Exhibit 10.11
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "AGREEMENT") is entered into as of
March 3, 1998, by and between Home Shark, Inc., a California corporation
("BUYER") and The Cobalt Group, Inc., a Washington corporation ("SELLER").
RECITALS
Buyer desires to acquire from Seller, and Seller desires to sell to
Buyer, all of the assets of Seller's business relating to the online real estate
listing service known as "HomeScout", which is made available on the World Wide
Web at xxxx://xxx.xxxxxxxxx.xxx or xxxx://xxx.xxxxxxxxxxxx.xxx (the "BUSINESS"),
on the terms and subject to the conditions set forth in this Agreement.
AGREEMENT
In consideration of the mutual agreements, representations, warranties
and covenants set forth below, Buyer and Seller agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
1.1 "ADVERSE CONSEQUENCES" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses.
1.2 "AFFILIATE" means with respect to any Person, a Person directly
or indirectly controlling or controlled by or under common control with such
Person.
1.3 "GOVERNMENTAL ENTITY" means any court, or any federal, state,
municipal or other governmental authority, department, commission, board, agency
or other instrumentality (domestic or foreign).
1.4 "LIEN" means any mortgage, pledge, lien, security interest,
option, covenant, condition, restriction, encumbrance, charge or other
third-party claim of any kind.
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1.5 "PERSON" means an individual, corporation, partnership,
association, trust, government or political subdivision or agent or
instrumentality thereof, or other entity or organization.
1.6 "TAXES" means all taxes, however denominated, including any
interest, penalties or other additions to tax that may become payable in respect
thereof, (i) imposed on Seller by any federal, territorial, state, local or
foreign government or any agency or political subdivision of any such
government, for which Buyer could become liable as successor to or transferee of
the Business or the Purchased Assets or which could become a charge against or
lien on any of the Purchased Assets, which taxes shall include, without
limitation, all sales and use taxes, ad valorem taxes, excise taxes, business
license taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, real property gains taxes, transfer taxes, payroll and
employee withholding taxes, unemployment insurance contributions, social
security taxes, and other governmental charges, and other obligations of the
same or of a similar nature to any of the foregoing, which are required to be
paid, withheld or collected, or (ii) any liability for amounts referred to in
(i) as a result of any obligations to indemnify another person.
2. SALE AND PURCHASE.
2.1 TRANSFER OF ASSETS. Subject to the terms and conditions of this
Agreement and the Seller Disclosure Schedule (as defined in Article 4 hereof),
Seller shall sell, assign, grant, transfer, and deliver to Buyer, and Buyer
shall purchase and accept from Seller as of the Closing Date (PROVIDED, HOWEVER,
that, at Buyer's option, such delivery shall occur at such subsequent time and
place as the Buyer shall reasonably request), free and clear of all Liens, all
of the Seller's right, title and interest in and to all of the assets,
properties and business used in or necessary to the Business (the "PURCHASED
ASSETS"), including, without limitation:
(a) all tangible personal property and leases of, and other
interests in, tangible personal property used in connection with the Business,
including, without limitation, the computer equipment and other items listed on
SCHEDULE 2.1(a);
(b) all rights under each of the license agreements,
distribution agreements, marketing agreements, listing agreements, service
agreements, linking rights agreements and other agreements and contracts listed
on SCHEDULE 2.1(b) (collectively the "CONTRACTS");
(c) all prepaid expenses relating to the operation of the
Business including, but not limited to Taxes, leases and rentals;
(d) all of Seller's rights, claims, credits, causes of action
or rights of set-off against third parties relating to the Purchased Assets,
including, without limitation, unliquidated rights under warranties;
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(e) subject to Section 2.2 below, all technology,
intellectual property and general intangibles used in or necessary to the
Business, including, without limitation:
(i) all copyrights, trademarks, service marks, trade
names, logos, domain names and reservations thereof (including, without
limitation, xxxxxxxxx.xxx and xxxxxxxxxxxx.xxx) and patents (and all
applications and registrations related to the foregoing), in each case whether
pending, applied for or issued and whether filed in the United States or in
other countries, including without limitation the items listed in SCHEDULE
2.1(e)(i), including all royalties therefrom and infringement claims against
third parties related thereto;
(ii) all trade secrets, proprietary processes and
formulae, license rights, specifications, technical manuals and data, drawings,
inventions, designs, product information and data, know-how, development
work-in-progress, business and marketing plans and other intellectual or
intangible property used in or pertaining to the Business; and
(iii) all software programs (in both source and object
code form), databases, listings, software code (including HTML code), CGI
scripts, Java applets, routines and other computer-related materials or
information used in or pertaining to the Business, along with all electronic
documentation therefor, including without limitation all search engines and
related software used in the presentation of real estate listings;
(f) all permits, authorizations, consents and approvals of
any Governmental Entity affecting or relating in any way to the Business (the
"PERMITS");
(g) all books, records, files and papers, whether in hard
copy or electronic format, used in the Business, including without limitation,
engineering information, sales and promotional literature, manuals and data,
sales and purchase correspondence, lists of present, former and prospective
suppliers and customers, mailing lists, price lists, personnel and employment
records, and any information relating to Taxes imposed on the Business or
Purchased Assets; and
(h) all goodwill associated with the Business or the
Purchased Assets, together with the right to represent to third parties that
Buyer is the successor to the Business.
2.2 EXCLUDED ASSETS. Buyer acknowledges and agrees that the
intellectual property set forth on SCHEDULE 2.2 (the "EXCLUDED ASSETS") shall be
excluded from the Purchased Assets. The Purchased Assets and the Excluded
Assets shall be referred to collectively as the "ASSETS."
2.3 ASSUMPTION OF LIABILITIES. Except for those obligations assumed
by Buyer under the Contracts, Buyer shall not assume and shall not be liable
for, and Seller shall retain and remain solely liable for and obligated to
discharge, all of the debts, contracts, agreements, commitments, obligations and
other liabilities of any nature whatsoever of Seller, whether known or unknown,
accrued or not accrued, fixed or contingent.
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2.4 PURCHASE PRICE. Subject to the performance by Seller of all of
its obligations under this Agreement (including delivering all documents
required to be delivered) at the Closing and in consideration of the acquisition
by Buyer of the Purchased Assets under Section 2.1 and the assumption of the
liabilities set forth in Section 2.3, Buyer shall deliver to Seller at the
Closing (a) $500,000 in cash; (b) a promissory note in the principal amount of
$1,000,000, which is convertible into 1,583,280 shares of Buyer's Series B
Preferred Stock, par value $0.001 per share (the "SHARES"), in the form attached
hereto as EXHIBIT A (the "CONVERTIBLE NOTE"); and (c) a secured promissory note
in the principal amount of $1,000,000 in the form attached hereto as EXHIBIT B
(the "TERM NOTE"). The terms of the Term Note and the Convertible Note provide
that they may be prepaid on or before May 3, 1998, in each case at a discount as
set forth therein. Such discount reflects Seller's willingness to accept a
lower price for the Purchased Assets if payment on such notes is made on or
before May 3, 1998. The Cash Consideration, the Convertible Note and the Term
Note shall be referred to collectively as the "PURCHASE PRICE." In the event
that the Convertible Note is pre-paid, in whole or in part, during the initial
sixty (60) day period following the Closing Date as permitted thereby and/or the
Term Note is pre-paid, in whole or in part, during the initial sixty (60) day
period following the Closing Date as permitted thereby, the aggregate amounts so
pre-paid shall be considered Cash Consideration for purposes of Sections 11.4
and 12 of this Agreement.
2.5 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the Purchased Assets as provided in EXHIBIT C for purposes of
complying with the requirements of Section 1060 of the Internal Revenue Code of
1986, as amended (the "CODE") and the regulations promulgated thereunder. Buyer
and Seller agree to each report to the appropriate federal, state and local tax
agencies an allocation of the Purchase Price that is consistent with the
allocation set forth in EXHIBIT C.
3. CLOSING.
3.1 CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices of Venture Law Group
at 0000 Xxxx Xxxx Xxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000 at 2:00 p.m., local time,
on March 3, 1998 or such other time, date and place as shall be fixed by
agreement of the parties hereto (the date on which the Closing actually occurs
being hereinafter referred to as the "CLOSING DATE").
3.2 ACTIONS AT THE CLOSING. At the Closing, Seller shall deliver the
Purchased Assets to Buyer, Buyer shall deliver the Purchase Price to Seller, and
Buyer and Seller shall take such actions and execute and deliver such
agreements, bills of sale, and other instruments and documents as necessary or
appropriate to effect the transactions contemplated by this Agreement in
accordance with its terms. Seller shall deliver all software, documentation,
databases and other similar intangible property hereunder via electronic
transmission only, without any accompanying physical packaging, disks, CD-ROMs
or tangible media of any kind. At the Closing, Seller shall provide reasonable
evidence of clear title to all of the Purchased Assets, in form and substance
reasonably satisfactory to Buyer.
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4. REPRESENTATIONS AND WARRANTIES OF SELLER.
Each representation and warranty set forth below is qualified by any
exception or disclosures set forth in the Seller Disclosure Schedule attached as
EXHIBIT D hereto, which exceptions specifically reference the Section(s) to be
qualified.
Seller hereby represents and warrants to Buyer as follows:
4.1 ORGANIZATION, STANDING AND POWER. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Washington and has full corporate power and authority and the legal right to
execute and deliver this Agreement and all of the other agreements and
instruments to be executed and delivered by Seller pursuant hereto, and to
consummate the transactions contemplated hereby and thereby. Seller has no
subsidiaries as of the date hereof.
4.2 AUTHORITY. The execution and delivery of this Agreement (and all
other agreements and instruments contemplated under this Agreement) by Seller,
the performance by Seller of its obligations hereunder and thereunder, and the
consummation by Seller of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action. This Agreement has been
duly and validly executed and delivered by Seller and constitutes, and each
other agreement or instrument executed and delivered or to be executed and
delivered by the Seller pursuant to this Agreement will, upon such execution and
delivery, constitute a legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms.
4.3 NONCONTRAVENTION. Neither the execution, delivery and
performance of this Agreement and all of the other agreements and instruments to
be executed and delivered pursuant hereto, nor the consummation of the
transactions contemplated hereby or thereby, will, with or without the passage
of time or the delivery of notice or both, (a) conflict with, violate or result
in any breach of the terms, conditions or provisions of the Articles of
Incorporation or Bylaws of Seller, (b) except as set forth in SCHEDULE 4.4,
conflict with or result in a violation or breach of, or constitute a default or
require consent of any Person (or give rise to any right of termination,
cancellation or acceleration with or without notice or the passage of time)
under, any of the terms, conditions or provisions of any Contract or any
contract, notice, bond, mortgage, indenture, license, franchise, permit,
agreement, lease or other instrument or obligation to which Seller is a party
and which relate to or affect any of the Assets, (c) violate any statute,
ordinance or law or any rule, regulation, order, writ, injunction or decree of
any Governmental Entity applicable to Seller or by which any properties or
assets of Seller may be bound, or (d) result in the creation of any Lien upon
any of the Assets pursuant to any mortgage, indenture, lease, agreement or other
instrument to which Seller is a party or by which Seller or any of its property
or assets is bound. No "bulk sales" legislation applies to the transactions
contemplated by this Agreement. The Seller is not required to give any notice
to, or make any filing with, a
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Governmental Entity or any other Person in connection with the execution by the
Seller of this Agreement and consummation and performance of the transactions
contemplated hereby.
4.4 CONSENTS. SCHEDULE 4.4 sets forth each agreement, contract or
other instrument binding upon Seller requiring a consent as a result of the
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby (each a "REQUIRED CONSENT").
4.5 FINANCIAL INFORMATION. Seller has delivered to Buyer a schedule
of revenues for the Business for the twelve months ended December 31, 1997,
which schedule is true and complete in all respects.
4.6 NO UNDISCLOSED LIABILITIES. Seller does not have any liability,
indebtedness, or obligation resulting from or arising out of Seller's operation
of the Business, or ownership of the Purchased Assets, prior to the Closing,
whether accrued, absolute, contingent, matured, unmatured or other, that is not
disclosed in this Agreement or in the Seller Disclosure Schedule.
4.7 ASSETS GENERALLY.
(a) The Assets include all properties, tangible and
intangible, and only such properties, currently used by Seller in operating the
Business.
(b) Seller holds good and marketable title, license to or
leasehold interest in all of the Assets and has the complete and unrestricted
power and the unqualified right to sell, assign and deliver the Purchased Assets
to Buyer. Upon consummation of the transactions contemplated by this Agreement,
Buyer will acquire good and marketable title, license or leasehold interest to
the Purchased Assets free and clear of any Liens and there exists no restriction
on the use or transfer of the Purchased Assets other than as described in this
Agreement, the Security Agreement or in the Contracts. No Person other than
Seller has any right or interest in the Assets, including the right to grant
interests in the Assets to third parties.
(c) None of the Purchased Assets that constitute tangible
personal property are held under any lease, security agreement, conditional
sales contract, lien, or other title retention or security arrangement.
(d) All of the Assets are in good operating condition and
repair (normal wear and tear excepted), as required for their use in the
Business as presently conducted, and conform in all material respects to all
applicable laws, and no notice of any violation of an law relating to any of the
Assets has been received by Seller.
(e) To Seller's knowledge: (i) all of the Assets are free
from material defects; (ii) all software included within the Assets is free from
viruses, expiry codes and material bugs
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of any kind; (iii) and all software and other technology included within the
Assets is fit for the purposes for which it is intended.
(f) THE REPRESENTATIONS AND WARRANTIES OF SELLER SET FORTH IN
THIS ARTICLE 4 ARE THE ONLY WARRANTIES MADE BY SELLER WITH RESPECT TO THE
PURCHASED ASSETS. SELLER MAKES NO OTHER WARRANTY WITH RESPECT TO THE PURCHASED
ASSETS AND HEREBY DISCLAIMS ALL OTHER IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
4.8 INTELLECTUAL PROPERTY.
(a) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not breach,
violate or conflict with any instrument or agreement governing any intellectual
property necessary or required for, or used in, the conduct of the Business as
presently conducted and will not cause the forfeiture or termination or give
rise to a right of forfeiture or termination of any such Intellectual Property
or, except as set forth in this Agreement or the Security Agreement, impair the
right of Buyer or any of its Affiliates to use, sell, license or dispose of, or
to bring any action for the infringement of any such intellectual property or
portion thereof;
(b) Neither the development, manufacture, marketing, license,
sale or use of any product or intellectual property currently licensed, used or
sold by Seller in the conduct of the Business or currently under development
for use in the Business violates or will violate any license or agreement to
which Seller is a party or infringes or will infringe any copyright, patent,
trademark, service xxxx, trade secret or other intellectual property right of
any other party. All registered trademarks, service marks, patents and
copyrights held by Seller are valid and subsisting. There is no pending or
threatened claim or litigation contesting the validity, ownership or right to
use, sell, license or dispose of any of the Assets nor, to Seller's knowledge
and except as disclosed on SCHEDULE 2.1(e)(j), is there any basis for any such
claim. Seller has not received any notice asserting that any such Asset or the
proposed use, sale, license or disposition thereof conflicts or will conflict
with the rights of any other party. To Seller's knowledge, there is no
unauthorized use, infringement or misappropriation on the part of any third
party of any of the Assets;
(c) Seller has taken reasonable steps (including, without
limitation, entering into confidentiality and non-disclosure agreements with all
officers and employees of and consultants to Seller with access to the Business)
to maintain the secrecy and confidentiality of, and its proprietary rights in,
the Assets. SCHEDULE 2.1(e)(i) contains a complete and accurate list of all
applications, filings and other formal actions made or taken pursuant to
federal, state, local and foreign laws by Seller to perfect or protect its
interest in the Assets, including, without limitation, all patents, patent
applications, trademarks, trademark applications, service marks and copyright
registrations.
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(d) All fees to maintain Seller's rights in the Assets,
including, without limitation, patent and trademark registration and prosecution
fees and all professional fees in connection therewith pertaining to the Assets
due and payable on or before the Closing Date, have been paid by Seller or will
be paid by Seller within a reasonable period after the Closing.
4.9 WARRANTIES AND INDEMNITIES. The Seller Disclosure Schedule
sets forth a summary of all warranties and indemnities, express or implied,
relating to products sold or services rendered by Seller in the conduct of
the Business, and no warranty or indemnity has been given by Seller in the
conduct of the Business which is not listed on the Seller Disclosure Schedule
or which differs therefrom in any material respect. Seller is in compliance
with all warranties described in the Seller Disclosure Schedule. The Seller
Disclosure Schedule also indicates all warranty and indemnity claims
currently pending against Seller.
4.10 LICENSES AND PERMITS. Seller holds all consents, approvals,
registrations, certifications, authorizations, permits and licenses of, and has
made all filings with, or notifications to, all Governmental Entities pursuant
to applicable requirements of all federal, state, local and foreign laws,
ordinances, governmental rules or regulations applicable to the Business. The
Business is in compliance with all federal, state, local and foreign laws,
ordinances, governmental rules and regulations relating to the services rendered
by the Business or otherwise related to the Business and Seller has no reason to
believe that any consents, approvals, authorizations, registrations,
certifications, permits, filings or notifications that it has received or made
to operate the Business are invalid or have been or are being suspended,
canceled, revoked or questioned. There is no investigation or inquiry to which
Seller is a party or, to Seller's knowledge, pending or threatened, relating to
the Business and its compliance with applicable federal, state, local or foreign
laws, ordinances, governmental rules or regulations. Each such consent,
approval, registration, certification, authorization, permit or license is
transferable and shall be transferred to Buyer in accordance with the terms of
this Agreement.
4.11 EMPLOYEES.
(a) SCHEDULE 4.11 sets forth the names and job titles of all
of the Seller's employees or independent contractors who provide or have
provided service to, or in connection with, the Business (the "BUSINESS
EMPLOYEES"). All employees, consultants, officers, directors and shareholders
of Seller or any Seller Affiliate that have had access to the Assets are parties
to a written agreement (a "CONFIDENTIALITY AGREEMENT"), under which each such
person (i) is obligated to disclose and transfer to Seller (subject to
applicable laws), without the receipt by such person of any additional value
therefor (other than normal salary or fees for consulting services), all
inventions, developments and discoveries which, during the period of employment
with or performance of services for Seller, he or she makes or conceives of
either solely or jointly with others, that relate to any subject matter with
which his or her work for Seller may be concerned, or relate to or are connected
with the Business, products or projects of Seller, or involve the use of the
time, material or facilities of Seller, and (ii) is obligated to maintain the
confidentiality of proprietary information of Seller. To Seller's knowledge,
the Business
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Employees are not obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that conflicts with their
obligation to promote the interests of Seller with regard to the Business or the
Assets or, with respect to Xxx Xxxxx and Xxxxx Xxxxxx, that would conflict with
an obligation to promote the interests of Buyer with regard to the Business or
the Assets. To Seller's knowledge, neither the execution nor the delivery of
this Agreement, nor the carrying on of the Business by its employees and
consultants, will conflict with or result in a breach of the terms, conditions
or provisions of, or constitute a default under, any contract, covenant or
instrument under which any of such persons or entities are now obligated. It is
currently not necessary for Seller to utilize in the Business any inventions of
any employee or consultant made or owned prior to their employment by or
affiliation with Seller, nor is it necessary to utilize any other assets or
rights of any such persons made or owned prior to their employment with or
engagement by Seller, in violation of any registered patents, trade names,
trademarks or copyrights or any other limitations or restrictions to which any
such persons are a party or to which any of such assets or rights may be
subject. To Seller's knowledge, none of Seller's employees, consultants,
officers, directors or shareholders that has had knowledge or access to
information relating to the Assets has taken, removed or made use of any
proprietary documentation, manuals, products, materials, or any other tangible
item from his or her previous employer relating to the Assets by such previous
employer which has resulted in Seller's access to or use of such proprietary
items included in the Assets.
(b) Except for the Confidentiality Agreements, there are no
written or oral contracts of employment between Seller and any Business
Employee. All Business Employees are employees at will.
4.12 EMPLOYEE BENEFIT AND COMPENSATION PLANS. Buyer will incur no
liability with respect to, or on account of, and Seller will retain any
liability for, and on account of, any employee benefit plan of Seller, any of
its Affiliates or an predecessor employer of any Business Employee, including,
but not limited to, liabilities Seller may have to such employees under all
employee benefit schemes, incentive compensation plans, bonus plans, pension and
retirement plans, vacation, profit-sharing plans (including any profit-sharing
plan with a cash-or-deferred arrangement) share purchase and option plans,
savings and similar plans, medical, dental, travel, accident, life, disability
and other insurance and other plans or arrangements, whether written or oral and
whether "qualified" or "non-qualified," or to any Business Employee as a result
of termination of employment by Seller. Seller has not, with respect to any
Business Employee, maintained or contributed to, or been obligated or required
to contribute to, any retirement or pension plan or any employee benefit plan.
Seller is not a party to any collective bargaining agreement covering any
Business Employee and Seller knows of no effort to organize any such employee as
a part of any collective bargaining unit.
4.13 TAXES. All Taxes have been or will be paid by Seller for all
periods (or portions thereof) prior to and including the Closing Date. Seller
and any other person required to file returns or reports of Taxes have duly and
timely filed (or will file prior to the Closing Date) all
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returns and reports of Taxes required to be filed prior to such date, and all
such returns and reports are true, correct, and complete. There are no liens
for Taxes on any of the Purchased Assets. Seller has complied with all record
keeping and tax reporting obligations relating to income and employment taxes
due with respect to compensation paid to employees or independent contractors
providing services to the Business. Seller is not a "foreign person" within the
meaning of Section 1445(f)(3) of the Code. There are no pending or, to Seller's
knowledge, threatened proceedings with respect to Taxes, and there are no
outstanding waivers or extensions of statutes of limitations with respect to
assessments of Taxes. No agreement or arrangement regarding compensation of any
employee providing services to the Business provides for any payments which
could result in a nondeductible expense to the Buyer pursuant to Section 280G of
the Code or an excise tax to the recipient of such payment pursuant to Section
4999 of the Code.
4.14 COMPLIANCE WITH LAW. The operation of the Business has been
conducted in all material respects in accordance with all applicable laws,
regulations and other requirements of Governmental Entities having jurisdiction
over the same.
4.15 ENVIRONMENTAL MATTERS. To Seller's knowledge, the Business is,
and at all times has been, conducted in compliance with all applicable federal,
state and local environmental laws, rules and regulations.
4.16 CONTRACTS.
(a) SCHEDULE 4.16 contains a list of all contracts relating
to the Business ("BUSINESS CONTRACTS"), along with the name of the appropriate
third party contact for each such contract other than described in subsection
(a)(vi) below). "BUSINESS CONTRACTS" shall include, without limitation, the
following and shall be categorized in the Seller Disclosure Schedule as follows:
(i) each contract (other than routine purchase orders
given and pricing quotes received in the ordinary course of the Business and
covering a period of less than one year) for the purchase of materials or
personal property with any supplier or for the furnishing of services to the
Business;
(ii) each customer contract and agreement of the
Business (other than routine purchase orders, pricing quotes with open
acceptance and other tender bids, in each case, entered into in the ordinary
course of business and covering a period of less than one year) which (A)
involved consideration of more than $5,000 in the aggregate during the fiscal
year ended December 31, 1997, (B) is likely to involve consideration of more
than $5,000 in the aggregate during the fiscal year ended December 31, 1998, (C)
is likely to involve consideration of more than $10,000 in the aggregate over
the remaining term of the contract or (D) cannot be canceled by Seller without
penalty or further payment;
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(iii) all distributor, sales representative, broker,
franchise, agency and dealer contracts and agreements of the Business and all
sales promotion, market research, marketing and advertising contracts and
agreements of the Business;
(iv) all management contracts with independent
contractors or consultants (or similar arrangements) of the Business and which
(A) involved consideration or more than $5,000 in the aggregate during the
fiscal year ended December 31, 1997, (B) are likely to involve consideration of
more than $5,000 in the aggregate during the fiscal year ended December 31,
1998, or (C) are likely to involve consideration of more than $10,000 in the
aggregate over the remaining term of the contract;
(v) all contracts and agreements under which the
Business has created, incurred, assumed or guaranteed (or may create, incur,
assume or guarantee) indebtedness or under which the Business has imposed (or
may impose) a security interest or lien on any of its assets, whether tangible
or intangible, to secure indebtedness;
(vi) all contracts, whether written or oral, with any
real estate listings provider;
(vii) all contracts and agreements that limit the
ability of any Person related to the Business, or any of its affiliates, to
compete in any line of business or with any person or in any geographic area or
during any period of time, or to solicit any customer or client;
(viii) all contracts pursuant to which the Business has
agreed to supply products or provide services to a customer at specified prices,
whether directly or through a specific distributor, manufacturer's
representative or dealer; and
(ix) all contracts pursuant to which Seller has
licensed intellectual property to or from a third party that is necessary for,
or used in, the business, and all development agreements pursuant to which a
third party has developed for Seller any software, technology or other
intellectual property.
(b) At or prior to the Closing, Seller will furnish Buyer
with access to true and complete copies of all Business Contracts together with
all amendments, waivers or other changes thereto.
(c) Each Contract (as set forth on SCHEDULE 2.1(b)) is a
legal, valid and binding agreement of Seller, and none of the Contracts is in
default by its terms or has been canceled by the other party; Seller is not in
receipt of any claim of default under any Contract; and Seller does not
anticipate any termination or change to, or receipt of a proposal with respect
to, any Contract as a result of the transactions contemplated hereby.
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4.17 PRODUCTS AND SERVICES. Each of the products and services
produced, sold or provided by Seller in connection with the Business is, and at
all times has been, in compliance with all applicable federal, state, local and
foreign laws and regulations.
4.18 LITIGATION; OTHER CLAIMS.
(a) There are no claims, actions, suits, inquiries,
proceedings, or investigations against Seller, or any of its officers, directors
or shareholders, relating to the Business or the Assets which are currently
pending or, to Seller's knowledge, threatened, at law or in equity or before or
by any Governmental Entity, or which challenges or seeks to prevent, enjoin,
alter or delay any of the transactions contemplated hereby, nor is Seller aware
of any basis for such claims, actions, suits, inquiries, proceedings, or
investigations; and, to Seller's knowledge, no Governmental Entity has at any
time challenged or questioned the legal right of Seller to produce, sell or
provide any of its products or services in the present manner or style thereof.
(b) There are no grievance or arbitration proceedings pending
or, to Seller's knowledge, threatened, and there are no actual or threatened
strikes or work stoppages with respect to the Business, the Assets or the
Business Employees, nor is Seller aware of any basis for such proceedings or
events.
4.19 DEFAULTS. Seller is not in default under or with respect to any
judgment, order, writ, injunction or decree of any court or any Governmental
Entity. There does not exist any default by Seller or, to Seller's knowledge,
by any other Person, or event that, with notice or lapse of time, or both, would
constitute a default by Seller or, to Seller's knowledge, by any other Person,
under any agreement entered into by Seller as part of the operations of the
Business, and no notices of breach thereof have been received by Seller.
4.20 FULL DISCLOSURE. Neither this Agreement nor any other agreement,
exhibit, schedule or officer's certificate being entered into or delivered
pursuant to this Agreement contains any untrue statement of a material fact or,
when taken as a whole, omits to state any material fact necessary in order to
make the statements contained in such documents not misleading in light of the
circumstances under which they are made.
4.21 BROKERS AND FINDERS. Except as set forth in SCHEDULE 4.21,
neither Seller nor any of its officers, directors or employees has employed any
broker or finder or incurred any liability for any brokerage fee, commission or
finder's fee in connection with the transactions contemplated by this Agreement.
4.22 NO FRAUDULENT CONVEYANCE. Seller is not now insolvent and will
not be rendered insolvent by the sale, transfer and assignment of the Purchased
Assets pursuant to the terms of this Agreement. Seller is not entering into
this Agreement or any of the other agreements referenced in this Agreement with
the intent to defraud, delay or hinder its creditors and the consummation of the
transactions contemplated by this Agreement, and the other
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agreements referenced in this Agreement, will not have any such effect.
Assuming that, in the event the Convertible Note is converted into the Shares
pursuant to the terms thereof, the Shares have a value equal to approximately
$0.6316 per share as of the Closing Date, the transactions contemplated in this
Agreement or any agreements referenced in this Agreement will not constitute a
fraudulent conveyance by Seller, or otherwise give rise to any right of any
creditor Seller to any of the Purchased Assets after the Closing.
4.23 INSURANCE. The Seller Disclosure Schedule lists all insurance
policies and fidelity bonds covering the Business or the Purchased Assets.
There is no claim by Seller pending under any of such policies or bonds as to
which coverage has been questioned, denied or disputed by the underwriters of
such policies and bonds. All premiums due and payable under all such policies
and bonds have been paid and Seller is otherwise in compliance with the terms of
such policies and bonds (or other policies and bonds providing substantially
similar insurance coverage). There is no threatened termination of, or premium
increase with respect to, any of such policies.
4.24 INVESTMENT IN BUYER SECURITIES. Seller represents and warrants
as follows:
(a) NO REGISTRATION. Seller acknowledges that the
Convertible Note, the Shares issuable upon conversion of such Convertible
Note and the Common Stock issuable upon conversion of the Shares
(collectively, the "SECURITIES") have not been registered under the
Securities Act of 1933, as amended (the "ACT"), and Seller agrees not to
sell, pledge, distribute, offer for sale, transfer or otherwise dispose of
the Securities in the absence of (i) an effective registration statement
under the Act as to such shares and registration or qualification of such
securities under any applicable U.S. federal or state securities law then in
effect, (ii) an opinion of counsel, reasonably satisfactory to Buyer, that
such registration and qualification are not required or (iii) such sale is
made in accordance with Rule 144 under the Act, provided that Buyer is given
prior written notice of such sale.
(b) INVESTMENT REPRESENTATION. Seller hereby represents,
warrants and covenants that (i) the Securities are being acquired for investment
only and not with a view to, or for sale in connection with, any distribution
thereof; (ii) Seller has had such opportunity as Seller has deemed adequate to
obtain from representatives of Buyer such information as is necessary to permit
Seller to evaluate the merits and risks of its investment in Buyer; (iii) Seller
is able to bear the economic risk of holding such Securities for an indefinite
period; (iv) Seller understands that the Securities will not be registered under
the Act and will be "restricted securities" within the meaning of Rule 144 under
the Act and that the exemption from registration under Rule 144 will not be
available for at least one year from the date of issuance, and even then will
not be available unless a public market then exists for the Shares, adequate
information concerning Purchaser is then available to the public, and other
terms and conditions of Rule 144 are complied with; and (v) the Convertible Note
and all stock certificates representing the Shares (and the Common Stock
issuable upon conversion of the Shares), if any, issued to Seller may have
affixed thereto a legend substantially in the following form:
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"THESE SECURITIES HAVE BEEN AND WILL BE ISSUED WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("THE ACT"), AND MAY NOT BE
SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT
REGISTRATION UNDER THE ACT OR UNLESS EITHER (A) THE COMPANY HAS RECEIVED
AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
THE COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN
CONNECTION WITH SUCH DISPOSITION OR (B) THE SALE OF SUCH SECURITIES IS
MADE PURSUANT TO SECURITIES AND EXCHANGE COMMISSION RULE 144."
(c) MARKET STANDOFF. In connection with the initial public
offering of Buyer's securities and upon request of Buyer or the underwriters
managing any underwritten public offering of Buyer's securities, Seller (and any
transferee of Seller) agrees (i) not to sell, make any short sale of, loan,
grant any option for the purchase of, or otherwise dispose of any shares of
Buyer's capital stock without the prior written consent of Buyer or such
underwriters, as the case may be, for such period of time from the effective
date of such registration as may be requested by Buyer or such managing
underwriters but in no event more than 180 days, and (ii) to execute any
reasonable form of agreement reflecting the foregoing as may be requested by the
underwriters at the time of the public offering.
4.25 TRAFFIC AND GEOGRAPHIC DISTRIBUTION OF LISTINGS. The information
regarding traffic and geographic distribution of listings set forth on SCHEDULE
4.25 is true and correct.
5. REPRESENTATIONS AND WARRANTIES OF BUYER.
Except as set forth in the Buyer Disclosure Schedule attached as EXHIBIT
E hereto (the "BUYER DISCLOSURE SCHEDULE"), Buyer represents and warrants to
Seller as follows:
5.1 ORGANIZATION. Buyer is a corporation duly formed and validly
existing under the laws of the State of California, and has full corporate power
and authority and the legal right to execute and deliver this Agreement and all
of the other agreements and instruments to be executed and delivered by Buyer
pursuant hereto, and to consummate the transactions contemplated hereby and
thereby.
5.2 AUTHORITY. The execution and delivery of this Agreement (and all
other agreements and instruments contemplated under this Agreement) by Buyer,
the performance by Buyer of its obligations hereunder and thereunder, and the
consummation by Buyer of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action. This Agreement has been
duly and validly executed and delivered by Buyer and constitutes, and each other
agreement or instrument executed and delivered or to be executed and delivered
by the Buyer pursuant to this Agreement will, upon such execution and delivery,
14
constitute a legal, valid and binding obligation of the Buyer, enforceable
against the Buyer in accordance with its terms.
5.2 NO VIOLATION. Neither the execution, delivery and performance of
this Agreement and all of the other agreements and instruments to be executed
and delivered pursuant hereto, nor the consummation of the transactions
contemplated hereby or thereby, will, with or without the passage of time or the
delivery of notice or both, (a) conflict with, violate or result in any breach
of the terms, conditions or provisions of the Articles of Incorporation or
Bylaws of Buyer, (b) conflict with or result in a violation or breach of, or
constitute a default or require consent of any Person (or give rise to any right
of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any contract, notice, bond, mortgage, indenture,
license, franchise, permit, agreement, lease or other instrument or obligation
to which Buyer is a party or by which any properties or assets of Buyer is
bound, (c) violate any statute, ordinance or law or any rule, regulation, order,
writ, injunction or decree of any Governmental Entity applicable to Buyer or by
which any properties or assets of Buyer is bound, or (d) result in the creation
of any Lien upon any property or assets of the Buyer pursuant to any mortgage,
indenture, lease, agreement or other instrument to which it is a party or by
which it or any of its property or assets is bound. Assuming the accuracy of
the representations set forth in Section 4.3 above, the Buyer is not required to
give any notice to, or make any filing with, a Governmental Entity or any other
Person in connection with the execution by the Buyer of this Agreement and
consummation and performance of the transactions contemplated hereby.
5.4 ADDITIONAL REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Buyer set forth in Sections 3.7, 3.8, 3.9, 3.10, 3.11, 3.12,
3.13, 3.14, 3.19, 3.20, 3.21, 3.22, 3.23 and 3.24 of the Series B Preferred
Stock Purchase Agreement dated December 31, 1997, as modified by the Buyer
Disclosure Schedule (the "SERIES B AGREEMENT"), which Series B Agreement is
attached as EXHIBIT F hereto, are true and correct as of the date hereof.
5.5 CAPITALIZATION. The authorized capital stock of Buyer consists
of 40,000,000 shares of Common Stock, 4,240,000 of which are issued and
outstanding, and 20,818,604 shares of Preferred Stock of which 2,492,900 are
designated as Series A Preferred Stock, all of which are issued and outstanding,
2,492,900 are designated as Series A-1 Preferred Stock, none of which are issued
and outstanding as of the Closing Date, 7,916,402 are designated as Series B
Preferred Stock, 5,168,986 are issued and outstanding prior to the Closing and
7,916,402 are designated as Series B-1 Preferred Stock, none of which are issued
and outstanding as of the Closing Date. All such issued and outstanding shares
have been duly authorized and validly issued, and are fully paid and
nonassessable and were issued in compliance with applicable federal and state
securities laws. Buyer has reserved an aggregate of 7,916,402 shares of Common
Stock for issuance upon conversion of the Series B Preferred Stock and/or the
Series B-1 Preferred Stock, as the case may be, and 2,777,100 shares of its
Common Stock for issuance to officers, directors, employees, sales
representatives and consultants of Buyer under Buyer's 1997 Stock Option Plan.
The Series B Preferred Stock and Series B-1 Preferred Stock shall have the
rights, preferences, privileges and restrictions set forth in Buyer's Amended
and Restated
15
Articles of Incorporation, a copy of which has been provided to Seller (the
"RESTATED ARTICLES"). Except as referenced herein, in the Rights Agreement or
in the Buyer Disclosure Schedule, there are no options, warrants, conversion
privileges or other rights presently outstanding to purchase or otherwise
acquire any authorized but unissued shares of the capital stock or other
securities of Buyer, nor any agreements or understandings with respect thereto.
Except for the Voting Agreement, Buyer is not a party or subject to any
agreement or understanding and, to Buyer's knowledge, there is no agreement or
understanding between any persons and/or entities, which affects or relates to
the voting or giving of consents with respect to any security of Buyer. Buyer
currently intends to authorize and issue additional shares of Series B Preferred
Stock in connection with additional financing for Buyer, and in such event the
representations and warranties in this Section 5.5 shall not be deemed
inaccurate for any purpose so long as Buyer updates this Section 5.5 in writing
and delivers such information to Seller prior to the Closing.
5.6 VALIDITY OF SHARES. The Shares, when and if issued, sold and
delivered in compliance with the provisions of this Agreement and the
Convertible Note, will be duly and validly issued and will be fully paid and
nonassessable and free and clear of all liens and encumbrances, and the Common
Stock issuable upon conversion of the Shares has been duly and validly reserved
and, when issued and delivered in compliance with the provisions of the Restated
Articles, will be duly and validly issued and will be fully paid and
nonassessable and free and clear of all liens and encumbrances and restrictions
on transfer other than as set forth in this Agreement and the Rights Agreement;
PROVIDED, HOWEVER, that the Shares (and the Common Stock issuable upon
conversion of the Shares) may be subject to restrictions on transfer under state
and/or federal securities laws. Except as set forth herein or in the Rights
Agreement (as defined in Section 6.15), there are no outstanding rights of first
refusal or preemptive rights applicable to the Shares.
5.7 BROKERS AND FINDERS. Neither Buyer nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fee, commission or finder's fee in connection with
the transactions contemplated by this Agreement.
5.8 NO FRAUDULENT CONVEYANCE. Buyer is not now insolvent and will
not be rendered insolvent by the payment of the Consideration pursuant to the
terms of this Agreement. Buyer is not entering into this Agreement or any of
the other agreements referenced in this Agreement with the intent to defraud,
delay or hinder its creditors and the consummation of the transactions
contemplated by this Agreement, and the other agreements referenced in this
Agreement, will not have any such effect. Assuming that the value of the (a)
Purchased Assets, (b) the license granted to Buyer pursuant to Article 7 hereof
and (c) the non-competition obligations set forth in Section 6.8 hereof equals
or exceeds the value of the Purchase Price, the transactions contemplated in
this Agreement or any agreements referenced in this Agreement will not
constitute a fraudulent conveyance by Buyer, or otherwise give rise to any right
of any creditor of Buyer to any of the Consideration after the Closing.
16
5.9 FULL DISCLOSURE. Neither this Agreement nor any other agreement,
exhibit, schedule or officer's certificate being entered into or delivered
pursuant to this Agreement contains any untrue statement of a material fact or,
when taken as a whole, omits to state any material fact necessary in order to
make the statements contained in such documents not misleading in light of the
circumstances under which they are made.
6. COVENANTS.
6.1 TRANSITION; ACCESS TO INFORMATION.
(a) Buyer and Seller shall use commercially reasonable
efforts to cooperate with each other, and shall cause their respective officers,
employees, agents, auditors and representatives to cooperate with each other,
for a period of not less than 180 days after the Closing, Date, to ensure the
orderly transition of the Purchased Assets from Seller to Buyer and to minimize
any disruption to the Business that might result from the transition of
ownership contemplated hereby. Seller shall use its commercially reasonable
efforts to enable the transition and continuing existence of all relationships
that exist between Seller and third party real estate listings providers as of
the Closing Date in accordance with the Support Services terms set forth as
EXHIBIT G hereto (the "SUPPORT SERVICES").
(b) After the Closing, upon reasonable written notice, Buyer
and the Seller shall furnish or cause to be furnished to each other and their
employees, counsel, auditors and representatives access, during normal business
hours and at the expense of the requesting party, to such information as is
reasonably necessary for financial reporting and accounting matters, the
preparation and filing of any tax returns, reports or forms or the defense of
any claim by a Governmental Entity or other third party.
(c) On the Closing Date, or as soon thereafter as
practicable, Seller shall deliver or cause to be delivered to Buyer all
agreements, documents, books, records and files, including records and files
stored on computer disks or tapes or any other storage medium, if any, in the
possession of the Seller relating to the Business or the Purchased Assets,
provided that Seller may retain any tax returns, reports or forms (and Buyer
shall be provided with copies of such returns, reports or forms) only to the
extent that they relate to separate returns or separate tax liability of Seller.
6.2 THIRD PARTY CONSENTS. Seller and Buyer shall use commercially
reasonable efforts to obtain, within the applicable time periods required, all
Required Consents, waivers, permits, consents and approvals and to effect all
registrations, filings and notices with or to third parties or Governmental
Entities which are necessary to consummate the transactions contemplated by this
Agreement.
17
6.3 TAX RETURNS. Seller shall file in a timely manner all returns
and reports relating to Taxes for periods prior to the Closing, and such returns
and reports shall be true, correct and complete and Seller shall be responsible
for and pay when due any and all such Taxes.
6.4 POST-CLOSING COOPERATION. Seller agrees that, if reasonably
requested by Buyer, it will cooperate with Buyer, at Buyer's expense, in
enforcing the terms of any agreements between Seller and any third party
involving the Business, including without limitation terms relating to
confidentiality and the protection of intellectual property rights.
6.5 NO POST-CLOSING RETENTION OF COPIES. Upon the later of (i)
payment in full of the Term Note and (ii) completion of Seller's Support
Services obligations, Seller shall deliver to Buyer or destroy copies of
Purchased Assets in Seller's possession that are in addition to copies delivered
to Buyer as part of the Closing, whether such copies are in paper form, on
computer media or stored in another form; PROVIDED, HOWEVER, that Seller may
retain and use copies of financial books and records relating to the Business as
well as other documents required by law to be kept by Seller for the sole
purposes of preparing its statutory accounts, preparing reports relating to the
Taxes and performing its Support Services obligations. Seller shall not be
permitted to use the financial books and records of the Business for any other
reason.
6.6 PUBLIC ANNOUNCEMENTS. Neither Buyer nor Seller will make any
public disclosure with respect this Agreement or the transactions contemplated
hereby unless both parties agree on the text and timing of such public
disclosure; PROVIDED, HOWEVER, that nothing contained herein shall prevent
either party at any time from furnishing any information to any Governmental
Entity.
6.7 FURTHER ASSURANCES. Subsequent to the Closing Date, each of
Buyer and Seller shall, from time to time, execute and deliver, upon the request
of the other party, all such other and further materials and documents and
instruments of conveyance, transfer or assignment as may reasonably be requested
by such other party to effect, record or verify the transfer to, and vesting in
Buyer and Seller, of all right, title and interest in and to the Purchased
Assets and the Shares, respectively, each free and clear of all Liens, in
accordance with the terms of this Agreement.
6.8 NON-COMPETITION AGREEMENT.
(a) In consideration of the Buyer entering into this
Agreement:
(i) Seller undertakes that for the two (2) year period
following the Closing Date it will not:
(A) participate, assist or otherwise be
directly or indirectly involved or concerned, financially or otherwise, as a
member, shareholder, unitholder, director, consultant, adviser, contractor,
principal, agent, manager, beneficiary, partner, associate, trustee,
18
financier or otherwise in any Restricted Business; PROVIDED, HOWEVER, that the
identified individuals may own up to 1% of the outstanding capital stock of a
publicly-traded corporation that engages in a Restricted Business;
(B) solicit, approach or accept any offer from
any person or entity who was at any time during the one (1) year immediately
preceding the Closing Date a customer or supplier of the Business with a view to
establishing a relationship with or obtaining the patronage of that person or
entity in a Restricted Business;
(C) interfere or seek to interfere, directly
or indirectly, with any relationship between Buyer and any client, customer,
employee or supplier of the Business.
(b) If any of the separate and independent covenants
and restraints referred to in clauses (a) and (b) of this Section 6.8 are or
become invalid or unenforceable for any reason then that invalidity or
unenforceability will not affect the validity or enforceability of any other
separate and independent covenants and restraints.
(c) If any prohibition or restriction contained in
clauses (a) or (b) of this Section 6.8 is judged to go beyond what is reasonable
in the circumstances, but would be judged reasonable if that activity was
deleted or that period or area was reduced, then the prohibitions or
restrictions apply with that activity deleted or period or area reduced by the
minimum amount necessary.
(d) Seller acknowledges that the prohibitions and
restrictions contained in clause (a) of this Section 6.8 are reasonable and
necessary and, in Seller's opinion, are fair in light of the consideration
provided to Seller under this Agreement.
(e) Seller and Buyer acknowledge and agree that it
will likely be difficult or impossible to determine the amount of damage or loss
to Buyer if Seller violated any of its agreements under this Section 6.8, that
Buyer will likely be without an adequate legal remedy if Seller violated the
provisions of this Section 6.8, and that any such violation may cause
substantial irreparable injury and damage to Buyer not fully compensable by
monetary damages. Therefore, Seller and Buyer agree that in the event of any
violation by Seller of this Section 6.8, Buyer, in addition to any other rights
and remedies it may have under this Agreement, shall be entitled to seek and
obtain specific performance, injunctive or other equitable relief, of either a
preliminary or permanent type.
6.9 NON-SOLICITATION. Except as otherwise set forth in Section 8
below, for a period of one (1) year following the conclusion of the parties'
Support Services obligations, neither party shall solicit, induce or encourage,
directly or indirectly, any employee of the other party to leave the employment
of such other party. Seller's non-solicitation obligation hereunder shall
extend to any Transferred Employees (as defined in Section 8.1 below).
19
6.10 PERMITS. Seller will assist Buyer in obtaining any licenses,
permits or authorizations required for carrying on the Business but which are
not transferable provided that Seller shall in no event be required to pay any
fees or otherwise incur obligations in connection therewith.
6.11 TAXES. Seller shall be responsible for paying, shall promptly
discharge when due, and shall reimburse, indemnify and hold harmless Buyer from,
any sales or use, transfer, real property gains, excise, stamp, or other similar
Taxes arising from, imposed on or attributable to the transactions contemplated
by this Agreement.
6.12 NO CONFLICTS OF INTEREST.
(a) Seller shall take all reasonable and necessary measures
to prevent the disclosure of any of Buyer's confidential or proprietary
information including, without limitation, patents, patent applications,
research, product or service plans, products, developments, inventions,
processes, designs, drawings, engineering plans, formulae, software (including
source and object code), computer programs, business plans, agreements with
third parties, customer or supplier lists, or marketing or financial information
of Buyer, to any shareholder, director or strategic partner of Seller that is a
member, shareholder, unitholder, director, consultant, adviser, contractor,
principal, agent, manager, beneficiary, partner, associate, trustee, or
financier of a Restricted Business. In addition, in the event that (i) the
Convertible Note is converted into the Shares, or any portion thereof, pursuant
to the terms thereof and (ii) any director of Seller is a member, shareholder,
unitholder, director, consultant, adviser, contractor, principal, agent,
manager, beneficiary, partner, associate, trustee, or financier of a Restricted
Business, Seller shall cause such director to be recused from all board actions
related to the voting of the Shares.
(b) In the event that the Convertible Note is converted into
the Shares, or any portion thereof, pursuant to the terms thereof, Seller shall
not transfer any such Shares to a Restricted Business or to an officer,
director, Affiliate or 5% or greater shareholder of a Restricted Business
without the prior written consent of Buyer.
6.13 SECURITY INTEREST. Buyer shall take all necessary measures
including, without limitation, the execution and delivery of the Security
Agreement attached as EXHIBIT H hereto (the "SECURITY AGREEMENT") and any
necessary financing statements, to ensure that Seller receives a valid,
enforceable, perfected, first-priority security interest in the Assets until
such time as the Term Note is paid in full; PROVIDED, HOWEVER, that Buyer shall
not be required to register any copyrightable Assets with the United States
Copyright Office or file applications for any trademarks included within the
Assets (other than the maintenance of the "HomeScout" trademark application)
with the United States Patent and Trademark Office. Buyer further agrees that,
until the Term Note is paid in full, Buyer will not license, sell, assign,
pledge or otherwise transfer any of the Assets in any manner, shall keep the
Assets in good condition (reasonable wear and tear excepted) and shall keep the
Assets free of any Liens other than the security interest in favor of Seller
granted pursuant to the Security Agreement or as otherwise approved
20
by Seller; PROVIDED, HOWEVER, that Buyer may, subject to the restrictions set
forth in this Agreement and the Security Agreement, grant non-exclusive licenses
to the Assets in the ordinary course of its business and provide for escrows of
related intellectual property in connection therewith and; PROVIDED FURTHER,
that Buyer may grant a security interest, subordinated to that of Seller, in
the Assets to Imperial Bank in connection with the extension of financial credit
to the Company by Imperial Bank.
6.14 FUTURE CONTRACTS. Until repayment in full of the Term Note,
Buyer shall not, without Seller's prior written consent, (a) enter into an
agreement with a third party whereby Buyer permits all or a portion of the
Purchased Assets to reside on a server owned or controlled by such third party
unless such agreement is terminable at will by Buyer (or a successor-in-interest
to the Business) within ninety (90) days following (i) an Event of Default under
the Security Agreement or (ii) the exercise by Buyer of its right of rescission
pursuant to Section 12 hereof, or (b) enter into an agreement whereby a third
party is permitted to provide listings search functionality using the Assets
under such party's branded service, which agreement is not terminable at will by
Buyer (or a successor-in-interest to the Business) within one (1) year following
(i) an Event of Default under the Security Agreement or (ii) the exercise by
Buyer of its right of rescission pursuant to Section 12 hereof.
6.15 SHAREHOLDER AGREEMENTS. In the event that the Convertible Note
is converted into the Shares, or any portion thereof, pursuant to the terms
thereof, Seller and Buyer shall, and Buyer shall cause all necessary and
appropriate Buyer shareholders to, execute and deliver (i) the Amended and
Restated Voting Agreement substantially in the form attached hereto as EXHIBIT I
(the "VOTING AGREEMENT") and (ii) the Amended and Restated Investor Rights
Agreement substantially in the form attached hereto as EXHIBIT J (the "RIGHTS
AGREEMENT"). The Voting Agreement and the Rights Agreement shall be referred to
collectively as the "SHAREHOLDER AGREEMENTS."
7. LICENSE TO EXCLUDED ASSETS.
Except as set forth on SCHEDULE 2.2, Seller hereby grants to Buyer, and
Buyer accepts from Seller, a sublicensable, royalty-free, worldwide right and
license under all applicable intellectual property rights (a) to use, modify and
reproduce the source code for any software included within the Excluded Assets,
(b) to use, modify and reproduce the technology, know-how and trade secrets
included within the Excluded Assets, and (c) to use, modify, publicly display,
publicly perform, distribute and transmit the software, content and other data
included within the Excluded Assets. Buyer's right and license hereunder shall
be irrevocable and perpetual so long as there has not been an Event of Default
under the terms of the Security Agreement and as long as Buyer has not exercised
its right of recession pursuant to Section 12 hereof.
21
8. EMPLOYEE MATTERS.
8.1 TRANSFERRED EMPLOYEES.
(a) OFFER OF EMPLOYMENT. Seller agrees that Buyer may make
offers of employment to the Seller employees set forth on SCHEDULE 8.1 (the
"SELECTED EMPLOYEES") and such Selected Employees shall be free to accept
employment with Buyer. As soon as reasonably practicable following the Closing,
Buyer shall hire those Selected Employees to whom it has made an offer in
accordance with this Section 8.1 and who accept such offer in the manner and
within the time frame reasonably established by Buyer. Each such Selected
Employee who is employed by Seller on the Closing Date and who actually
transfers to employment with Buyer at or after the Closing Date as a result of
an offer of employment made by Buyer is hereafter referred to as a "TRANSFERRED
EMPLOYEE."
(b) PRIOR BENEFITS. Seller, and not Buyer, shall be
obligated to make all payments of salary, compensation, wages, health or similar
benefits, commissions, bonuses (deferred or otherwise), severance, stock or
stock options or any other sums accruing (i) to any Transferred Employee prior
to 12:01 a.m. on the day after the Closing Date (or the end of the day at such
later date on which such Transferred Employee ceases to be employed by Seller)
or (ii) to any Business Employees other than the Transferred Employees. In
addition, Seller will be fully responsible for all amounts payable to any
Business Employee, including (without limitation) all termination payments,
redundancy compensation, severance pay, accrued vacation pay and other amounts
payable in respect of the termination of employment of any employee in
connection with the sale of the Purchased Assets to the Buyer.
8.2 COMPENSATION AND BENEFITS OF TRANSFERRED EMPLOYEES. Coverage for
Transferred Employees under Buyer's compensation and benefit plans and other
programs shall commence as of 12:01 a.m. on the day after the Closing Date (or
at such later date on which such Transferred Employee commences employment with
Buyer). Buyer shall be free to establish its own employee benefit plans; Buyer
shall have no obligation to offer benefit plans of the same type or with terms
similar to or better than the terms of Seller's current employee benefit plans.
Buyer may, at its option, give each Transferred Employee credit for such
Transferred Employee's years of most recent continuous service with Seller for
purposes of determining participation and benefit levels under all of Buyer's
vacation policies and benefit plans and programs.
8.3 NO RIGHT TO CONTINUED EMPLOYMENT OR BENEFITS. No provision in
this Agreement, other than the indemnification provisions of Section 11 hereof,
shall create any third party beneficiary or other right in any Person (including
any beneficiary or dependent thereof) for any reason, including, without
limitation, in respect of continued, resumed or new employment with Seller or
Buyer or in respect of any benefits that may be provided, directly or
indirectly, under any plan or arrangement maintained by Seller or Buyer. Buyer
is under no obligation to hire any employee of Seller, or to make any payments
or provide any benefits to those employees of Seller whom Buyer chooses not to
employ.
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9. CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions, all or any of which may be waived by Buyer in writing, except as
otherwise provided by law:
9.1 REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE; CERTIFICATE.
(a) The representations and warranties of Seller contained in
this Agreement shall be true and correct in all material respects as of the
Closing Date with the same effect as though such representations and warranties
had been made or given again at and as of the Closing Date;
(b) Seller shall have performed and complied with all of its
agreements, covenants and conditions required by this Agreement to be performed
or complied with by it prior to or on the Closing Date;
(c) The conditions set forth in this Section 9 have been
fulfilled or satisfied, unless otherwise waived in writing by Buyer; and
(d) Buyer shall have received a certificate, dated as of the
Closing Date, signed and verified by an officer of Seller on behalf of Seller
certifying to the matters set forth in Sections 9.1(a) and 9.1(b) above.
9.2 CONSENTS. All Governmental Authorizations, Required Consents and
consents required to transfer the Contracts to Buyer on the terms and conditions
provided to Seller, without change as a result of the transfer to Buyer, shall
have been obtained.
9.3 NO PROCEEDINGS OR LITIGATION.
(a) No preliminary or permanent injunction or other order
shall have been issued by any Governmental Entity, nor shall any statute, rule,
regulation or executive order be promulgated or enacted by any Governmental
Entity which prevents the consummation of the transactions contemplated by this
Agreement.
(b) No suit, action, claim, proceeding or investigation
before any Governmental Entity shall have been commenced and be pending against
any of the parties, or any of their respective Affiliates, associates, officers
or directors, seeking to prevent transactions contemplated by this Agreement,
including, without limitation, the sale of the Purchased Assets or asserting
that the sale of the Purchased Assets would be illegal or create liability for
damages or which may have an adverse effect on the Business or the Assets.
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9.4 DOCUMENTS. This Agreement, the exhibits and schedules attached
hereto, and any other instruments of conveyance and transfer and all other
documents to be delivered by Seller at the Closing and all actions of Seller
required by this Agreement and the exhibit agreements, or incidental thereto,
and all related matters, shall be in form and substance reasonably satisfactory
to Buyer and Buyer's counsel and shall be in full force and effect.
9.5 GOVERNMENTAL FILINGS. The parties shall have made any required
filing with Governmental Entities in connection with this Agreement and the
exhibit agreements, and any approvals related thereto shall have been obtained
or any applicable waiting periods shall have expired. If a proceeding or review
process by a Governmental Entity is pending in which a decision is expected,
Buyer shall not be required to consummate the transactions contemplated by this
Agreement until such decision is reached or rendered, notwithstanding Buyer's
legal ability to consummate the transactions contemplated by this Agreement
prior to such decision being, reached or rendered.
9.6 LEGAL OPINION. Buyer shall have received a legal opinion from
Stoel Rives LLP, legal counsel to Seller, dated the Closing Date, in a form
reasonably satisfactory to Buyer.
9.7 DUE DILIGENCE. Buyer shall have satisfactorily completed its due
diligence review of the Business and the Assets.
9.8 EMPLOYMENT. Buyer shall have entered into satisfactory
employment arrangements with each of Xxxxxxxx Xxxxx and Xxxxx Xxxxxx, which
arrangements shall include satisfactory assurances to the Buyer that Xxxxxxxx
Xxxxx and Xxxxx Xxxxxx will provide continued service, at Buyer's discretion,
for up to one (1) year following the Closing Date (collectively, the "EMPLOYMENT
AGREEMENTS").
9.9 NO MATERIAL ADVERSE EFFECT. Subsequent to the date of this
Agreement, no event has occurred that has had or could reasonably be expected to
have a material adverse effect on the Assets.
10. CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions, all or any of which may be waived in writing by Seller, except as
otherwise provided by law:
10.1 REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE.
(a) The representations and warranties of Buyer contained in
this Agreement shall be true and correct in all material respects as of the
Closing Date with the same effect as though such representations and warranties
had been made or given again at and as of the Closing Date;
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(b) Buyer shall have performed and complied with all of its
agreements, covenants and conditions required by this Agreement to be performed
or complied with by it prior to or on the Closing Date;
(c) Seller shall have received a certificate, dated as of the
Closing Date, signed and verified by an officer of Buyer on behalf of Buyer
certifying to the matters set forth in Sections 10.1(a) and 10.1(b) above.
10.2 NO PROCEEDING OR LITIGATION.
(a) No preliminary or permanent injunction or other order
shall have been issued by any Governmental Entity, nor shall any statute, rule,
regulation or executive order be promulgated or enacted by any Governmental
Entity which prevents the consummation of the transactions contemplated by this
Agreement.
(b) No suit, action, claim, proceeding or investigation
before any Governmental Entity shall have been commenced and be pending against
any of the parties, or any of their respective Affiliates, associates, officers
or directors, seeking to prevent the sale of the Purchased Assets or asserting
that the sale of the Assets would be illegal or create liability for damages.
10.3 DOCUMENTS. This Agreement, any other instruments of conveyance
and transfer and all other documents to be delivered by Buyer to Seller at the
Closing and all actions of Buyer required by this Agreement or incidental
thereto, and all related matters, shall be in form and substance reasonably
satisfactory to Seller and Seller's counsel.
10.4 GOVERNMENTAL FILINGS. The parties shall have made any filing
required with Governmental Entities, and any approvals shall have been obtained
or any applicable waiting periods shall have expired. If a proceeding or review
process by a Governmental Entity is pending, in which a decision is expected,
Seller shall not be required to consummate the transactions contemplated by this
Agreement until such decision is reached or rendered, notwithstanding Seller's
legal ability to consummate the transactions contemplated by this Agreement
prior to such decision being reached or rendered.
10.5 LEGAL OPINION. Seller shall have received a legal opinion from
Venture Law Group, A Professional Corporation, legal counsel to Buyer, dated the
Closing Date, in a form reasonably satisfactory to Seller.
10.6 NOTES AND SECURITY AGREEMENT. Buyer shall have executed and
delivered to Seller the Convertible Note, the Term Note and the Security
Agreement.
10.7 CONSENTS. All consents required for Buyer to execute, deliver
and per-form this Agreement, or any agreement contemplated hereby, shall have
been obtained.
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10.8 NO MATERIAL ADVERSE EFFECT. Subsequent to the date of this
Agreement, no event has occurred that has had or could reasonably be expected to
have a material adverse effect on the financial condition or solvency of Buyer.
11. INDEMNIFICATION
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of Buyer and Seller contained in this Agreement
shall survive the Closing (even if the damaged party knew or had reason to know
of any misrepresentation or breach of warranty at the time of Closing) and
continue in full force and effect for a period of eighteen (18) months from the
Closing Date.
11.2 INDEMNIFICATION BY SELLER.
(a) In the event the Seller breaches (or in the event any
third party alleges facts that, if true, would mean the Seller has breached) any
of its representations, warranties and covenants contained in this Agreement,
and, if there is an applicable survival period pursuant to Section 11.1,
provided that the Buyers make a written claim for indemnification against the
Seller within such survival period, then the Seller agrees to indemnify the
Buyer, its officers, directors, employees, contractors, agents and
representatives (collectively, the "BUYER INDEMNIFIED PARTIES") from and against
any Adverse Consequences such Buyer Indemnified Party may suffer through and
after the date of the claim for indemnification (including any Adverse
Consequences such party may suffer after the end of any applicable survival
period) caused by the breach or the alleged breach.
(b) In addition, the Seller agrees to indemnify the Buyer
Indemnified Parties from and against any Adverse Consequences such parties may
suffer caused by:
(i) any liability of the Seller that becomes a
liability of the Buyer Indemnified Parties under any bulk transfer law of any
jurisdiction, under any common law doctrine of de facto merger or successor
liability, under environmental, health, and safety requirements or otherwise by
operation of law;
(ii) the retained liabilities of the Seller; and
(iii) any liability arising from claims relating to the
Closing or periods prior to the Closing brought by any employees or contractors
of Seller who are terminated at or prior to the Closing or in connection with
the transactions contemplated hereby.
11.3 INDEMNIFICATION BY BUYER In the event that Buyer breaches (or in
the event a third party alleges facts that, if true, would mean Buyer has
breached) any of its representations, warranties and covenants contained in this
Agreement, and, if there is an applicable survival period pursuant to Section
11.1, provided that the Seller makes a written claim for
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indemnification against the breaching Buyer within such survival period, then
Buyer agrees to indemnify the Seller, its officers, directors, employees,
contractors, agents and representatives (collectively, the "SELLER INDEMNIFIED
PARTIES") from and against any Adverse Consequences the Seller Indemnified
Parties may suffer through and after the date of the claim for indemnification
caused by the breach or the alleged breach.
11.4 LIABILITY LIMITATION.
(a) The maximum amount of liability of the Seller to the
Buyer Indemnified Parties under this Section 11, and the maximum amount of
liability of the Buyer to the Seller Indemnified Parties under this Section 11,
shall be limited in each case to an aggregate amount equal to the Purchase Price
(assuming, in the event that the Convertible Note is converted into the Shares
pursuant to the terms thereof, that the value of the Shares is $1,000,000 (the
"CAP"); PROVIDED, HOWEVER, that, in the event that the Convertible Note is
pre-paid, in whole or in part, during the initial sixty (60) day period
following the Closing Date as permitted thereby, the Cap shall be reduced by the
Discount (as defined in the Convertible Note) and, further, in the event the
Term Note is pre-paid, in whole or in part, during the initial sixty (60) day
period following the Closing Date as permitted thereby, the Cap shall be reduced
by the Discount (as defined in the Term Note); and PROVIDED FURTHER, that upon
the expenditure by Seller of an amount equal to the Cash Consideration in
satisfying any obligations under this Section 11, Seller may satisfy any
additional liability to Buyer hereunder by, at Seller's election, (i)
cancellation of principal amounts owing on the Convertible Note and Term Note,
if outstanding, dollar for dollar, (ii) in the event that the Convertible Note
is converted into the Shares, or any portion thereof, pursuant to the terms
thereof, returning to Buyer for cancellation a number of Shares having a value
equal to such additional liability, or (iii) a combination of (i) and (ii)
above. For the purposes of this Section 11.4, the Shares shall have a value
equal to $0.6316 per share, which was the per-share purchase price of Buyer's
Series B Preferred Stock.
(b) Seller shall have no obligation to indemnify the Buyer
Indemnified Parties pursuant to this Section 11 above for any Adverse
Consequences suffered by such Buyer Indemnified Parties unless and until the
aggregate amount of such Adverse Consequences exceeds $50,000, at which point
Seller shall be responsible for indemnifying such Buyer Indemnified Parties for
the amount of such Adverse Consequences that exceed the $50,000 threshold
(subject to the limitations set forth in Section 11.4(a) above).
(c) Buyer shall have no obligation to indemnify the Seller
Indemnified Parties pursuant to this Section 11.3 above for any Adverse
Consequences suffered by such Seller Indemnified Parties unless and until the
aggregate amount of such Adverse Consequences exceeds $50,000, at which point
Buyer shall be responsible for indemnifying such Seller Indemnified Parties for
the amount of such Adverse Consequences that exceed the $50,000 threshold
(subject to the limitations set forth in Section 11.4(a) above).
11.5 MATTERS INVOLVING THIRD PARTIES.
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(a) If any third party shall notify any party to this
Agreement (the "INDEMNIFIED PARTY") with respect to any matter (a "THIRD PARTY
CLAIM") which may give rise to a claim for indemnification against any other
party to this Agreement (the "INDEMNIFYING PARTY") under this Section 11, then
the Indemnified Party shall promptly notify each Indemnifying Party thereof in
writing; PROVIDED, HOWEVER, that no delay on the part of the Indemnified Party
in notifying any Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless (and then solely to the extent) the Indemnifying
Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the Indemnifying
Party notifies the Indemnified Party in writing within twenty (20) days after
the Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against any
Adverse Consequences the Indemnified Party may suffer that are caused by the
Third Party Claim, (ii) the Indemnifying Party provides the Indemnified Party
with evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against the Third
Party Claim and fulfill its indemnification obligations hereunder, (iii) the
Third Party Claim involves only money damages and does not seek an injunction or
other equitable relief, (iv) settlement of, or an adverse judgment with respect
to, the Third Party Claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice materially adverse
to the continuing business interests of the Indemnified Party, and (v) the
Indemnifying Party conducts the defense of the Third Party Claim actively and
diligently.
(c) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with (b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim, (ii) the Indemnified
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (iii) the Indemnifying
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
(d) In the event any of the conditions in (b) above is or
becomes unsatisfied, however, (i) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner it reasonably may deem appropriate,
provided it obtains the prior written consent of the Indemnifying Party (not to
be withheld unreasonably), (ii) the Indemnifying Party will reimburse the
Indemnified Party for the Indemnified Party's out-of-pocket expenses incurred in
defending against the Third Party Claim upon receipt of a monthly invoice
provided by the Indemnified Party, and (iii) the Indemnifying Party will remain
responsible for any Adverse Consequences the Indemnified Party may suffer as a
result of the Third Party Claim to the fullest extent provided in this Section
11.
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(e) Notwithstanding anything contained in this Section 11.5,
the Indemnified Party shall advance one-half of the out-of-pocket expenses
incurred by the Indemnifying Party in the defense of any third-party claim under
this Section 11.5, upon receipt of a monthly invoice provided by the
Indemnifying Party or, in the event that the Indemnified Party is defending the
third party claim in accordance with Section 11.5(d) above, the Indemnifying
Party shall, in lieu of its obligations under 11.5(d)(ii), reimburse the
Indemnified Party for one-half of the Indemnified Party's out-of-pocket expenses
incurred in defending against the Third Party Claim upon receipt of a monthly
invoice provided by the Indemnified Party. Upon any final resolution of the
third-party claim, the Indemnified Party shall be entitled to (i) a refund from
the Indemnifying Party of all advances made in accordance with this Section
11.5(e) or, (ii) in the event that the Indemnified Party is defending the third
party claim in accordance with Section 11.5(d) above, payment from the
Indemnifying Party of the remaining one-half of the out-of-pocket expenses
invoiced to the Indemnifying Party pursuant to Section 11.5(d)(ii) above, unless
the claim is conclusively determined not to be subject to indemnification
hereunder.
11.6 EXCLUSIVITY OF REMEDY. The foregoing indemnification provisions
shall be the exclusive remedy of Buyer and Seller with respect to any breach of
the representations, warranties, or covenants made pursuant to this Agreement.
12. CERTAIN REMEDIES OF BUYER. In the event that on or after the sixtieth
(60th) day following the Closing Date, despite Buyer's commercially reasonable
best efforts (which efforts shall not include making payments to listings
providers), Buyer has permission to use and display summary information on fewer
than 450,000 real estate listings in the Business database, Buyer, at its
option, may rescind this Agreement, and all transactions contemplated hereby.
If Buyer elects to rescind this Agreement and all transactions
contemplated hereby pursuant to this Section 12, Buyer shall provide written
notice thereof to Seller, whereupon, (a) this Agreement, and all agreements
contemplated hereby including, without limitation, the Security Agreement and
Seller's rights and obligations under the Shareholder Agreements, shall
terminate and be of no further force or effect, (b) Seller shall, within ten
(10) days following receipt of such written notice, (i) return to Buyer the Cash
Consideration and (ii) surrender for cancellation the Convertible Note and the
Term Note, if outstanding, and the Shares, if applicable, in each case free from
all Liens and (c) Buyer shall, within ten (10) days following Seller's return of
the Cash Consideration and surrender of the Convertible Note, Term Note and
Shares, as applicable, return the Purchased Assets in good condition (normal
wear and tear excepted).
13. DISPUTE RESOLUTION.
Any dispute between Buyer and Seller involving the interpretation of
this Agreement or the rights and obligations of, or remedies available to, the
parties hereto shall be determined by binding arbitration in accordance with the
arbitration rules of JAMS-Endispute in San Francisco County, California, in the
event that such arbitration is initiated by Seller, or in Seattle,
29
Washington, in the event that such arbitration is initiated by Buyer. The
arbitrator shall be knowledgeable in the relevant industry, shall be mutually
acceptable to the parties and shall have the authority to permit discovery upon
request of a party. The cost of such arbitration shall be shared equally by the
parties. Any determination or award issued from such arbitration may be
enforced in any court of competent jurisdiction in the United States.
14. MISCELLANEOUS.
14.1 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or waived with the written consent of the parties or their respective
successors and assigns. Any amendment or waiver effected in accordance with
this Section 14.1 shall be binding upon the parties and their respective
successors and assigns.
14.2 SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
14.3 GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
Washington, without giving effect to principles of conflicts of law.
14.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
14.5 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
14.6 NOTICES. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the regular mail as certified or
registered mail with postage prepaid, if such notice is addressed to the party
to be notified at such party's address or facsimile number as set forth below,
or as subsequently modified by written notice, and (a) if to Buyer, with a copy
to Venture Law Group, 0000 Xxxx Xxxx Xxxx, Xxxxx Xxxx, XX 00000, Attn: Xxx
Xxxxx, or (b) if to Seller, with a copy to Stoel Rives LLP, 000 Xxxxxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, XX 00000, Attn: Xxxxxx X. Lone.
14.7 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith,
30
in order to maintain the economic position enjoyed by each party as close as
possible to that under the provision rendered unenforceable. In the event that
the parties cannot reach a mutually agreeable and enforceable replacement for
such provision, then (i) such provision shall be excluded from this Agreement,
(ii) the balance of the Agreement shall be interpreted as if such provision were
so excluded and (iii) the balance of the Agreement shall be enforceable in
accordance with its terms.
14.8 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein are the product of both of the parties hereto, and constitute the entire
agreement between such parties pertaining to the subject matter hereof and
thereof, and merge all prior negotiations and drafts of the parties with regard
to the transactions contemplated herein and therein. Any and all other written
or oral agreements existing between the parties hereto regarding such
transactions are expressly canceled.
14.9 ADVICE OF LEGAL COUNSEL. Each party acknowledges and represents
that, in executing this Agreement, it has had the opportunity to seek advice as
to its legal rights from legal counsel and that the person signing on its behalf
has read and understood all of the terms and provisions of this Agreement. This
Agreement shall not be construed against any party by reason of the drafting or
preparation thereof.
[Signature Page Follows]
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This Agreement has been duly executed and delivered by the duly
authorized officers of Seller and Buyer as of the date first above written.
HOME SHARK, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
THE COBALT GROUP, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
The following individuals are executing this Purchase Agreement solely
for the purposes of Section 6.8.
XXXX XXXXXX
-----------------------------------------
XXXX XXXX
-----------------------------------------
XXXXXXXX XXXXX
-----------------------------------------
SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
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This Agreement has been duly executed and delivered by the duly
authorized officers of Seller and Buyer as of the date first above written.
HOME SHARK, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
THE COBALT GROUP, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
The following individuals are executing this Purchase Agreement solely
for the purposes of Section 6.8.
XXXX XXXXXX
-----------------------------------------
XXXX XXXX
-----------------------------------------
XXXXXXXX XXXXX
-----------------------------------------
SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
33
