EXECUTION COPY
ASSET PURCHASE AGREEMENT
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ASSET PURCHASE AGREEMENT, dated as of July 19, 2001, by and
among HOLLYWOOD MEDIA CORP., a Florida corporation ("XXXX"), INDEPENDENT
HOLLYWOOD, INC., a Delaware corporation ("Buyer"), and ALWAYS INDEPENDENT
ENTERTAINMENT CORP., a California corporation ("Seller").
W I T N E S S E T H :
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WHEREAS, upon the terms and subject to the conditions
hereinafter set forth, Seller desires to sell, assign and transfer to Buyer, and
Buyer desires to purchase and acquire from Seller, all of Seller's right, title
and interest in the Assets (as defined herein);
WHEREAS, the parties hereto intend this transaction to be a
fully taxable transaction for income tax purposes; and
WHEREAS, the parties hereto intend this Agreement to qualify,
for California sales and use tax purposes, as a Technology Transfer Agreement
pursuant to Sections 6011(c)(10) and 6012(c)(10) of the California Revenue and
Taxation Code.
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto hereby agree as follows:
ARTICLE I
ACQUISITION AND TRANSFER OF ASSETS
Section 1.1. Assets to be Acquired.
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(a) Upon the terms and subject to the conditions hereinafter
set forth, Seller shall sell, assign, transfer, convey and deliver to Buyer, and
Buyer shall purchase, acquire and accept from Seller (the "Acquisition"), free
and clear of all Liens (as defined in Section 1.1(b) below), all right, title
and interest of Seller in, to and under all of the assets, properties, rights,
contracts, claims, operations and business of Seller (collectively, the
"Assets") (but excluding the Excluded Assets, as defined in Section 1.2 below),
whether or not appearing on the books of Seller, including, without limitation,
the following:
(i) all of Seller's contracts or license agreements with
individuals or entities, related to the submission of films to Seller
that can be assigned by Seller at Closing (the "Film Submission
Agreements") and selected business development or affiliate agreements
to which Seller is a party (the "Affiliate Agreements"), all of which
contracts and other agreements referred to in this clause (i)
(collectively, the "Assigned Contracts") are listed on Schedule
1.1(a)(i) hereto, and the database and library of films subject to the
Film Submission Agreements;
(ii) the website currently located at xxx.xxxxxxx.xxx and all
hardware, software, databases and other property related to the
operation of the website;
(iii) the furniture, supplies, computers office equipment,
fixtures and other fixed assets owned by Seller, as listed on Schedule
1.1(a)(iii) (the "Fixed Assets");
(iv) the Intangible Property (as defined in Section 3.12
below);
(v) all papers, databases, computer programs, disks, software,
and other books, records, documents and materials related to the Assets
and owned by Seller (the "Books and Records");
(vi) all assets of Seller (other than Excluded Assets) as to
which Buyer assumes any liability;
(vii) all rights of Seller under or pursuant to all
warranties, representations and guarantees made by suppliers,
manufacturers and contractors in connection with any of the foregoing
Assets;
(viii) all goodwill relating to the foregoing Assets;
(ix) three hundred thousand dollars ($300,000) in cash;
(x) all subscribers to the xxxxxxx.xxx web site and the
portion of the accounts receivable in respect of the subscribers; and
(xi) an amount of cash equal to the amount payable through the
Closing Date under all of Seller's contracts or license agreements with
individuals or entities related to the submission of films to Seller
(the "Filmmaker Payable").
(b) For the purposes of this Agreement, "Lien" shall mean any
lien, pledge, mortgage, deed of trust, security interest, claim, lease, charge,
option, right of first refusal, easement or other real estate declaration,
covenant, condition, restriction or servitude, transfer restriction under any
shareholder or similar agreement, or encumbrance, but excluding with respect to
the Assigned Contracts, restrictions on assignment or provisions requiring the
consent of third parties to assignment disclosed to Buyer in the Schedule of
Disclosures.
Section 1.2. Excluded Assets. Notwithstanding anything in Section 1.1
to the contrary, the parties hereto expressly agree that Seller is not hereunder
selling, assigning, transferring, conveying or delivering to Buyer, and Buyer is
not purchasing, acquiring or accepting, the following assets, rights and
properties (collectively, the "Excluded Assets"):
(i) any cash, bank deposits or similar cash items of Seller
with the exception of that amount of cash specified in Sections
1.1(a)(ix) and 1.1(a)(xi) of this Agreement;
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(ii) all notes receivable and the portion of the accounts
receivable not related to the subscribers (as described in Section
1.1(a)(x)) due to Seller;
(iii) any insurance policies, bonds, letters of credit or
other similar items, or any cash surrender value in regard thereto;
(iv) any claim, right or interest in or to any refund for
federal, state or local franchise, income or other taxes or fees of any
nature whatsoever for periods on or prior to the Closing Date (as
defined in Section 9.1 below) and any interest (or similar amount)
thereon;
(v) any of Seller's corporate books and records of internal
proceedings or tax records, and any books and records that Seller is
required by law to retain (the "Corporate Records"), but Buyer shall
have access to the same to the extent permitted by Section 10.3 below;
(vi) any employment, consulting or similar agreement;
(vii) any lease for personal or real property; and
(viii) the contracts and other agreements listed on Schedule
1.2.
Section 1.3. Assumed and Excluded Liabilities.
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(a) Buyer shall not assume or be bound by any obligations,
liabilities (including without limitation, liabilities in respect of Taxes (as
defined in Section 3.13(a) below) and "employee benefit plans" (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended)
or any other pension plans or employee benefit arrangements) or commitments of
Seller or any of its affiliates of any kind, character or description, whether
absolute, accrued, known, unknown, asserted, unasserted, due or to become due,
contingent or otherwise ("Liabilities"), in connection with the Assets or
otherwise, other than (1) obligations and liabilities arising after the Closing
Date under the Assigned Contracts in respect of the period following such
Closing Date and (2) payments owing to filmmakers through the Closing Date under
all of Seller's contracts or license agreements with individuals or entities
related to the submission of films to Seller in an amount equal to the Filmmaker
Payable-.
(b) Any ad valorem Taxes relating to a period straddling the
Closing Date shall be prorated to the Closing Date, and the portion allocable to
the period prior to the Closing Date shall be promptly paid or reimbursed by
Seller, and the portion allocable to the period after the Closing Date shall be
promptly paid or reimbursed by Buyer. All other Liabilities of Seller shall
remain the sole responsibility of Seller.
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ARTICLE II
CONSIDERATION
Section 2.1. Amount and Form of Consideration.
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(a) The aggregate consideration (the "Consideration") to be
paid on the Closing Date by Buyer to Seller for the Assets shall consist of the
following:
(i) fully paid and nonassessable shares of XXXX'x common
stock, $.01 par value per share (the "Common Stock"), having an
aggregate value equal to One Million Two Hundred Forty-Five Thousand
Dollars ($1,245,000) using a per share value equal to the average
closing price of the Common Stock on the NASDAQ National Market for the
five (5) business days preceding the Closing (the "Stock
Consideration"); plus
(ii) the assumption by Buyer of certain of the obligations and
liabilities of Seller pursuant to Section 1.3 above.
Section 2.2. Allocation of Purchase Price. The Consideration and other
relevant items shall be allocated among the Assets acquired hereunder by Buyer
and Seller in accordance with Schedule 2.2 attached hereto. Seller and Buyer
each agree to report and file all Tax Returns (as defined in Section 3.13(a))
(including amended Tax Returns and claims for refund) consistent with such
allocation, and shall take no position contrary thereto or inconsistent
therewith (including, without limitation, in any audits or examinations by any
taxing authority or any other proceedings). Seller and Buyer shall cooperate in
the filing of any forms (including Form 8594) with respect to such allocation,
including any amendments to such forms required with respect to any adjustment
to the Consideration, pursuant to this Agreement. Notwithstanding any other
provisions of this Agreement, the foregoing agreement shall survive the Closing
Date without limitation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
Section 3.1. Organization. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of California,
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as now being conducted. All of the
outstanding capital stock of Seller is owned beneficially and of record by the
shareholders set forth on Schedule 3.1 (the "Shareholders").
Section 3.2. Authorization of Agreement. Seller has full corporate
power and corporate authority to execute and deliver this Agreement and each
other agreement, document, instrument or certificate contemplated by this
Agreement or to be executed by Seller or the Shareholders in connection with the
consummation of the transactions contemplated by this Agreement (all such other
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agreements, documents, instruments and certificates are hereafter collectively
referred to as the "Seller Documents") and to perform fully its obligations
hereunder and thereunder. The execution, delivery and performance of this
Agreement and each of the Seller Documents have been duly and validly authorized
and approved by the Board of Directors of Seller and by all other necessary
corporate action on behalf of Seller. The Board of Directors has recommended
that the Shareholders approve this Agreement and the Seller Documents. This
Agreement has been, and on or prior to the Closing each of the Seller Documents
will be, duly and validly executed and delivered by Seller and (assuming the due
authorization, execution and delivery by the other parties hereto and thereto)
this Agreement constitutes, and each of the Seller Documents when so executed
and delivered will constitute, the legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its respective terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
Section 3.3. Consents and Approvals; No Violation. (a) No filing with,
notification to or consent, authorization, waiver, approval, order, license,
certificate or Permit (as defined in Section 3.14 below) of, any Government Body
(as defined in Section 3.14 below) is necessary for Seller's execution, delivery
or performance of this Agreement or any of the Seller Documents or the
consummation by Seller of the transactions contemplated by this Agreement and
the Seller Documents.
(b) Except as set forth on Schedule 3.3(b), none of the
execution and delivery by Seller of this Agreement and the Seller Documents, the
consummation of the transactions contemplated hereby or thereby or compliance by
Seller with any of the provisions hereof or thereof will (i) conflict with or
result in any breach of any provision of the Articles of Incorporation, as
amended and restated, or By-laws of Seller, (ii) violate any order, injunction,
judgment, decree, ruling, writ, assessment or arbitration award (each, an
"Order") or statute, rule or regulation of any Government Body by which Seller
or any of its properties or assets is bound, (iii) conflict with, violate,
result in the breach or termination of, or (with or without due notice or the
lapse of time or both) constitute a default or give rise to any "takeback" right
or right of termination or acceleration or right to increase the obligations
under or otherwise modify any of the terms, conditions or provisions of any
note, bond, mortgage, license, franchise, Permit, indenture, contract, agreement
or other instrument or obligation to which Seller is a party, or by which Seller
or any of its properties or assets is or may be bound, or (iv) result in the
creation of any Lien upon any of the Assets.
Section 3.4. Title to Assets. Seller has good and marketable title to
all of the Assets, free and clear of all Liens. Upon the sale, assignment,
transfer and conveyance of the Assets to Buyer hereunder, there will be vested
in Buyer good and marketable title to such Assets, free and clear of all Liens
other than those placed thereon by Buyer.
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Section 3.5. No Undisclosed Liabilities. Except as set forth on
Schedule 3.5 hereto, to Seller's knowledge, Seller has no Liabilities of any
kind, and, there is no basis for the assertion of any claim or Liability of any
nature against Seller. Seller has no indebtedness for borrowed money.
Section 3.6. Results of Operations; Subscriptions.
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(a) Seller's annual running revenue and annual running
operating cash flow, based on actual figures for the month of May 2001
determined in accordance with generally accepted accounting principles ("GAAP")
(i.e., multiplying May's amounts by twelve), were no less than $68,907.60 and
($1,517,777.16), respectively. The foregoing revenue and operating cash flow
amounts for the month of May 2001 do not include any extraordinary or
non-recurring sources of revenue or any revenues resulting from contracts that
were not negotiated and entered into by Seller on an arm's length basis.
(b) As of May 15, 2001, Seller had a total of 770 paying
subscribers for the Xxxxxxx.xxx website and approximately 277 subscribers
receiving a free thirty-day subscription to the Xxxxxxx.xxx website. As of June
15, 2001, Seller had a total of 915 paying subscribers for the Xxxxxxx.xxx
website and approximately 210 subscribers receiving a free thirty-day
subscription to the Xxxxxxx.xxx website. The average monthly subscription fee
being paid by paying subscribers as of May 30, 2001 was $7.38.
Section 3.7. Litigation, etc. There is no judicial, administrative or
arbitral action, suit, proceeding (public or private), claim or governmental
proceeding (each, a "Legal Proceeding") pending or, to the knowledge of Seller,
threatened that questions the validity of this Agreement, the Seller Documents
or any action taken or to be taken by Seller in connection with the consummation
of the transactions contemplated hereby or thereby. Except as set forth on
Schedule 3.7 hereto, (i) no investigation or review by any Government Body with
respect to Seller is pending or, to the knowledge of Seller, threatened, nor has
any Government Body indicated to Seller an intention to conduct the same, (ii)
there is no Legal Proceeding pending or, to the knowledge of Seller, threatened
against or affecting Seller or its assets at law or in equity, or before any
Government Body (and, to the knowledge of Seller, there is no basis for any such
Legal Proceeding not so set forth which, if adversely determined, could
adversely affect Seller or Buyer) and (iii) there is no outstanding or, to the
knowledge of Seller, threatened Order of any Government Body against, affecting
or naming Seller or affecting any of the Assets. Except as set forth on Schedule
3.7 hereto, during the three years preceding the date of this Agreement, no
Legal Proceeding has been commenced or, to the knowledge of Seller, threatened
against or affecting Seller or its assets at law or in equity, or before any
Government Body. On and after the date hereof until the Closing, Seller will
notify Buyer of the existence or threat of any investigation, review, Legal
Proceeding or Order which would be required to be disclosed on Schedule 3.7.
Section 3.8. Compliance with Law. Seller has not violated or failed to
comply in any material respect with any statute, law, ordinance, regulation,
rule or Order of any Government Body.
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Section 3.9. Employment Agreements. Except as set forth on Schedule
3.9 hereto, Seller is not now and has never been a party to any employment,
compensation, consulting, severance or indemnification agreement or any other
agreement with a present or former employee of Seller that provides for
severance payments or stay bonuses contingent upon a change in control of Seller
or a sale of its business or assets.
Section 3.10. Certain Agreements.
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(a) Except as set forth on Schedule 1.1(a)(i) hereto or
Schedule 3.10 hereto, neither Seller nor any of its properties or assets is a
party to or bound by any (i) Film Submission Agreement, (ii) Affiliate
Agreement, (iii) lease or rental agreement, (iv) contract granting a right of
first refusal or for the acquisition, sale or lease of any assets of Seller, (v)
mortgage, pledge, conditional sales contract, security agreement or other
similar contract with respect to any property of Seller, (vi) loan agreement,
credit agreement, promissory note, guarantee, subordination agreement, letter of
credit or other similar type of contract, (vii) or any other material contract.
Seller has delivered to Buyer true, correct and complete copies of the Assigned
Contracts, including all amendments, modifications, supplements, side letters or
consents affecting the obligations of any party thereunder.
(b) Each Assigned Contract (assuming the authorization of the
parties thereto other than Seller as specified in Schedule 3.10 hereto) is valid
and enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). Seller is not in
breach of or in default under any Assigned Contract and, to Seller's knowledge,
there has not occurred any event which, after the giving of notice or lapse of
time or both, would constitute a default under or result in a breach of an
Assigned Contract by any party subject thereto. No previous or current party to
any Assigned Contract (i) has given notice of or made a claim with respect to
any breach or default under any Assigned Contract or (ii) has given notice of
termination or non-renewal of any Assigned Contract. Except as set forth in
Schedule 3.10 hereto, each of the Assigned Contracts is freely transferable by
Seller to Buyer and no third party consents are required for such transfer.
Section 3.11. Real Property.
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(a) Seller does not now own and has never owned any real
property.
(b) Other than the lease agreement, dated July 11, 2000 (the
"Lease"), between Vet Med (the "Lessee"), and Nor-Pac Commercial Company (the
"Lessor"), which Lease was assigned to Seller effective November 1, 2000 under
the Assignment of Lease by and among Lessee, Lessor and Seller and except as set
forth on Schedule 3.11(b) hereto, Seller is not now and has never been a party
to any lease, sublease, license, sublicense or other agreement or arrangement
with respect to any real property, and has not used or occupied, does not use or
occupy, and does not have any right to use or occupy, now or in the future, any
real property.
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(c) The Lease is valid and enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject as to enforceability to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity). Seller is not in breach of or in default under the Lease and, to
Seller's knowledge, there has not occurred any event which, after the giving of
notice or lapse of time or both, would constitute a default under or result in a
breach of the Lease. Seller has delivered to Buyer a true, correct and complete
copy of the Lease, together with all amendments, modifications, supplements or
side letters affecting the obligations of any party thereto. No previous or
current party to the Lease has given notice of or made a claim with respect to
any breach or default thereunder.
Section 3.12. Intangible Property.
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(a) Schedule 3.12(a) sets forth all trade names, trademarks,
service marks, domain names, and copyrights and their registrations and
applications for registration, owned by Seller or in which Seller has any rights
or licenses. Seller in the current conduct of its business is not infringing on
any copyright, trademark, or service xxxx, belonging to any other person, firm,
or corporation. Except as set forth in Schedule 3.12(a), Seller is not a party
to any license, agreement, or arrangement, whether as licensor, licensee, or
otherwise, with respect to any trademarks, service marks, trade names, or
applications for them, any domain names, or any copyrights. Seller owns, or
holds adequate licenses or other rights to use, all trademarks, service marks,
trade names, and copyrights and holds current registrations for all domain names
listed on Schedule 3.12(a).
(b) Seller has no patents, patentable inventions, industrial
models, and applications for patents in which they have any rights, licenses, or
immunities.
(c) Schedule 3.12(c) to this Agreement is a true and complete
list, without extensive or revealing descriptions, of Seller's trade secrets,
including all secret formulae, customer lists, processes, know-how, computer
programs and routines, and other technical data. Seller has taken all reasonable
security measures to protect the secrecy, confidentiality, and value of these
trade secrets; Seller's employees and any other persons who developed,
discovered, programmed, or designed these secrets, or who have knowledge of or
access to information relating to them have been put on notice and, if
appropriate, have entered into agreements that these secrets are proprietary to
Seller. To Seller's knowledge, all these trade secrets are presently not part of
the public knowledge or literature; nor to Seller's knowledge have they been
used, divulged, or appropriated for the benefit of any past or present employees
or other persons, or to the detriment of Seller. Except as set forth in Schedule
3.12(c), Seller is not a party to any license, agreement, or arrangement,
whether as licensor, licensee, or otherwise, with respect to any trade secrets.
To Seller's knowledge and belief, Seller in the current conduct of its business
does not use any trade secrets misappropriated from any person, firm, or
corporation.
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(d) The items listed on Sections 3.12(a) and (c) are referred
to herein as the "Intangible Property."
Section 3.13. Taxes.
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(a) For purposes of this Agreement:
(i) "Tax" or "Taxes" shall mean all taxes, charges, fees,
imposts, levies or other assessments by any governmental authority,
including all net income, gross receipts, capital, sales, use, ad
valorem, value added, transfer, franchise, profits, inventory, capital
stock, license, withholding, payroll, employment, social security,
unemployment, excise, severance, stamp, occupation, property and
estimated taxes, customs duties, fees, assessments and charges of any
kind whatsoever, and all interest, penalties, fines, additions to tax
or other amounts imposed by any governmental authority which relate in
any way to the assessment of collection of any taxes or the filing of
any Tax Return, and shall include any transferee or successor liability
in respect of taxes (whether by contract or otherwise) and any
liability in respect of any tax as a result of being a member of any
Affiliated Group, including any consolidated, combined, unitary or
similar group.
(ii) "Tax Return" means any return (including any
consolidated, combined or unitary return in which Seller is, or was,
included or includible), declaration, report, claim for refund,
separate election or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
(iii) "Affiliated Group" means any affiliated group within the
meaning of Section 1504 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any consolidated, combined, unitary or similar
group defined under a similar provision of state, local or foreign law.
(b) Except as set forth on Schedule 3.13(b) hereto, Seller has
(w) filed when due or will file when due (taking into account extensions) with
the appropriate federal, state, local, foreign and other governmental
authorities, all Tax Returns required to be filed by it or on its behalf, all of
which Tax Returns were true or will be true, complete and correct as of the time
of filing, (x) paid when due and payable (and, through the Closing Date, will
timely pay) all required Taxes (except for Taxes which are being contested in
good faith, as set forth on Schedule 3.13(b), and for which adequate reserves
have been established in accordance with GAAP, and (y) established (and through
and including the Closing Date will establish) reserves that are adequate for
the payment of all Taxes not yet due and payable with respect to the results of
operations through the Closing Date. There are no Taxes assessed or asserted or
claimed in writing to be due by any governmental authority or otherwise in
respect of any Tax Returns filed by Seller or on Seller's behalf, and no issues
have been raised (and are currently pending) by any governmental authority in
connection with any such Tax returns that Seller is aware of.
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(c) Seller has duly and timely withheld and paid over to the
appropriate governmental authorities all Taxes and other amounts required to be
so withheld and paid over for all periods under all applicable laws in
connection with amounts paid or owing to any employee, independent contractor,
subcontractor, lender, stockholder or other third party or other personnel
supplied by any third party.
(d) There is no audit, examination, deficiency, or refund
proceeding pending with respect to any Taxes or Tax Returns of Seller that
Seller is aware of, and no governmental authority has given oral or written
notice of the assessment or intent to make any assessment or has given written
or oral notice of the commencement of any audit, examination or deficiency
proceeding with respect to any Taxes or Tax Returns of Seller. Seller has not
received written or oral notice of any claim by a governmental authority in a
jurisdiction where Seller does not file Tax Returns that Seller is or may be
subject to Tax by that jurisdiction or is obliged to act as withholding agent
under the laws of that jurisdiction.
(e) Set forth on Schedule 3.13(e) is a complete list of all
federal, state, local, and foreign Tax Returns filed by, or on behalf of, Seller
for taxable periods since its inception, and all jurisdictions in which Seller
is currently subject to tax.
(f) Set forth on Schedule 3.13(f) is a complete list of all
notices required to be filed (whether by Buyer or Seller), in connection with
the transactions contemplated herein, with any governmental authority with
respect to Taxes of Seller.
(g) Except as set forth in Schedule 3.13(g), Seller is not a
party to or bound by any Tax sharing, Tax indemnification or similar agreements
(or portions of any agreements) with respect to Taxes.
(h) Seller does not have, nor has Seller ever had, a permanent
establishment (within the meaning of any applicable Tax treaty) in any foreign
country, nor does it engage or has it ever engaged in a trade or business in any
foreign country that has subjected its business to Tax in such foreign country.
(i) Except as set forth in Schedule 3.13(i), Seller is not a
party to any joint venture, partnership or other arrangement that constitutes a
partnership for federal income tax purposes.
(j) Except as set forth in Schedule 3.13(j), the performance
of the transactions contemplated by this Agreement will not (either alone or
upon the occurrence of any additional or subsequent event) result in, nor do the
Liabilities assumed by Buyer otherwise provide for, any payment by Buyer that
would constitute an "excess parachute payment" within the meaning of Section
280G of the Code.
(k) Except as set forth in Schedule 3.13(k), none of the
Assets are (i) property required to be treated as being owned by another Person
pursuant to the provisions of Section 168(f)(8) of the Code; (ii) "tax-exempt
use property" within the meaning of Section 168(h)(l) of the Code; (iii) tax
exempt bond financed property within the meaning of Section 168(g) of the Code;
(iv) property used "predominantly outside of the United States" within the
meaning of Section 168(g)(4); or (v) "limited use property" (as defined in Rev.
Proc. 76-30).
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(l) There are no Security Interests on any of the assets of
Seller that arose in connection with any failure (or alleged failure) to pay any
Tax.
(m) Except as set forth in Schedule 3.13(n), Seller (i) is not
and has never been a member of any Affiliated Group and (ii) has no liability
for the Taxes of any Person under Treasury Regulation ss. 1.1502-6 or any
similar provision of state, local or foreign law.
Section 3.14. Permits. Schedule 3.14 hereto sets forth a list of all
approvals, authorizations, consents, franchises, licenses, permits or
certificates (collectively, "Permits") granted by any government or governmental
or regulatory body thereof or political subdivision thereof, whether federal,
state, local or foreign, or any agency or instrumentality thereof, or any court
or arbitrator (public or private) (each, a "Government Body") and applications,
if any, for any of the foregoing, held by Seller. Seller is the holder of all
Permits necessary or appropriate to enable it to continue to conduct its
business in all material respects as presently conducted. Each of the Permits is
in full force and effect.
Section 3.15. Related Parties; Related Party Transactions. Neither
Seller nor any employee of Seller owns any direct or indirect interest of any
kind in, or controls or is a director, officer, employee or partner of, or
consultant to, or lender to or borrower from or has the right to participate in
the profits of, any Person which is (A) a competitor, supplier, customer,
landlord, tenant, creditor or debtor of Seller, (B) engaged in a business
related to the business of Seller, (C) participating in any transaction to which
Seller is a party, or (D) a party to any contract, agreement, indenture, note,
bond, loan, instrument, lease, conditional sale contract, mortgage, license,
franchise, insurance policy, commitment or other arrangement or agreement with
Seller.
Section 3.16. Options. Except as set forth on Schedule 3.16 hereto,
there are no outstanding securities of Seller convertible into or evidencing the
right to purchase or subscribe for any shares of capital stock of Seller and
there are no outstanding or authorized options, warrants, calls, subscriptions,
rights, commitments or any other agreements of any character obligating Seller
to issue any shares of its capital stock or any securities convertible into or
evidencing the right to purchase or subscribe for any shares of such stock.
Section 3.17. Year 2000. Each computer program used by Seller in its
business is Year 2000 Compliant. "Year 2000 Compliant" means that such program
is capable of managing and manipulating data involving dates after the year 1999
without any functional or data abnormality and without inaccurate results
related to such dates.
Section 3.18. Investor Representations. The shares of Common Stock
received by Seller pursuant to this Agreement will be acquired for Seller's own
account and not with a view to or in connection with the sale or distribution of
any part thereof except for distributions to the Shareholders on the anticipated
dissolution and liquidation of Seller.
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Section 3.19. Exemption from Registration; Restricted Securities.
Seller understands that the shares of Common Stock received by Seller pursuant
to this Agreement will not be registered under the Securities Act on the ground
that the sale provided for in this Agreement is exempt from registration under
the Securities Act, and that the reliance of Buyer on such exemption is
predicated in part on Seller's representations set forth in this Agreement. The
certificates representing the shares of Common Stock issued to Seller pursuant
to this Agreement will bear an appropriate legend reflecting such exempt
issuance without registration. Seller understands that the shares of Common
Stock received by Seller pursuant to this Agreement are restricted securities
within the meaning of Rule 144 under the Securities Act.
Section 3.20. Brokers. No broker, finder or investment banker is
entitled to any brokerage fee, finder's fee or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND XXXX
Buyer and XXXX represent and warrant to Seller as follows:
Section 4.1. Organization. Each of Buyer and XXXX is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
Buyer is an indirect, wholly owned subsidiary of XXXX.
Section 4.2. Authorization of Agreement. Each of Buyer and XXXX has
full corporate power and authority to execute and deliver this Agreement and
each other agreement, document, instrument or certificate contemplated by this
Agreement or to be executed by Buyer or XXXX in connection with the consummation
of the transactions contemplated hereby and thereby (all of such agreements,
documents, instruments and certificates required to be executed by Buyer or XXXX
being hereinafter referred to, collectively, as the "Buyer Documents"), and to
perform fully its obligations hereunder and thereunder. The execution, delivery
and performance by Buyer and XXXX of this Agreement and each Buyer Document have
been duly authorized by the Board of Directors of Buyer and XXXX and by all
other necessary corporate action on the part of Buyer and XXXX. This Agreement
has been, and at or prior to the Closing, each of the Buyer Documents will be,
duly and validly executed and delivered by Buyer or XXXX, as applicable, and
(assuming the due authorization, execution and delivery by the other parties
hereto and thereto) this Agreement constitutes, and each of the Buyer Documents
when so executed and delivered will constitute, the legal, valid and binding
obligation of Buyer and XXXX, enforceable against Buyer and XXXX, as applicable,
in accordance with its respective terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
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Section 4.3. Consents and Approvals; No Violations.
-------------------------------------
(a) Except for filings, notifications, authorizations,
consents and approvals as may be required under federal and state securities or
blue sky laws, no filing with, notification to or consent, authorization,
waiver, approval, order, license, certificate or Permit of, any Government Body
is necessary for Buyer's or XXXX'x execution, delivery or performance of this
Agreement or any of the Buyer Documents or the consummation by Buyer or XXXX of
the transactions contemplated by this Agreement and the Buyer Documents.
(b) None of the execution and delivery by Buyer or XXXX of
this Agreement or the Buyer Documents, the consummation of the transactions
contemplated hereby or thereby or compliance by Buyer or XXXX with any of the
provisions hereof or thereof will (i) conflict with or result in any breach of
any provision of the Certificate of Incorporation or By-laws of Buyer or the
Articles of Incorporation, as amended and restated, or By-laws of XXXX, (ii) to
the best of Buyer's and XXXX'x knowledge, violate any Order or statute, rule or
regulation of any Government Body by which Buyer or XXXX or any of their
respective properties or assets is bound, or (iii) conflict with, violate,
result in the breach or termination of, or (with or without due notice or the
lapse of time or both) constitute a default or give rise to any "takeback" right
or right of termination or acceleration or right to increase the obligations
under or modify any of the terms, conditions or provisions of any note, bond,
mortgage, license, franchise, Permit, indenture, agreement or other instrument
or obligation to which Buyer or XXXX is a party, or by which Buyer or XXXX or
any of their respective properties or assets is or may be bound.
Section 4.4. Litigation. There are no Legal Proceedings pending or, to
the knowledge of Buyer or XXXX, threatened that question the validity of this
Agreement, the Buyer Documents or any action taken or to be taken by Buyer or
XXXX in connection with the consummation of the transactions contemplated hereby
or thereby. On and after the date hereof until the Closing, Buyer will notify
Seller of the existence or threat of any such Legal Proceeding.
Section 4.5. Capital Stock of XXXX.
---------------------
(a) The authorized capital stock of XXXX consists of (i) 100,000,000
shares of Common Stock, of which, as of July 10, 2001, 26,774,769 shares of
Common Stock were issued and outstanding (each together with a Common Stock
purchase right issued pursuant to the Rights Agreement, dated as of August 23,
1996 by and between XXXX and American Stock Transfer & Trust Company); and (ii)
one million shares of Preferred Stock, of which, as of the date hereof, no
shares of preferred stock are issued and outstanding. All of the outstanding
shares of Common Stock are duly authorized, validly issued fully paid and
nonassessable. Except as set forth in XXXX'x annual report filed with the
Securities and Exchange Commission ("SEC") on Form 10-K for the year ended
December 31, 2000 (the "December 31, 2000 Form 10-K") or XXXX'x quarterly report
filed with the SEC on Form 10-Q for the quarter ended March 31, 2001 (the "March
31, 2001 Form 10-Q"), and except for outstanding options and warrants to acquire
Common Stock of XXXX, XXXX has no other authorized, issued or outstanding equity
securities or securities containing any equity features, or any other securities
convertible into, exchangeable for or entitling any person to otherwise acquire
any other securities of Buyer containing any equity features.
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(b) The Common Stock constitutes the only class of equity securities of
XXXX or its subsidiaries registered or required to be registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
Section 4.6. SEC Reports; Financial Statements.
---------------------------------
(a) XXXX has filed all required forms, reports and documents
required to be filed by it ("XXXX SEC Reports") with the SEC since January 1,
1999, each of which has complied as to form in all material respects with all
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act, each as in effect on the dates such
forms, reports and documents were filed. XXXX SEC Reports, including the
December 31, 2000 Form 10-K and the March 31, 2001 Form 10-Q, do not contain any
untrue statement of material fact required to be stated therein or necessary to
make the statements made therein in light of the circumstances under which they
were made, not misleading.
(b) The audited consolidated financial statements of XXXX
included in the XXXX SEC Reports were prepared in accordance with GAAP and
present fairly the consolidated financial position of XXXX and its consolidated
subsidiaries as of the dates thereof and their consolidated results of
operations and changes in financial position for the periods then ended.
Section 4.7. Brokers. No broker, finder or investment banker is
entitled to any brokerage fee, finder's fee or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Buyer or XXXX.
ARTICLE V
COVENANTS OF SELLER
Section 5.1. Access to Information. From the date of this Agreement
until the Closing Date, Seller shall permit Buyer and its representatives,
including, without limitation, its legal counsel and accountants, to conduct an
appropriate due diligence examination and investigation with respect to Seller.
Seller will reasonably cooperate with Buyer's diligence, and such cooperation
will include, without limitation, the following:
(i) providing Buyer and its representatives with reasonable
access to all data, records and other information that they may request
in connection with their evaluation of the transactions contemplated by
this Agreement (including, without limitation, lists of contact
persons, marketing information, and records of negotiations with
existing and prospective customers);
(ii) allowing Buyer and its representatives to conduct a
complete business, financial and legal review of all aspects of Seller;
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(iii) affording Buyer and its representatives the opportunity
to discuss the affairs, finances, operations and accounts of Seller
with Seller's officers, directors, agents and other appropriate
personnel; and
(iv) facilitating conversations between Buyer and its
representatives and representatives of the other parties to the
Assigned Contracts.
Section 5.2. Exclusivity. From the date of this Agreement until the
termination of this Agreement in accordance with its terms, neither Seller nor
the Shareholders shall, nor shall Seller permit its officers, directors,
affiliates, representatives or agents to (including, without limitation,
investment bankers, financial advisors, brokers and other advisors)
(collectively, the "Representatives"), to directly or indirectly do any of the
following:
(i) discuss, negotiate, undertake, authorize, recommend,
propose or enter into, either as the proposed surviving, merged,
acquiring or acquired corporation, any transaction (an "Acquisition
Transaction") involving any disposition or other change of ownership or
control of a substantial portion of Seller's stock or assets or any
assumption by Seller of substantial liabilities, including, without
limitation, any joint venture or partnership involving any of the
foregoing (other than the transaction contemplated in this Agreement);
(ii) facilitate, encourage, solicit or initiate or in any way
engage in discussions, negotiations or submissions of proposals or
offers in respect of an Acquisition Transaction (other than the
transaction contemplated in this Agreement);
(iii) furnish or cause to be furnished to any Person (other
than Buyer or its representatives) any information concerning the
business, operations, properties or assets of Seller in connection with
an Acquisition Transaction; or
(iv) otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any
other Person to do or seek any of the foregoing.
Seller shall inform Buyer by telephone, within 24 hours, of Seller's receipt of
any proposal or bid (including the terms thereof and the Person making such
proposal or bid) in respect of any Acquisition Transaction other than the
transaction described in this Agreement. Seller shall, immediately upon
execution of this Agreement, instruct its Representatives to cease all further
activities with respect to the sale of Seller or Seller's assets, including,
without limitation, the dissemination of information.
Section 5.3. Conduct of Business. From the date of this Agreement until
the earlier of the Closing Date or the Termination Date (as defined in Section
12.1 below) Seller (i) shall not, without the prior written consent of Buyer,
amend or modify (or agree to amend or modify), enter into or cancel any
agreement of the type to be included in the Assets, (ii) shall use its best
efforts to preserve its present relationships with Persons having business
dealings with Seller, (iii) (A) shall maintain the books, accounts and records
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of Seller in the ordinary course of business consistent with past practices and
(B) shall comply in all material respects with all contractual and other
obligations applicable to the operations of Seller, (iv) shall not subject any
of the properties or assets (whether tangible or intangible) of Seller to any
Lien, or incur any indebtedness for borrowed money, (v) shall not acquire any
properties or assets or sell, assign, transfer, convey, lease or otherwise
dispose of any of the properties or assets of Seller other than as set forth on
Schedule 5.3, (vi) shall not cancel or compromise any debt or claim or waive or
release any right of Seller, (vii) shall not introduce any change with respect
to the operation of Seller and (viii) shall operate only in the ordinary course
of business. The foregoing shall not restrict Seller from canceling any
agreement not included in the Assets. Seller shall pay all Liabilities that are
due and owing by it to any party as of the Closing Date other than those
Liabilities expressly assumed by Buyer pursuant to Section 1.3 and those
Liabilities set forth on Schedule 5.3.
Section 5.4. Public Announcements. Seller agrees that it shall not
issue any press release or make any public statement, announcement or filing
concerning this Agreement or any aspect of the transactions contemplated hereby,
except as may be required by applicable law or with the prior consent of Buyer.
Seller agrees that it shall not issue any such release or make any such
statement, announcement or filing required by applicable law except after prior
consultation with and prior written approval of Buyer, which approval shall not
be unreasonably withheld.
Section 5.5. No Breach of Representations and Warranties. Seller agrees
that it shall not take any action, and shall use its reasonable commercial
efforts not to permit any event to occur, which would result in any of the
representations and warranties of Seller contained in this Agreement not being
true and correct in any material respect on and as of the Closing Date with the
same force and effect as if such representations and warranties had been made on
and as of the Closing Date.
Section 5.6. Updating Information. Seller shall promptly deliver to
Buyer any information concerning events subsequent to the date of this Agreement
which is necessary to supplement the representations and warranties contained
herein, including the Schedules hereto, or the information delivered by Seller
pursuant to any of the covenants contained herein, in order that such
representations and warranties (including such Schedules) or the information so
delivered be complete and accurate in all material respects, it being understood
and agreed that the delivery of such information shall not in any manner
constitute a waiver by Buyer of any of the conditions precedent to the Closing
hereunder, including, without limitation, the conditions contained in Section
7.1.
Section 5.7. Consents. Seller shall use its diligent, good faith
efforts to obtain, at the earliest practicable date, all consents and approvals
required to consummate the transactions contemplated by this Agreement.
Section 5.8. Taxable Transaction. Seller agrees to treat this
transaction as a fully taxable transaction for income tax purposes and shall not
take any actions inconsistent with such treatment.
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Section 5.9. Further Actions. Seller agrees to execute and deliver such
instruments and promptly take such other actions as may reasonably be required
to consummate the transactions contemplated hereby in accordance with the terms
hereof.
ARTICLE VI
COVENANTS OF buyer
Section 6.1. No Breach of Representations and Warranties. Buyer agrees
that it shall not take any action, and shall use its reasonable commercial
efforts not to permit any event to occur, which would result in any of the
representations and warranties of Buyer contained in this Agreement not being
true and correct in any material respect on and as of the Closing Date with the
same force and effect as if such representations and warranties had been made on
and as of the Closing Date.
Section 6.2. Consents and Conditions. Buyer shall use its reasonable
efforts to assist Seller in causing each of the conditions precedent to the
obligations of Seller to be satisfied.
Section 6.3. Taxable Transaction. Buyer agrees to treat this
transaction as a fully taxable transaction for income tax purposes and shall not
take any actions inconsistent with such treatment.
Section 6.4. Further Actions. Buyer agrees to execute and deliver such
instruments and take such other actions as may reasonably be required to
consummate the transactions contemplated hereby in accordance with the terms
hereof.
ARTICLE VII
CONDITIONS PRECEDENT TO buyer's OBLIGATIONS
Section 7.1. Conditions. The obligation of Buyer to consummate the
Acquisition on the Closing Date is subject to the satisfaction of the following
conditions (any or all of which may be waived by Buyer, in its sole discretion,
in whole or in part, to the extent permitted by applicable law):
(i) each of the representations and warranties of Seller
contained herein shall be true and correct in all material respects on
and as of the Closing Date with the same force and effect as though the
same had been made on and as of the Closing Date;
(ii) Seller shall have performed and complied, in all material
respects, with the covenants and provisions of this Agreement required
to be performed or complied with by it between the date hereof and the
Closing Date;
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(iii) since the date of this Agreement, no event or
circumstance shall have occurred that has had, or is reasonably likely
to have, a material adverse effect on the business, assets, properties,
liabilities, financial condition or results of operations of Seller;
(iv) (A) no Legal Proceeding shall have been instituted or
threatened or claim or demand made against Seller, Buyer, or XXXX
seeking to restrain or prohibit or to obtain damages with respect to
the consummation of the transactions contemplated by this Agreement, or
which might, in the reasonable opinion of Buyer, result in a material
adverse change in the Assets of Seller and (B) there shall not be in
effect any Order of a Government Body of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement;
(v) Buyer, XXXX and Seller shall have received all necessary
governmental and regulatory approvals and all other consents that Buyer
or XXXX may reasonably require with respect to its assumption of any
contracts, licenses, agreements, understandings and other arrangements
and instruments to which Seller is a party;
(vi) Buyer shall not have obtained or discovered, in the
course of its due diligence review referred to in Section 5.1 above,
information concerning Seller or the Assets which, in the sole judgment
of Buyer, could materially adversely affect the business, assets,
financial condition or results of operations of the Seller or Buyer.
This condition shall lapse on the earlier of ten (10) calendar days
from the date hereof or the date Buyer advises Seller of the completion
of its due diligence;
(vii) Buyer shall have received a certificate to the effect
set forth in clauses (i), (ii) and (iii) above, dated the Closing Date
and signed by a duly authorized officer of Seller;
(viii) Buyer shall have received a certificate of the
Secretary of Seller, dated the Closing Date, setting forth resolutions
of the Board of Directors and of the Shareholders of Seller authorizing
the execution and delivery of this Agreement and each document and
instrument required to be executed and delivered by Seller hereunder
and the consummation of the transactions contemplated hereby and
thereby, and certifying that such resolutions were duly adopted and
have not been rescinded or amended as of the Closing Date; and
(ix) Seller shall have executed and delivered to Buyer (A) all
documents to be delivered at the Closing in accordance with the terms
of this Agreement and (B) such other documents and instruments as Buyer
may reasonably request and which Seller can obtain with reasonable
commercial efforts in order to consummate the transactions contemplated
by this Agreement.
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ARTICLE VIII
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
Section 8.1. Conditions. The obligation of Seller to consummate the
Acquisition on the Closing Date is subject to the satisfaction of the following
conditions (any or all of which may be waived by Seller, at the sole option of
Seller, in whole or in part to the extent permitted by applicable law):
(i) each of the representations and warranties of Buyer and
XXXX contained herein shall be true and correct in all material
respects on and as of the Closing Date with the same force and effect
as though the same had been made on and as of the Closing Date;
(ii) Buyer shall have performed and complied, in all material
respects, with the covenants and provisions of this Agreement required
to be performed or complied with by it between the date hereof and the
Closing Date;
(iii) Seller shall have received a certificate to the effect
set forth in clauses (i) and (ii) above, dated the Closing Date and
signed by a duly authorized officer of Buyer and XXXX;
(iv) Seller shall have received certificates of the Secretary
of Buyer and XXXX, dated the Closing Date, setting forth resolutions of
the Board of Directors of Buyer and XXXX authorizing the execution and
delivery of this Agreement and each document and instrument required to
be executed and delivered by Buyer and XXXX hereunder and the
consummation of the transactions contemplated hereby and thereby, and
certifying that such resolutions were duly adopted and have not been
rescinded or amended as of the Closing Date;
(v) Buyer shall have executed and delivered to Seller (A) all
documents to be delivered at the Closing in accordance with the terms
of this Agreement and (B) such other documents and instruments as
Seller may reasonably request and which Buyer can obtain with
reasonable commercial efforts in order to consummate the transactions
contemplated by this Agreement; and
(vi) The Agreement and the Seller Documents shall have been
approved by the required percentage of shares held by the Shareholders.
ARTICLE IX
THE CLOSING
Section 9.1. Closing Date. Except as hereinafter provided, the closing
of the transactions contemplated by this Agreement (the "Closing") shall take
place at the offices of Buyer, or such other place as mutually agreed upon in
writing by the parties, at 10:00 a.m. on the third business day following the
date on which each of the
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conditions specified in Section 7.1 and Section 8.1 (other than those as to
which the parties agree will be satisfied at the Closing) of this Agreement has
been fulfilled (or waived by the party entitled to waive that condition) or at
such other time and place as Seller and Buyer may mutually agree in writing, but
in no event shall the Closing occur later than twenty (20) calendar days
subsequent to the date hereof unless mutually agreed upon in writing by the
parties hereto. The date on which the Closing of the Acquisition occurs is
referred to herein as the "Closing Date."
Section 9.2. Proceedings at the Closing. All proceedings to be taken
and all documents to be executed and delivered by Seller in connection with the
Closing shall be reasonably satisfactory in form and substance to Buyer and its
counsel. All proceedings to be taken and all documents to be executed and
delivered by Buyer in connection with the Closing shall be reasonably
satisfactory in form and substance to Seller and its counsel. All proceedings to
be taken and all documents to be executed and delivered by both parties at the
Closing shall be deemed to have been taken and executed simultaneously, and no
proceedings shall be deemed taken nor any documents executed or delivered until
all have been taken and delivered.
Section 9.3. Deliveries by Seller to Buyer. At the Closing, Seller
shall deliver, or shall cause to be delivered, to Buyer the following:
(i) a xxxx of sale and assignment and assumption agreement in
the form of Exhibit A hereto (the "Xxxx of Sale and Assignment and
Assumption Agreement"), duly executed by Seller;
(ii) all other assignments and other instruments or documents
as shall be reasonably necessary in the judgment of Buyer to evidence
the sale, assignment, transfer and conveyance by Seller to Buyer of the
Assets in accordance with the terms hereof, free and clear of all
Liens, including all documents and consents necessary to transfer
ownership through the appropriate registrar of all domain names
included in the Assets;
(iii) copies of all approvals and consents referred to in
clause (v) of Section 7.1 above;
(iv) the certificate, signed by a duly authorized officer of
Seller, referred to in clause (vii) of Section 7.1 above;
(v) the certified resolutions of the Board of Directors and
Shareholders of Seller referred to in clause (viii) of Section 7.1
above;
(vi) an affidavit of Seller, in a form reasonably satisfactory
to Buyer, stating, under penalties of perjury, Seller's United States
taxpayer identification number and that Seller is not a foreign person
within the meaning of Section 1445(b)(2) of the Code;
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(vii) a certificate of the Secretary of Seller attesting to
the incumbency and signature of each officer of Seller who shall
execute this Agreement or any other Seller Document; and
(viii) delivery of the assets as set forth in Section 9.5.
Section 9.4. Deliveries by Buyer to Seller. At the Closing, Buyer shall
deliver to Seller the following:
(i) the certificate, signed by a duly authorized officer of
Buyer and XXXX, referred to in clause (iii) of Section 8.1 above;
(ii) the certified resolutions of the Board of Directors of
Buyer and XXXX referred to in clause (iv) of Section 8.1 above;
(iii) a certificate of a duly authorized officer of Buyer and
XXXX attesting to the incumbency and signature of each officer of Buyer
and XXXX who shall execute this Agreement or any other Buyer Document;
(iv) the Xxxx of Sale and Assignment and Assumption Agreement,
duly executed by Buyer; and
(v) a stock certificate for the Stock Consideration specified
in Section 2.1(a)(i).
Section 9.5. Delivery of Assets. Those Assets, which are treated as
computer programs under Regulation 1502(f) of the California Sales and Use Tax
Regulations shall either be transferred by remote telecommunications from
Seller's place of business to Buyer's place of business, to or through computer
equipment owned by Buyer, or shall be installed by Seller or its representatives
directly onto computer equipment owned by Buyer. Those Assets, which constitute
tangible personal property under Section 6016 of the California Revenue and
Taxation Code shall be delivered by Seller, its agent, or a common carrier to
Buyer's place of business in Boca Raton, Florida
ARTICLE X
ADDITIONAL POST-CLOSING COVENANTS
Section 10.1. Further Assurances by Seller.
----------------------------
(a) From time to time after the Closing Date, Seller will, at
the request of Buyer, execute and deliver such other and further instruments of
sale, assignment, transfer and conveyance and take such other and further
actions as Buyer may reasonably request in order to make all the benefits of the
Assigned Contracts and rights of Seller included in the Assets available to
Buyer, to vest in Buyer and put Buyer in possession of the Assets and to
transfer to Buyer any contracts and rights of Seller relating to the Assets and
to assure to Buyer the benefits thereof and effectuate fully the purposes of
this Agreement.
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(b) With respect to any Assigned Contract which is not assumed
by Buyer at the Closing because a consent to assignment is required but not
obtained prior to the Closing, if Seller or Buyer shall thereafter obtain such
consent to assignment, then, at Buyer's request, Seller and Buyer shall each
execute and deliver such instruments of assignment and assumption as may
reasonably be required for Seller to assign and Buyer to assume such Assigned
Contract, subject to all the terms and conditions of this Agreement as if such
Assigned Contract had been included in the Assets at the Closing.
Section 10.2. Seller to Change Name. On the Closing Date or as soon
thereafter as practicable (but in no event more than 5 business days
thereafter), Seller shall adopt (and shall make all appropriate filings so as to
adopt), and shall thereafter do business under, a new name that does not contain
the words "Alwaysi" or "Always Independent" or any variations thereof.
Section 10.3. Preservation of Corporate Records. Seller shall preserve
and keep the Corporate Records for a period of seven years from the Closing Date
and shall make such Corporate Records and personnel, if any, of Seller available
to Buyer as Buyer may reasonably require (i) in connection with, among other
things, any insurance claims by, Legal Proceedings against or governmental
investigations of Buyer or (ii) in order to enable Buyer to comply with its
obligations under the Code, any other applicable statute with respect to
taxation, this Agreement and each other agreement, document or instrument
contemplated hereby.
Section 10.4. Confidentiality. From and after the Closing Date, none of
Seller, nor any of its employees shall divulge, furnish or make available to any
person any knowledge or information with respect to the Assets or Buyer or XXXX
(other than in the regular course and in furtherance of the Buyer's business)
which is, or which Seller is advised or has reason to believe is, confidential
(including, but not limited to, information relating to any marketing, financial
or personnel matters in connection with the Assets).
Section 10.5. Transfer of Shares. Buyer and XXXX acknowledge that
Seller intends to dissolve and liquidate subsequent to the Closing and in
connection with such dissolution and liquidation will transfer the Stock
Consideration to its Shareholders. Buyer and XXXX agree to fully cooperate with
such transfer of the Stock Consideration.
ARTICLE XI
INDEMNIFICATION
Section 11.1. Indemnification.
---------------
(a) Seller agrees to indemnify and hold Buyer and XXXX
harmless from and against any and all losses, liabilities, obligations,
judgments, damages, deficiencies, costs, penalties and expenses (including,
without limitation, reasonable attorneys' fees and expenses) (collectively,
"Losses") based upon, attributable to or resulting from:
(i) (A) any misrepresentation or breach of warranty on the
part of Seller under this Agreement or any of the Seller Documents or
(B) any breach of covenant or other agreement on the part of Seller
under this Agreement, or any of the Seller Documents;
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(ii) any Liabilities of Seller not expressly assumed by Buyer
under the terms of this Agreement, including, without limitation:
(A) any liabilities and obligations arising out of or
based upon the conduct of the business of Seller prior to the
Closing Date (other than obligations or liabilities that are
expressly assumed by Buyer under the terms of this Agreement);
(B) any claims for any injury to person or property
attributable to any services rendered by Seller prior to the
Closing Date, regardless of whether such claims are asserted
prior to or after the Closing;
(C) any claims by any employee or former employee of
Seller arising out of the employment or termination of
employment of the employee or former employee on or prior to
the Closing Date or as a result of the transactions
contemplated by this Agreement;
(D) any third party claims with respect to
occurrences or events that occurred on or prior to the Closing
Date and relate to Seller, its employees or the Assets,
including the Liabilities of Seller listed in Schedule 3.5
hereto; and
(iii) any claims related to this Agreement made by any
Shareholders under Chapter 13 of the California Corporations Code or
otherwise challenging the validity of the transactions contemplated by
this Agreement, the amount or nature of the Consideration to be paid by
Buyer hereunder, or any other matters related to the consummation of
the transactions contemplated by this Agreement.
(iv) any liabilities and obligations, based in any way on
agreements, arrangements or understandings made by or on behalf of
Seller, for any brokerage fees, finder's fees, commissions or like
payments in respect of the transactions contemplated by this Agreement;
and
(v) all actions, suits, proceedings, demands, assessments,
judgments, costs, penalties and expenses, including reasonable
attorneys' fees, incident to the foregoing.
(b) Buyer and XXXX agree to indemnify and hold Seller harmless from and
against any and all Losses attributable to or resulting from:
(i) (A) any misrepresentation or breach of warranty on the
part of Buyer or XXXX under this Agreement or any of the Buyer
Documents or (B) any breach of covenant or other agreement on the part
of Buyer under this Agreement or any of the Buyer Documents;
23
(ii) any liabilities expressly assumed by Buyer pursuant to
Section 1.3 hereof;
(iii) to the extent Buyer is not indemnified with respect
thereto under Section 11.1(a), any claims that arise from Buyer's
ownership or operation of the Assets subsequent to the Closing Date;
(iv) any liabilities and obligations, based in any way on
agreements, arrangements or understandings made by or on behalf of
Buyer or XXXX, for any brokerage fees, finder's fees, commissions or
like payments in respect of the transactions contemplated by this
Agreement; and
(v) all actions, suits, proceedings, demands, assessments,
judgments, costs, penalties and expenses, including reasonable
attorneys' fees, incident to the foregoing.
Section 11.2. Procedures for Indemnification.
------------------------------
(a) Whenever a claim shall arise for indemnification under
Section 11.1 above, with the exception of claims for litigation expenses in
respect of a litigation as to which a notice of claim, as provided below in this
Section 11.2, has previously been given, which expenses shall be funded on an
ongoing basis, the party entitled to indemnification (the "Indemnified Party")
shall promptly notify the party from whom indemnification is sought (the
"Indemnifying Party") of such claim and, when known, the facts constituting the
basis for such claim; provided, however, that in the event of any claim for
indemnification hereunder resulting from or in connection with any claim or
Legal Proceeding by a third party, the Indemnified Party shall give such notice
thereof to the Indemnifying Party not later than 10 business days prior to the
time any response to the asserted claim is required, if possible, and in any
event within 5 business days following receipt of notice thereof.
Notwithstanding anything in the preceding sentence to the contrary, the failure
of any Indemnified Party to so notify the Indemnifying Party shall not relieve
the Indemnifying Party from any liability for indemnification it may have if and
to the extent that the Indemnifying Party shall not have been prejudiced by such
omission. In the event of any such claim for indemnification resulting from or
in connection with a claim or Legal Proceeding by a third party, the
Indemnifying Party may, at its sole cost and expense, assume the defense
thereof; provided, however, that the Indemnifying Party shall first have agreed
in writing that it does not and will not contest its responsibility for
indemnifying the Indemnified Party in respect of Losses attributable to such
claim or Legal Proceeding; and, provided, further, that Seller shall not be
entitled to assume the defense of any claim or Legal Proceeding against Buyer or
XXXX for Taxes with respect to a period ending after the Closing Date. If an
Indemnifying Party assumes the defense of any such claim or Legal Proceeding,
the Indemnifying Party shall be entitled to select counsel and take all steps
necessary in the defense thereof; provided, however, that no settlement shall be
made without the prior written consent of the Indemnified Party, which consent
shall not be unreasonably withheld (and if the Indemnified Party shall withhold
its consent to any monetary settlement proposed by the Indemnifying Party and
24
which the other party to the action has indicated it is prepared to accept, the
Indemnified Party shall in no event be deemed for purposes of this Agreement, to
have suffered Losses in connection with such claim or proceeding in excess of
the proposed amount of such settlement); provided, further, that the Indemnified
Party may, at its own expense, participate in any such proceeding with the
counsel of its choice without any right of control thereof. So long as the
Indemnifying Party is in good faith defending such claim or Legal Proceeding,
the Indemnified Party shall not compromise or settle such claim without the
prior written consent of the Indemnifying Party. If the Indemnifying Party does
not assume the defense of any such claim or Legal Proceeding in accordance with
the terms hereof, the Indemnified Party may defend (and, in the case of any
claim or Legal Proceeding against Buyer or XXXX for Taxes with respect to a
period ending after the Closing Date, shall defend) against such claim or Legal
Proceeding in such manner as it may deem appropriate, including, but not limited
to, settling such claim or litigation (after giving prior written notice of the
same to the Indemnifying Party and obtaining the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld) on such
terms as the Indemnified Party may deem appropriate, and the Indemnifying Party
will promptly indemnify the Indemnified Party in accordance with the provisions
of this Section 11.2; provided, however, that if the Indemnified Party does not
obtain the prior written consent of the Indemnifying Party to any such
settlement, and such written consent is not unreasonably withheld by the
Indemnifying Party, the Indemnified Party shall not be entitled to
indemnification hereunder from such Indemnifying Party with respect to the claim
settled. Notwithstanding anything in this Section 11.2 to the contrary, if, in
any claim or Legal Proceeding with respect to which the Indemnified Party has
given the notice required under this Section 11.2, (i) the Indemnifying Party
shall not have promptly employed counsel reasonably satisfactory to the
Indemnified Party or (ii) such Indemnified Party shall have reasonably
concluded, based upon the opinion of its outside legal counsel, that there may
be one or more legal defenses available to it that are different from or
additional to those available to the Indemnifying Party, then in either event
(x) the Indemnified Party may participate in any such proceeding with the
counsel of its choice, the expense for which shall be borne by the Indemnifying
Party (but in no event shall the Indemnifying Party be required to pay the fees
and expenses of more than one counsel employed by the Indemnified Party with
respect to such claim or proceeding) and (y) the Indemnifying Party shall not
have the right to direct the defense of any such action on behalf of the
Indemnified Party.
(b) If Buyer or XXXX is the Indemnifying Party, all payments
by the Indemnifying Party pursuant to this Article XI shall be in cash and in
immediately available funds. If Seller is the Indemnifying Party, Seller, in its
sole discretion, may elect to make all payments pursuant to this Article XI in
the form of (m) cash; (n) shares of the Stock Consideration valued at the
average closing price of the Common Stock on the NASDAQ National Market for the
five (5) business days preceding the Closing Date; or (o) some combination of
(m) and (n).
(c) Notwithstanding any other provision in this Agreement, in
the absence of fraud or willful misconduct on the part of the Indemnifying Party
or any of its employees or agents, an Indemnifying Party shall not be
responsible for Losses indemnifiable under this Article XI in excess of Nine
Hundred Thousand Dollars ($900,000); provided, however, that the foregoing cap
shall not apply to any Losses in respect of Taxes for which Seller has
indemnified Buyer under Section 11.1(a).
25
(d) Except as provided in Section 13.1, the indemnification
obligations set forth in Section 11.1 shall expire upon the latter of the filing
of a Certificate of Dissolution of Seller with the California Secretary of State
or December 31, 2001; provided that such indemnification obligations shall
survive with respect to any claims made by an Indemnified Party to the
Indemnifying Party under Section 11.1 prior to such latter date.
Section 11.3. Determination of Damages and Related Matters.
--------------------------------------------
To the extent any payment under this Article XI cannot properly be treated as an
adjustment to the Consideration for Tax purposes, then any such amount shall be
increased to take account of any net Tax cost actually incurred by the
Indemnified Party by reason of the receipt of any indemnity payment (grossed-up
for such increase) for the taxable year during which such payment is received.
With respect to any Tax Cost arising in a year subsequent to the year in which
the indemnity payment is made, the Indemnifying Party shall pay to the
Indemnified Party the amount of such Tax Cost when such Tax Cost is actually
incurred. Any payment to an Indemnified Party pursuant to this Article XI shall
be reduced to take account of any net Tax benefit actually realized by the
Indemnified Party in respect of the taxable year in which such Loss is incurred
or paid and, with respect to a Tax benefit arising in a year subsequent to the
year in which the Loss is paid or incurred, the Indemnified Party shall pay to
the Indemnifying Party the amount of such Tax benefit (including, as relevant,
any member of its Affiliated Group) when such Tax benefit is actually realized.
In computing the amount of any such Tax cost or Tax benefit, the Indemnified
Party shall be deemed to recognize all other items of income, gain, loss,
deduction or credit before recognizing any item arising from the receipt of any
indemnity payment hereunder or the incurrence or payment of any indemnified
loss, liability, claim, damage or expense.
ARTICLE XII
TERMINATION
Section 12.1. Termination. This Agreement may be terminated (i) by the
written agreement of Seller and Buyer, (ii) by either Seller or Buyer by written
notice to the other given after the date that is twenty (20) calendar days after
the date of this Agreement if the Closing shall not have occurred on or before
such date, and (iii) by Buyer upon written notice given to Seller on or before
ten (10) calendar days after the date of this Agreement if, in the course of the
due diligence review referred to in Section 5.1, Buyer obtains or discovers
information concerning Seller or the Assets, which, in the sole judgment of
Buyer, could materially adversely affect the business, assets, financial
condition or results of operations of Seller or Buyer (unless, within 10 days
after delivery by Buyer of such notice, Seller is able to satisfy Buyer that the
event, occurrence, fact or situation discovered or obtained by Buyer has been
cured and could not materially adversely affect the business, assets, financial
condition or results of operations of Seller or Buyer). The date of any such
termination is referred to herein as the "Termination Date."
26
Section 12.2. Liabilities After Termination. Upon any termination of
this Agreement pursuant to Section 12.1 above, no party hereto shall thereafter
have any further liability or obligation hereunder; provided, however, that no
such termination shall relieve any party hereto of any liability for any breach
of this Agreement prior to the date of such termination and provided, further,
that Seller shall remain bound by Section 5.4 above and each of Seller and Buyer
shall remain bound by Section 13.5 below.
ARTICLE XIII
MISCELLANEOUS
Section 13.1. Survival of Representations and Warranties. Seller, Buyer
and XXXX hereby agree that the representations and warranties contained in this
Agreement, as supplemented or modified by any amendments to the Schedules hereto
made on or prior to the Closing Date, shall survive the execution and delivery
of this Agreement and shall further survive the Closing hereunder until December
31, 2001, regardless of any investigation made by the parties hereto; provided,
however, that the representations and warranties contained in Section 3.13 shall
survive for the applicable statute of limitations plus 90 days.
Section 13.2. Entire Agreement. This Agreement (with its Schedules and
Exhibits) contains, and is intended as, a complete statement of, all of the
terms and the arrangements between the parties hereto with respect to the
matters provided for herein, and supersedes any previous agreements and
understandings among the parties hereto with respect to those matters including,
without limitation, the Mutual Non-Disclosure Agreement dated June 4, 2001.
Section 13.3. Governing Law; Construction. This Agreement and all
agreements related thereto shall be governed by and construed in accordance with
the laws of the State of Florida applicable to contracts to be made, executed,
delivered and performed wholly in such state, but without regard to conflicts of
law principles of such state. The table of contents, captions and headings in
this Agreement are for reference purposes only and shall be given no effect in
the construction and interpretation of this Agreement. No provision of this
Agreement shall be construed against either party because such party drafted or
caused to be drafted such provision. Each provision of this Agreement shall be
construed as if such provision were proposed by both Buyer and Seller.
Section 13.4. Transfer Taxes. Seller shall pay when due (i) all
transfer and documentary taxes and fees imposed with respect to instruments of
conveyance in the transactions contemplated hereby and (ii) all sales, use and
other transfer or similar taxes on the transfer of the Assets contemplated
hereby. Buyer shall execute and deliver to Seller at the Closing any
certificates or other documents as Seller may reasonably request to perfect any
exemption from any such transfer, documentary, sales or use tax.
Section 13.5. Expenses. Each of Buyer and Seller shall bear its own
expenses (including, without limitation, all fees and expenses of financial
institutions, accountants, legal counsel, brokers, investment bankers and other
advisors), incurred in connection with the negotiation, preparation, execution,
review, delivery and performance of this Agreement, each of the other documents
and instruments executed in connection with or contemplated by this Agreement or
related hereto, and the consummation of the transactions contemplated hereby and
thereby.
27
Section 13.6. Notices. Any notice, request, instruction or other
communication to be given under this Agreement or otherwise in connection with
the Acquisition shall be in writing and shall be delivered by hand or prepaid
telecopy, or sent, postage prepaid, by registered, certified or express mail, or
reputable overnight courier service and shall be deemed given when so delivered
by hand or telecopied, or if mailed, three days after mailing (one business day
in the case of express mail or overnight courier service) to a party at the
following address (or at such other address as such party may have specified by
notice given to the other party pursuant to this provision):
if to Seller at: Prior to the Closing Date:
Always Independent Entertainment Corp.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx
Telecopier No.: (000) 000-0000
After the Closing Date:
Always Independent Entertainment Corp.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx
Telecopier No.: (000) 000-0000
with a copy to: Xxxxxxx Xxxxx & Xxxxx LLP
Xxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Low
Telecopier No.: (000) 000-0000
and if to Buyer at: Independent Hollywood, Inc.
0000 Xxxxxx Xxxx
Xxxxx 000X
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxxxxx
Telecopier No.: (000) 000-0000
with a copy to: Independent Hollywood, Inc.
0000 Xxxxxx Xxxx
Xxxxx 000X
Xxxx Xxxxx, Xxxxxxx 00000
Attention: General Counsel
Telecopier No.: (000) 000-0000
28
and if to XXXX at: Hollywood Media Corp.
0000 Xxxxxx Xxxx
Xxxxx 000X
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxxxxx
Telecopier No.: (000) 000-0000
with a copy to: Hollywood Media Corp.
0000 Xxxxxx Xxxx
Xxxxx 000X
Xxxx Xxxxx, Xxxxxxx 00000
Attention: General Counsel
Telecopier No.: (000) 000-0000
Section 13.7. Severability. If any provision of this Agreement, or the
application of such provision to Buyer, XXXX, Seller, or any Person or
circumstance, shall be held invalid, then the remainder of this Agreement, or
the application of such provision to persons, entities or circumstances other
than those as to which it is held invalid, shall not be affected thereby.
Section 13.8. Binding Effect; No Assignment.
-----------------------------
(a) This Ag1reement shall be binding upon and inure to the
benefit of the parties and their respective successors and permitted assigns.
Nothing in this Agreement shall create or be deemed to create any third party
beneficiary rights in any Person not party to this Agreement. Except as
expressly permitted below, no assignment of this Agreement or of any rights or
obligations hereunder may be made by either party (by operation of law or
otherwise) without the prior written consent of the other party hereto and any
attempted assignment without such required consent shall be void.
(b) After the Closing, Buyer may assign any or all of its
rights and obligations with respect to the Assets without the consent of Seller,
provided that Buyer shall cause its obligations to Seller under this Agreement
in respect of the Acquisition to be binding upon any successor to Buyer and
Buyer shall directly and unconditionally guarantee the obligations of such
successor.
Section 13.9. Amendments. This Agreement may be amended, supplemented
or modified, and any provision hereof may be waived, only pursuant to a written
instrument making specific reference to this Agreement signed by each of the
parties hereto.
Section 13.10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
29
IN WITNESS WHEREOF, the parties hereto have executed this
instrument as of the date and year first above written.
ALWAYS INDEPENDENT ENTERTAINMENT CORP.
By: /s/ Xxxxxx Xxxxxxxxx
------------------------------------------------
Xxxxxx Xxxxxxxxx
President, Chairman of the Board, and Chief
Financial Officer
INDEPENDENT HOLLYWOOD, INC.
By: /s/ W. Xxxxxx Xxxxxxx
------------------------------------------------
W. Xxxxxx Xxxxxxx
Executive Vice President
HOLLYWOOD MEDIA CORP.
By: /s/ W. Xxxxxx Xxxxxxx
-----------------------------------------------
W. Xxxxxx Xxxxxxx
Senior Vice President and General Counsel
EXECUTION COPY
TABLE OF CONTENTS
-----------------
Page
Article I ACQUISITION AND TRANSFER OF ASSETS................................................1
Section 1.1. Assets to be Acquired......................................................1
Section 1.2. Excluded Assets............................................................2
Section 1.3. Assumed and Excluded Liabilities...........................................3
Article II CONSIDERATION.....................................................................3
Section 2.1. Amount and Form of Consideration...........................................3
Section 2.2. Allocation of Purchase Price...............................................3
Article III REPRESENTATIONS AND WARRANTIES OF SELLER..........................................4
Section 3.1. Organization...............................................................4
Section 3.2. Authorization of Agreement.................................................4
Section 3.3. Consents and Approvals; No Violation.......................................4
Section 3.4. Title to Assets............................................................5
Section 3.5. No Undisclosed Liabilities.................................................5
Section 3.6. Results of Operations; Subscriptions.......................................5
Section 3.7. Litigation, etc............................................................5
Section 3.8. Compliance with Law........................................................6
Section 3.9. Employment Agreements......................................................6
Section 3.10. Certain Agreements.........................................................6
Section 3.11. Real Property..............................................................7
Section 3.12. Intangible Property........................................................7
Section 3.13. Taxes......................................................................8
Section 3.14. Permits...................................................................10
Section 3.15. Related Parties; Related Party Transactions...............................10
Section 3.16. Options...................................................................10
Section 3.17. Year 2000.................................................................11
Section 3.18. Investor Representations..................................................11
Section 3.19. Exemption from Registration; Restricted Securities........................11
Section 3.20. Brokers...................................................................11
i
Article IV REPRESENTATIONS AND WARRANTIES OF BUYER..........................................11
Section 4.1. Organization..............................................................11
Section 4.2. Authorization of Agreement................................................11
Section 4.3. Consents and Approvals; No Violations.....................................12
Section 4.4. Litigation................................................................12
Section 4.5. Capital Stock of Buyer....................................................12
Section 4.6. SEC Reports; Financial Statements.........................................13
Section 4.7. Brokers...................................................................13
Article V COVENANTS OF SELLER..............................................................13
Section 5.1. Access to Information.....................................................13
Section 5.2. Exclusivity...............................................................14
Section 5.3. Conduct of Business.......................................................14
Section 5.4. Public Announcements......................................................15
Section 5.5. No Breach of Representations and Warranties...............................15
Section 5.6. Updating Information......................................................15
Section 5.7. Consents..................................................................16
Section 5.8. Taxable Transaction.......................................................16
Section 5.9. Further Actions...........................................................16
Article VI COVENANTS OF buyer...............................................................16
Section 6.1. No Breach of Representations and Warranties...............................16
Section 6.2. Consents and Conditions...................................................16
Section 6.3. Taxable Transaction.......................................................16
Section 6.4. Further Actions...........................................................16
Article VII CONDITIONS PRECEDENT TO buyer's OBLIGATIONS......................................16
Section 7.1. Conditions................................................................18
Article VIII CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS.....................................18
Section 8.1. Conditions................................................................18
Article IX THE CLOSING......................................................................19
Section 9.1. Closing Date..............................................................19
Section 9.2. Proceedings at the Closing................................................19
Section 9.3. Deliveries by Seller to Buyer.............................................19
Section 9.4. Deliveries by Buyer to Seller.............................................20
ii
Article X ADDITIONAL POST-CLOSING COVENANTS................................................20
Section 10.1. Further Assurances by Seller..............................................20
Section 10.2. Seller to Change Name.....................................................21
Section 10.3. Preservation of Corporate Records.........................................21
Section 10.4. Confidentiality...........................................................21
Article XI INDEMNIFICATION..................................................................21
Section 11.1. Indemnification...........................................................21
Section 11.2. Procedures for Indemnification............................................23
Section 11.3. Determination of Damages and Related Matters..............................24
Article XII TERMINATION......................................................................25
Section 12.1. Termination...............................................................25
Section 12.2. Liabilities After Termination.............................................25
Article XIII MISCELLANEOUS....................................................................25
Section 13.1. Survival of Representations and Warranties................................25
Section 13.2. Entire Agreement..........................................................26
Section 13.3. Governing Law; Construction...............................................26
Section 13.4. Transfer Taxes............................................................26
Section 13.5. Expenses..................................................................26
Section 13.6. Notices...................................................................26
Section 13.7. Severability..............................................................27
Section 13.8. Binding Effect; No Assignment.............................................27
Section 13.9. Amendments................................................................28
Section 13.10. Counterparts..............................................................28
iii
EXECUTION COPY
SCHEDULE OF DISCLOSURES
1.1(a) (i) Assigned Contracts
1.1(a)(iii) Fixed Assets
1.2 Excluded Assets
3.1 Shareholders
3.3(b) Consents
3.5 Liabilities
3.7 Litigation, etc.
3.9 Employment Agreements
3.10 Certain Agreements
3.11(b) Real Property
3.12 Intangible Property
3.13 Taxes
3.14 Permits
3.16 Options
5.3 Conduct of Business
ASSET PURCHASE AGREEMENT
BY AND AMONG
HOLLYWOOD MEDIA CORP.,
INDEPENDENT HOLLYWOOD, INC.
AND
ALWAYS INDEPENDENT ENTERTAINMENT CORP.
Dated as of July 19, 2001
