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EXHIBIT 2.1
ACQUISITION AGREEMENT
BY AND BETWEEN
INTERNET PICTURES CORPORATION
AND
HOMESTORE VIRTUAL TOURS, INC.
DATED AS OF
JANUARY 12, 2001
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ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT ("AGREEMENT") is made and entered into as of
January 12, 2001 (the "Closing Date"), by and between INTERNET PICTURES
CORPORATION, a Delaware corporation ("IPIX"), and HOMESTORE VIRTUAL TOURS, INC.,
a Delaware corporation ("HOMESTORE VT"). Capitalized terms not otherwise defined
in the body of this Agreement shall have the meaning ascribed to them in EXHIBIT
A.
The parties agree as follows:
ARTICLE I
PURCHASE AND SALE; CLOSING
1.1. PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES.
Subject to the terms and conditions of this Agreement, on the Closing Date, IPIX
will sell, convey, assign, transfer and deliver to Homestore VT, and Homestore
VT will purchase, acquire and accept from IPIX, all of the Assets (together with
the other transactions contemplated or required by this Agreement, the
"TRANSACTIONS"). Subject to the terms and conditions of this Agreement, on the
Closing Date, Homestore VT also will assume and agree to pay, perform and
discharge when due the Assumed Liabilities, but not the Retained Liabilities.
The Assets will be transferred to Homestore VT under the Xxxx of Sale and
Assignment, Assumption and Transfer Agreement attached hereto as EXHIBIT B
effective as of the Closing Date. IPIX shall remain fully and solely liable for
all of the Retained Liabilities.
1.2. PURCHASE PRICE. Homestore VT will pay to IPIX at the Closing
an aggregate purchase price (the "PURCHASE PRICE") consisting of (a) the
assumption of the Assumed Liabilities by Homestore VT, and (b) $12,000,000. On
the Closing Date, Homestore VT will deliver to IPIX, by wire transfer in
immediately available funds, the Purchase Price as set forth above, and payable
as follows: (a) $154,672.01 of the Purchase Price shall be paid to Silicon
Valley Bank, (b) $4,895,223.52 of the Purchase Price shall be deposited into the
Virtual Tours Backlog Account (as defined in the Coordination, Billing and
Collection Agreement - Backlog Tours entered into by and between Imaging
Services Corporation, a Delaware corporation and Homestore VT, dated as of the
date hereof (the "CBC Agreement")), (c) $2,558,978.48 of the Purchase Price
shall be deposited into the Provider Account (as defined in the CBC Agreement),
and (d) the remainder of the Purchase Price shall be paid to IPIX. The parties
hereby acknowledge and agree that the payment of the Purchase Price by Homestore
VT represents fair market value, based on an actual, arms-length transaction, in
consideration for the acquisition of the Assets and the assumption of the
Assumed Liabilities by Homestore VT.
1.3. CLOSING. Subject to the terms and conditions of this
Agreement, the closing of the Transactions and the other actions contemplated by
this Agreement to occur in connection therewith (the "CLOSING") will take place
on the Closing Date at the offices of Xxxxxxxxx.xxx, Inc., located at 00000
Xxxxxxx Xxxxx Xxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxxxx.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF IPIX
As a material inducement to Homestore VT to enter into and perform this
Agreement, IPIX represents and warrants as of the Closing Date that:
2.1. ORGANIZATION AND POWER. IPIX is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with full power and authority to own or lease and operate its properties and
assets and to carry on its business as such business is now conducted and is
currently proposed to be conducted. IPIX is duly qualified to do business as a
foreign corporation under the laws of each jurisdiction in which the conduct of
its business requires such qualification or license, except where the failure of
such qualification or license would not reasonably be expected to result in a
Material Adverse Effect.
2.2. AUTHORIZATION; BINDING EFFECT, ETC. IPIX has all requisite
power and authority to execute, deliver and perform this Agreement and each
other document being executed herewith. The execution, delivery and performance
of this Agreement and all other documents and agreements contemplated hereby to
be executed by IPIX have been duly authorized by all requisite action of IPIX,
and (assuming the due authorization, execution and delivery hereof and thereof
by the other parties hereto and thereto), this Agreement and each such other
document or agreement contemplated hereunder will be a valid and binding
obligation of IPIX, enforceable against IPIX in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity. IPIX has, as of the Closing
Date, taken all actions necessary and advisable in order to approve and adopt
this Agreement and the Transactions contemplated hereby.
2.3. NONCONTRAVENTION. Except as provided in SCHEDULE 2.3 hereof,
the execution, delivery and performance of this Agreement and each document
executed herewith and the consummation of the transactions contemplated hereby
do not and will not (a) violate any provisions of law applicable to IPIX; (b)
with or without the giving of notice or passage of time, or both, conflict with
or result in the breach of any provision of IPIX's certificate of incorporation
or bylaws or any material instrument, license, agreement or commitment to which
IPIX is a party, or by which the Assets are bound; (c) constitute a violation of
any order, judgment or decree to which IPIX is a party or by which the Assets
are bound, which violation could have a Material Adverse Effect; or (d) require
the consent, approval, order or authorization of, or registration, qualification
or filing with, any court, administrative agency, other governmental authority
or third party.
2.4. FINANCIAL STATEMENTS. The Financial Statements provided to
Homestore VT were prepared in accordance with generally accepted accounting
principles in effect at the time of such statements and applied on a consistent
basis (except as indicated in the notes thereto) and fairly present the
financial position of IPIX and the Real Estate Division as of the date thereof
and its results of operations and cash flows for the three (3) month period then
ended (subject to the absence of footnotes and normal year end adjustments in
the case of any unaudited interim financial statements).
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2.5. NO UNDISCLOSED LIABILITIES. IPIX has no material liabilities
or obligations of any kind or nature, whether accrued, contingent, or otherwise,
and there is no existing condition, situation or set of circumstances which
could reasonably be expected to result in such a liability or obligation, other
than (i) liabilities provided for in the Financial Statements or disclosed in
the notes thereto, (ii) obligations under Contracts disclosed on SCHEDULE 2.7,
and (iii) interim operating expense liabilities incurred in the Ordinary Course
of business not to exceed $50,000 either individually or in the aggregate.
2.6. REAL AND PERSONAL PROPERTY. (a) IPIX has good and marketable
title or, in the case of leasehold interests, valid leasehold interests, to all
of the Assets including the Intellectual Property Rights, and all such
properties and assets are free and clear of Liens (other than Permitted Liens
listed on SCHEDULE 2.6).
(b) As of the Closing Date, SCHEDULE 1 further contains a
true, accurate and complete list of all real property assets and all leases,
subleases or assignments of leases (together with all amendments, modifications,
supplements, renewals or extensions of any thereof) affecting each real property
or personal property asset being transferred to Homestore VT by IPIX hereunder,
regardless of whether IPIX is the landlord or tenant (whether directly or as an
assignee or successor in interest) in the case of real property under such
lease, sublease or assignment. Each agreement listed in the immediately
preceding sentence is in full force and effect and IPIX has performed in all
material respects all of the obligations required to be performed by it to date,
and there exists no default, or any event which upon the giving of notice or the
passage of time, or both, would give rise to a claim of a default in the
performance by IPIX or, to the Knowledge of IPIX, any other party, of their
respective obligations thereunder. Each such agreement constitutes the legally
valid and binding obligation of IPIX, enforceable against IPIX in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles.
(c) The Assets, together with the assets utilized under
the Intellectual Property License Agreement, the Processing, Hosting and
Distribution Agreement and the Sales, Billing and Collection Agreement,
constitutes all of the property, real, personal and intangible, owned or leased
by IPIX in connection with the Real Estate Business and are adequate to conduct
such business as currently conducted and as proposed to be conducted.
2.7. CONTRACTS. (a) SCHEDULE 2.7 sets forth a true, complete and
correct list of all Contracts. The Contracts are in full force and effect,
constitute legal, valid and binding obligations of the respective parties
thereto, and are enforceable in all material respects in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity. IPIX has, in
all material respects, performed all of the obligations required to be performed
by it to date, and there exists no default, or any event which upon the giving
of notice or the passage of time, or both, would give rise to a claim of a
default in the performance by IPIX or, to the Knowledge of IPIX, any other
party, of their respective obligations thereunder. Except as set forth on
SCHEDULE 2.7, no consent or approval by, or any notification or filing with, any
party to any Contract is required in connection with the execution, delivery and
performance by IPIX of this Agreement or the
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consummation by IPIX of the Transactions, the lack of which consent or approval,
singularly or in the aggregate, would reasonably be expected to have a Material
Adverse Effect.
(b) SCHEDULE 2.7(b) correctly describes each Contract
IPIX has with brokers as of the Closing Date (such contracts, the "Broker
Contracts") and all information set forth therein is true and correct as of such
date. No party thereto is in default or breach in any material respect under the
terms of any Broker Contract and no condition, event or circumstance exists or
has occurred that, with notice or lapse of time or both, would constitute a
material default under any such Broker Contract. All Broker Contracts represent
contracts that are for Full Service Virtual Tours (as defined in the
Intellectual Property License Agreement), are valid and binding agreements of
IPIX and are in full force and effect and are assignable in the manner
contemplated herein and by the Assignment, Assumption and Transfer Agreement
without requiring consent of any party thereto. Except as set forth on SCHEDULE
2.7(b), no consent or approval by, or any notification or filing with, any party
to any Broker Contract is required in connection with the execution, delivery or
performance by IPIX of this Agreement.
(c) SCHEDULE 2.7(c) correctly describes each Contract
IPIX has with agents as of the Closing Date (such contracts, the "Agent
Contracts") and all information set forth therein is true and correct as of such
date. No party thereto is in default or breach in any material respect under the
terms of any Agent Contract and no condition, event or circumstance exists or
has occurred that, with notice or lapse of time or both, would constitute a
material default under any such Agent Contract. All Agent Contracts represent
contracts that are for Full Service Virtual Tours, are valid and binding
agreements of IPIX and are in full force and effect and are assignable in the
manner contemplated herein and by the Assignment, Assumption and Transfer
Agreement without requiring consent of any party thereto. Except as set forth on
SCHEDULE 2.7(c), no consent or approval by, or any notification or filing with,
any party to any Agent Contract is required in connection with the execution,
delivery or performance by IPIX of this Agreement.
(d) The Image Capturing rights and obligations under the
Broker Contracts and the Agent Contracts have been assigned to Imaging Services
Corporation pursuant to the Assignment, Assumption and Transfer Agreement.
2.8. ACCOUNTS RECEIVABLE. The accounts receivable and all other
receivables shown on SCHEDULE 2.8 are bona fide receivables and represent
amounts due with respect to actual, arms-length transactions entered into in the
Ordinary Course of business of IPIX and the Real Estate Business and, to the
Knowledge of IPIX, are valid obligations of the obligors.
2.9. LITIGATION; CRIMINAL PROCEEDINGS. Except as disclosed on
SCHEDULE 2.9, there is no claim, action, suit, investigation or proceeding which
could involve liability of IPIX which would reasonably be expected, individually
or in the aggregate, to exceed $250,000 or to otherwise result in a Material
Adverse Effect pending against, or to the Knowledge of IPIX, threatened against
or affecting, IPIX, or any of its respective properties before any court or
arbitrator or any governmental body, agency or official. IPIX is not subject
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to any judgment, injunction, order decree or arbitration award relating to the
Assets or which would reasonably be expected to have a Material Adverse Effect.
2.10. COMPLIANCE WITH LAWS AND COURT ORDERS. Except as disclosed in
SCHEDULE 2.10, IPIX is not in violation in any material respect of, and has not
since the date of its formation violated in any material respect, and is not
under investigation with respect to and, to its Knowledge, has not been
threatened to be charged with or given notice of any violation in any material
respect of, any applicable law, rule, regulation, judgment, injunction, order or
decree.
2.11. EMPLOYEES. (a) Homestore VT will not become liable for any
bonus, retirement, severance, job security or similar benefit or enhanced such
benefit (including acceleration of vesting or exercise of an incentive award) as
a result of the transactions contemplated hereby to any employee or director or
former employee or director of IPIX.
(b) IPIX is not a party to or bound by any collective
bargaining agreement with any labor organization, group or association covering
any of its employees in the Real Estate Business, and to the Knowledge of IPIX,
there are no attempts to organize any of IPIX's employees by any Person, unit or
group seeking to act as their bargaining agent. Except as disclosed on SCHEDULE
2.11, IPIX has complied with all material applicable laws relating to the
employment of labor, including provisions thereof relating to wages, hours,
equal opportunity, collective bargaining, discrimination against race, color,
national origin, religious creed, physical or mental disability, sex, age,
ancestry, medical condition, marital status or sexual orientation, and the
withholding and payment of social security and other taxes related to the Real
Estate Business except for such non-compliance that would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
There are no pending or, to the Knowledge of IPIX, threatened charges of unfair
labor practices or of employment discrimination or of any other wrongful action
with respect to any aspect of employment of any Person employed or formerly
employed by IPIX in the Real Estate Business. No union representation elections
relating to IPIX's employees have been scheduled by any Governmental Agencies,
no organizational effort is being made with respect to any of such employees
there is no investigation of IPIX's employment policies or practices by any
Governmental Agencies pending or, to the Knowledge of IPIX, threatened. IPIX is
not currently, and in the past has not been, involved in labor negotiations with
any unit or group seeking to become the bargaining unit for any employees of
IPIX. IPIX has never experienced any work stoppages and, to the Knowledge of
IPIX, no work stoppage has been threatened or is planned.
2.12. INSURANCE. IPIX has maintained insurance policies covering the
Assets in accordance with commercially reasonable standards with financially
stable insurance companies. There is no claim by IPIX pending under any of such
policies or bonds as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or bonds or in respect of which such
underwriters have reserved their rights. All premiums payable under all such
policies and bonds have been timely paid and IPIX has otherwise complied fully
with the terms and conditions of all such policies and bonds. To the Knowledge
of IPIX, all such policies and bonds are in full force and effect and there are
no threatened terminations of, premium increases with respect to, or material
alterations of coverage under, any of such policies or bonds.
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2.13. BOOKS AND RECORDS. The books and records relevant to the Real
Estate Business are correct and complete in all material respects and have been
maintained in accordance with commercially reasonable business practices.
2.14. OPERATION OF BUSINESS IN ORDINARY COURSE. Except for certain
restructuring activities set forth in SCHEDULE 2.14, IPIX has been engaged
solely in the operation of its business in the Ordinary Course since September
30, 2000, consistent with past practice, and (i) except in the operation of its
business in the Ordinary Course, consistent with past practice, no party has
accelerated, terminated, modified or canceled any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses) to
which IPIX is a party or by which it is bound which individually or in the
aggregate with any other such agreements, contracts, leases or licenses, has had
or may have a Material Adverse Effect and no party has provided IPIX with notice
of his/its intention to take any such action; (ii) IPIX has not experienced any
damage, destruction, or loss (whether or not covered by insurance) to any of the
Assets; (iii) there has not been any other occurrence, event, incident, action,
failure to act or transaction outside the Ordinary Course of business involving
IPIX which has had or is reasonably likely to have a Material Adverse Effect;
and (iv) IPIX has not committed to do any of the foregoing.
2.15. DISCLOSURE. None of this Agreement, the Financial Statements,
any Schedule or Exhibit hereto or any certificate, document or other statement
delivered in connection with this Agreement contains any untrue statement of a
material fact, or omits any statements of material fact necessary to make the
statements contained herein or therein not misleading.
2.16. TAX MATTERS. (a) IPIX has filed with the appropriate federal,
state, local and foreign taxing authorities all tax returns required to be filed
on or before the date hereof by or with respect to it, and such tax returns are
true, correct and complete in all material respects except the failure to file
such returns, or errors or omissions in such returns, which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. IPIX has paid in full or has made provision in the Financial
Statements for all taxes which are due or claimed to be due from it by any
taxing authority. IPIX has not incurred any liability for taxes other than in
the Ordinary Course of its business since the date of such Financial Statements.
There are no liens for taxes upon the assets and properties of IPIX except for
statutory liens for current taxes not yet due.
(b) Except where such actions would not reasonably be
expected to result in a Material Adverse Effect, (i) IPIX has not requested any
extension of time within which to file any tax return, which tax return has not
since been filed, or waived any statute of limitations for, or agreed to any
extension of time with respect to, the assessment of taxes, (ii) IPIX has not
received any notice of deficiency or assessment from any federal, state, local
or foreign taxing authorities with respect to liabilities for taxes which have
not been fully paid or finally settled, (iii) no tax return of IPIX has ever
been audited by the Internal Revenue Service or any state taxing agency or
authority, and (iv) no claim has ever been made by an authority in a
jurisdiction where IPIX does not file tax returns that it is or may be subject
to taxation by that jurisdiction.
(c) Except as disclosed on SCHEDULE 2.16, IPIX has
withheld and paid all taxes and other items required to have been withheld and
paid in connection with amounts paid
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or owing to any employee, independent contractor, director, creditor,
shareholder, or other third party.
(d) IPIX does not have any liability for the taxes of any
other Person (i) under Treasury Regulations ss. 1.1502-6 (or any similar
provision of state, local, or foreign law), (ii) as a transferee or successor,
(iii) by contract, or (iv) otherwise.
(e) For the purposes of this SECTION 2.16 the terms "TAX"
and "TAXES" include all federal, state, local and foreign income, gains,
franchise, excise, property, sales, use, employment, license, payroll,
occupation, recording, value added or transfer taxes, governmental charges,
fees, levies or assessments (whether payable directly or by withholding), and,
with respect to such taxes, any estimated tax, interest and penalties or
additions to tax and interest on such penalties and additions to tax.
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2.17. BENEFIT PLANS; ERISA. SCHEDULE 2.17 lists all employment and
consulting agreements relating to employees in the Real Estate Business,
pension, retirement, disability, medical, dental or other health plans, life
insurance or other death benefit plans, profit sharing, deferred compensation
agreements, stock, option, bonus or other incentive plans, vacation, sick,
holiday or other paid leave plans, severance plans or other similar employee
benefit plans maintained by IPIX ("BENEFIT PLANS"). IPIX has no commitment,
proposal, or communication to employees regarding the creation of an additional
Benefit Plan or any increase in benefits under any Benefit Plan. IPIX has
provided a copy of each Benefit Plan (including amendments) or, where
substantially similar arrangements exist, a sample copy and a list of Persons
participating in such arrangement.
2.18. ENVIRONMENTAL MATTERS. In connection with any real
property, IPIX has not generated, transported, stored, treated or disposed, nor
has IPIX allowed or arranged for any third Persons to transport, store, treat or
dispose, any hazardous substance to or at: (a) any location other than a site
lawfully permitted to receive such hazardous substance for such purposes or (b)
any location designated for remedial action pursuant to federal, state or local
statute or any other law and relating to the environment or waste disposal; nor
has IPIX performed or arranged for or allowed by any method or procedure such
transportation or disposal in contravention of any laws or regulations or in any
other manner which may result in liability for contamination or threat of
contamination of the environment. No generation, use, handling, storage,
treatment, release, threat of release, discharge, spillage or disposal of any
hazardous substance, has occurred or is occurring at any real property owned or
leased by IPIX (such property, the "REAL PROPERTY") or any other facilities or
properties owned or operated by IPIX in connection with any Real Property which
is being transferred to Homestore VT. IPIX has not received notification, or is
aware of, any past or present failure by it to comply with any environmental
laws, regulations, permits, franchises, licenses or orders applicable to any
Real Property. IPIX has not received notification, nor is aware of, any past or
present failure to comply with any environmental laws, regulations, permits,
franchises, licenses or orders applicable to Real Property which may result in
judicial, regulatory or other legal proceedings having a material adverse impact
on such property or result in the imposition of any lien, claim, assessment or
other encumbrance against the Assets. To the Knowledge of IPIX, the Real
Property does not contain asbestos or polychlorinated biphenyls or any
underground storage tanks.
2.19. AFFILIATE TRANSACTIONS. IPIX has not, directly or indirectly,
entered into or permitted to exist any transaction (including the purchase,
sale, lease or exchange of any property or the rendering of any service) with
any stockholder or any Affiliate of IPIX on terms that are less favorable to
IPIX than those that might be obtained at the time from Persons who are not a
stockholder or Affiliate.
2.20. HEAD LEASE. None of the portions blacked out or otherwise
omitted from the copy of that certain lease dated May 1, 1993 entered into
between Taradown Holdings, Inc. and Xxxxxxxxxxx Group, Inc. provided to
Homestore VT by IPIX in connection with a sublease that may be entered into
between VT Canada Inc., an Ontario corporation ("VT Canada") and Internet
Pictures (Canada) Corporation contains any restrictions, limitations,
prohibitions or other terms that will adversely affect VT Canada's ability to
use the subleased premises.
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2.21. NON-CASH DEFERRED REVENUE. The deferred revenue related to the
Broker Contracts listed in SCHEDULE 2.7(b) and the Agent Contracts listed in
SCHEDULE 2.7(c) include the gross amount of all accounts receivable outstanding
related to Virtual Tours that remain unperformed as of the Closing Date ("The
Non-Cash Deferred Revenue"). IPIX acknowledges that Homestore VT is legally
entitled to all the cash associated with the Non-Cash Deferred Revenue and IPIX
agrees to indemnify Homestore VT in full for any Non-Cash Deferred Revenue that
may be omitted from SCHEDULES 2.7(b) AND 2.7(c) in accordance with Article V of
this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HOMESTORE VT
As a material inducement to IPIX to enter into and perform this
Agreement, Homestore VT represents and warrants that:
3.1. ORGANIZATION AND POWER. Homestore VT is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with full power and authority to own or lease and use its properties
and assets and to carry on its business as such business is now conducted.
Homestore VT is duly qualified to do business as a foreign corporation under the
laws of each jurisdiction in which the conduct of its business requires such
qualification or license except where the failure of such qualification or
license would not reasonably be expected to result in any change or effect that
is or is reasonably likely to be materially adverse to the ability of Homestore
VT to perform its obligations under this Agreement other than a change or effect
arising out of general economic conditions or conditions affecting companies
generally in the industries in which Homestore VT participates.
3.2. NO VIOLATION. The execution, delivery and performance by
Homestore VT of this Agreement or any related agreements to which Homestore VT
may be a party, or consummation of the transactions herein or therein
contemplated, or compliance with the terms, conditions and provisions hereof or
thereof will not conflict with or violate any provision of law or the
certificate of incorporation or bylaws of Homestore VT, or result in a violation
or default in any provision of any regulation, order, writ, injunction or decree
of any court or governmental authority or of any agreement or instrument to
which Homestore VT is a party or by which Homestore VT is bound or to which
Homestore VT is subject, or constitute a default thereunder or result in the
imposition of any lien, charge, encumbrance or security interest of any nature
whatsoever upon any of Homestore VT's assets pursuant to the terms of any such
agreement or instrument.
3.3. HOMESTORE VT'S AUTHORITY. Homestore VT has all requisite power
and authority to execute, deliver and perform this Agreement and each other
document being executed in connection herewith to which it is a party, and to
consummate the Transactions. The execution, delivery and performance of this
Agreement and all other documents and agreements contemplated hereby to be
executed by Homestore VT have been duly authorized by all requisite actions of
Homestore VT, and (assuming the due authorization, execution and delivery hereof
and thereof by the other parties hereto and thereto), this Agreement and each
such other document or agreement contemplated hereunder will be a valid and
binding obligation of
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Homestore VT, enforceable against Homestore VT in accordance with their terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity. As of the Closing Date,
Homestore VT has taken all actions necessary and advisable in order to approve
and adopt this Agreement and the Transactions contemplated hereby.
3.4. APPROVALS. No approval, authorization, order, license or
consent of or registration, qualification or filing with any governmental
authority and no approval or consent by any other person or entity is required
in connection with the execution, delivery or performance by Homestore VT of
this Agreement and each other document being executed in connection herewith to
which it is a party, and to consummate the Transactions.
3.5. DISCLOSURE. None of this Agreement, any Schedule or Exhibit
hereto or any certificate, document or other statement delivered in connection
with this Agreement by Homestore VT contains any untrue statement of a material
fact, or omits any statements of material fact necessary to make the statements
contained herein or therein not misleading.
ARTICLE IV
COVENANTS
4.1. EMPLOYEE TRANSFER.
(a) As of the Maturity Date and for a period of thirty
(30) days thereafter, IPIX shall take all reasonable actions to encourage those
employees of IPIX that have received an offer of employment from Homestore VT to
accept such offer of employment.
(b) IPIX waives all non-competition restrictions that may
adversely affect Homestore VT's right to hire any IPIX employee and IPIX will
not make any claims against Homestore VT or its Affiliates as a result of
Homestore VT hiring such IPIX employees.
(c) IPIX shall make available to Homestore VT the IPIX
employees located at the Toronto call center whose jobs and functions relate
primarily to the Real Estate Business in accordance with the terms of the
Transition Services Agreement.
4.2. COVENANT NOT TO COMPETE. Except for the Permitted Activities
(as defined below), for a period of five (5) years from the date hereof, IPIX
will not, directly or indirectly through any other Person:
(a) engage in the Excluded Business or knowingly assist
any other Person to engage in an Excluded Business;
provided that nothing herein shall prevent any Person
which becomes a Controlling Affiliate of IPIX after
the date hereof from continuing to conduct any
Excluded Business it conducts as of the date it
becomes such a Controlling Affiliate; provided
further that (i) such Controlling Affiliate shall not
use any of IPIX's assets that are material to the
Residential Real Estate Market, including, but not
limited, IPIX's intellectual property assets, or any
IPIX key employee that has substantial experience in
the Residential Real Estate Market, directly or
indirectly, in any Excluded Business; and (ii)
Homestore VT
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may request one time during each twelve (12) month
period, and such Controlling Affiliate shall agree to
disclose to Homestore VT pursuant to such request, a
list of all IPIX assets that are currently being used
by such Controlling Affiliate in the Residential Real
Estate Market;
(b) solicit, divert or take away, or attempt to solicit,
divert or take away, the business or patronage of any
of the clients, customers or suppliers of Homestore
VT and its Affiliates that is related to an Excluded
Business;
(c) knowingly lend or allow its name or reputation,
knowledge or experience to be used by any Person
engaged in an Excluded Business; and
(d) invest in or otherwise acquire an equity interest in
any Person engaged in an Excluded Business; provided
that, with respect to any Person which is acquired by
or merged into IPIX and is engaged primarily in
businesses other than the Excluded Business, IPIX
shall use its best efforts to cause that Person to
terminate as soon as possible any Excluded Businesses
and, in the failure to so terminate, IPIX shall
divest of its interest in any such Excluded
Businesses within one hundred (100) days of such time
IPIX becomes aware or reasonably should have become
aware of such Excluded Businesses.
The restrictions in this Section 4.2 will be effective (i) in the counties of
Los Angeles and Ventura, (ii) in the state of California and (iii) in the United
States of America (collectively, the "Locations"). IPIX acknowledges that the
business and operations of the Homestore VT and its Affiliates are national,
rather than local, in scope and that the restrictions in this Agreement are
reasonable both individually and in the aggregate and that the duration,
geographic scope, extent and application of each of such restrictions are no
greater than is necessary for the protection of Homestore VT's and its
Affiliates' legitimate business interests, which include but are not limited to
Homestore VT's trade secrets and other valuable confidential information
acquired by IPIX, its substantial relationships with prospective or existing
customers and suppliers and the goodwill associated with Homestore VT and its
Affiliates.
For the purposes of this Section:
"Excluded Business" is defined as the development, marketing,
promotion, sale, license or distribution of any goods, products or services that
compete with the goods, products or services of Homestore VT or any of its
Affiliates in the Residential Real Estate Market.
"Permitted Activities" is defined as the (i) development, marketing,
promotion, sale, license or distribution of IPIX's Rimfire technology utilized
for collecting, transforming, transporting and displaying media objects; (ii)
marketing, promotion and sale of imaging products or services to multiple
listing services and related Persons, and (iii) rights and activities permitted
under Section 3.8 of the Intellectual Property License Agreement; provided,
however, that no Permitted Activity shall include the use of video technologies
or any interactive (user controlled or otherwise controlled) and xxxxxxxxx
xxxxxx (including xxxxxxxxx xxxxxx that are larger or smaller than the user's
viewing window area) to provide a visual simulation of being present at or
immersed in the image or enables the user to look at and spatially navigate (if
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desired) in the image by (and without limitation) panning, tilting, zooming,
rotating or moving within the image or experience through other senses such as
sound, touch, smell or taste.
4.3. STALE TOUR RECONCILIATION.
a. On or before February 5, 2001, IPIX will deliver a
report (the "Reconciliation Report"), certified by an
executive officer of IPIX, setting forth a true and
correct list of (1) the amounts transferred to
Homestore VT included in deferred revenue as listed
in Schedule 2.7(c) that represents accounts
receivable as of the Closing Date for Virtual Tours
that have been fully performed as of the Closing Date
(the "A/R True-Up Amount"), (2) the number of Agent
Contracts included in SCHEDULE 2.7(C) that have not
had Activity within the twelve (12) month period
prior to the Closing Date and which were entered into
more than twelve (12) months prior to the Closing
Date (the "Stale Contracts"); (3) the number of
unperformed Virtual Tours related thereto (the "Stale
Tours"); and (4) the revenues related to the Stale
Tours for each Stale Contract (it being understood
and agreed that such revenue shall be calculated by
taking the product of the number of Stale Tours under
the relevant Stale Contract multiplied by the average
sales price per Virtual Tour under such Stale
Contract) (the "Stale Revenues"). For purposes of
this Section, "Activity" shall mean the request by
the applicable customer and performance of any
Virtual Tours under the applicable Agent Contract.
The Reconciliation Report shall be deemed a
representation made by IPIX under this Agreement.
b. If the total amount of Stale Revenues plus the A/R
True-Up Amount (the "Applicable Amount") is equal to
or greater than $1,000,000, then Homestore VT will
select a number of Stale Contracts, subject to IPIX's
reasonable approval, that constitute Stale Revenues
equal to $1,000,000 and IPIX will take title and the
obligations to such selected Stale Contracts and IPIX
will update SCHEDULE 2.7(C) by specifically deleting
such selected Stale Contracts.
c. If the Applicable Amount is less than $1,000,000,
then:
1. IPIX will take title and the obligations to
all Stale Contracts and IPIX will update
SCHEDULE 2.7(C) by specifically deleting all
Stale Contracts;
2. To the extent the difference between
$1,000,000 and the Applicable Amount (the
"Non-Stale Amount") is equal to or less than
$250,000, Homestore VT shall be entitled to
invoice and IPIX shall be required to pay to
Homestore VT an amount equal to $78.55 for
each Virtual Tour performed by Homestore VT
under an Agent Contract owned by Homestore
VT until iPIX has been invoiced and paid an
amount equal to the Non-Stale Amount.
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3. In the event the Non-Stale Amount is in
excess of $250,000 (the "Excess Non-Stale
Amount"), IPIX will (a) be subject to the
requirements under Subsection (2) above with
respect to the first $250,000 of the
Non-Stale Amount and (b) pay to Homestore VT
in cash, within ten (10) days of Homestore's
receipt of the Reconciliation Report, an
amount equal to the Excess Non-Stale Amount.
d. IPIX hereby acknowledges that notwithstanding its
obligation to take title back to Stale Contracts as
required above, that it shall not, in any event, be
entitled to service or otherwise perform its
obligations under such Stale Contracts and IPIX
hereby agrees to indemnify Homestore VT for any
Losses that Homestore might incur with respect to
such Stale Contracts in accordance with Section 5.2
of this Agreement.
4.4. [INTENTIONALLY OMITTED].
4.5. BROKER MAINTENANCE. IPIX agrees that it will pay all co-op
marketing expenses incurred or to be incurred with respect to tours performed or
delivered on or before the Closing Date pursuant to the terms of the Agent
Contracts and Broker Contracts associated with prepaid virtual tours in the same
manner and on the same terms as it has conducted its business in the past (such
expenses, the "Cooperative Expenses").
4.6. PAYMENT OF COMMISSIONS. IPIX agrees that it will pay all
commissions owed to salespersons in connection with the Broker Contracts and
Agent Contracts including, but not limited to, amounts payable upon draw down of
tour backlog (such commissions, the "Sales Commissions").
4.7. SEVERABLE COVENANTS. The parties intend that the covenants in
SECTION 4.2 will be construed as a series of separate covenants, each consisting
of the covenants in SECTION 4.2 for each of the Locations. Except for the
Locations, all such separate covenants will be deemed identical. The parties
desire and intend that this Agreement be enforced to the fullest extent
permissible under the Laws and public policies applied in each jurisdiction in
which enforcement is sought. If any particular provision of SECTION 4.2 is
adjudicated to be invalid or unenforceable, (a) each of the parties agrees that
if such provisions would be valid or enforceable if some part or parts of them
were deleted or the period or area of application reduced, the applicable
restriction will apply with the modifications necessary to make it valid and
enforceable, and (b) such adjudication will apply only with respect to the
operation of this Agreement in the particular jurisdiction in which the
adjudication is made, and the unenforceable covenant will be eliminated from
this Agreement to the extent necessary to permit the remaining separate
covenants (or portions of them) to be enforced.
4.8. CONFIDENTIALITY. Each party agrees that it will, for a period
of three (3) years following the Closing Date, (i) use commercially reasonable
efforts to safeguard Confidential Information and to prevent unauthorized
access, reproduction, disclosure, and/or
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use of any Confidential Information; (ii) disclose Confidential Information only
to those officers, directors and/or employees who need to know such information
in order to carry out this Agreement and the Transition Services Agreement
provided that such officers, directors and/or employees agree to be bound by the
terms of this SECTION 4.8; (iii) not use any Confidential Information other than
for the purpose of carrying out this Agreement and the Transition Services
Agreement and then only in strict compliance with the provisions hereof; (iv) to
the maximum extent permitted by applicable law, refrain from copying,
reproducing or disclosing software and any other Confidential Information; (iv)
not directly or indirectly disclose the existence, content and/or substance of
any of the Confidential Information to any third party, or develop, manufacture,
produce and/or distribute any software product derived from or which otherwise
uses any Confidential Information; and (v) promptly notify the other party in
writing of any unauthorized use or disclosure of Confidential Information, such
notice including a detailed description of the circumstances of the disclosure
and the parties involved; provided that neither party shall have an obligation
to maintain the confidentiality of any Confidential Information which becomes
part of the public domain through no act or fault on the part of such party and,
provided further, that in the event disclosure of Confidential Information may
be required by Law, the party required by Law to disclose the Confidential
Information shall promptly notify the other party of each such requirement so
that the other party may seek a protective order or other appropriate remedy
(including a request for confidential treatment from the Securities and Exchange
Commission) and/or waive compliance with the provisions of this Agreement and
shall only disclose such Confidential Information that it is advised by counsel
is legally required to be so disclosed and exercise reasonable efforts to obtain
assurance that confidential treatment will be accorded to such Confidential
Information.
4.9. PAYMENTS RECEIVED BY IPIX AFTER THE CLOSING. To the extent
IPIX receives any payments, other than those payments received under this
Agreement, relating to the Assets, Assumed Liabilities or the Real Estate
Business after the Closing, IPIX will promptly remit any such payments to the
appropriate account established under the Coordination, Billing and Collection
Agreement entered into between Homestore VT and Imaging Services Corporation,
dated as of the date hereof.
4.10. CENDANT SETTLEMENT.
(a) IPIX and Homestore VT agree that, for a period of
thirty (30) days from the Closing Date (the "Permitted Period"), IPIX shall have
the right as set forth in the Intellectual Property License Agreement to make,
use, offer for sale or sell products or services using the Licensed Technology
(as defined in the Intellectual Property License Agreement) and to Process, Host
and Distribute (each as defined in the Intellectual Property License Agreement)
to the extent necessary to perform IPIX's obligations under the existing
Purchasing Agreement, dated as of May 26, 2000 (the "Purchasing Agreement"),
between IPIX and RETT f/k/a National Realty Trust ("RETT"). IPIX also agrees
that, during the Permitted Period, if the Cendant Entities (as defined below)
agree to settle their existing disputes with IPIX under the Purchasing
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Agreement, that certain Marketing Program Agreement dated as of June 30, 2000
(the "2000 Marketing Agreement") between IPIX and Xxxx.xxx, Inc. ("Move" and,
together with RETT and Cendant Corporation, the "Cendant Entities"), that
certain 2001 Marketing Program Agreement, whether written or oral (the "2001
Marketing Agreement"), and any other marketing agreements or purported marketing
agreements between IPIX and a Cendant Entity (all such marketing agreements,
together with the 2000 Marketing Agreement and the 2001 Marketing Agreement,
collectively the "Marketing Agreements") that includes substantially the same
terms as set forth in Subsection (d) below, IPIX shall agree to such settlement
and shall promptly execute and deliver one or more agreements documenting such
Settlement (the "Settlement Agreements") after February 1, 2001 but within two
business days of presentment of the Settlement Agreements to IPIX, provided that
IPIX shall not be obligated to sign the Settlement Agreement if the Modification
Agreement and the Assignment Agreement are not also signed.. IPIX agrees to
provide Homestore VT copies of the Settlement Agreements.
(b) IPIX also agrees that, during the permitted period,
IPIX shall use commercially reasonable efforts to (i) negotiate in good faith a
modification to the Purchasing Agreement (the "Modification Agreement") and (ii)
obtain the agreement of RETT to permit the acquisition by and assignment of the
Modification Agreement to Homestore VT or its designee. Upon conclusion of the
negotiations for the Modification Agreement (but prior to the signing of the
Modification Agreement), IPIX shall provide to Homestore VT a written copy of
such Modification Agreement and Homestore VT shall have five (5) Business Days
(the "Consideration Period") to decide whether or not it desires to acquire and
take an assignment of the Modification Agreement, provided, however, that such
Modification Agreement permits such assignment to Homestore VT. If Homestore VT
elects to acquire the Modification Agreement and take such assignment, then,
within the Consideration Period, (i) Homestore VT shall provide written notice
of such election and Homestore VT and IPIX shall promptly execute and deliver
the agreements documenting such acquisition and assignment (the "Assignment
Agreement") (it being understood and agreed that the Modification Agreement
being acquired by Homestore VT or its designee shall be substantially identical
to the copy of the Modification Agreement provided to Homestore VT pursuant to
the preceding sentence), (ii) Homestore VT and/or its Affiliates shall be
entitled to all revenues under such assigned Modification Agreement subsequent
to the date of the Assignment Agreement, and (iii) Homestore VT shall pay to
IPIX the Contract Acquisition Payment (as defined below). If Homestore VT elects
not to acquire the Modification Agreement and take such assignment, Homestore VT
and its Affiliates shall have no obligation or liability whatsoever to IPIX
under this Section, and IPIX shall have the right as set forth in the License
Agreement to make, use, offer for sale or sell products or services using the
Licensed Technology in an amount not to exceed $8 million in the aggregate, and
to Process, Host and Distribute to the extent necessary to perform IPIX's
obligations under the Modification Agreement or the Purchasing Agreement, as the
case may be, through June 30, 2001 at which point IPIX's right in respect of the
Licensed Technology in connection with the Modification Agreement or the
Purchasing Agreement, as the case may be, shall end. The Modification Agreement
shall not offer any products or services (1) not existing on the date hereof or
(2) at a price that is lower than a twenty percent (20%) discount to the
standard price for such products or services as of the date hereof.
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(c) Homestore VT acknowledges that IPIX is entitled to
all revenues under the Purchasing Agreement prior to the date of the Assignment
Agreement.
(d) Terms of acceptable Settlement Agreement:
(1) Payment by IPIX to a Cendant Entity of an
amount not to exceed $6.7 million to satisfy IPIX's obligations under the
Marketing Agreements.
(2) Payment to IPIX of an amount not to exceed
$4.5 million to satisfy RETT's obligations under the Purchasing Agreement.
(3) Mutual Release of IPIX, on the one hand
(including a novation of IPIX under the Modification Agreement as assigned to
Homestore VT under the Assignment Agreement), and the Cendant Entities, on the
other hand, under the Purchasing Agreement, the 2000 Marketing Agreement and the
2001 Marketing Agreement.
(e) As used herein:
(1) "Contract Acquisition Payment" means the sum
of (A) IPIX Incremental Settlement Costs
(defined below) multiplied by 80% (the
"Recoverable Settlement Amount") plus (B)
the product of (i) an amount (if it is a
positive number) equal to the revenue (as
determined in accordance with US GAAP) to
Homestore VT from the sale of Keys (as
defined in the IP License Agreement) under
the Modification Agreement ("Key Revenues")
minus the Recoverable Settlement Amount
multiplied by (ii) 30% plus (3) the product
of (i) the revenue (as determined in
accordance with US GAAP) to Homestore VT
under the Modification Agreement (other than
Key Revenues) multiplied by (ii) 20%. In no
event shall the Contract Acquisition Payment
exceed $4.8 million.
(2) "IPIX Incremental Settlement Costs" means
the amount IPIX is obligated to pay to Move
in excess of the Pro Rata Marketing
Obligation (as defined below) to settle
under the Settlement Agreements and be fully
released from the Marketing Agreements.
(3) "Pro Rata Marketing Obligation" means the
product of (i) the quotient of (a) the
amount of services delivered and invoiced
under the Purchasing Agreement as of the
effective date of the Assignment Agreement
divided by (b) $12.25 million multiplied by
(ii) $6.7 million.
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ARTICLE V
LIABILITY AND INDEMNIFICATION
5.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES, COVENANTS AND
AGREEMENTS. The indemnification obligations with respect to breaches of
representations and warranties in this Agreement will survive for two (2) years
after the Closing Date, except that (a) such obligations with respect to the
representations and warranties in SECTIONS 2.1, 2.2, 3.1, AND 3.3 will survive
the Closing and will remain in full force indefinitely; (b) such obligations
with respect to the representations and warranties in SECTION 2.10 will survive
the Closing and will remain effective through the expiration of the applicable
statute of limitations as the same may be extended (the representations and
warranties in SECTIONS 2.1, 2.2, 2.10, 3.1 and 3.3 are collectively referred to
as the "EXCLUDED REPRESENTATIONS"); and (c) if a claim or notice is given under
Article V with respect to any representation or warranty before the applicable
expiration date, the indemnification obligations with respect to that
representation or warranty will continue indefinitely until the claim is finally
resolved (the "SURVIVAL PERIOD"). Continuing covenants in this Agreement will
continue indefinitely, or for any shorter period specified in the relevant
section.
5.2. INDEMNIFICATION BY IPIX. Regardless of any pre-Closing
investigation, examinations or prior knowledge of Homestore VT or due diligence
conducted by it or disclosure by IPIX, IPIX hereby agrees to indemnify and hold
Homestore VT and its Affiliates, together with their respective directors,
officers, employees, managers, agents and advisors, harmless from, against and
with respect to any and all demands, claims, actions or causes of action,
assessments, liabilities, losses, costs, damages, penalties, charges or
expenses, including without limitation interest, penalties and reasonable
counsel and accountants' fees, disbursements and expenses (collectively,
"LOSSES") arising out of, or related to:
(a) any breach of any representation, warranty, covenant
or agreement made by IPIX in this Agreement, including the Schedules and
Exhibits hereto delivered by or on behalf of IPIX in connection therewith;
provided, however, that for purposes of this Section 5.2(a), the Schedules and
the Exhibits, to the extent they purport to carve out an exception to a
representation, warranty, covenant or agreement made by IPIX in this Agreement,
shall be disregarded;
(b) without limiting the foregoing, any liabilities or
obligations of, or proceedings against, Homestore VT or its Affiliates that
arise with respect to or relate to any period(s) before the Closing related to
the Real Estate Business;
(c) any and all Losses relating to the failure by IPIX to
have operated its businesses in compliance with all applicable Laws;
(d) any and all Losses resulting from any Stale Contract
that IPIX obtains title to in accordance with Section 4.3 above; and
(e) any and all Losses relating to Retained Liabilities.
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IPIX's obligations pursuant to this SECTION 5.2 shall not include any
Losses for which Homestore VT is responsible pursuant to SECTION 5.3.
5.3. INDEMNIFICATION BY HOMESTORE VT. Homestore VT hereby agrees to
indemnify, defend and hold IPIX and its Affiliates, together with their
respective directors, officers, employees, managers, agents and advisors
harmless from, against and with respect to any and all Losses arising out of, or
related to:
(a) any breach of any representation, warranty, covenant
or agreement made by Homestore VT in this Agreement, including the Schedules and
Exhibits hereto delivered by or on behalf of Homestore VT in connection
herewith;
(b) the Assets other than the Collateral; provided that
such Losses relate to actual or alleged events, actions or omissions occurring
or alleged to have occurred after the Closing; and
(c) the Assumed Liabilities.
Homestore VT's obligations pursuant to this SECTION 5.3 shall not include any
Losses for which IPIX is responsible pursuant to SECTION 5.2.
5.4. LIMITATIONS ON INDEMNIFICATION. Notwithstanding the foregoing,
any claim for indemnification or breach of representation and warranty against
the parties hereunder shall be payable only in the event that the accumulated
amount of claims in respect of an indemnifying party's obligations to indemnify
hereunder shall exceed the amount of one hundred thousand dollars ($100,000) in
the aggregate (the "Indemnification Threshold"), in which case the indemnifying
party will be obligated to indemnify the other parties for the total amount of
damages including any amounts which would not otherwise be required to be paid
by reason of this SECTION 5.4. Notwithstanding anything herein to the contrary,
the maximum aggregate amount payable to any party by another party pursuant to
this Article V shall not in any event exceed eight million dollars ($8,000,000),
except in the case of fraud or a willful breach by the breaching party.
5.5. PROCEDURES. (a) Any claim for recovery pursuant to this
indemnification will be made promptly after discovery of the circumstances
underlying such claim in a written statement signed by the party seeking
indemnification, which will specify in reasonable detail each individual item of
Loss and the estimated amount thereof, the date such item was claimed or the
facts giving rise to such claim were discovered, the basis for any alleged
liability and the nature of the breach or claim to which each such item is
related.
(b) The party seeking indemnification will give the
indemnifying party prompt notice of any third party claim, action or proceeding
which might give rise to liability of the indemnifying party for indemnification
hereunder. If the indemnifying party contests any third party claim, it will
have the option to defend (retaining counsel reasonably acceptable to the
indemnified party), at the indemnifying party's expense, any such matter,
provided that the indemnified party will have the right, at its own cost and
expense, to participate in the defense of
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such claim. However, notwithstanding the preceding sentence, (a) if the
indemnifying party elects not to defend the claim, or (b) if the claim has been
brought or asserted against the indemnifying party as well as the indemnified
party and such indemnified party reasonably concludes that there may be one or
more factual or legal defenses available to it that are in conflict with those
available to the indemnifying party and the indemnifying party is unwilling to
raise such defenses, then the indemnified party may elect to conduct its defense
on its own behalf, in which case the reasonable fees and expenses of the
indemnified party's counsel will be at the expense of the indemnifying party. In
the latter event, the indemnified party may settle such claim, after giving
notice of such proposed settlement to the indemnifying party, on such terms as
the indemnified party may reasonably deem appropriate and no such action taken
by the indemnified party in defending or settling such claim will release the
indemnifying party of any obligation hereunder. Except under the circumstances
described in the preceding sentence, the indemnified party will not enter into
any settlement agreement without the indemnifying party's consent which will not
be unreasonably withheld or delayed. The indemnifying party will not, without
the prior written consent of the indemnified party (which will not be
unreasonably withheld), enter into any settlement of a claim, if pursuant to or
as a result of such settlement, injunctive or other equitable relief will be
imposed against the indemnified party or if such settlement does not expressly
unconditionally release the indemnified party from all liabilities or
obligations with respect to such claim, with prejudice. The indemnified party
and the indemnifying party will cooperate with the each other in the defense,
compromise or settlement of any claim for which indemnification is sought.
5.6. INDEMNIFICATION RECOVERY. (a) If any party gives written
notice to the other party of a Loss in the manner provided under this Agreement,
and the parties are unable to reach a mutually acceptable resolution of such
Loss within twenty-one (21) days, the matter will be determined pursuant to the
provisions set forth in SECTION 5.6(B), below.
(b) At the time of delivery of notice of a claim of a
Loss hereunder the party against whom such claim is made will respond to the
claiming party within fifteen (15) days following receipt of such notice. If
there is no dispute of such claim, the indemnifying party will promptly make
payment to the other party. Upon receipt of a disputed claim, the party will
deliver, in good faith, to the claiming party a written statement responding to
the claim and presenting the basis of reasonable dispute of the terms thereof.
The parties will attempt in good faith to agree upon the rights of the
respective parties with respect to each of such claims. If the parties cannot
agree upon a settlement of any claim within thirty (30) days thereafter, the
parties will submit such dispute to arbitration.
ARTICLE VI
TAX MATTERS
6.1. TAXES ON SALE. The responsibility for paying all
transfer, documentary, sales, use, registration, value-added and other similar
Taxes (including all applicable real estate transfer Taxes) and related fees
(including any penalties, interest and additions to Taxes (collectively,
"TRANSFER TAXES") incurred in connection with this Agreement and the
Transactions will be borne by IPIX. To the extent legally able to do so,
Homestore VT will deliver to IPIX exemption certificates satisfactory in form
and substance to IPIX with respect to
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Transfer Taxes if such delivery would reduce the amount of Transfer Taxes that
would otherwise be imposed.
6.2. ALLOCATION OF PURCHASE PRICE AMONG ASSETS. The allocation of
the Purchase Price and Assumed Liabilities among the Assets (the "ALLOCATION")
will be made in accordance with Homestore VT's determination of the fair market
value of the Assets, in consultation with IPIX. Homestore VT and IPIX will each
use the Allocation in filing any Tax Returns or similar reports, and each agrees
not to take any position inconsistent therewith in connection with any Tax audit
or similar proceeding. If any party receives notice that a Governmental Agency
disputes the Allocation, that party will promptly notify and consult with the
other party concerning the strategy for the resolution of the dispute, and will
keep the other party apprised of the status of the dispute and its ultimate
resolution.
ARTICLE VII
GENERAL
7.1. ARBITRATION. (a) In the event the parties are unable to
resolve a disputed claim or claims, either of the parties may request
arbitration of the matter unless the amount of the damage or loss is at issue in
pending litigation with a third party, in which event arbitration will not be
commenced until such amount is ascertained or both parties thereto agree to
arbitration; and in either such event the matter will be settled by arbitration
conducted by three arbitrators. Homestore VT and IPIX will each select one
arbitrator, and the two arbitrators so selected will select a third arbitrator.
The arbitrators will set a limited time period and establish procedures designed
to reduce the cost and time for discovery while allowing the parties an
opportunity, adequate in the sole judgment of the arbitrators, to discover
relevant information from the opposing parties about the subject matter of the
dispute. The arbitrators will rule upon motions to compel or limit discovery and
will have the authority to impose sanctions, including attorneys' fees and
costs, to the extent as a court of competent law or equity, should the
arbitrators determine that discovery was sought without substantial
justification or that discovery was refused or objected to without substantial
justification. The decision of a majority of the three arbitrators as to the
validity and amount of any claim will be binding and conclusive upon the parties
to this Agreement.
(b) Judgment upon any award rendered by the arbitrators
may be entered in any court having jurisdiction. Any such arbitration will be
held in the county of the party that did not request the arbitration under the
rules then in effect of the American Arbitration Association.
7.2. ASSIGNMENT AND BINDING EFFECT.
(a) This Agreement may not be assigned by either party
without the prior written consent of the other party, except (i) as part of a
corporate reorganization, consolidation, merger or sale of substantially all
related assets used in the Virtual Tour business (for the purposes of this
Section 7.2(a) in respect of IPIX, Virtual Tour shall not be limited to
Residential Real Estate (as such term is defined in the Intellectual Property
License Agreement))
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or all stock of the assigning party, and the assigning party shall provide
notice of such assignment to the other party; or (ii) Homestore VT may assign
its rights and obligations under this Agreement in connection with the
Collateral to VT Canada in the event of a Collateral Loan Repayment.
(b) This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns.
7.3. HEADINGS. All headings are inserted for convenience only and
shall not affect any construction or interpretation of this Agreement.
7.4. NONWAIVER. No delay or omission to exercise any right, power
or remedy accruing to any party upon any breach of any other party under this
Agreement shall impair any such right, power or remedy of such nonbreaching
party, nor shall it be construed to be a waiver of any such right, power or
remedy for any present or future breach or default. Any waiver, permit, consent
or approval of any kind under this Agreement, or any waiver on the part of any
party of any provision or condition of this Agreement, must be in writing and
shall be effective only to the extent specifically set forth in such writing.
All remedies under this Agreement or by law or otherwise afforded to any party
shall be cumulative and not in the alternative.
7.5. COUNTERPARTS. This Agreement may be executed in one or more
identical counterparts all of which together shall constitute one original
document.
7.6. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Tennessee.
7.7. AMENDMENTS. No amendment of this Agreement or any provision of
this Agreement shall in any event be effective unless the same shall have been
made or consented to in writing by each of the parties hereto.
7.8. SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations shall not in any way be affected or implied thereby.
7.9. ENTIRE AGREEMENT. All Exhibits and Schedules hereto will be
deemed to be incorporated into and made part of this Agreement. This Agreement,
together with the Exhibits and Schedules hereto, constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all prior negotiations, agreements, discussions, correspondence,
memoranda and understandings (whether written or oral) of the parties concerning
or relating to the subject matter of this Agreement.
7.10. NOTICES. Except as provided herein, all notices, consents and
approvals given under this Agreement shall be in writing and shall be delivered
in person or by certified mail to the addresses given below:
If to IPIX:
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Internet Pictures Corporation
0000 Xxxxxxxx Xxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxx 00000
Attn: President
With a copy to:
Xxxxx Xxxxxx
Baker, Donelson, Bearman & Xxxxxxxx
1800 Republic Centre
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
If to the Homestore VT:
Homestore Virtual Tours, Inc.
00000 Xxxxxxx Xxxxx Xxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: General Counsel
Any party may change its address or addressee for the purposes of this SECTION
7.10 by notice. Notice given in accordance with this SECTION 7.10 shall be
deemed given when first received.
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24
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.
INTERNET PICTURES CORPORATION
By:
-----------------------------------------
Title:
--------------------------------------
HOMESTORE VIRTUAL TOURS, INC.
By:
-----------------------------------------
Title:
--------------------------------------
Date:
---------------------------------------
[SIGNATURE PAGE TO ACQUISITION AGREEMENT)
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EXHIBIT A
DEFINITIONS
AFFILIATE, as applied to any Person, means any other Person directly or
indirectly Controlling, Controlled by, or under common Control with, that
Person.
ASSIGNMENT, ASSUMPTION AND TRANSFER AGREEMENT means that certain
Assignment, Assumption and Transfer Agreement entered into between IPIX and
Imaging Services Corporation dated as of the date hereof.
ASSETS means (a) all of IPIX's right, title and interest, to or in
those assets, contracts and properties listed on SCHEDULE 1 attached hereto
including without limitation all amounts prepaid in connection with Broker
Contracts and Agent Contracts (excluding $2,558,978.48 prepaid in connection
with prepaid photography services and the image capturing rights and obligations
assigned to Imaging Services Corporation under the Assignment, Assumption and
Transfer Agreement) and (b) as of the Maturity Date (as defined in the Loan
Agreement), the Collateral (as defined in the Loan Agreement) in the event of a
Collateral Loan Repayment.
ASSUMED LIABILITIES means all obligations and liabilities related to
the Assets incurred after the Closing Date and not relating to any occurrence
prior to the Closing Date. The Assumed Liabilities shall in no event include
Sales Commissions and Cooperative Expenses.
COLLATERAL LOAN REPAYMENT means repayment by IPIX of the Loan (as
defined in the Loan Agreement) by delivering a Xxxx of Sale (as defined in the
Loan Agreement) transferring title to the Collateral to Homestore VT.
CONFIDENTIAL INFORMATION means the terms of this Agreement and trade
secrets, know-how, discoveries, inventions, customer or supplier lists, pricing
information, marketing arrangements, strategies, business plans, internal
performance statistics, training manuals, and any other information concerning
the Real Estate Business or Homestore VT and IPIX, as applicable, and their
Affiliates that is sensitive or confidential.
CONTRACTS means any written or oral purchase or sales commitments,
financing or security agreements, guaranties, licenses, franchises, repurchase
agreements, agency agreements, customer agreements, supplier agreements,
representative agreements, commission agreements, employment or collective
bargaining agreements, independent contractor agreements, and leases of real or
personal property or any other agreements to which IPIX is a party or is bound
as of the Closing Date relating to the Real Estate Business, including any oral
or unwritten amendments, waivers, or legally binding understandings with respect
thereto.
CONTROL (including, with correlative meanings, the terms "Controlling,"
"Controlled by," and "under common Control with"), as applied to any Person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that Person, whether through the
ownership of voting securities or by contract or otherwise.
COOPERATIVE EXPENSES shall have the meaning of such term set forth in
SECTION 4.5.
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FINANCIAL STATEMENTS means the (i) unaudited balance sheet and the
related statements of operations and accumulated deficit and cash flows of IPIX
and any notes thereto for the year ended December 31, 1999; (ii) unaudited
balance sheets and the related statements of operations, income and accumulated
deficit and cash flows of IPIX and any notes thereto for the period ended
September 30, 2000; and (iii) unaudited balance sheet and the related statements
of operations, income and accumulated deficit and cash flows of the Real Estate
Division and any notes thereto as of and for the nine month period ended
September 30, 2000, attached hereto as Exhibit D.
GOVERNMENTAL AGENCIES means federal, state and local governments, and
their subdivisions, instrumentalities, departments, agencies, courts, tribunals
or other bodies.
IMAGE CAPTURING means using a digital, film or other camera or imaging
equipment to create one or more images.
INTELLECTUAL PROPERTY LICENSE AGREEMENT shall mean the Intellectual
Property License Agreement by and between Homestore VT and IPIX and dated as of
the date hereof.
INTELLECTUAL PROPERTY RIGHTS means those rights conferred to Homestore
VT under the Intellectual Property License Agreement.
KNOWLEDGE means a Person's actual knowledge after reasonable inquiry of
the personnel responsible for the subject matter in question.
LAW means any statute, rule, regulation or other provision of law, or
any order, judgment or other direction of a court or other tribunal, or any
other governmental requirement, permit, registration, license or authorization.
LIEN means any lien, mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest) and any option, trust or other preferential arrangement
having the practical effect of any of the foregoing.
LOAN AGREEMENT shall mean the Loan Agreement by and between Homestore
VT and IPIX and dated as of the date hereof.
MATERIAL ADVERSE EFFECT means, with respect to IPIX, (i) any change or
effect that is or is reasonably likely to be materially adverse to the business,
results of operations or conditions (financial or otherwise) of the Real Estate
Business or the Assets, other than any change or effect arising out of general
economic conditions or conditions affecting companies generally in the
industries in which IPIX participates or, (ii) the material impairment of the
ability of IPIX to perform or to consummate the transactions contemplated under
this Agreement.
ORDINARY COURSE means IPIX's ordinary and customary course of business.
PERMITTED LIENS means those Liens permitted pursuant to SECTION 2.6.
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PERSON means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments (whether federal,
state or local, domestic or foreign, and including political subdivisions
thereof) and agencies or other administrative or regulatory bodies thereof.
REAL ESTATE BUSINESS means the business of performing Virtual Tours (as
such term is defined in the Intellectual Property License Agreement) in the
Residential Real Estate Market as such business has been conducted and operated
by IPIX immediately prior to the date hereof.
REAL ESTATE DIVISION means the business of providing any real estate
products, including but not limited to, the provision of Virtual Tours and the
sale of keys and flats to multiple listing services, in the Residential Real
Estate Market as such business has been conducted and operated by IPIX
immediately prior to the date hereof.
RESIDENTIAL REAL ESTATE MARKET shall have the meaning of such term as
set forth in the Intellectual Property License Agreement.
RETAINED LIABILITIES means any and all obligations that are not Assumed
Liabilities, including, but not limited to (a) Cooperative Expenses, (b) Sales
Commissions, and (c) any liabilities arising under the Worker Adjustment and
Retraining Notification Act ("WARN"), Section 4980 of the Code ("COBRA"),
Section 402(f) of the Code ("Rollover Notice"), or under applicable
corresponding Canadian Laws in connection with the Transactions contemplated
under this Agreement.
SALES COMMISSIONS shall have the meaning of such term set forth in
SECTION 4.6.
TAXES means all federal, foreign, state, local, and other taxes, fees,
assessments, duties and other similar governmental charges owed by IPIX or
related to the Real Estate Business (including interest and penalties).
TAX RETURNS means federal, foreign, state, local, and other tax returns
and reports.
TRANSITION SERVICES AGREEMENT means that certain Transition Services
Agreement entered into between Homestore VT and IPIX and dated as of the date
hereof.
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EXHIBIT B
XXXX OF SALE AND
ASSIGNMENT, ASSUMPTION AND TRANSFER AGREEMENT
THIS AGREEMENT is made to be effective as of the 12th day of January,
2001 by and between Homestore Virtual Tours, Inc. (the "Assignee") and Internet
Pictures Corporation (the "Assignor"), both Delaware corporations.
A. Pursuant to an Acquisition Agreement dated effective as of
January 12, 2001 (the "Acquisition Agreement"), the Assignor agreed to
unconditionally and irrevocably sell, convey, grant, assign and transfer certain
assets and certain contract rights and obligations relating to Assignor's Real
Estate Business to the Assignee, and the Assignee agreed to receive the assets
and to assume certain rights and obligations of the Assignor in exchange for the
Purchase Price set forth therein.
B. As provided under the Acquisition Agreement, Assignor is
assigning and transferring to Assignee certain assets and contract rights and
its rights and obligations under those contracts to Assignee pursuant to this
Agreement.
NOW, THEREFORE, for and in consideration of the premises and other good
and valuable consideration, the receipt of which is hereby acknowledged, the
parties hereby agree as follows:
1. As part of the transfer of the Real Estate Business and other
good and valuable consideration, the receipt of which is hereby acknowledged,
Assignor has and does hereby sell, grant, transfer, assign, and convey to
Assignee and its successors and assigns all of the rights, title and interest of
the Assignor, or either of them, in and to those properties and assets of every
kind exclusively used by the Assignor in connection with the Real Estate
Business not including the Collateral but otherwise including, without
limitation, the Real Estate Business as a going concern, intellectual property,
business software, trade names and marks, recipes, formulae, good will,
inventory, franchises, licenses, furniture, fixtures, equipment and contract
rights set forth on Exhibit A to this Agreement (the "Assets"), incorporated
herein by reference, to have and to hold unto the Assignee and its successors
and assigns forever.
Assignor, for itself and its successors and assigns, will warrant and
forever defend the right and title to the Assets transferred and conveyed to
Assignee against the lawful claims of all Persons whomsoever.
2. Assignor hereby transfers, assigns and conveys unto Assignee,
its successors and assigns, any and all of the rights, title and interest in and
to, together with the economic benefit associated therewith, under those
contracts identified on Exhibit B attached hereto (the "Contracts") excluding
the rights therein related to Image Capturing. Assignee hereby assumes and
agrees to fully perform and hold Assignor harmless from all of the obligations
of Assignor, or either of them, excluding the obligations related to Image
Capturing, under the Contracts which accrue from and after the date hereof.
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3. The terms and provisions hereof shall extend to and be binding
upon the parties hereto, their successors and assigns. This Agreement shall be
governed by and construed in accordance with the laws of the State of Tennessee.
Any capitalized term used herein and not expressly defined herein shall have the
meaning ascribed to it in the Acquisition Agreement.
4. Nothing contained in this Agreement shall be deemed to
supersede, enlarge, diminish or otherwise modify any of the obligations,
agreements, covenants or warranties of Assignor to Assignee contained in any
other agreement between the parties.
IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to
be duly executed as of the day and year first above written.
HOMESTORE VIRTUAL TOURS, INC.
By:
-----------------------------------------
Title:
--------------------------------------
INTERNET PICTURES CORPORATION
By:
-----------------------------------------
Title:
--------------------------------------
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EXHIBIT A TO
XXXX OF SALE AND
ASSIGNMENT, ASSUMPTION AND TRANSFER AGREEMENT
ASSETS
31
EXHIBIT B TO
XXXX OF SALE AND
ASSIGNMENT, ASSUMPTION AND TRANSFER AGREEMENT
CONTRACTS ASSIGNED
Agent Contracts
Broker Contracts
32
EXHIBIT C
FORM OF LANDLORD CONSENT
33
EXHIBIT D
REAL ESTATE DIVISION FINANCIAL STATEMENT
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000
