliance in all material respects with all
laws applicable to the Seller's assets, properties, business and operations. The
Seller does not require the consent of any person or entity to permit it to
operate in the manner in which it is presently being operated. The Seller
possesses all permits, licenses and other authorizations from all persons or
entities necessary to permit it to operate its business in the manner in which
it presently is conducted and the consummation of the transactions contemplated
by this Agreement will not prevent the Seller from being able to continue to use
such permits and operating rights.
4.11 BROKERS AND FINDERS. Neither the Seller nor any of the Seller's
directors, officers, shareholders or employees have employed any broker, finder,
or financial advisor or incurred
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any liability for any brokerage fee or commission, finder's fee or financial
advisory fee, in connection with the transactions contemplated hereby, nor is
there any basis known to the Seller for any such fee or commission to be claimed
by any person or entity.
4.12 ACCURACY OF INFORMATION. No representation or warranty made by the
Seller in this Agreement, the disclosure schedules attached hereto, or in any
agreement, instrument, document, certificate, statement or letter furnished or
to be furnished to the Purchaser at the Closing by or on behalf of the Seller in
connection with any of the transactions contemplated by this Agreement contains
or will contain any untrue statement of material fact or omit or will omit to
state any material fact necessary in order to make the statements herein or
therein not misleading in light of the circumstances in which they are made, and
all of the foregoing completely and correctly present the information required
or purported to be set forth herein or therein. There is no material fact as of
the date hereof which has not been disclosed in writing to the Purchaser to
which the Seller has knowledge related to the Seller, its operations,
properties, financial condition or prospects which has a material adverse effect
or, to the knowledge of the Seller, in the future may have a material adverse
effect on the Seller.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants as of the date hereof to and for
the benefit of Seller as follows:
5.1 ORGANIZATION, STANDING AND POWER. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware. Purchaser has all requisite corporate power and authority to carry on
its business as now being conducted.
5.2 AUTHORITY. Purchaser has the corporate power and authority to execute
this Agreement and the ancillary agreements to which it is or will be a party
and to consummate the transactions contemplated thereby and by this Agreement.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Purchaser.
5.3 NO VIOLATION. The execution, delivery and performance by Purchaser of
this Agreement and the consummation of the transaction contemplated by this
Agreement do not: (a) violate any law, judgement, order, decree, statute,
ordinance, rule or regulation applicable to it; (b) conflict with any provision
of Purchaser's organizational documents; (c) conflict in any material respect
with any contract or permit to which Purchaser is a party.
5.4 CONSENTS AND APPROVALS. No Consent of any individual or entity is
required in connection with the execution, delivery or performance of this
Agreement by the Purchaser or the consummation by the Purchaser of the
transactions contemplated herein.
5.5 LITIGATION. There are no material actions, suits, claims, demands or
proceedings pending or, to the knowledge of Purchaser, threatened against or by
Purchaser in any court or
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before any arbitrator, private alternative dispute resolution system or
governmental agency, nor has Purchaser been charged with, nor, to the knowledge
of Purchaser, is it under investigation with respect to any material charge
concerning any violation of any provision of any federal, state or other
applicable law, rule, regulation, ordinance, order, decree or governmental
restriction. There are no unsatisfied judgments against Purchaser or any consent
decrees, writs, restraining orders, or preliminary or permanent injunctions to
which Purchaser is subject.
5.6 COMPLIANCE WITH LAWS. The assets, properties, business and operations
of the Purchaser, are and have been in compliance in all material respects with
all laws applicable to the Purchaser's assets, properties, business and
operations. The Purchaser does not require the consent of any person or entity
to permit it to operate in the manner in which it is presently being operated.
The Purchaser possesses all permits, licenses and other authorizations from all
persons or entities necessary to permit it to operate its business in the manner
in which it presently is conducted and the consummation of the transactions
contemplated by this Agreement will not prevent the Purchaser from being able to
continue to use such permits and operating rights.
5.7 BROKERS AND FINDERS. Neither the Purchaser nor any of the Purchaser's
directors, officers, shareholders or employees have employed any broker, finder,
or financial advisor or incurred any liability for any brokerage fee or
commission, finder's fee or financial advisory fee, in connection with the
transactions contemplated hereby, nor is there any basis known to the Purchaser
for any such fee or commission to be claimed by any person or entity.
ARTICLE VI
COVENANTS
6.1 COVENANTS OF THE SELLER. The Seller shall keep, perform and fully
discharge the following covenants and agreements:
(a) INTERIM CONDUCT OF BUSINESS. From the date hereof until the
Closing, the Seller shall (i) operate the Business as a going concern consistent
with prior practice and in the ordinary course of business, (ii) use its best
efforts to preserve substantially intact its business organizations and (iii)
use its best efforts to preserve its current relationships with customers,
employees, suppliers and other persons with which it has significant business
relations.
(b) ACCESS. The Seller shall, upon reasonable notice, give Purchaser
and its representatives full and free access to all properties, assets, books,
contracts, commitments and records of the Seller during reasonable business
hours and shall promptly furnish Purchaser with all financial and operating data
and other information as to the history, ownership, business, operations and
properties of the Seller as Purchaser may from time to time reasonably request.
(c) ACCURACY OF REPRESENTATIONS AND WARRANTIES. Without the prior
written consent of Purchaser, the Seller will not take any action from the date
hereof to the Closing Date that would cause any representation or warranty of
the Seller contained in this Agreement to become untrue or cause the breach of
any agreement hereof or covenant contained herein. The Seller will promptly
bring to the attention of Purchaser any facts which come to its attention that
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would cause any of the representations and warranties of the Seller to be untrue
or materially misleading in any respect.
6.2 NON-COMPETITION AND NON-SOLICITATION.
(a) For a period of five (5) years from the Closing Date, the Seller
will not anywhere in the world engage or participate in, directly or indirectly,
as principal, agent, employee, employer, consultant, investor or partner, or
assist in the management of, or own any stock or any other ownership interest
in, any business which is in direct competition with the business of the
Purchaser; provided that the ownership of not more than 5% of the outstanding
securities of any class listed on an exchange or regularly traded in the
over-the-counter market shall not constitute a violation of this Section 6.2(a).
(b) For a period of two (2) years from the Closing Date (the
"Non-Solicitation Period"), Seller will not solicit, or attempt to solicit, any
officer, director, consultant or employee of the Purchaser or any of its
subsidiaries or affiliates to leave his or her engagement with the Purchaser or
such subsidiary or affiliate nor will it call upon, solicit, divert or attempt
to solicit or divert from the Purchaser or any of its affiliates or subsidiaries
any of their customers or suppliers, or potential customers or suppliers, of
names he was aware during the term of his employment with the Seller; provided,
however, that nothing in this Section 6.2(b) shall be deemed to prohibit the
Seller from calling upon or soliciting a customer or supplier during the
Non-Solicitation Period if such action relates solely to a business which is not
Competitive with the Purchaser; and provided, further, however, that nothing in
this Section 6.2(b) shall be deemed to prohibit the Seller from placing
advertisements in newspapers or other media of general circulation advertising
employment opportunities.
(c) It is specifically understood and agreed that any breach of the
provisions of this Section 6.2 is likely to result in irreparable injury to the
Purchaser and that the remedy at law alone will be an inadequate remedy for such
breach, and that in addition to any other remedy it may have, the Purchaser
shall be entitled to enforce the specific performance of this Agreement by the
Seller and to seek both temporary and permanent injunctive relief (to the extent
permitted by law) without the necessity of proving actual damages.
6.3 COVENANT OF THE PURCHASER. Purchaser represents and warrants to Seller
that it will take all necessary actions to permit it to issue the number of
shares of capital stock required to be issued pursuant to Schedule 1. The
capital stock issued pursuant to Schedule 1 will, when issued, be validly
issued, fully paid and nonassessable and no shareholder of Purchaser has or will
have any rights of subscription or purchase in respect thereof.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER. The obligation
of the Purchaser to consummate the purchase of the Acquired Assets under this
Agreement is subject to the fulfillment, prior to or at the Closing, of each of
the following conditions:
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(a) All representations and warranties of the Seller to the Purchaser
contained in this Agreement or in any schedule, certificate, or document
delivered by the Seller to the Purchaser pursuant to the provisions hereof shall
be true and correct in all material respects as of the time of the Closing with
the same effect as though made at and as of that time;
(b) The Seller shall have performed and compiled in all material
respect with all obligations and covenants required by this Agreement to be
performed or complied with by the Seller prior to or at the Closing;
(c) On the Closing Date, no action is threatened or pending
challenging or otherwise relating to the transactions provided for herein or
which may affect the Seller, the Business or the Assets in a manner which is
materially adverse;
(d) All corporate and other actions and proceedings by the Seller in
connection with the transactions contemplated hereby, and all board and
shareholder resolutions, documents and instruments incidental thereto, shall be
reasonably satisfactory in form and substances to counsel for the Purchaser, and
the Purchaser shall have received all such resolutions, documents and
instruments, or copies thereof, as its counsel shall have reasonably requested;
(e) The Seller shall have received (and there shall be in full force
and effect) all consents, approvals, licenses, permits, orders and other
authorizations of, and shall have made (and there shall be in full force and
effect) all such filings, registrations, qualifications and declarations with,
any Person pursuant to any applicable law, statute, ordinance regulation or rule
or pursuant to any agreement, order or decree to which the Seller is a party or
to which it is subject, in connection with the transactions contemplated by this
Agreement and the sale of the Acquired Assets including but not limited to the
consent of Xoom Software, Inc. and Digital River, Inc.
(f) Each of Art Holden and Xxxxx Xxxxxxx shall have executed and
delivered to Purchaser an employment agreement in substantially the form of
Exhibit D attached hereto (the "Employment Agreements").
(g) The Purchaser shall have completed to its satisfaction its legal,
financial and accounting due diligence of the Seller, the Assets and the
Business.
(h) There shall not have been, in the Purchaser's reasonable
judgment, any material adverse change in the Business, operations, assets,
financial condition or prospects of the Seller, the Business or the Assets.
7.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER. The obligation of
the Seller to consummate the sale of Assets under this Agreement is subject to
the fulfillment, prior to or at the Closing, of each of the following conditions
(any or all of which may be waived by the Seller in writing);
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(a) all representations and warranties of the Purchaser to the Seller
contained in this Agreement or in any schedule, certificate, or document
delivered by the Purchaser to the Seller pursuant to the provisions hereof shall
be true and correct in all material respects at and as of the time of the
Closing with the same effect as though those representations and warranties had
been made at and as of that time;
(b) the Purchaser shall have performed and compiled in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by it prior to or at the Closing;
(c) on the Closing Date, no Action is pending or threatened,
challenging or otherwise relating to the transactions provided for herein;
(d) all corporate and other actions and proceedings by the Purchaser
in connection with the transactions contemplated hereby, and all resolutions,
documents, and instruments incidental thereto, shall be reasonably satisfactory
in form and substance to counsel for the Seller, and the Seller shall have
received all such resolutions, documents, and instruments, or copies thereof, as
its counsel shall have reasonably requested; and
(e) the Purchase Price shall be paid to the Seller as set forth on
Schedule 1.
ARTICLE VIII
MUTUAL COVENANTS
8.1 FURTHER ASSURANCES. Each Party agrees, at any time and from time to
time, upon the request of the other Party, to do, execute, acknowledge and
deliver, or to cause to be done, executed, acknowledged and delivered, all such
further acts, assignments, transfers and conveyances as may be reasonably
required, without enlarging or extending any obligation or liability of any
Party beyond what is otherwise contemplated by this Agreement, to facilitate the
transactions contemplated by this Agreement.
8.2 EXPENSES. All expenses incurred by Purchaser or Seller in connection
with the negotiation, authorization, preparation, execution and performance of
this Agreement, including, without limitation, all fees and expenses of agents,
representatives, counsel and accountants for Purchaser or Seller as applicable,
shall be paid by the Party incurring such expense.
ARTICLE IX
TAX MATTERS
9.1 Notwithstanding anything to the contrary in this Agreement, Purchaser
shall pay any and all sales, use, transfer, documentary, registration, and
similar Taxes relating to the Assets that arise by reason of the transactions
contemplated by this Agreement. Seller shall be responsible for and pay all
income tax liability attributable to it as a result of the sale of the Assets.
Each party shall be responsible for filing its own tax returns of whatever sort
deemed appropriate and necessary by the filing party.
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ARTICLE X
INDEMNIFICATION
10.1 INDEMNIFICATION OF PURCHASER. Seller agrees to indemnify, defend and
hold harmless Purchaser and its officers, directors, employees and agents from
and against any and all losses, damages of any kind, liabilities, costs, and
expenses, including without limitation all fines, penalties, amounts paid in
settlement, and reasonable attorneys' fees (collectively, "Losses") incurred or
sustained by Purchaser as a result of:
(a) any breach of any warranty or the inaccuracy of any
representation, made by Seller in this Agreement;
(b) any breach or nonfulfillment or non-performance, partial or
total, of any covenant or any agreement of Seller contained in this Agreement or
in any ancillary agreement delivered to Purchaser by or on behalf of Seller
pursuant to the express provisions of this Agreement;
(c) all obligations and liabilities of Seller, whether direct or
indirect, fixed or contingent, known or unknown; or
(d) any claims arising from the Seller's use of the Assets prior to
the Closing Date.
10.2 INDEMNIFICATION OF SELLER. Purchaser agrees to indemnify, defend and
hold harmless Seller, its affiliates and their respective officers, directors,
employees and agents from and against any and all losses, damages of any kind,
liabilities, costs, and expenses, including without limitation all fines,
penalties, amounts paid in settlement and reasonable attorneys' fees
(collectively, "Losses") incurred or sustained by Seller as a result of:
(a) any breach by Purchaser of any of its representations or
warranties made in this Agreement;
(b) any breach or nonfulfillment or non-performance, partial or
total, of any covenant or any agreement of Purchaser contained in this Agreement
or in any ancillary agreement delivered to Seller by or on behalf of Purchaser
pursuant to the express provisions of this Agreement;
(c) the failure of Purchaser to perform any of the agreements or
undertakings made by Purchaser in this Agreement; or
(d) any claims arising from Purchaser's use of the Assets after
Closing Date.
10.3 COOPERATION. Notwithstanding anything to the contrary contained in
this Article X, the parties shall cooperate with each other to maximize the
availability of insurance coverage for claims or actions by third parties which
may be subject to indemnification pursuant to this Article X, and if any
insurance carrier for any Party agrees to defend such claim or action, such
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defense shall be tendered to such insurance carrier and the rights of the
Parties between themselves regarding the assumption and control of such defense
shall be subject to the reasonable requirements of such insurance carrier.
10.4 SURVIVAL OF REPRESENTATIONS. The representations, warranties,
covenants, agreements and indemnifications of the parties contained in this
Agreement or in any writing delivered pursuant to the express provisions of this
Agreement shall survive any investigation heretofore or hereafter made by
Purchaser or Seller and the consummation of the transactions contemplated herein
for a period of three years from the Closing Date.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 AMENDMENT AND WAIVER. This Agreement may be amended, modified and
supplemented only by written agreement of each of the Parties hereto. By an
instrument in writing, either Party may waive compliance by the other Party with
any term or provision of this Agreement that such other Party was or is
obligated to comply with or perform.
11.2 NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand or mailed, first class certified mail
with postage paid:
If to Seller:
Eclipse Digital Imaging, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxxx Xxxxx, XX 00000
Attn: Art Holden
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx
0000 X. Xxxxxxxx
X.X. Xxx 000
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to Purchaser:
Andover Advanced Technologies, Inc.
00 Xxxxx Xxxxxx Xxxx
Xxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx, President
Facsimile: (000) 000-0000
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with a copy to:
Xxxxxxxx, Xxxxxxx & Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other person or address as any Party hereto shall furnish to the
other Parties hereto in writing pursuant to this Section 11.2.
11.3 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their respective successors and permitted
assigns. This Agreement may not be assigned by the Seller without the prior
written consent of the Purchaser. The Purchaser may assign its rights and
obligations under this Agreement (whether by sale, merger or otherwise) without
the consent of Seller.
11.4 GOVERNING LAW. This Agreement shall be governed by the law of the
Commonwealth of Massachusetts regardless of the laws that might otherwise govern
applicable conflicts of laws.
11.5 COUNTERPARTS; FACSIMILE. This Agreement may be signed and delivered
either originally or by facsimile, and in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
11.6 HEADINGS. The Article and Section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.7 INTERPRETATION. When a reference is made in this Agreement to a
Section or Exhibit, such reference shall be to a Section or Exhibit of this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"included", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the phrase "without limitation." When used in this
Agreement, the word "primarily" shall be deemed to be followed by the phrase "or
exclusively". All accounting terms not defined in this Agreement shall have the
meanings determined by GAAP.
11.8 ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding of the Parties hereto in respect of the subject matter contained
herein. This Agreement supersedes all prior agreements and understandings among
the Parties hereto with respect to such subject matter.
11.9 THIRD PARTIES. Except for the indemnity provisions of Article X, which
are also for the benefit of the Parties identified therein, nothing in this
Agreement, whether express or implied, is intended to: (a) confer any rights or
remedies on any person other than the Seller and
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Purchaser, and their respective successors and permitted assignees; (b) relieve
or discharge the obligation or liability of any third party; or (c) give any
third party any right of subrogation or action against Seller or Purchaser.
11.10 PUBLICITY OF TRANSACTION. So long as this Agreement is in effect,
neither Seller nor Purchaser shall issue or cause the publication of any press
release or other public announcement with respect to the transactions
contemplated by this Agreement, including any statement as to the terms and
conditions of this Agreement, without the prior written consent of the other
Party, except that such prior approval shall not be required as to any
disclosure required under law nor shall this prohibition limit Purchaser from
normal and customary advertisement of its business. In the event that any
disclosure is required by law, the disclosing party will notify the other party
of the required disclosure at least five (5) business days prior to disclosure
in order to give the other party an opportunity to seek protective orders or
other lawful preventive or restrictive measures.
11.11 EXHIBITS. All Exhibits referred to herein are intended to be and
hereby are specifically made a part of this Agreement.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Parties, acting through their duly authorized
representative, have executed this Agreement as of the day and year first above
written.
ANDOVER ADVANCED TECHNOLOGIES, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
Title: President
ECLIPSE DIGITAL IMAGING, INC.
By: /s/ Art Holden
-----------------------------
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EXHIBIT A
Assets
The AnimationFactory, EclipseDigital, JavaArt, AnimOutlet, GifArtist and
AnimFactory websites and all URL's owned by the Seller (collectively, the
"Website"), including without limitation all content including text and
graphics, all design elements including look and feel, all advertising systems
and advertising information including banners and site statistics, all software
code (including source and object code) including HTML code, Java scripts, CGI
scripts and links, and all brands and commercial identification including logos,
trademarks, service marks and trade names. All rights in income related to the
Website, including without limitation advertising revenues.
The domain names "xxx.xxxxxxxxxxxxxx.xxx", "xxx.xxxxxxx.xxx",
"xxx.xxxxxxxxxxx.xxx", "xxx.xxxxxxxxx.xxx" and "xxx.xxxxxxxxxxxxxxxx.xxx" and
all related trademarks or service marks and all rights and interests of Seller
therein, together with the goodwill of all business symbolized by such xxxx.
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EXHIBIT 2.4
ASSUMED LIABILITIES
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SCHEDULE 1
CONSIDERATION
1. CASH CONSIDERATION. Total cash consideration to be paid shall be
$1,500,000, which shall be paid as follows:
(a) At Closing, Purchaser shall pay to Seller a cash payment of
$250,000.
(b) On October 18, 1999 (date which is four months after Closing),
and every month thereafter until December 18, 2000 (date which is 18 months
after Closing), Purchaser shall pay to Seller a cash payment of $83,333.
2. STOCK CONSIDERATION.
(a) In the event that the Purchaser completes an initial public
offering of its common stock (an "Offering"), in addition to the consideration
set forth above, the Purchaser shall issue shares of its common stock to the
Seller with an aggregate value as set forth below. The number of shares of
common stock to be issued to the Seller in each instance shall be calculated
using the price per share initially offered to the public in such Offering:
Aggregate Value Timing
--------------- ------
$200,000 Upon closing of Offering
$200,000 Twelve (12) months after closing of Offering
$200,000 Twenty-four (24) months after closing of Offering
In the event that the employment of either Art Holden or Xxx Xxxxxxx with
the Purchaser is terminated for Cause or voluntarily by the individual, the
payments remaining to be made by the Purchaser after the date of termination
shall be reduced by 50%. In the event that the employment of both Xx. Xxxxxx and
Xx. Xxxxxxx with the Purchaser is terminated for Cause or voluntarily by the
individual, the Purchaser shall not be required to issue any shares remaining to
be issued to the Seller following the date of such termination.
(b) MILESTONES The payments described in Section 2(a) above (the
"Stock Payments") are subject to the achievement of the following (the
"Milestones"):
(i) Thirty four percent (34%), or $66,667 in value, of each
Stock Payment shall be due and payable so long as both
Xx. Xxxxxx and Xx. Xxxxxxx remain employed with the
Purchaser pursuant to the terms of their employment
agreements.
(ii) An additional twenty-two percent (22%), or $44,000 in
value, of each Stock Payment shall become due and
payable in the event that the Website's traffic
increases by 50% per year from the
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traffic as of the Closing. The increase to be measured
and verified by an independent auditor reasonably
acceptable to the Purchaser and the Seller. The parties
agree that the traffic figures in this Milestone are
not to be compounded on an annual basis.
(iii) An additional twenty-two percent (22%), or $44,000 in
value, of each Stock Payment shall become due and
payable in the event that at least two new Animation
Content discs each year are prepared for sale to the
public.
(iv) An additional twenty-two percent (22%), or $44,000 in
value, of each Stock Payment shall become due and
payable in the event that at least 2,500 new animation
images per month are completed. If the Purchaser, in
its sole discretion, elects to terminate this segment
of its business, the percentage of each Stock Payment
determined by this clause (iv) shall automatically be
earned by the Seller.
(c) Purchaser will take all good faith efforts (including commitment
of reasonable resources) to permit the foregoing Milestones to be achieved.
Notwithstanding the foregoing, if the Purchaser determines to change its
strategic focus or abandon the business being acquired, all of the Milestones in
Section 2(b) will be deemed to have been achieved.
3. ALTERNATE CASH CONSIDERATION. In the event that an Offering does not
occur within eighteen (18) months from the Closing, the Seller shall have a one
time option which must be exercised in writing not less than eighteen (18)
months after the Closing and not more than nineteen (19) months after the
Closing, to forgo the consideration set forth in Section 2 above and to receive
in lieu thereof the following cash payments: (i) $200,000 to be paid on the date
which is 5 days following the receipt by the Purchaser of the Seller's election
hereunder; (ii) $200,000 to be paid on the date which is twenty-four (24) months
after the Closing; and (iii) $200,000 on the date which is thirty-six (36)
months after the Closing. In all cases, the Milestones set forth in Section 2(a)
above shall apply to the cash payments in this Section 3, if the Seller elects
to receive these cash payments in lieu of the Stock Payments set forth above.
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