EXHIBIT 10.40
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of July 31, 2002, is by and among
INTEGRATED TRADING SOLUTIONS, INC., a Delaware corporation (the "PURCHASER"),
X.X. XXXXXX GROUP INC., a Delaware corporation ("ABW"), and X.X. XXXXXX, INC., a
New York corporation ("INC." and, with ABW, referred to at times as a "SELLER"
or "SELLERS").
W I T N E S S E T H:
WHEREAS, the Sellers desires to sell, transfer and assign to the Purchaser,
and the Purchaser desires to purchase and assume from the Sellers, all of the
Sellers` proprietary software assets, certain related intellectual property and
contract rights, and certain other assets, all as set forth in EXHIBIT A (the
"ASSETS"), pursuant to and in accordance with the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto, intending to be legally bound, hereby
agree as follows:
ARTICLE I
SALE OF ASSETS; ASSUMPTION OF LIABILITIES; CLOSING
1.1. SALE OF ASSETS. Subject to the terms and conditions of this Agreement,
at the Closing (as defined herein), the Sellers shall sell, assign, transfer and
deliver to the Purchaser, and the Purchaser shall purchase from the Sellers, all
of the Sellers` right, title and interest in and to the Assets.
1.2. ASSUMPTION OF LIABILITIES. The Purchaser does not assume and shall
have no liability whatsoever for any liability or obligation of any nature of
the Sellers, other than those liabilities and obligations arising from
agreements assigned to Purchaser by Sellers (and for which Sellers and Purchaser
have obtained the written consent of applicable third parties) after Closing to
the extent the same are expressly noted as accepted in writing by Purchaser in a
separate written notice provided by Purchaser to Sellers at or after Closing or
are noted as "Assumed Liabilities" on EXHIBIT A subject to any limitations noted
on EXHIBIT A (collectively, the "ASSUMED LIABILITIES"). Subject solely to the
effect of the terms set forth on EXHIBIT A and/or in any separate written notice
referred to in the first sentence of this Section, Purchaser shall reimburse
Sellers for the costs incurred by Sellers in connection with the Assumed
Liabilities. Notwithstanding anything to the contrary in the first sentence of
this Section, Purchaser shall not be obligated to assume the agreements
comprising Assumed Liabilities unless such assumption is on terms satisfactory
to Purchaser, provided that Purchaser agrees to use commercially reasonable
efforts to reach such acceptable terms with any third party to such agreements,
provided, further, that Sellers understand and agree that the decision to assume
any such agreement shall be in Purchaser`s sole discretion (for example, and
without limitation, (a) the failure of a third party to provide a license for
its products that will enable Purchaser to utilize such products for itself (and
not just for the benefit of Sellers) to enable global service bureau operations,
offsite licensing and product sales, (b) any increase proposed by a third party
with respect to its fees or costs, (c) any requirement that Purchaser assume
liabilities of Sellers that exist or existed prior to June 1, 2002, (d) any
determination by Purchaser or a third party that Sellers are not sufficiently
participating in the settlement of outstanding issues or indebtedness, and (e)
any determination by Purchaser that it would have to accept an obligation
related to providing multiple server or connectivity redundancy or technology
facilities or service of any kind from any physical location other than
Purchaser`s facility in Texas, would excuse Purchaser from concluding an
assignment). At the reasonable request of any Seller, Purchaser shall consider
in good faith (but without any obligation) incurring costs for other unknown
equipment useful in operating the Assets to the extent Sellers agree to reduce
the cost of other Assumed Liabilities in a manner that offsets any proposed
increased cost.
1.3. PURCHASE PRICE. As consideration for the purchase of the Assets, the
Purchaser agrees to pay or cause to be paid to ABW a purchase price as follows
(the "PURCHASE PRICE"):
(a) At the Closing, Two Million One Hundred Fifty Thousand Dollars
($2,150,000) in principal amount of indebtedness owing by ABW, that was assigned
to Xxxxxx Financial Services, Inc. ("XXXXXX") prior to the Closing by Atlantic
Group, Xxxxxx Xxxxx and LAN/WAN, and all interest owing in connection therewith
shall no longer be deemed by Xxxxxx to be an outstanding obligation of ABW in
favor of Xxxxxx (it being agreed that Purchaser and its affiliates make no
representation of any kind as to the actual value of such assigned
indebtedness);
(b) At the Closing, One Million Two Hundred Sixty Eight Thousand
Fifteen Dollars ($1,268,015) in principal amount of indebtedness owing by ABW to
Xxxxxx under the Promissory Note dated as of March 27, 2002, as amended (the
"NOTE"), shall no longer be deemed by Xxxxxx to be an outstanding obligation of
ABW in favor of Xxxxxx;
(c) An additional Two Million One Hundred Fifty Thousand Nine Hundred
Ninety Four Dollars ($2,150,994) in principal amount of indebtedness owing by
ABW to Xxxxxx under the Note (subject, however, to the operation of SECTION 3(F)
of the Note notwithstanding anything to the contrary herein), together with all
accrued interest in relation to such Note, shall no longer be deemed by Xxxxxx
to be an outstanding obligation of ABW in favor of Xxxxxx on such date as Xxxxxx
has received no less than Five Million Dollars ($5,000,000) in revenues, from
and after the Closing Date but prior to the thirty-sixth month after the Closing
Date, under the Fully Disclosed Clearing Agreement dated as of October 3, 1996,
as amended, between Xxxxxx and Inc. (for purposes of this clause "revenues"
means the amount received by Xxxxxx that equals the sum of (i) wholesale ticket
charges for transactions introduced by Inc. charged by Xxxxxx to Inc. (i.e., any
xxxx up of such charges by Inc. to its customers and regulatory charges shall
not be included in the calculation of revenues received) and (ii) net interest
income earned by Xxxxxx from Inc.`s customers to the extent such interest
payments are for Xxxxxx`s sole benefit, it being understood and agreed that
Xxxxxx`s ordinary course records of such charges and amounts shall be conclusive
and binding evidence as to the total of such charges and amounts absent manifest
error); provided, further that (i) notwithstanding the above provision (but
subject to the effect of SECTION 3(F) of the Note) the cancellation of
outstanding obligations referenced in this SECTION 1.3(C) shall occur on such
earlier date on which the Sellers provide written notice to Xxxxxx (together
with all relevant documentation evidencing (A) in the case of new equity
investment, compliance with the condition regarding redemption and other cash
payment provisions set forth below, and (B) in other cases such evidence as
Xxxxxx may request, in each such case such evidence to be in form and substance
acceptable to Xxxxxx), and Xxxxxx confirms by written notice (such confirmation
by Xxxxxx to be delivered no later than 10 business days after the date Xxxxxx
receives appropriate evidence of the new equity investment described above and
such confirmation to be delivered no later than 30 days after the date Xxxxxx
receives other evidence referred to above, in each case assuming the appropriate
evidence and the terms of this Agreement and the Related Documents have been
complied with) to Sellers its satisfaction with the applicable supporting
documentation therefor, that at least Four Million Dollars ($4,000,000) in new
equity capital (with any equity not permitted to have any cash payment pursuant
to mandatory redemption or other cash payment provisions affecting the principal
amount of the investment made in obtaining such equity prior to 18 months after
the Closing Date) is raised and received by Sellers (which shall include
forgiveness of debt after the Closing Date (but not any inchoate debt or payment
obligation of Sellers such as a guaranty by any Seller) solely to the extent
debt is forgiven by unaffiliated third parties that are not shareholders of ABW
and where such debt forgiveness does not occur as a result of Purchaser`s or its
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affiliates` acceptance of any Assumed Liabilities, in connection with any
provision for debt forgiveness under this Agreement or any Related Document (as
defined below)) or as a result of any payment or reimbursement by Purchaser or
an affiliate in respect of any such debt forgiveness, provided that such
cancellation shall not in any event be effective prior to nine (9) months after
the Closing Date, and (ii) if Sellers raise less than Four Million Dollars
($4,000,000) in such new equity capital, Xxxxxx shall in good faith consider a
reduction in whole or in part of such indebtedness;
(d) From the Closing Date, the Purchaser shall pay royalties to ABW,
if any are received, with respect to the Licensed Software (as defined in the
License Agreement dated the date hereof among the Purchaser and Sellers)
licensed by the Purchaser to third parties within 30 days after the Purchaser`s
receipt thereof as follows to the extent ABW makes an introduction to the third
parties listed below (other than Sungard Data Systems, Inc. and E*TRADE Group,
Inc., for which no introduction shall be required):
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PROVIDED, HOWEVER, that notwithstanding any of the forgoing to the contrary, (A)
ABW shall not be entitled to any payments for amounts that do not constitute
royalties or license fees for licensed sales or licenses (by way of example, and
without limitation, all software maintenance fees and expenses, technical
consulting fees and expenses and operational pass through fees and expenses
shall not be shared with ABW) provided that Purchaser shall not intentionally
structure any such licenses so that amounts that would normally be paid as a
royalty or a license fee are classified as some other type of payment (it being
acknowledged and agreed by Sellers that software maintenance, consulting and
similar charges may vary on a deal-by-deal basis based on numerous factors), (B)
with respect to each such licensed sale or license, ABW`s entitlement to any
sharing of royalties or license fees shall cease with respect to any period that
occurs five (5) years after the initial license period begins, and shall include
any renewals (except to the extent any renewal is extended beyond such initial
five (5) year time period by the Purchaser in its sole discretion), and (C) all
documentation relating to licenses of the Licensed Software shall be in form and
substance satisfactory to the Purchaser in its sole discretion;
PROVIDED, FURTHER, that for purposes of this SECTION 1.3(D), Purchaser shall be
deemed to include any affiliates of Purchaser but without any implication or
agreement that any such entity is a guarantor of any obligations of Purchaser.
(e) after the Closing Date, Xxxxxx shall promptly release as directed
by ABW in a written document delivered prior to the occurrence of the Closing,
any and all amounts in that certain depositary account maintained at Mellon Bank
under the terms of the Consent and Agreement dated as of May 27, 2002 between
E*TRADE Group, Inc. and ABW (the "CONSENT") and
(f) Xxxxxx`s forbearance from the exercise of all of its rights and
remedies under the Note and related loan documents until the Closing Date, and
on the Closing Date, the remaining indebtedness shall be restructured pursuant
to the Amendment to the Note attached hereto as EXHIBIT F, and all existing
defaults on or prior to the Closing Date under such indebtedness and the Related
Documents (as defined herein) shall be waived subject to the effect of SECTION
9.3.
1.4. PURCHASE PRICE ALLOCATION. The Purchase Price shall be allocated among
the Assets as determined in good faith by Purchaser after soliciting input from
Sellers. Each of the Sellers and the Purchaser agree that each will never take a
position that is in any way inconsistent with such allocation on any income tax
return, before any government agency charged with the collection of any income
tax or in any judicial proceeding.
1.5. CLOSING. The closing of the purchase and sale of the Assets (the
"CLOSING") shall take place at the offices of the Purchaser as promptly as
practicable after the satisfaction of the closing conditions set forth in
Articles V and VI (the "CLOSING DATE"). At the Closing, the Purchaser shall
deliver the portion of the Purchase Price due in accordance with SECTION 1.3,
the Sellers shall deliver or cause to be delivered to the Purchaser the
certificates, documents and instruments described in ARTICLE V, and the
Purchaser shall deliver or cause to be delivered to the Sellers the
certificates, documents and instruments described in ARTICLE VI.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
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The Sellers hereby jointly and severally represent and warrant to the
Purchaser as follows, provided that all of such representations and warranties
shall be subject to, and qualified by, the attached Disclosure Schedules:
2.1. ORGANIZATION AND GOOD STANDING. Except as set forth on SCHEDULE 2.1,
ABW is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and is duly qualified to transact business and
is in good standing in each jurisdiction in which the character or location of
the properties owned or leased by it or the nature of the business conducted by
it makes such qualification necessary. Inc. is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the character or location of the properties owned or
leased by it or the nature of the business conducted by it makes such
qualification necessary.
1.6. CORPORATE AUTHORITY. Each Seller has full corporate power and
authority to own and use its property, including the Assets, as currently being
conducted. Subject to satisfaction of the condition set forth in SECTION 6.9,
each Seller has full corporate power and authority to execute, deliver and
perform all of its respective obligations under this Agreement and all other
agreements, including, without limitation, amendments to documents and the
documents they amend, executed in connection with this Agreement (and including
the Transaction Documents as defined in the Master Subordination, Waiver,
Release and Indemnification Agreement dated as of March 27, 2002 among the
Sellers and the other parties thereto, referred to collectively as the "RELATED
DOCUMENTS"), that are to be executed, delivered and performed by it hereunder.
Subject to satisfaction of the condition set forth in SECTION 6.9, each Seller
has taken all necessary corporate action to authorize and approve the execution,
delivery and performance of this Agreement and the Related Documents to which it
is a party (including approval by the Board of Directors). This Agreement and
each Related Document to which a Seller is a party has been duly and validly
executed and delivered by each Seller and constitutes a legal, valid and binding
obligation of each Seller, enforceable against it in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance, moratorium and similar
laws affecting creditors` rights and general equity principles.
1.7. NO CONFLICT; CONSENTS. Except as set forth on SCHEDULE 2.3, neither
the execution and delivery of this Agreement and any Related Document to which
any Seller is a party, nor the consummation or performance of any of the
transactions contemplated hereby or under any Related Document, (i) will violate
or conflict with any provision of the Certificate of Incorporation or By-laws of
either Seller, (ii) is prohibited by or requires either Seller to obtain or make
any consent, authorization, approval, registration or filing under any statute,
law, ordinance, regulation, rule, injunction, judgment, order, decree, ruling,
charge or other restriction of any government, governmental agency, court,
bureau, body, department or authority or of any other person, (iii) will
conflict with, result in the breach, acceleration or termination of any
provision of, create in any party the right to accelerate, terminate, modify or
cancel or exercise any remedy under, or require any notice or constitute a
breach or default under, any note, bond, indenture, lease, contract, agreement
or other instrument or obligation to which either Seller is a party or by which
any of the Assets may be subject, bound or affected, or (iv) will result in the
creation or imposition of any lien, claim, charge, restriction or encumbrance of
any kind or give to any person (other than the Purchaser) any interest or right
in or with respect to any of the Assets. Except as set forth on SCHEDULE 2.3,
each Seller is not a party to any contract or subject to any legal restriction
that would prevent or restrict complete fulfillment by any Seller of all of the
terms and conditions of this Agreement or any Related Document or compliance
with any of its obligations hereunder.
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2.3. FINANCIAL INFORMATION. Attached hereto as SCHEDULE 2.4 is Sellers`
list of all outstanding amounts owing with respect to each Assigned Contract (as
defined in EXHIBIT A). All of the information included in SCHEDULE 2.4 is
correct and complete in all respects and fairly and accurately presents the
financial obligations with respect to each Assigned Contract.
2.4. ASSETS INFORMATION. Attached hereto as SCHEDULE 2.5 is a list of all
software products (third party and proprietary software) used as of the Closing
Date in order to render the Licensed Software fully functional as it is deployed
and used on the Closing Date. All such information is correct and complete in
all respects.
2.5. RIGHTS OF THIRD PARTIES IN ASSETS. Except as set forth on SCHEDULE
2.6, no party other than the Purchaser, the Sellers or a counter party to an
Assigned Contract (but solely with respect to the Assigned Contract to which
such counter party is a signatory) has any right title or interest of any kind
(whether accrued, absolute, contingent, inchoate or otherwise) in or to the
Assets or has sold, transferred or otherwise disposed of any interest in any of
the Assets. Except as set forth on SCHEDULE 2.6:
(a) Neither Seller has been notified of any investigation, inquiry or
request for information from any governmental or other regulatory agency
relating to the Assets or the transactions contemplated by this Agreement or any
Related Document; and
(b) Neither Seller has entered into any transaction (whether or not in
writing) not in the ordinary course of its business affecting the Assets.
2.6. TITLE TO AND CONDITION OF ASSETS. Except as set forth on SCHEDULE 2.7,
the Sellers have and at the Closing will transfer to the Purchaser good and
marketable title to all of the Assets, free and clear of all encumbrances,
liens, charges, claims or other restrictions of any kind or character other than
those created by Purchaser and its affiliates, including such rights as are
being granted by Purchaser to Sellers pursuant to this Agreement and the
documents referenced herein.
2.7. LITIGATION. Except as set forth on SCHEDULE 2.8, there is no action,
suit, proceeding or investigation, either at law or in equity, by or before any
governmental or other instrumentality or agency, or any other entity or person
pending or, to the Sellers` best knowledge, threatened or proposed or, to the
Seller`s best knowledge, any circumstances that could reasonably form the basis
of any action, suit, proceeding or investigation, against or affecting any of
the Sellers or any of their properties or assets which, if determined adversely
to any Seller, are reasonably likely to (i) adversely affect the Assets; (ii)
question the validity of this Agreement or any Related Document or any of the
transactions contemplated hereby or thereby; or (iii) seek to delay, prohibit or
restrict any actions taken or to be taken by any of the Sellers hereunder or
under any Related Document.
2.7. TAXES. Except as set forth on SCHEDULE 2.9, the Sellers have filed, or
prior to the Closing will file, within the times and within the manner
prescribed by law, all federal, state, local and foreign tax returns,
information returns, forms, reports, declarations and all other tax reports and
returns (collectively, "RETURNS") which are required to be filed by them through
the Closing Date or that may affect title to any Asset. Each Return is true,
correct and complete and accurately reflects or will fully and accurately
reflect all required and appropriate liability for taxes of the applicable
Seller for the periods covered thereby and no Return has been amended. All
federal, state, local and foreign income, profits, franchise, sales, use,
occupancy, excise and other taxes and assessments, including estimated taxes and
interest and penalties (collectively, "TAXES"), payable by or due from the
Sellers have been, or prior to the Closing will be, fully and timely paid or
fully provided for in the books and records of the applicable Seller except for
such Taxes which are being contested in good faith, by appropriate proceedings,
and as to which adequate reserves (determined in accordance with generally
accepted accounting principles consistently applied) have been provided in the
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Sellers` financial statements. No Seller has waived any statute of limitations
in respect of Taxes or agreed to any extension of time with respect to the
filing of any Return or the payment of any Tax assessment or deficiency. All
Taxes that each Seller is or was required to withhold or collect have been duly
withheld or collected and, to the extent required, have been paid to the proper
governmental authority.
2.8. INTELLECTUAL PROPERTIES. SCHEDULE 2.10 contains a true and complete
list of all copyrights, trade names, trademarks, service marks, domain names,
URLs and all registrations and applications therefor and licenses thereto, owned
or used by the Sellers in the operation of the Assets (collectively, including
without limitation the Licensed Software, the "INTELLECTUAL PROPERTY"). Except
as set forth on SCHEDULE 2.10, the Intellectual Property is owned by the Sellers
free and clear of all liens, claims, restrictions and encumbrances of any nature
whatsoever, and the Sellers have the exclusive right to use the Intellectual
Property without payment to a third party other than the rights granted to
E*TRADE Group, Inc. and the rights being granted by Purchaser to Sellers
pursuant to this Agreement and the documents referenced herein. No Intellectual
Property infringes or, to the Sellers` best knowledge, is infringed upon by any
rights of third parties or is involved in any opposition, invalidation or
cancellation action.
2.9. SOFTWARE AND INFORMATION SYSTEMS. The Sellers have all necessary
right, title or interest, including without limitation the right to use, to all
electronic data processing systems, information systems, computer software
programs, program specifications, source codes, input data, data bases, report
layouts and formats, record file layouts, functional specifications and other
related material utilized by the Sellers in operating the Assets (collectively,
the "SOFTWARE ASSETS"). SCHEDULE 2.11 contains a true and complete list and
summary description of all Software Assets owned or leased by the Sellers and
identifies Software Assets owned by the Sellers and any licensees thereof and
Software Assets licensed by the Sellers and any other Software Assets in which
the Sellers have any use, possessory or proprietary rights. After the Closing
Date, the Sellers will retain no copies of source code relating to the Software
Assets.
2.10. COMPLIANCE WITH LAWS. Except as set forth on SCHEDULE 2.12, the
Sellers are in compliance in all material respects with all applicable laws,
rules, regulations, ordinances, orders, judgments and decrees of each and every
jurisdiction applicable to the Assets, this Agreement or the Related Documents.
The Sellers have not received any notice or other communication from any
governmental or regulatory authority or agency regarding any actual, alleged or
potential violation of, or failure to comply with, any law, rule, regulation,
ordinance, order, judgment or decree relating to the Assets, this Agreement or
the Related Documents, and, to the Sellers` best knowledge, there does not exist
any reasonable basis for any claim of material default under or material
violation of any such law, rule, regulation, ordinance, order, judgment or
decree.
2.12. MATERIAL CONTRACTS. Attached hereto as SCHEDULE 2.13 is a list of all
contracts, commitments and agreements of the Sellers relating to the Assets.
Correct and complete copies of all such material contracts, commitments and
agreements have been provided to the Purchaser. All such contracts, commitments
and agreements are valid and binding agreements, in full force and effect and
enforceable in accordance with their respective terms and neither the Sellers
nor, to the best knowledge of the Sellers, any other party thereto, is in breach
or default in any material respect of any of the terms thereof.
2.13. BROKER`S OR FINDER`S FEES. No agent, broker, person or firm acting on
behalf of the Sellers is or will be entitled to any commission or broker`s or
finder`s fees from any of the parties hereto in connection with any of the
transactions contemplated herein.
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2.14. DISCLOSURE. Except as disclosed herein or in the Disclosure
Schedules, no representation or warranty of the Sellers in this Agreement or in
any schedule, agreement or certificate delivered in accordance with the terms
hereof by the Sellers contains any untrue statement of a material fact or omits
to state any material fact necessary, in the light of the circumstances under
which made, in order to make the statements contained herein or therein not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Sellers as follows:
3.1. ORGANIZATION AND GOOD STANDING. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
3.2. CORPORATE AUTHORITY. The Purchaser has full corporate power and
authority to execute, deliver and perform this Agreement and each Related
Document to be executed, delivered and performed by the Purchaser hereunder; the
execution, delivery and performance of this Agreement and each Related Document
to which Purchaser is a party has been duly authorized and approved by all
necessary corporate action of the Purchaser; and this Agreement and each Related
Document to which Purchaser is a party has been duly and validly executed and
delivered by the Purchaser and constitutes a valid and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance, moratorium and similar
laws affecting creditors` rights and general equity principles.
3.3. NO CONFLICT; CONSENTS. Neither the execution and delivery of this
Agreement or any Related Document to which the Purchaser is a party, nor the
consummation or performance of any of the transactions contemplated hereby will
violate or conflict with any provision of the Certificate of Incorporation or
By-laws of the Purchaser or any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge or other restriction of any
government, governmental agency or court to which the Purchaser or any of its
assets or properties is subject or any material contract or agreement to which
it is a party. No authorization, consent or approval of any public body or
authority or any third party is necessary to permit the consummation of the
transactions contemplated by this Agreement or any Related Document to which
Purchaser is a party.
3.4 LITIGATION. There is no action, suit, proceeding or investigation,
either at law or in equity, by or before any governmental or other
instrumentality or agency, or any other entity or person pending or, to the
Purchaser`s best knowledge, threatened or proposed or, to the Purchaser`s best
knowledge, any circumstances that could reasonably form the basis of any action,
suit, proceeding or investigation, against or affecting Purchaser or any of its
properties or assets which, if determined adversely to Purchaser, are reasonably
likely to (i) adversely affect the Assets; (ii) question the validity of this
Agreement or any Related Document or any of the transactions contemplated hereby
or thereby; or (iii) seek to delay, prohibit or restrict any actions taken or to
be taken by Purchaser hereunder or under any Related Document.
3.5 BROKER`S OR FINDER`S FEES. No agent, broker, person or firm acting
on behalf of the Purchaser is or will be entitled to any commission or broker`s
or finder`s fees from Purchaser in connection with any of the transactions
contemplated herein.
3.6 DISCLOSURE. No representation or warranty of the Purchaser in this
Agreement or in any schedule, agreement or certificate delivered in accordance
with the terms hereof by the Purchaser contains any untrue statement of a
material fact or omits to state any material fact necessary, in light of the
circumstances under which made, in order to make the statements contained herein
or therein not misleading.
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ARTICLE IV
COVENANTS
4.1. CONDUCT OF BUSINESS. The Sellers jointly and severally covenant and
agree that from and after the date hereof and until the Closing Date (or the
earlier termination of this Agreement pursuant to SECTION 7.1 hereof), and
except as otherwise consented to or approved by an authorized officer of the
Purchaser in writing:
(a) the Assets shall be deployed and utilized only in the ordinary and
usual course of business and consistent with past practices;
(b) no change shall be made in the Certificate of Incorporation or
By-laws of the Sellers;
(c) the Sellers shall not (i) acquire, sell, lease, license, transfer
or dispose of any Assets; (ii) terminate or modify any contract or agreement
relating to the Assets; or (iii) enter into any contract, arrangement or
commitment relating to the Assets other than in the ordinary course of business
consistent with past practice;
(d) the Sellers shall use their commercially reasonable efforts to
preserve the Assets intact, to preserve its relationship with current customers,
regulators and others with whom business relationships currently exist with
respect to the Assets and to preserve their goodwill and keep intact the value
of the Assets; and
(e) the Sellers shall not take, agree to take or permit to be taken
any action or do or permit to be done anything in the conduct of their business
or otherwise which would be in breach of any of the terms of this Agreement or
any Related Document or which would cause any of their representations and
warranties contained herein or therein to be or become untrue in any material
respect.
4.2. ACCESS AND INFORMATION. From the date of this Agreement until the
Closing Date (or the earlier termination of this Agreement), the Sellers shall
grant the Purchaser and its authorized representatives (including but not
limited to lawyers, accountants, bankers and other advisors) full access to the
Sellers` assets, properties and employees and shall permit the Purchaser and its
authorized representatives to inspect and make copies of all documents, records
and information, in each case only with respect to the Assets as the Purchaser
and its authorized representatives shall from time to time reasonably request.
4.3. INSURANCE AND MAINTENANCE OF ASSETS. The Sellers shall continue to
insure the Assets against all insurable risks in the manner and to the extent
the Assets were insured on December 31, 2001 and any insurance proceeds received
from any loss of, or damage or destruction to, its assets and properties since
such date shall be maintained for the account of the Purchaser. Risk of loss of
or damage or destruction to the Assets shall be borne by the Sellers until the
Closing Date.
4.4. TRANSFER OF ASSETS INVOLVING THIRD PARTIES. Subject to the effect of
limitations contained in SECTION 1.2 relating to the conduct of Purchaser,
immediately upon execution of this Agreement by all parties, all parties hereto
shall use their commercially reasonable efforts to cause all third parties with
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rights to any of the Assets to permit the transfer of Assets subject to such
rights to the Purchaser as soon as reasonably practical on terms acceptable to
the Purchaser in its sole discretion. The Sellers further agree to provide the
Purchaser with such assistance, documentation and information as shall be
reasonably necessary and appropriate to facilitate the transfer of such Assets.
On the Closing Date, the Sellers shall deliver to the Purchaser all of the books
and records maintained in connection with such Assets for periods prior to the
Closing Date. As promptly as practicable after the execution of this Agreement
by all parties, the Sellers and the Purchaser shall cooperate in the preparation
and distribution of letters to all of the Sellers` vendors and other parties
having rights in and to the Assets concerning the transfer of the Assets to the
Purchaser. Any written communication to such vendors and other parties may be
made independently by each party but shall be agreed to by each of the Sellers
and the Purchaser in advance, acting reasonably.
4.5. TAX MATTERS.
(a) The Sellers shall be responsible for the timely, accurate and
complete payment of all Taxes and preparation of all Returns of the Sellers for
all Tax periods that began before, and ended before, on or after, the Closing
Date in connection with the Assets and Assumed Liabilities. Notwithstanding this
subparagraph (a), each of the Sellers and the Purchaser believe that the
transfer of Assets and Assumed Liabilities to the Purchaser should be exempt
from any such Taxes, and each of the Sellers and the Purchaser agrees that it
will use reasonable efforts (as determined by Purchaser in its sole discretion,
it being understood and agreed that Purchaser shall have no obligation to
violate any applicable law or rule of any government agency or order or
directive in any judicial or other proceeding or to incur any expense in
connection therewith) not to take a position or act in a manner inconsistent
with such belief in respect of such Taxes, including without limitation before
any government agency or in any judicial or other proceeding. In the event after
the Closing Date Purchaser is advised by its legal and/or accounting advisers or
any governmental agency that Purchaser should change its belief that the
transfer of Assets and Assumed Liabilities to the Purchaser should be exempt
from any such Taxes, Purchaser agrees to use commercially reasonable efforts to
notify the Sellers of such change, it being understood that Purchaser`s failure
to so notify Sellers shall not result in any claim for damages or liability of
any kind for Taxes or otherwise for Purchaser.
(b) The Sellers shall be jointly and severally liable for and pay any
and all excise, sales, use, stamp, documentary, filing, recordation and other
transfer Taxes arising in connection with the transfer of the Assets and the
Assumed Liabilities to the Purchaser hereunder and the Sellers shall jointly and
severally indemnify, defend and hold the Purchaser harmless against any and all
such transfer Taxes.
4.6. The Sellers and the Purchaser agree to furnish or cause to be
furnished to each other, upon request, as promptly as practicable, such
information and assistance (including access to books and records) relating to
the Assets as is reasonably necessary for the preparation of any Return for
Taxes or claim for refund, the conduct of any audit and the prosecution or
defense of any claim, suit or proceeding relating to any proposed adjustment of
any Tax. The Sellers and the Purchaser agree to (i) retain all books and records
with respect to Tax matters concerning the Assets and any taxable period
beginning before the Closing Date until the expiration of the statute of
limitations and any extensions thereof and (ii) give each other reasonable prior
written notice before transferring, destroying or discarding any such books and
records and, if the other party so requests, allow the other party to take
possession of such books and records.
4.7. PUBLIC ANNOUNCEMENTS. Except as necessary to comply with their
obligations under applicable securities laws (in which case each party shall
nonetheless use commercially reasonable efforts to provide at least two business
days prior notice of its intent to make a public announcement together with a
copy of the text to be disseminated), provided, further, that, in the event of a
public announcement relating to the Closing, each party shall provide the other
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parties with no less than 2 business days prior written notice of its intent to
make a public announcement together with a copy of the text to be disseminated),
none of the parties hereto nor any of their respective employees, agents or
representatives shall make any public disclosure or announcement concerning the
terms of this transaction without the prior written consent of the other parties
hereto.
4.8. WEBSITE ADJUSTMENTS. Sellers also agree to remove all material related
to their ownership of the Assets from their websites, but may continue to use
such websites to promote the software products and services which are a part of
the Assets in a manner reasonably acceptable to the Purchaser, it being agreed
that Seller`s promotion of such products and services by stating it is "powered
by Integrated Trading Solutions, Inc." is acceptable, subject to such further
requirements as Purchaser may impose to protect its intellectual property rights
in the Assets. The Sellers agree not to post, or cause to be posted, any
material to such websites that are reasonably likely to materially and adversely
affect the Purchasers` interest in the Assets. The Sellers shall be permitted to
promote such products and services on a "private label" basis, subject to such
further requirements as Purchaser may impose to protect its intellectual
property rights in the Assets. The Sellers obligations in the immediately two
preceding sentences shall be broadly construed to apply to all other tangible
material and documents produced by or on behalf of the Sellers.
ARTICLE V
CONDITIONS TO THE PURCHASER`S OBLIGATIONS
5. CONDITIONS TO THE PURCHASER`S OBLIGATIONS. The Purchaser`s obligation to
purchase the Assets and take the other actions required to be taken by the
Purchaser at the Closing is conditional upon receipt by the Purchaser of all the
documents required to be delivered by the Sellers pursuant to this Article V,
and compliance by the Sellers with all of the terms of this Article V, unless
any such condition shall have been waived by an authorized officer of the
Purchaser in its sole discretion in writing.
5.1. TRANSFER DOCUMENTS. The Sellers shall have delivered to the Purchaser
bills of sale, assignments, certificates and other appropriate documents of
transfer in form and substance satisfactory to the Purchaser, transferring the
Assets to the Purchaser.
5.2. TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Sellers contained in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and as of the Closing
Date, as though made on and as of the Closing Date, except (i) to the extent
such representations and warranties are by their express provisions made as of a
specified date and (ii) for the effect of transactions contemplated by this
Agreement, and an executive officer of each Seller shall have delivered to the
Purchaser a certificate, dated the Closing Date, to such effect.
5.3. DELIVERY OF SOURCE CODE. The Sellers shall have delivered to the
Purchaser the source code for all Licensed Software together with all related
documentation.
5.4. LICENSE AGREEMENT. Sellers shall have entered into and delivered to
the Purchaser a Software License Agreement (the "License Agreement") in
substantially the form attached hereto as EXHIBIT B for the use of the Licensed
Software.
5.5. PERFORMANCE OF AGREEMENTS. Each and all of the agreements of the
Sellers to be performed on or before the Closing Date pursuant to the terms
hereof shall have been duly performed in all material respects, and an executive
officer of each Seller shall have delivered to the Purchaser a certificate,
dated the Closing Date, to such effect.
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5.5. NO LITIGATION THREATENED. No action or proceeding shall have been
instituted or, to the Sellers` best knowledge, shall have been threatened before
a court or other government body or by any public authority to restrain or
prohibit any of the transactions contemplated hereby or which would have a
material adverse effect on the Assets. An executive officer of each Seller shall
have delivered to the Purchaser a certificate, dated the Closing Date, to such
effect.
5.6. CONSENTS AND APPROVALS. The Sellers shall have received all consents
and approvals necessary for the consummation of the transactions contemplated
hereby (including, without limitation, the consents of SDS Merchant Fund, L.P.,
DMG Legacy International Ltd., DMG Legacy Institutional Fund LLC, DMG Legacy
Fund LLC, International and Institutional Fund LLC, and New York Community
Investment Company L.L.C.) and such consents and approvals shall be in form and
substance satisfactory to the Purchaser and received by the Purchaser.
5.8. CLEARING AGREEMENT AMENDMENT. Inc. shall have entered into and
delivered to Purchaser an Amendment to the Fully Disclosed Clearing Agreement
dated as of October 3, 1996, as amended, between Xxxxxx and Inc. (the "Clearing
Agreement") in form and substance satisfactory to Xxxxxx.
5.9. INTENTIONALLY OMITTED.
5.10. COPYRIGHT TRANSFER. ABW shall have entered into and delivered to the
Purchaser a Copyright Transfer Agreement in substantially the form attached
hereto as EXHIBIT C.
5.11. AMENDMENT TO MASTER AGREEMENT. Sellers and such other parties as
Purchaser shall request shall have entered into and delivered to the Purchaser a
Third Amendment to the Master Subordination Agreement in substantially the form
attached hereto as EXHIBIT D.
5.12. AMENDMENT TO NOTE; OTHER PROMISSORY NOTES. Sellers shall have entered
into and delivered an Amended and Restated Note in substantially the form
attached hereto as EXHIBIT E as well as documents relating to the assignment of
the promissory note referred to in SECTION 1.3(B) as Purchaser shall request.
5.13 LEGAL OPINION. Sellers shall have caused to be delivered a legal
opinion of Morris, Nichols, Arsht & Tunnel in form and substance satisfactory to
Purchaser that Sellers are not required to obtain shareholder consent under
Section 271 of the Delaware General Corporation Law in connection with the sale
of the Assets to Purchaser.
5.14 ASSIGNMENT AND ACKNOWLEDGEMENT OF LICENSE AGREEMENT. Sellers shall
have delivered an Assignment and Acknowledgement of the License Agreement dated
as of June 1, 2002 among Sellers and Xxxxxx in substantially the form attached
as EXHIBIT F.
5.15 DELIVERY OF TRANSACTION DOCUMENTS. Sellers shall have delivered fully
executed versions of the First Amendment and Second Amendment to the Master
Subordination Agreement, the preferred stock certificate in favor of Xxxxxx
required by the Transaction Documents and such other fully executed Transaction
Documents as Xxxxxx has requested Borrower to deliver prior to the Closing Date
as were required to have been delivered in connection with the closing of the
Master Subordination Agreement.
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ARTICLE VI
CONDITIONS TO THE SELLERS` OBLIGATIONS
6. CONDITION TO THE SELLER`S OBLIGATIONS. The Sellers` obligation to sell
the Assets and take the other actions required to be taken by the Sellers at the
Closing is conditional upon receipt by the Sellers of the Purchase Price, in
accordance with SECTION 1.3, receipt of all of the documents required to be
delivered by the Purchaser pursuant to this ARTICLE VI and compliance by the
Purchaser with all of the terms of this ARTICLE VI, unless any such condition
shall have been waived by the Sellers in their sole discretion in writing.
6.1. INTENTIONALLY OMITTED.
6.2. TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchaser contained in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and as of the
Closing Date, as though made on and as of the Closing Date and an executive
officer of the Purchaser shall have delivered to the Sellers a certificate,
dated the Closing Date, to such effect.
6.3. PERFORMANCE OF AGREEMENTS. Each and all of the agreements of the
Purchaser to be performed on or before the Closing Date pursuant to the terms
hereof shall have been duly performed in all material respects, and an executive
officer of the Purchaser shall have delivered to the Sellers a certificate,
dated the Closing Date, to such effect.
6.2. NO LITIGATION THREATENED. No action or proceeding shall have been
instituted or, to the Purchaser`s best knowledge, shall have been threatened
before a court or other government body or by any public authority to restrain
or prohibit any of the transactions contemplated hereby. An executive officer of
the Purchaser shall have delivered to the Sellers a certificate, dated the
Closing Date, to such effect.
6.3. CONSENTS AND APPROVALS. The Purchaser shall have received all consents
and approvals necessary for the consummation of the transactions contemplated
hereby (including, without limitation, the consents of SDS Merchant Fund, L.P.,
DMG Legacy International Ltd., DMG Legacy Institutional Fund LLC, DMG Legacy
Fund LLC, International, Institutional Fund LLC, and New York Community
Investment Company L.L.C.), all in form and substance satisfactory to the
Purchaser.
6.4. LICENSE AGREEMENT. Purchaser shall have entered into and delivered to
the Sellers the License Agreement in substantially the form attached hereto as
EXHIBIT B for the use of the Licensed Software. 6.7. CLEARING AGREEMENT
AMENDMENT. Xxxxxx shall have entered into and delivered to Inc. an Amendment to
the Clearing Agreement in form and substance satisfactory to Inc.
6.8. AMENDMENT TO NOTE; RELIEF UNDER OTHER PROMISSORY NOTES. Xxxxxx shall
have entered into and delivered an Amended and Restated Note in substantially
the form attached hereto as EXHIBIT F and shall relieve ABW`s obligations under
the Notes referred to in SECTIONs 1.3(A) and (B) in a form and manner
satisfactory to Sellers.
6.9. LEGAL OPINION. Sellers shall have received a legal opinion of Morris,
Nichols, Arsht & Tunnel in form and substance satisfactory to Sellers that
Sellers are not required to obtain shareholder consent under Section 271 of the
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Delaware General Corporation Law in connection with the sale of the Assets to
Purchaser.
6.10. FAIRNESS OPINION. Sellers shall have received a fairness opinion from
Xxxxxxx Capital, Inc. in form and substance satisfactory to Sellers.
6.11 SECURITY DOCUMENTS. Xxxxxx and the relevant DMG Entities identified in
SECTION 6.5 shall have entered into and delivered a side letter in form and
substance satisfactory to the Sellers in respect of the Security Documents.
ARTICLE VII
TERMINATION
7.1. TERMINATION BY EITHER PARTY. If the Closing has not occurred hereunder
(i) because all of the conditions to Closing have not occurred (or been waived)
on or before July 31, 2002 (the "TERMINATION Date") or (ii) because of a
material breach of any provision of this Agreement or any Related Document by
any party thereto, which breach is not cured within three days after receipt of
written notice thereof, then this Agreement may be terminated by either the
Purchaser or the Sellers at any time prior to the Closing upon written notice to
the other parties; provided, that the party or parties exercising such right are
not then in breach of any provision of this Agreement. A termination by any
nonbreaching party or parties under this SECTION 7.1 will not operate as a
waiver by such party or parties of any rights to seek damages or any other
remedy for a breach of this Agreement by the other party or parties.
7.2. EFFECT OF TERMINATION. In the event this Agreement is terminated
pursuant to SECTION 7.1 hereof, this Agreement shall become void and of no
effect and there shall be no liability on the part of the parties hereto;
PROVIDED, HOWEVER, that SECTIONS 7.3, 8.2, 9.3, and ARTICLE X hereof shall
survive any termination and provided, further, that nothing herein shall relieve
a party hereto from liability for a breach of any of its representations,
warranties, agreements and covenants contained in this Agreement.
7.3. TERMINATION FEE. In the event this Agreement is terminated by any of
the Sellers for any reason (including a decision by the Board of Directors of
ABW prior to the Closing Date to accept a financially more advantageous offer
for the Assets (valuing as well the cost to ABW of payment of additional
applicable default fees and interest that may be owing to Purchaser and its
affiliates under all Related Documents) from a third party based on a fiduciary
legal obligation to do so , to which Purchaser shall not object to the extent it
has been given a reasonable prior opportunity to counter such more advantageous
offer) other than (i) the nonfulfillment by the Purchaser of the conditions
precedent to the obligations of the Sellers as set forth in ARTICLE VI hereof or
(ii) the failure of the parties to close by the Termination Date due to no fault
of their own after the exercise of their respective best efforts, then the
Sellers shall be jointly and severally liable to pay to the Purchaser a
termination fee, in cash, equal to One Hundred Thousand Dollars ($100,000). Such
fee shall be paid within five (5) business days following the occurrence of the
event giving rise to such payment.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
8.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations and warranties of the Sellers and the Purchaser contained in
this Agreement or in any exhibit or schedule delivered pursuant hereto shall
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survive the Closing Date for a period of two (2) years; PROVIDED, that the
representations and warranties contained in SECTION 2.9 shall survive for the
applicable statute of limitations periods. In the event written notice of any
claim for indemnification shall have been given within the applicable survival
period, the representations and warranties that are the subject of such
indemnification claim shall survive until such time as such claim is finally
resolved.
8.2. INDEMNIFICATION.
(a) The Sellers agree to jointly and severally indemnify, defend and
hold harmless the Purchaser and its officers, directors, employees, agents and
"affiliates" (as such term is defined in Rule 405 of the Securities Act of 1933)
from and against any claim, liability, obligation, loss, damage, assessment,
judgment, cost and expense (including, without limitation, reasonable attorney`s
and accountant`s fees and costs and expenses reasonably incurred in
investigating, preparing, defending against or prosecuting any litigation or
claim, action, suit, proceeding or demand) of any kind or character ("LOSSES")
arising out of or in any manner incident, relating or attributable to (i) any
inaccuracy in any representation or breach of any warranty of either Seller
contained in this Agreement or in any exhibit or schedule, certificate,
instrument or other document or agreement executed or delivered by any Seller in
accordance with this Agreement; (ii) any failure by either Seller to perform or
observe any covenant, agreement or condition to be performed or observed by it
under this Agreement or under any schedule, certificate, instrument or other
document or agreement executed by it in accordance with this Agreement; or (iii)
any and all liabilities of the Sellers, other than such Assumed Liabilities that
Purchaser expressly accepts as its obligations after the Closing Date in
accordance with SECTION 1.2 of this Agreement. The obligations of the Sellers to
indemnify the Purchaser as herein stated shall survive the consummation of the
transactions herein described. The Sellers will also jointly and severally
indemnify, defend and hold Purchaser and its officers, directors, employees,
agents and affiliates, and its and their employees, agents, independent
contractors and licensees harmless from and against any and all claims, actions,
suits, proceedings, losses or damages (including reasonable attorneys` fees)
brought against such person or entity based on an allegation that the Licensed
Software or Xxxxxx Marks, as transferred to Purchaser on the Closing Date or as
existing on or prior to such date, violate any Intellectual Property Right of a
third party to the extent Purchaser or its affiliates are not responsible for
causing such allegation or violation. As used in this SECTION 8.2(A),
"INTELLECTUAL PROPERTY RIGHTS" means any U.S. or foreign patents, patent
applications, trademarks, trade names, service marks, brand names, logos and
other trade designations (including unregistered names and marks), trademark and
service xxxx registrations and applications, copyrights and copyright
registrations and applications, moral rights, inventions, invention disclosures,
formulae, formulations, processes, methods, trade secrets, computer software
(including the architecture thereof), computer programs and source codes,
manufacturing research and similar technical information, engineering know-how,
assembly and test data, drawings and royalty rights, and "XXXXXX MARKS" means
all existing trademarks, service marks, logos and trade names of ABW and its
affiliates, including all current and future registrations and other rights with
respect thereto.
(b) The Purchaser agrees to indemnify, defend and hold harmless the
Sellers and the Sellers` officers, directors, employees, agents and affiliates
from and against any Losses arising out of or in any manner incident, relating
or attributable to (i) any inaccuracy in any representation or breach of any
warranty of the Purchaser contained in this Agreement, in any schedule,
certificate, instrument or other document or agreement executed or delivered by
the Purchaser in accordance with this Agreement; (ii) any failure by the
Purchaser to perform or observe any covenant, agreement or condition to be
performed or observed by it under this Agreement or under any exhibit, schedule,
certificate, instrument or other document or agreement executed by it in
accordance with this Agreement or (iii) such Assumed Liabilities that Purchaser
expressly accepts as its obligation after the Closing Date in accordance with
SECTION 1.2 of this Agreement. The obligation of the Purchaser to indemnify the
Sellers as herein stated shall survive the consummation of the transactions
herein described.
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(c) If the Purchaser believes that a matter has occurred that entitles
it to indemnification under SECTION 8.2(A) (other than matters covered by
subsection (d) below) or either Seller believes that a matter has occurred that
entitles it to indemnification under SECTION 8.2(B) (other than matters covered
by subsection (d) below), the Purchaser or either Seller, as the case may be
(the "INDEMNIFIED PARTY"), shall give prompt written notice to any party against
whom indemnification is sought (each of whom is referred to herein as an
"INDEMNIFYING PARTY") describing such matter in reasonable detail. The
Indemnified Party shall be entitled to give such notice prior to the
establishment of the amount of its Losses and to supplement its claim from time
to time thereafter by further notices as they are established. The Indemnifying
Party shall send a written response to such claim for indemnification within
thirty (30) days after receipt of the claim stating its acceptance or objection
to the indemnification claim, and explaining its position with respect thereto
in reasonable detail. If such Indemnifying Party does not respond within such
thirty (30) day period, it will be deemed to have accepted the Indemnified
Party`s indemnification claim as specified in the notice given by the
Indemnified Party. If the Indemnifying Party gives a timely objection notice,
then the parties will negotiate in good faith to attempt to resolve the dispute.
Upon the expiration of an additional thirty (30) day period from the date of the
objection notice or such longer period as to which the Indemnified and
Indemnifying Parties may agree, any such dispute shall be submitted to
arbitration in Dallas, Texas to a panel of three members of the American
Arbitration Association selected in accordance with the rules of the American
Arbitration Association, who shall promptly arbitrate such dispute in accordance
with the rules of such Association and report to the parties upon such disputed
items, and such report shall be final, binding and conclusive on the parties.
Judgment upon the award by the arbitrator(s) may be entered in any court having
jurisdiction. The prevailing party in any such arbitration shall be entitled to
recover from, and have paid by, the other party hereto to all fees and
disbursements of such arbitrator or arbitrators and reasonable attorney`s fees,
costs and expenses incurred by the prevailing party in such arbitration.
(d) If a third person asserts a claim against an Indemnified Party in
connection with a matter giving rise to indemnification rights hereunder, the
Indemnified Party shall promptly (but in no event later than ten (10) days prior
to the time at which an answer or other responsive pleading or notice with
respect to the claim is required) notify the Indemnifying Party in writing of
such claim. The Indemnifying Party shall have the right, at its election, to
pursue the defense or settlement of such claim by giving prompt written notice
to the Indemnified Party that it will do so, such election to be made and notice
given in any event at least five (5) days prior to the time at which an answer
or other responsive pleading or notice with respect thereto is required. If the
Indemnifying Party makes such election, the Indemnifying Party may conduct the
defense of such claim through counsel of its choosing, will be responsible for
the expenses of such defense, may take all steps to defeat, settle or compromise
such claim and shall be bound by the results of its defense or settlement of the
claim to the extent it produces damage or loss to the Indemnified Party. The
Indemnifying Party shall not settle such claims without prior written notice to
and consultation with the Indemnified Party, and no such settlement by the
Indemnifying Party involving any injunction or material and adverse effect on
the Indemnified Party may be agreed to without the Indemnified Party`s prior
written consent. As long as the Indemnifying Party is diligently contesting or
seeking to settle any such claim in good faith, the Indemnified Party shall not
pay or settle any such claim without the prior written consent of the
Indemnifying Party, such consent not to be unreasonably withheld. If the
Indemnifying Party does not make such election, or having made such election
does not proceed diligently to defend or settle such claim prior to the time at
which an answer or other responsive pleading or notice with respect thereto is
required, or does not continue diligently to contest or seek to settle such
claim, then the Indemnified Party may conduct the defense and proceed with such
claim in its exclusive discretion, and the Indemnifying Party shall be bound by
any defense or settlement that the Indemnified Party may make in good faith with
respect to such claim. The parties agree to cooperate in defending such third
16
party claims, and the defending party shall have reasonable access to records,
information and personnel in control of the other party which are pertinent to
the defense thereof.
(e) The right to indemnification, payment of damages or any other
remedy based on the representations, warranties, covenants and agreements in
this Agreement shall not be affected by (i) any investigation conducted, whether
before or after the execution of this Agreement, with respect to the accuracy or
inaccuracy of or compliance with, any such representation, warranty, covenant or
agreement, except to the extent that a party has knowledge of any such
inaccuracy or noncompliance prior to the Closing Date or (ii) subject to
applicable law, any actual knowledge of a party that any representation,
warranty or covenant in this Agreement is inaccurate has or has not been
complied with except as disclosed in writing herein or in the Disclosure
Schedules. The parties acknowledge and agree that the indemnification provisions
set forth in this ARTICLE VIII shall be their sole and exclusive remedy and
recourse for the recovery of money damages with respect to any and all claims
relating to or arising out of this ARTICLE VIII; PROVIDED; HOWEVER, the parties
may seek any remedy available to them, in equity or at law, for any other cause
of action including, but not limited to, any cause of action based on fraud.
ARTICLE IX
POST-CLOSING COVENANTS
9.1. NON-SOLICITATION. The Sellers agrees that they shall not, and they
shall cause their directors, officers, employees, agents and affiliates not to,
directly or indirectly, contact or solicit any person or entity with regard to
licensing or purchasing the Assets other than with the prior written consent of
an authorized officer of the Purchaser or to the extent such person or entity is
referenced in SECTIONS 1.3(D)(I), (II) and (IV) (but only during the nine (9)
month period referenced therein in which ABW would be permitted to contact such
person or entity in order to obtain royalties from Purchaser).
9.2. NON-COMPETITION. Until the later of five (5) years from the Closing
Date, the last date on which Purchaser makes a royalty payment to Sellers
pursuant to SECTION 1.3(D), and the date on which Xxxxxx and/or Purchaser is no
longer providing services to Sellers or their affiliates, the Sellers agree that
they shall not, and shall cause each of their affiliates and their then
currently employed or engaged officers and directors not to, directly or
indirectly, anywhere in the United States of America, own more than five percent
(5%) of, manage, operate, control, be employed by or act as agent for, a
business which licenses or sells to third parties software providing
substantially similar functionality to the Licensed Software. Notwithstanding
the foregoing, no violation of the foregoing sentence shall occur as a result of
Sellers or their affiliates selling, licensing, or otherwise providing the
Licensed Software to their customers in connection with their trading business
(but solely as permitted in accordance with the express provisions of the
License Agreement referred to in SECTION 5.4). Within ten (10) days of the
Closing Date the Sellers shall file with the Secretary of State of Delaware and
the Secretary of State of New York a termination of their fictitious name
filings, if any, pertaining to the name "UltimateTrader" or "WatleyTrader" and
shall provide a copy thereof to the Purchaser and shall take any other actions
which may be necessary to transfer all of its trade names, trademarks or service
names included in the Assets to the Purchaser.
9.3. COMPLIANCE WITH AGREEMENT/RELATED DOCUMENTS; CLAWBACK. In the event
that any party hereto commits a non-material breach of this Agreement with
respect to any of its obligations which it is required to perform after the
Closing Date, the other party hereto may send written notice to the breaching
party, setting forth in reasonable detail the breach which has been committed.
The breaching party shall have thirty (30) days after its receipt of such
written notice to cure such breach, provided that if such breach is not capable
of being cured within such thirty (30) day period, the breaching party shall
have an additional thirty (30) days to cure such breach. In the event that any
party hereto commits a material breach (for purposes of this SECTION 9.3, a
"material breach" shall be deemed to include, without limitation, any conduct
17
which constitutes a breach of a provision of this Agreement by any Seller that
adversely impairs the unrestricted ownership and use by Purchaser and/or its
affiliates of the Assets and any breach of a payment or indemnification
obligation by any Seller in this Agreement) of this Agreement with respect to
any of its obligations which it is required to perform after the Closing Date,
the other party hereto may send written notice to the breaching party, setting
forth in reasonable detail the breach which has been committed. The breaching
party shall have fifteen (15) days after its receipt of such written notice to
cure such breach. If, at the end of such respective cure periods, the applicable
breach has not been cured, the non-breaching party may terminate (i) this
Agreement, but only with respect to the performance of any future obligations
hereunder, and (ii) any Related Document.
In the event of any claim or challenge by any person or entity other than
Purchaser and its affiliates to the validity and/or enforceability of the
transactions contemplated by this Agreement ("CHALLENGE"), the parties agree
that to the extent such Challenge does not result in the impairment of the
rights of Purchaser and its affiliates under the terms of this Agreement and/or
any Related Document ("IMPAIRMENT"), Purchaser and its affiliates may elect to
offset at any time the costs of Purchaser and/or its affiliates in defending
against such Challenge against any consideration payable or debt forgiveness
required to occur as part of the Purchase Price referred to in SECTION 1.3, in
Purchaser`s and its affiliates sole discretion. In the event a Challenge results
in any Impairment as determined by Purchaser and its affiliates, Purchaser and
its affiliates may deem this Agreement and the documents executed in connection
therewith to be void and of no effect ab initio and any such Related Documents
(and the rights and remedies of Purchaser and its affiliates in connection
therewith) shall be deemed to exist as if this Agreement and the documents
executed in connection therewith had not been executed; provided, however, that
Purchaser and its affiliates shall be entitled to demand immediate (i) repayment
of all principal, interest, fees and expenses in connection with any and all
advances and any and all debt forgiven pursuant to SECTION 1.3 (it being agreed
that, notwithstanding the forgoing, the debt forgiven pursuant to SECTION 1.3(A)
shall be reinstated in accordance with its terms and shall only be due in
accordance with its terms), (ii) payment of a $100,000 termination fee (it being
acknowledged and agreed by Sellers that payment of such fee here and in Section
7.3 shall not be deemed a "penalty" under applicable law given the significant
cost to Purchaser and its affiliates of the conduct that gave rise to the
obligation to pay such fee), and (iii) damages with respect to such other rights
and remedies as Purchaser and its affiliates may have, all of which are hereby
reserved. Among other things, the practical effect of a Challenge resulting in
Impairment may be an immediate requirement for the repayment of all outstanding
obligations by the Sellers under the terms of the applicable Related Documents.
In such event Purchaser shall, upon the reasonable request of Sellers and at
their expense, execute such documents and take such actions to evidence the
Sellers` ownership of the Assets. Any breach by a party hereto or their
affiliates of a Related Document after the Closing that results in a termination
by the non-breaching party of such Related Document shall give rise to an
immediate termination event with respect to the performance of its future
obligations hereunder (without any requirement for any additional grace or cure
period as set forth herein) and/or a claim for Impairment.
9.4. FURTHER ASSURANCES. From time to time after the Closing and without
further consideration from any other party, each of the Purchaser and the
Sellers, at their sole cost and expense, shall execute and deliver, or cause to
be executed and delivered, to the other party or parties such further
instruments of sale, assignment, transfer and delivery and take such other
action as the requesting party or parties may reasonably request in order to
more effectively convey the Assets to the Purchaser and consummate and afford to
the Purchaser and Sellers the benefit of the transactions contemplated hereby.
Following the Closing, at the request of any party, the other party or parties
shall cooperate in the preparation of any financial statements or tax returns
and participate as witnesses in any lawsuit, investigation or administrative
hearing involving the Assets or any of the Assets, at no cost or expense to the
requesting party or parties, other than reimbursement of the cooperating party`s
or parties` out of pocket expenses incurred as a result thereof. Within 15
business days after the Closing Date, Purchaser agrees to deliver to Sellers an
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amendment to that certain Master Equipment Lease relating to equipment provided
by Xxxxxx that eliminates from the applicable lease schedule the equipment
delivered by Sellers to ABW`s Texas office from and after the date such
equipment was received in such office.
ARTICLE X
MISCELLANEOUS
10.1. KNOWLEDGE. Where any representation or warranty contained in this
Agreement is expressly qualified by reference to the best knowledge of any
party, it shall mean the actual knowledge of the executive officers of such
party in each instance after they have made such due and diligent inquiry as
they deem necessary and appropriate as to the matters that are the subject of
such representations and warranties.
10.2. PROFESSIONAL EXPENSES. The Sellers, on the one hand, and the
Purchaser, on the other hand, shall each pay all of their own professional
expenses relating to negotiating, drafting and closing the transactions
contemplated by this Agreement, including, without limitation, the fees and
expenses of its respective counsel, financial advisers, investment bankers and
accountants, whether or not the transactions contemplated hereby are
consummated.
10.3. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Texas without giving effect
to conflicts of laws principles.
10.4. JURISDICTION. Any judicial proceeding brought against any of the
parties to this Agreement on any dispute arising out of this Agreement or any
matter related hereto shall be brought solely in the appropriate state or
Federal courts located in Dallas, Texas (PROVIDED that Purchaser,
notwithstanding the foregoing, may elect to pursue its rights and remedies in
another forum if it so desires). Each of the parties hereby irrevocably and
unconditionally submits, for itself and its property, to the in personam
jurisdiction of the state and Federal courts sitting in Dallas County, Texas, in
each case with respect to any action or proceeding arising out of or relating to
this Agreement. Each party hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any such court. Each party
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
10.5. CAPTIONS. The Article and Section captions used herein are for
reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
10.6. NOTICES. Any notice or other communications required or permitted
hereunder shall be sufficiently given if delivered in person or sent by
telecopy, overnight courier service, express mail or by registered or certified
mail, postage prepaid, addressed as follows:
(i) If to the Purchaser:
Integrated Trading Solutions, Inc.
0000 Xxxxxxx Xxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: CEO
Telecopy: (000) 000-0000
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If to Xxxxxx:
Xxxxxx Financial Services, Inc.
0000 Xxxxxxx Xxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: President and COO
Telecopy: (000) 000-0000
(ii) If to the Sellers:
X.X. Xxxxxx Group Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: CEO
Telecopy: (000) 000-0000
X.X. Xxxxxx, Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: CEO
Telecopy: (000) 000-0000
or such other address as shall be furnished in writing by any such party in
accordance with this SECTION 10.6, and such notice or communication shall be
deemed to have been given as of the date so personally delivered or telecopied,
one business day after delivery by express mail or overnight courier service and
three business days after deposit in the U.S. mail.
10.7. PARTIES IN INTEREST. Subject to the effect of the other provisions of
this Section, this Agreement shall be binding upon and shall inure to the
benefit of the successors and assigns of the parties. Purchaser may assign its
rights, interests and obligations under this Agreement. Notwithstanding any
other provision of this Agreement, neither this Agreement nor any interest in
this Agreement or any rights hereunder shall be sold, transferred, or assigned
by Sellers, by operation of law or otherwise, including the merger or
consolidation of any Seller with or into another entity. For purposes of this
Section, any change in "control" of any Seller shall constitute an assignment.
Control means the direct or indirect power to direct or cause direction of the
management and policies of an entity, whether through the exercise of voting
power, by contract or otherwise, as determined by Purchaser in its sole
discretion, and provided further that a transaction shall not constitute a
change in control if (i) the Sellers shall have notified the Purchaser in
writing (sent by telecopy marked conspicuously on the cover sheet with
"Urgent-Immediate Reply Needed" to each of Purchaser`s CEO and COO, each of
Xxxxxx`s CEO, COO, CFO, General Counsel and Chief Compliance Officer and to
Xxxxxx Xxxxxx (208-275-3940)) in reasonable detail of the general terms of a
proposed transaction and identity of the applicable investor(s) and/or acquirer,
and the Purchaser either confirms that such transaction does not constitute a
change in control or does not notify the Sellers within six business days after
the day on which it receives the notice from the Sellers that the Purchaser
deems the transaction to be a change in control and the Sellers complete a
transaction on terms no less favorable to the Sellers than those provided in the
notice or (ii) it involves the issuance by the Sellers of common stock or other
equivalent equity securities (A) in connection with the conversion of existing
indebtedness on the date hereof of the Sellers or (B) upon the conversion or
exercise of warrants, preferred stock or other securities existing on the date
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hereof or issued pursuant to clause (A) above into common stock of the Sellers.
Any attempted assignment, transfer, sale, or other delegation in violation of
this Section shall be void. For purposes of this Agreement, Xxxxxx shall be
considered to be an affiliate of Purchaser. In the event of any merger,
consolidation, acquisition or similar transaction involving all or substantially
all of Purchaser`s right, title and interest in the Assets, or the transfer of a
controlling voting or equity interest in Purchaser, with or to a third party,
notwithstanding anything to the contrary in this Agreement, Sellers shall not be
entitled to any payment of any kind (including pursuant to SECTION 1.3(D) of
this Agreement) from the purchase price consideration received by Purchaser or
its stakeholders (i.e., there shall be no "deemed royalties" or attempt to pro
rate purchase price consideration as a royalty payment notwithstanding the
identity of any third party), it being agreed that the operation of this
sentence shall not obviate a third party acquiror`s obligation to pay actual
royalties with respect to such license contracts with parties identified in
SECTION 1.3 hereof as it may elect to assume.
10.8. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which taken together
shall constitute one instrument.
10.9. ENTIRE AGREEMENT. This Agreement, including the exhibits, schedules,
certificates and other documents referred to herein which form a part hereof,
contains the entire understanding of the parties hereto with respect to the
subject matter contained herein and therein. This Agreement supersedes all prior
agreements and understandings (oral or written) between the parties with respect
to such subject matter, provided that Xxxxxx`s obligations under SECTION 4(B) of
the License Agreement dated as of June 1, 2002 between Xxxxxx and Sellers, as
amended pursuant to SECTION 5.14 and subject to the effect of SECTION 1.2
hereof, shall not be superseded but shall remain in full force and effect
subject to the effect of the Amendment referenced in such SECTION 5.14.
10.10. AMENDMENTS; WAIVERS. This Agreement may only be amended by an
agreement in writing signed by the Purchaser and the Sellers. Neither the
failure nor any delay by any party in exercising any right hereunder will
operate as a waiver of such right, and no single or partial exercise of any such
right will preclude any other or further exercise of such right or the exercise
of any other right.
10.11. SEVERABILITY. In case any provision in this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof will not in any way be affected or impaired
thereby. Any provision held invalid, illegal or unenforceable in part will
remain in full force and effect to the extent not held invalid, illegal or
unenforceable.
10.12. RULES OF CONSTRUCTION. The normal rules of construction which
require the terms of an agreement to be construed most strictly against the
drafter of such agreement are hereby waived since each party has been
represented by counsel in the drafting and negotiation of this Agreement.
10.13. JOINT AND SEVERAL OBLIGATIONS. The provisions of this Agreement
shall be broadly construed such that the obligations of the Sellers shall be
joint and several obligations of each Seller.
10.14 AUDIT RIGHTS. During the periods for which Purchaser has an
obligation to pay royalties pursuant to SECTION 1.3(D), Purchaser shall maintain
books and records concerning such royalties. Such books and records shall be
complete and accurate in all material respects and ABW shall have the right,
through its representatives or auditors, to reasonable inspection of the books
and records of Purchaser relating to such royalties, PROVIDED that any such
inspection shall only occur (i) upon fifteen (15) days` prior written notice to
Purchaser, (ii) with minimum disruption to Purchaser`s business operations,
(iii) subject to the confidentiality provisions set forth in SECTION 8 of the
License Agreement and the other existing confidentiality agreements between the
parties, and (iv) at ABW`s expense except to the extent any audit identifies an
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error on the part of Purchaser that misstates the amounts due to ABW by 7.5% or
more.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date and year first above written.
INTEGRATED TRADING SOLUTIONS, INC.
By: _______________________________________
Name:
Title:
X.X. XXXXXX GROUP INC.
By: _______________________________________
Name:
Title:
By: _______________________________________
Name:
Title:
X.X. XXXXXX, INC.
By: _______________________________________
Name:
Title:
[*] Confidential information has been omitted and has been separately filed
with the Securities and Exchanges Commission.
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