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Exhibit 2.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
BETWEEN
NETWORK 1 FINANCIAL CORPORATION
BUYER
AND
CYBERCASH, INC.
SELLER
MARCH 1, 2001
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TABLE OF CONTENTS
Page
1. DEFINITIONS; INTERPRETATION..............................................................1
(a) Definitions......................................................................1
(b) Interpretation...................................................................6
2. SALE AND PURCHASE OF ACQUIRED ASSETS; EXCLUDED ASSETS; ASSUMPTION OF LIABILITIES........6
(a) Purchase and Sale of Acquired Assets.............................................6
(b) Excluded Assets..................................................................7
(c) Assumption of Liabilities........................................................9
(d) Excluded Liabilities.............................................................9
3. PAYMENT..................................................................................9
(a) Payment..........................................................................9
(b) Purchase Price Adjustment........................................................9
4. CLOSING; CLOSING DOCUMENTS..............................................................10
(a) Closing.........................................................................10
(b) Deliveries by Seller............................................................10
(c) Deliveries by Buyer.............................................................11
5. REPRESENTATIONS AND WARRANTIES OF SELLER................................................11
(a) Organization and Authority......................................................11
(b) No Approvals Conflict...........................................................12
(c) Litigation......................................................................12
(d) Financial Statements............................................................12
e) Title to Acquired Assets........................................................12
(f) Environmental Matters...........................................................13
(g) Contracts.......................................................................13
(h) Real and Personal Property Leases...............................................13
(i) Real Property; Condemnation.....................................................14
(j) Employees Schedule..............................................................14
(k) Brokers' Fees...................................................................14
(m) Patents, Trademarks, Trade Names, Etc...........................................14
(l) Disclaimer of Other Representations and Warranties..............................14
6. REPRESENTATIONS AND WARRANTIES OF BUYER.................................................15
(a) Organization and Authority......................................................15
(b) No Approvals; Conflict..........................................................15
(c) Litigation......................................................................15
(d) Brokers' Fees...................................................................15
7. EMPLOYEES...............................................................................15
8. COVENANTS...............................................................................16
(a) General.........................................................................16
(b) Operation.......................................................................16
(c) Reasonable Access...............................................................16
(d) Notice of Developments..........................................................17
(e) Bankruptcy Court Approval.......................................................17
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(f) Order Approving Notice Procedures...............................................18
(g) Post-Closing Access to Records..................................................18
(h) Access to Certain Employees.....................................................18
9. CONDITIONS TO CLOSING...................................................................18
(a) Conditions to Obligation of Buyer...............................................18
(b) Conditions to Obligation of Seller..............................................19
10. TERMINATION.............................................................................20
(a) Mutual Agreement................................................................20
(b) Adverse Development.............................................................20
(c) Termination by Buyer............................................................20
(d) Termination by Seller...........................................................20
(e) Effect of Termination...........................................................21
11. MISCELLANEOUS...........................................................................21
(a) Survival of Representations and Warranties......................................21
(b) Expenses and Fees...............................................................21
(c) Transfer Taxes..................................................................21
(d) Waiver..........................................................................21
(e) Press Releases and Public Announcements.........................................22
(f) Third-Party Beneficiaries.......................................................22
(g) Entire Agreement; Amendment.....................................................22
(h) Succession and Assignment.......................................................22
(i) Counterparts: and Facsimile Execution...........................................22
(j) Headings........................................................................22
(k) Notices.........................................................................23
(l) Governing Law; Jurisdiction.....................................................24
(m) Arbitration.....................................................................24
(n) Confidentiality.................................................................24
(o) Severability....................................................................24
(p) Incorporation of Disclosure Letter..............................................25
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EXHIBITS
Exhibit A Assignment and Assumption Agreement
Exhibit B Xxxx of Sale
Exhibit C Closing Certificate of Seller
Exhibit D Closing Certificate of Buyer
Exhibit E Motion to Approve Sale
Exhibit F Sale Order
Exhibit G Bid Procedures Order
Exhibit H Accounts Receivable Collection Agreement
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made as of March 1,
2001 by and between NETWORK 1 FINANCIAL CORPORATION, a Virginia corporation
("BUYER"), and CYBERCASH, INC., a Delaware corporation ("Seller"). Buyer and
Seller are sometimes referred to herein individually as a "PARTY" and together
the "PARTIES."
RECITALS
A. Seller desires to sell to Buyer, and Buyer desires to purchase and
acquire from Seller, certain assets used or held for use in connection with the
Business (as defined below) in accordance with and subject to the terms and
conditions set forth in this Agreement.
B. Following the execution of this Agreement, Seller plans to file a
voluntary petition for relief under Chapter 11 of the Bankruptcy Code (as
defined below) (the "BANKRUPTCY CASE") in the United States Bankruptcy Court for
the District of Delaware (the "COURT").
C. The Acquired Assets (as defined below) will be sold pursuant to the
terms and conditions of this Agreement and an order of the Court approving such
sale under Sections 105, 363, 365 and 1146 of the United States Bankruptcy Code
(11 U.S.C. Section 101 et. seq.) (the "BANKRUPTCY CODE"), and such sale will
include the assumption and assignment of certain executory contracts and
unexpired leases and liabilities thereunder in accordance with Section 365 of
the Bankruptcy Code.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties agree as follows:
1. DEFINITIONS; INTERPRETATION.
(a) Definitions. In addition to the terms defined elsewhere in
this Agreement, the following terms shall have the respective meanings specified
below:
"AAA" has the meaning set forth in Section 11(m).
"ACCOUNTS RECEIVABLE" means all rights to payment for goods sold,
licensed or leased or for services rendered, all sums of money or other proceeds
due or becoming due thereon and all instruments pertaining thereto.
"ACQUIRED ASSETS" has the meaning set forth in Section 2(a) hereof.
"ACQUIRED CONTRACTS" means all contracts to which Seller is a party
except for those contracts listed in Section 2(b)(v) of the Disclosure Letter
and which Acquired Contracts will be identified on Attachment 1 to the
Assumption Agreement.
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"ACQUIRED LEASES" means the real and personal property leases relating
to property that is used or held for use solely or primarily in connection with
the conduct of the Business identified in Section 5(h) of the Disclosure Letter.
"ACQUIRED SUBSIDIARIES" means ICVerify, Inc., Tellan, Inc. and CyberCash
India, Pvt. Ltd.
"AFFILIATE" means, with respect to any Person; (i) a spouse or member of
the immediate family of such Person; (ii) any member, manager, director, officer
or partner of such Person; (iii) any corporation, partnership, business,
association, limited liability company, firm or other entity of which such
Person is a member, manager, director, officer or partner or owns or controls,
directly or indirectly, more than fifty percent (50%) of the voting stock or
other equity interests; and (iv) any other Person that directly or indirectly
controls, is controlled by or is under direct or indirect common control with
such first Person.
"ASSUMED LIABILITIES" has the meaning set forth in Section 2(c).
"ASSUMPTION AGREEMENT" means that certain assignment and assumption
agreement to be executed and delivered by the Parties at Closing in
substantially the form of Exhibit A attached hereto.
"BANKRUPTCY CASE" has the meaning set forth in the preamble to this
Agreement.
"BANKRUPTCY CODE" means Title 11 of the United States Code, 11 U.S.C.
Sections 1.01 et. seq., as in effect on the date Seller files its voluntary
petitions for relief with the Court as set forth in the preamble to this
Agreement.
"BID PROCEDURES ORDER" has the meaning set forth in Section 8(f).
"XXXX OF SALE" has the meaning set forth in Section 4(b).
"BREAKUP FEE" has the meaning set forth in Section 3(c).
"BUSINESS" means Seller's operating business which consists of the
development and distribution of transaction processing services and software
products, but excluding the provision of such services and distribution of such
products within Japan.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day
on which commercial banks in Wilmington, Delaware, are authorized or required by
Law to be closed.
"BUYER'S CLOSING DOCUMENTS" has the meaning set forth in Section 4(c).
"CLAIM" shall have the meaning set forth in Section 101(5) of the
Bankruptcy Code.
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"CLOSING" has the meaning set forth in Section 4(a).
"CLOSING DATE" has the meaning set forth in Section 4(a).
"CODE" means the Internal Revenue Code of 1986, any amendments thereto,
any successor statutes and any regulations promulgated thereunder.
"COLLECTION AGREEMENT" has the meaning set forth in Section 4(b)(ix).
"CONFIDENTIAL INFORMATION" means all trade secrets and all proprietary
and confidential information concerning the businesses and affairs of Seller and
its Affiliates, the Acquired Assets or the Business that are not already
generally available to the public.
"COURT" has the meaning set forth in the preamble to this Agreement.
"DISCLOSURE LETTER" has the meaning set forth in Section 5.
"EFFECTIVE TIME" has the meaning set forth in Section 4(a).
"EMPLOYEES" means the employees of Seller immediately prior to the
Effective Time.
"EXCLUDED ASSETS" has the meaning set forth in Section 2(b).
"EXCLUDED LIABILITIES" has the meaning set forth in Section 2(d).
"EXCLUDED SUBSIDIARIES" means Reston Parkway I, Inc., a Delaware
corporation and Reston Parkway II, Inc., a Delaware corporation, and any
Subsidiary of either such entity.
"FINANCIAL STATEMENTS" means CyberCash, Inc.'s audited consolidating
profit and loss statements for the Business for the fiscal year ended December
31, 2000.
"FORMER SELLER EMPLOYEES" has the meaning set forth in Section 7.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"GOVERNMENTAL AUTHORITY" means any agency, board, bureau, executive,
court, commission, department, legislature, tribunal, instrumentality or
administration of the United States, a foreign country or any state, provincial,
territorial, municipal, county, local or other governmental entity in the United
States or a foreign country.
"GOVERNMENTAL PERMITS" means all licenses, permits, approvals, consents,
certificates, waivers, exemptions, orders, registrations, certificates,
variances and other authorizations from any and all Governmental Authorities,
including any state sales tax numbers, used or held for use solely or primarily
in connection with the conduct of the Business.
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"HIRED EMPLOYEES" has the meaning set forth in Section 7.
"INTELLECTUAL PROPERTY" means: (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof; (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith; (c) all computer software programs, all copyrightable works, all
copyrights, and all applications, registrations, and renewals in connection
therewith; (d) all mask works and all applications, registrations, and renewals
in connection therewith; (e) all trade secrets and confidential business
information (including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information, and business and marketing plans and proposals); (f) all
computer software (including data and related documentation); (g) all other
proprietary rights; and (h) all copies and tangible embodiments thereof (in
whatever form or medium).
"KNOWLEDGE OF SELLER" means the actual knowledge of Xxxx X. Xxxxxx,
Xxxxxx Xxxx and Xxxxxx X. Xxxxxxx.
"LAW" means any law, statute, regulation, rule, code, ordinance or court
order enacted, adopted, issued or promulgated by any Governmental Authority.
"LIABILITY" or "LIABILITIES" means any and all liabilities, obligations,
judgments, damages, charges, claims, costs, debts and indebtedness of any and
every kind and nature whatsoever, absolute or contingent, liquidated or
unliquidated, in Law, equity or otherwise.
"LIEN" means, with respect to any asset or property of any character,
any mortgage, pledge, security interest, lien (including any mechanics or
materialmen lien, tax lien, shipper or warehousemen lien or customs lien),
restriction, right of first refusal, option or other right to acquire, transfer
for security, charge, claim, easement, conditional sale agreement, title
retention agreement, defect in title, or other interest, encumbrance or adverse
claim of any nature pertaining to or affecting such asset or property, whether
voluntary or involuntary and whether arising by Law, contract or otherwise.
"MATERIAL ADVERSE EFFECT" means any event, occurrence, fact, condition,
change or effect that is materially adverse to the business, assets, financial
obligations or results of operations of the Business, taken as a whole taking
into account the operation of the Seller as a distressed company prior to and
following the commencement of the Bankruptcy Case; provided, that: (i)
commencement and conduct of the Bankruptcy Case as referenced in and
contemplated by this Agreement; (ii) defaults under Governmental Permits, real
property leases and personal property leases including the Acquired Leases, or
contracts (including the
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Acquired Contracts) occasioned solely by the commencement of the Bankruptcy
Case; and (iii) the insufficiency of working capital of the Business occasioned
by the inability to obtain additional funding, shall not, individually or in the
aggregate, be deemed to constitute a Material Adverse Effect.
"MOTION TO APPROVE SALE" has the meaning set forth in Section 8(e).
"NET DECLINE IN REGISTERED CUSTOMERS" means the percentage determined by
dividing (i) the number that is the difference between the number of Registered
Merchants on the date the Court enters the Sale Order and the number of
Registered Merchants on the date hereof by (ii) the number of Registered
Merchants on the date hereof.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business of
Seller consistent with Seller's past custom and practice (including with respect
to quantity and frequency), taking into account the commencement of the
Bankruptcy Case and the operation of the Seller as a distressed company prior to
and following the commencement of the Bankruptcy Case including the occurrence
of the following events: (i) defaults under Governmental Permits, real property
leases and personal property leases including the Acquired Leases, or contracts
(including the Acquired Contracts) occasioned solely by the commencement of the
Bankruptcy Case; and (ii) the insufficiency of working capital of the Business
occasioned by the inability to obtain additional funding.
"PERMITTED ENCUMBRANCES" means Liens of Seller or the Acquired
Subsidiaries arising or which have arisen in the Ordinary Course of Business.
"PERSON" means any individual, corporation, partnership, proprietorship,
joint venture, limited liability company, association, joint-stock company,
trust, unincorporated organization, Governmental Authority, or other entity,
organization or institution of any type whatsoever,
"PRE-CLOSING EMPLOYMENT CLAIMS" has the meaning set forth in Section 7.
"PRELIMINARY PURCHASE PRICE" has the meaning set forth in Section 3(a).
"PURCHASE PRICE" has the meaning set forth in Section 3(b).
"RECORDS" has the meaning set forth in Section 2(a).
"REGISTERED MERCHANTS" means those customers of Seller that are
obligated to pay Seller a minimum monthly fee.
"SALE ORDER" means an order, in substantially the form attached hereto
as Exhibit F, entered by the Court approving this Agreement and the Assumption
Agreement and the transactions provided for herein and therein, including
approval of assignments of executory contracts and unexpired leases which order
shall be acceptable to Buyer in its reasonable discretion.
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"SELLER'S CLOSING DOCUMENTS" has the meaning set forth in Section 4(b).
"SEVERANCE OBLIGATIONS" means any obligation of Seller to pay to its
current or former employees (i) severance, and (ii) accrued but unused vacation
time, in each case in accordance with Seller's standard policies as a result of
termination of the employment of any such employee.
"SUBSIDIARY" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) directly or indirectly, owns a majority of the
common stock or has the power to vote or direct the voting of sufficient
securities to elect a majority of the directors.
"TRANSACTION DOCUMENTS" means the Seller's Closing Documents and the
Buyer's Closing Documents.
(b) Interpretation.
Words used herein, regardless of the number and gender used, shall be
deemed and construed to include any other number, singular or plural, and any
other gender, masculine, feminine or neuter, as the context requires and, as
used herein, unless the context otherwise requires, the words "hereof,"
"herein," and "hereunder," and words of similar import, shall refer to this
Agreement as a whole and not to any particular provision hereof. The term
"including" shall be deemed to mean including, without limitations. Accounting
terms used herein shall have the meanings given to them by GAAP applied on a
consistent basis by the Person to which they relate. References to any Law shall
be construed as a reference to the same as in effect on the date of this
Agreement. Unless otherwise expressly stated, all dollar amounts stated herein
are in United States currency.
2. SALE AND PURCHASE OF ACQUIRED ASSETS; EXCLUDED ASSETS;
ASSUMPTION OF LIABILITIES.
(a) Purchase and Sale of Acquired Assets. Upon the terms and
subject to the conditions of this Agreement and the Sale Order, on the Closing
Date, Seller shall sell, transfer, assign, convey and deliver to Buyer, and
Buyer shall purchase, accept and acquire from Seller, free and clear of any and
all Liens (other than Permitted Encumbrances), all of Seller's right, title and
interest as of the Effective Time in and to the properties and assets of Seller
and its Affiliates (other than the Excluded Subsidiaries) that are owned and
used or held for use solely or primarily in connection with the operation of the
Business, of every kind, nature, character and description, wherever located,
but excluding the Excluded Assets (collectively, the "ACQUIRED ASSETS"). By way
of illustration, and not limitation, the term "Acquired Assets" includes, but is
not limited to, each and all of the items in the following categories that
conform to the definition of the term "Acquired Assets":
(i) all machinery, equipment, motor vehicles,
furniture, furnishings, computers, computer networks, computer hardware,
telephone systems, fixtures, leasehold
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improvements, replacement parts, office supplies and similar tangible property
(including any of the foregoing purchased subject to any conditional sales or
title retention agreement in favor of any other Person);
(ii) all of the rights of Seller under the Acquired
Contracts and the Acquired Leases for, and pertaining to, all periods from and
after the Effective Time, including any right (A) to receive payment for
products sold or services rendered after the Effective Time and (B) to assert
claims and take other rightful actions in respect of breaches, defaults and
other violations of such contracts, arrangements, licenses, leases and other
agreements to the extent such violations occur following the Effective Time;
(iii) all Intellectual Property to the extent permitted
by Law, and except to the extent that it is employed solely in connection with
Excluded Assets, goodwill and contact telephone numbers associated therewith,
licenses and sublicenses granted and obtained with respect thereto, and rights
thereunder, remedies against infringement thereto and rights to protection of
interest therein under the laws of all jurisdictions, including any Intellectual
Property arising after the date hereof;
(iv) all books, records, operating data, manuals,
customer records and data and other materials (in any form or medium) except to
the extent solely relating to the Excluded Assets, including advertising matter,
catalogues, price lists, correspondence, mailing lists, lists of customers,
distribution lists, photographs, production data, sales and promotional
materials and records, purchasing materials and records, personnel records
(subject to any necessary employee consents), manufacturing and quality control
records and procedures, blueprints, research and development files, records,
data and laboratory books, Intellectual Property disclosures, media materials
and plates, accounting records, sales order files and litigation files
(collectively, "RECORDS");
(v) to the extent their transfer is permitted by law,
all Governmental Permits, including all applications therefor;
(vi) all manufacturer warranties and similar rights in
favor of Seller with respect to any Acquired Asset; and
(vii) all capital stock or other equity interests in the
Acquired Subsidiaries.
(b) Excluded Assets. Notwithstanding anything to the contrary
contained in Section 2(a) or any other provision of this Agreement, the Acquired
Assets shall not include the following properties and assets of Seller and its
Affiliates, as applicable (collectively, the "EXCLUDED ASSETS"):
(i) all cash and cash equivalents, all bank, custody
and investment accounts, all marketable securities;
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(ii) all deposits, withholdings, prepayments, credits and
refunds except as otherwise provided in Section 2(a)(vii);
(iii) all accounts, Accounts Receivable (except Accounts
Receivable due to Seller from the Acquired Subsidiaries), notes and notes
receivable which are payable to Seller or its Affiliates, all guaranties and
security therefor, and all goods and services giving rise thereto and the rights
pertaining to such goods and services and all related insurance with respect
thereto and all security deposits and prepayments, prepaid expenses, deposits
and advances, whether or not reflected on Seller's books and records;
(iv) all Claims, causes of action, choses in action,
rights of recovery, (y) relating to Excluded Assets, or (z) that have accrued,
arisen or been asserted against any Person or that relate to any period before
the Effective Time, in each case which do not relate primarily to the Acquired
Assets (including without limitation fiduciary duty claims, tort claims and
claims against current and former employees of the Seller that accrued prior to
Closing), all rights and powers of a trustee and debtor-in-possession against
any Person whatsoever, including all avoidance powers granted to Seller under
the Bankruptcy Code and all causes of action and remedies granted pursuant to
Sections 502, 510, 541, 544, 545, 547 through 551 and 553 of the Bankruptcy
Code;
(v) all rights of Seller and its Affiliates in, to and
under any agreement, lease or other contract with respect to which Buyer does
not assume rights or obligations hereunder or under the Assumption Agreement and
which are set forth in Section 2(b)(v) of the Disclosure Letter;
(vi) all capital stock or other equity interests of
Seller and the Excluded Subsidiaries;
(vii) the certificate of incorporation, qualifications to
conduct business as a foreign corporation, taxpayer and other identification
numbers, seals, minute books, stock transfer books, blank stock certificates,
and other corporate documents and records relating to the organization or
maintenance of the corporate existence of Seller and the Excluded Subsidiaries;
(viii) all assets held by or for the account of Seller or
its Affiliates pursuant to the terms of any deferred compensation, incentive
compensation, welfare or other employee benefit plan, or the assets of any
related trust described in Section 401 of the Code;
(ix) all rights that accrue to Seller under this
Agreement;
(x) any Governmental Permit or similar right that by
its terms or applicable Law is not transferable to Buyer; and
(xi) the assets of Seller listed in Section 2(b)(x) of
the Disclosure Letter.
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(c) Assumption of Liabilities. As additional consideration for
the Acquired Assets, Buyer agrees to assume, pay, perform and discharge only
those Liabilities specified in Section 2(c) of the Disclosure Letter
(collectively, the "ASSUMED LIABILITIES").
(d) Excluded Liabilities. Buyer shall not assume or be obligated
or be responsible to pay, perform, satisfy or otherwise discharge any
Liabilities whatsoever of Seller that are not specifically set forth in Section
2(c) of the Disclosure Letter (collectively, the "EXCLUDED LIABILITIES"). The
Excluded Liabilities include without limitation the Liabilities set forth in
Section 2(d) of the Disclosure Letter.
3. PAYMENT.
(a) Payment. In consideration of the transfer of the Acquired
Assets and the other undertakings of Seller under this Agreement, and in
addition to assuming the Assumed Liabilities, at Closing Buyer will pay to
Seller via wire transfer of immediately available funds to an account designated
by Seller, an amount equal to $8,000,000 (the "PRELIMINARY PURCHASE PRICE")
subject to adjustment at Closing as set forth in Section 3(b) below.
(b) Purchase Price Adjustment. If the number of Registered
Merchants on the date the Court enters the Sale Order is less than the number of
Registered Merchants on the date hereof, then the Preliminary Purchase Price
shall be adjusted as follows:
(i) If the Net Decline in Registered Customers is less
than or equal to 10%, then the Preliminary Purchase Price will not be adjusted
pursuant to this Section 3(b).
(ii) If the Net Decline in Registered Customers is
greater than 10% and less than or equal to 20%, then the Preliminary Purchase
Price shall be reduced by 10%.
(iii) If the Net Decline in Registered Customers is
greater than 20% and less than or equal to 30%, then the Preliminary Purchase
Price shall be reduced by 20%.
(iv) If the Net Decline in Registered Customers is
greater than 30%, at the Buyer's option, either this Agreement shall be
terminated, or the Preliminary Purchase Price shall be adjusted downward by 30%.
The Preliminary Purchase Price as adjusted in accordance with this
Section 3(b) is referred to herein as the "PURCHASE PRICE."
(c) Breakup Fee. Buyer shall be entitled to a fee in the amount
equal to $550,000 (the "BREAKUP FEE"), if Seller fails to consummate the
transactions contemplated under this Agreement because either:
(i) Seller consummates an Alternative Transaction (as
defined in the Bid Procedures Order) for the Acquired Assets; or
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(ii) Seller breaches its obligations to Buyer under this
Agreement and Buyer has satisfied all contingencies, conditions and obligations
of Buyer for Closing set forth herein (other than payment of the Purchase
Price).
If Buyer is entitled to payment of the Breakup Fee pursuant to this
Section 3(c), such Breakup Fee shall be delivered to Buyer within two (2) days
of closing of any transaction described in subparagraph (i) above.
4. CLOSING; CLOSING DOCUMENTS.
(a) Closing. The closing ("CLOSING") of the transactions
contemplated hereby shall take place as soon as practicable following the date
of entry by the Court of the Sale Order in the Bankruptcy Case (provided that
the Sale Order states that it shall not be subject to any stay) (such date being
referred to herein as the "CLOSING DATE") at the offices of Xxxxx Xxxxxxx
Xxxxxxx & Xxxxx LLP, 0000 00xx Xxxxxx, X.X., Xxxxxxxxxx, XX 00000, or such other
time or such other place as may be mutually agreeable to the Parties. Closing
shall be effective as of 12:01 a.m. on the Closing Date (the "EFFECTIVE TIME").
(b) Deliveries by Seller. Subject to the fulfillment or waiver of
the conditions set forth in Section 9(b), at Closing, Seller shall deliver, or
cause to be delivered, to Buyer the following (the "SELLER'S CLOSING
DOCUMENTS"):
(i) a Xxxx of Sale and Assignment for the personal
property assets to be conveyed to Buyer hereunder substantially in the form of
Exhibit B attached hereto ("XXXX OF SALE") and any other conveyance documents as
may be reasonably requested by Buyer to effectuate the transactions contemplated
hereby;
(ii) the Assumption Agreement;
(iii) a certified copy of the Sale Order;
(iv) a certificate of Seller, dated the Closing Date,
substantially in the form attached hereto as Exhibit C, duly executed by Seller;
(v) any transferable Governmental Permits assigned to
Buyer;
(vi) originals (or copies thereof if originals are not
available) of all of the Acquired Contracts, Acquired Leases and Records;
(vii) copies of certificates evidencing compliance with
all applicable notice requirements under the Federal Rules of Bankruptcy
Procedure and Local Bankruptcy Rules governing the approval by the Court of this
Agreement and the transactions contemplated hereby;
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(viii) such other endorsements, assignments and
instruments as are contemplated by this Agreement or as are reasonably deemed
necessary by Buyer or Buyer's legal counsel to vest in Buyer good and valid
title to the Acquired Assets (as contemplated by the Sale Order); and
(ix) the Accounts Receivable Collection Agreement
substantially in the form attached hereto as Exhibit H (the "COLLECTION
AGREEMENT").
(c) Deliveries by Buyer. Subject to the fulfillment or waiver of
the conditions set forth in Section 9(a), at Closing, Buyer shall deliver to
Seller the following documents (the "BUYER'S CLOSING DOCUMENTS"):
(i) the Purchase Price;
(ii) the Assumption Agreement;
(iii) a certificate of Buyer, dated the Closing Date,
substantially in the form attached hereto as Exhibit D duly executed by Buyer;
(iv) such other instruments as are contemplated by this
Agreement or as reasonably deemed necessary by Seller or Seller's legal counsel;
and
(v) the Collection Agreement.
5. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents
and warrants to Buyer that the statements contained in this Section 5 are true
and correct as of the date of this Agreement and will be true and correct as of
the Closing Date, except as set forth in the disclosure letter accompanying this
Agreement and initialed by the Parties (the "DISCLOSURE LETTER"). The Disclosure
Letter will be arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Section 5 and Section 6 hereof.
(a) Organization and Authority. Each of Seller, ICVerify, Inc.
and Tellan, Inc. is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Seller has
requisite corporate power and authority (i) to own or lease its properties and
assets (including the Acquired Assets) and to carry on the Business as it is now
being conducted and (ii) to enter into this Agreement and each Transaction
Document to be entered into by Seller and to carry out its obligations hereunder
and thereunder. The execution, delivery and performance by Seller of this
Agreement and of each Transaction Document to be entered into by Seller, and the
consummation by Seller of the transactions contemplated hereby and thereby, has
been approved by all necessary corporate action on the part of Seller. This
Agreement has been duly executed and delivered by Seller and upon approval of
the Court will constitute the legal, valid and binding agreement of Seller,
enforceable against Seller in accordance with its terms.
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(b) No Approvals; Conflict. Except for (and subject to obtaining)
the approval of the Court and any other approvals of Governmental Authorities
identified in Section 5(b) of the Disclosure Letter, and except for (and subject
to obtaining) any consents required in connection with the assignment to Buyer
of Acquired Contracts and Acquired Leases (which consents are identified in
Section 5(b) of the Disclosure Letter), the execution, delivery and performance
by Seller of this Agreement and the Transaction Documents, the fulfillment of
and compliance with the respective terms and provisions hereof and thereof by
Seller and the consummation of the transactions contemplated hereby and thereby
by Seller do not and will not: (i) require any consent, authorization or
approval of or any filing or registration with any Governmental Authority or
other Person; (ii) result in a breach of any material obligation; (iii)
constitute a material default or an event creating rights of acceleration,
termination or cancellation or a loss of material rights; or (iv) result in the
creation or imposition of any material Lien upon any of the Acquired Assets, in
each case under any provision of (A) the certificate of incorporation or bylaws
of Seller, (B) any material contract, lease or agreement to which Seller is a
party or (C) any Law to which Seller or any of the Acquired Assets is subject.
(c) Litigation. Except as set forth in Section 5(c) of the
Disclosure Letter and except for the Bankruptcy Case, there is no litigation,
action, lawsuit, claim, audit, review. examination, inquiry, proceeding or
investigation pending or, to the Knowledge of Seller, threatened against Seller
or the Acquired Subsidiaries which relates to the Acquired Assets or the
Business and there is no litigation, action, lawsuit, claim, audit, review,
examination, inquiry, proceeding or investigation pending or, to the Knowledge
of Seller, threatened, in which Seller or the Acquired Subsidiaries is the
plaintiff or claimant, which in either case is material to the Business or the
Acquired Assets. There is no litigation, action, lawsuit, claim, audit, review,
examination, inquiry, proceeding or investigation involving Seller or the
Acquired Subsidiaries pending or, to the Knowledge of Seller, threatened, which
questions the legality or propriety of the transactions contemplated by this
Agreement or any of the Transaction Documents. Except as set forth in Section
5(c) of the Disclosure Letter, there is no outstanding order, writ, injunction,
or decree of any Governmental Authority against or affecting the Acquired Assets
or the Business.
(d) Financial Statements. The Financial Statements (i) were
derived from Seller's historical records relating to the Business and (ii)
fairly present in all material respects the items contained thereon. The
Financial Statements do not reflect the operations of any entity or business not
intended to constitute a part of the Business after giving effect to the
transactions contemplated by this Agreement, reflect all material costs that
historically have been incurred by the Business (other than the Excluded
Liabilities) and present fairly the results of operations of the Business for
the periods indicated. Seller shall provide copies of the Financial Statements
to Buyer as soon as practicable after the date hereof.
(e) Title to Acquired Assets. Except for Permitted Encumbrances,
Seller has good and valid title to all of the Acquired Assets. Upon the
execution and delivery to Buyer on the Closing Date of the Xxxx of Sale, the
Assumption Agreement and any other instruments of transfer and assignment
contemplated by this Agreement, and subject to the entry of a Sale Order
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by the Court, Seller will transfer to Buyer good and valid title to the Acquired
Assets, in each case free and clear of all Liens (other than Permitted
Encumbrances).
(f) Environmental Matters. To the Knowledge of Seller, each of
Seller and the Acquired Subsidiaries has in the conduct of the Business, and the
use of all real property subject to the Acquired Leases, complied, in all
material respects, with all federal, state and local, laws, rules, regulations,
judicial decisions and decrees pertaining to the use, storage, transportation or
disposal of hazardous waste or toxic materials, and with respect to such real
property, there are presently no material violations of federal, state and
local, laws, rules, regulations, judicial decisions and decrees pertaining to
the use, storage, transportation or disposal of hazardous waste or toxic
materials.
(g) Contracts. The contracts listed in Section 5(g) of the
Disclosure Letter constitute all the material contracts of Seller or the
Acquired Subsidiaries including without limitation material contracts that (i)
involve payment to or receipt by the Seller or the Acquired Subsidiaries of more
than $5,000 per year (other than the contracts, if any, that Buyer with full
information and knowledge thereof as provided to Buyer by Seller, has elected
not to assume) and the originals or true and complete copies thereof have been,
or will be, as a condition precedent to Closing, provided to Buyer; (ii) grant
to any person or entity a right of first refusal or option to purchase or
acquire any material assets; (iii) relate to the acquisition or disposition of
any of the Acquired Assets; and (iv) restrict or prohibit the Seller or the
Acquired Subsidiaries from engaging in any line of business or from competing
with any person or entity. Except as set forth in Section 5(g) of the Disclosure
Letter: (i) each of the Acquired Contracts is in full force and effect in all
material respects and has been made available to Buyer; (ii) Seller has not
assigned, transferred, pledged or otherwise conveyed its rights under any
Acquired Contract; and (iii) no party to any of the Acquired Contracts is in
default in any material respect in the performance, observance, or fulfillment
of any obligation, covenant or condition contained therein, and to the Knowledge
of Seller, no event has occurred that, with or without the giving of notice or
lapse of time, or both, would constitute a default thereunder in any material
respect.
(h) Real and Personal Property Leases. The leases set forth in
Section 5(h) of the Disclosure Letter hereof constitute all of the real and
personal property leases that are material to the Business (other than leases,
if any, that Buyer, with full information and knowledge thereof as provided to
Buyer by Seller, has elected not to assume) and the originals, or true, correct
and complete copies thereof have been, or will as a condition precedent to
Closing, be provided by Seller to Buyer. Except as set forth in Section 5(h) of
the Disclosure Letter: (i) each of the Acquired Leases is in full force and
effect in all material respects; (ii) all insurance required to be maintained by
Seller under each Acquired Lease is in full force and effect; (iii) the Seller
has not assigned, transferred, pledged or otherwise conveyed its rights under
any Acquired Lease; and (iv) no party to any of the Acquired Leases is in
default in any material respect in the performance, observance or fulfillment of
any obligation, covenant or condition contained therein, and to the Knowledge of
Seller, no event has occurred that, with or without the giving of notice or
lapse of time, or both, would constitute a default thereunder.
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(i) Real Property; Condemnation. To the Knowledge of Seller,
Seller has good and valid rights of ingress and egress to and from all real
property leased under each Acquired Lease from and to the public streets for all
usual street, road and utility purposes. To the Knowledge of Seller, none of
such real property is subject to any pending suit for condemnation,
expropriation or other taking by any Governmental Authority (or private party
acting through such Governmental Authority), and, to the Knowledge of Seller, no
such condemnation or other taking is threatened.
(j) Employees Schedule. Within ten (10) days of the date hereof,
Seller shall provide Buyer a list of all current employees of Seller or the
Acquired Subsidiaries working solely or primarily in the Business. The amount of
unused vacation, personal or sick time accrued by each such employee of Seller
as of the date hereof while employed with Seller has been made available to
Buyer. All employment agreements to which Seller is a party are set forth in
Section 5(j) of the Disclosure Letter.
(k) Brokers' Fees. Except for any obligations Seller may have to
pay First Annapolis Capital, Inc. and Jefferies & Company (as previously
disclosed by Seller to Buyer), Seller has no liability or obligation to pay any
fees or commissions to any broker or finder with respect to the transactions
contemplated by this Agreement.
(l) Patents, Trademarks, Trade Names, Etc. Except as set forth in
Section 5(l) of the Disclosure Schedule, the Seller owns or is licensed to use
all patents, trade names, trademarks, copyrights and software used by the Seller
in connection with the Business. Section 5(l) of the Disclosure Schedule
contains a complete and accurate list of (i) all patents, registered trademarks,
trade names, registered copyrights and material software owned or used by the
Seller and all applications therefor and (ii) all material agreements relating
to technology, know-how or processes which the Seller is licensed or authorized
to use by others or granting to others a right to use or practice any rights
under the Intellectual Property. No claims have been asserted against Seller by
any person to the ownership of or the right to use Intellectual Property or
challenging or questioning the validity or effectiveness of any license or
agreement with respect to the Intellectual Property; the use by the Seller of
the Intellectual Property does not infringe on the rights of any person; and to
the knowledge of Seller, no person is infringing upon or otherwise violating any
of the Intellectual Property.
(m) Disclaimer of Other Representations and Warranties. EXCEPT AS
EXPRESSLY SET FORTH IN THIS SECTION 5, SELLER MAKES NO REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF ANY OF ITS
ASSETS (INCLUDING THE ACQUIRED ASSETS), LIABILITIES OR OPERATIONS, INCLUDING
WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, AND ANY
SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED. Buyer
hereby acknowledges and agrees that, except to the extent specifically set forth
in this Section 5, Buyer is purchasing the Acquired Assets on an "as-is,
where-is" basis. Without limiting the generality of the foregoing, Seller makes
no representation or warranty regarding any assets other than the Acquired
Assets, and none shall be implied at law or in equity.
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6. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby
represents and warrants to Seller that the statements contained in this Section
6 are true and correct as of the date of this Agreement and will be true and
correct as of the Closing Date, except as set forth in the Disclosure Letter.
(a) Organization and Authority. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia. Buyer has requisite power and authority to enter into
this Agreement and each of the Transaction Documents to be entered into by Buyer
and to carry out its obligations hereunder and thereunder. The execution,
delivery and performance by Buyer of this Agreement and of each Transaction
Document to be entered into by Buyer, and the consummation by Buyer of the
transactions contemplated hereby and thereby, have been approved by all
necessary action on the part of Buyer. This Agreement has been duly executed and
delivered by Buyer and constitutes the legal, valid and binding agreement of
Buyer, enforceable against it in accordance with its terms.
(b) No Approvals; Conflict. Except for the approval of the Court,
the execution, delivery and performance by Buyer of this Agreement and the
Transaction Documents, the fulfillment of and compliance with the respective
terms and provisions hereof and thereof by Buyer and the consummation of the
transactions contemplated hereby and thereby by Buyer do not and will not (i)
require any consent, authorization or approval of or any filing or registration
with any Governmental Authority or other Person, (ii) result in a breach of any
material obligation, (iii) constitute a material default or an event creating
rights of acceleration, termination or cancellation or a loss of material
rights, or (iv) result in the creation or imposition of any material Lien upon
any of the Acquired Assets, in each case under any provision of (A) the articles
of incorporation or bylaws of Buyer, (B) any material contract, lease or
agreement to which Buyer is a party or (C) any Law to which Buyer or any of the
Acquired Assets is or are subject.
(c) Litigation. There is no litigation, action, lawsuit, claim,
audit, review, examination, inquiry, proceeding or investigation involving Buyer
pending or, to Buyer's knowledge, threatened, which questions the legality or
propriety of the transactions contemplated by this Agreement or any of the
Transaction Documents.
(d) Brokers' Fees. Except for any obligation Buyer may have to
pay First Annapolis Capital, Inc., Buyer has no liability or obligation to pay
any fees or commissions to any broker or finder with respect to the transactions
contemplated by this Agreement for which Seller could become liable or
obligated.
7. EMPLOYEES. To the extent that Buyer hires any Employees in
its sole discretion (the "HIRED EMPLOYEES"), (i) such employment shall be on an
at-will basis, and (ii) the Buyer shall provide such Hired Employees with
benefits pursuant to Buyer's benefit plans and policies, which benefits shall
commence effective as of the Closing Date or the date of hire. With respect to
employee pension, welfare and fringe benefits provided by the Buyer to Hired
Employees as of the Closing Date, and subject to any terms, conditions or
restrictions in Buyer's
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plans which prohibit such actions, (i) service with the Seller credited as
service for purposes of the Seller's plans, policies, programs, and arrangements
shall be recognized for purposes of participation, eligibility, vesting and
benefit accrual under the Buyer's plans, policies, programs, and arrangements
and (ii) the Buyer shall waive all waiting periods and pre-existing condition
requirements under any plans that have any such requirements or restrictions.
The Seller shall take any action that may be necessary or appropriate to ensure
that each Hired Employee is 100% vested in his or her account balance under the
401(k) Plan, any other pension or welfare benefit plans of Seller as of the
Closing Date. If Seller terminates any Employees on the Closing Date that do not
become Hired Employees ("FORMER SELLER EMPLOYEES"), Buyer shall pay to Seller
the Seller's portion of Seller's liabilities for Severance Obligations to such
Former Seller Employees that exceeds $180,000 in the aggregate. Buyer shall
provide to Seller a list of potential Hired Employees within twenty-five (25)
days of the date hereof, but shall have no obligation to hire employees on the
list. Seller shall terminate all Hired Employees as of the Closing Date.
Notwithstanding any provision herein to the contrary, except for the Assumed
Liabilities and as otherwise set forth in this Section 7, Seller is solely
responsible for defending, and for any Liabilities for, any Claims arising out
of the employment or termination of employment of the Employees by Seller and
for any salary, wages, overtime, bonuses, incentives, health care insurance and
benefits, retirement benefits, pension benefits or similar employment-related
payments or benefits of the Employees accruing or arising prior to or at the
Effective Time ("PRE-CLOSING EMPLOYMENT CLAIMS"). Buyer shall assume liability
and have sole responsibility for all Claims arising out of Buyer's employment of
the Hired Employees after the Effective Time and for all vacation, benefits,
salary, bonuses, incentives, health care insurance and benefits, retirement
benefits, pension benefits and other similar employment-related payments or
benefits of the Hired Employees accruing or arising from the Hired Employees'
employment with Buyer after the Effective Time.
8. COVENANTS.
(a) General. Subject to Section 8(f) below and the procedures set
forth in the Bid Procedures Order, each of the Parties will use its commercially
reasonable efforts to take all actions and to do all things necessary, proper or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement, including satisfaction, but not waiver, of the
closing conditions set forth in Section 9 below.
(b) Operation. Except as otherwise contemplated by this
Agreement, Seller will not and will not cause or permit any of its Subsidiaries
to engage in any practice, take any action, or enter into any transaction
outside the Ordinary Course of Business, except that, subject to Section 8(f)
below, Seller may take actions to sell its assets (or the assets of its
Subsidiaries) other than the Acquired Assets or to wind up, discontinue or
otherwise curtail the operations of the Excluded Subsidiaries.
(c) Reasonable Access. Prior to Closing, Seller will use its
commercially reasonable efforts to take all action and to do all things
necessary, proper or advisable to permit representatives of Buyer to have
access, at all reasonable times and in a manner so as not to interfere with the
normal business operations of Seller and its Subsidiaries, to all premises,
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properties, personnel, books, records (including tax records), contracts, and
documents of or pertaining to Seller related to the Business and the Acquired
Assets. Buyer will treat and hold as such any Confidential Information it
receives from Seller and its Subsidiaries in the course of the reviews
contemplated by this Section 8(c), will not use any of the Confidential
Information except in connection with this Agreement, and, if this Agreement is
terminated for any reason whatsoever, will return to Seller all tangible
embodiments (and all copies) of the Confidential Information which are in its
possession.
(d) Notice of Developments. At any time prior to Closing, Seller
shall notify Buyer of any material development relating to the Business,
including any development causing a breach of any of its representations and
warranties hereunder. In addition, Seller shall, prior to Closing, supplement
the Disclosure Letter hereto with respect to any matter coming to the Knowledge
of Seller that, if existing or known as of the date hereof, would have been
required to have been set forth or described in the Disclosure Letter. Any such
supplemental disclosure shall not be deemed to cure any breach of any
representation or warranty made herein as of the date hereof, nor shall it be
deemed to have been disclosed to Buyer as of the date hereof for the purposes of
determining whether or not Buyer has any further obligation to consummate the
transactions contemplated hereby.
(e) Bankruptcy Court Approval.
(i) Within twenty (20) calendar days after the date
hereof, Seller shall file a motion with the Court substantially in the form of
Exhibit E (the "MOTION TO APPROVE SALE") seeking, among other things, the entry
of the Bid Procedures Order and the Sale Order.
(ii) Promptly after the filing of the Motion to Approve
Sale, Seller shall use reasonable efforts to obtain a hearing thereon at the
earliest available date after expiration of the applicable notice period. After
filing the Motion to Approve Sale, Seller shall not (without prior written
consent of Buyer which consent shall not be unreasonably withheld) amend, modify
or withdraw the Motion to Approve Sale. Seller shall use its best efforts to
obtain, promptly, entry of a Sale Order, and Seller shall take all necessary
actions in connection therewith. In accordance with Law, Seller shall provide at
least twenty (20) days' notice of the hearing to be held in the Court regarding
the Motion to Approve Sale to, (i) each person or entity that has filed a notice
of appearance, or that has otherwise filed a written request to receive copies
of pleadings, in the Bankruptcy Case, (ii) the Securities and Exchange
Commission, (iii) the Internal Revenue Service, (iv) the Office of the United
States Trustee, (v) the taxing authorities for each of the States of
Connecticut, Florida, Massachusetts, Maryland, Michigan, Nebraska, New York,
North Carolina, Ohio and California and any appropriate political subdivisions
of any thereof, (vi) counsel to any statutory committee of creditors appointed
by the Office of the United States Trustee in the Bankruptcy Case, (vii) Buyer
and its counsel, (viii) the employment agencies for Virginia, California,
Michigan, Maryland, the District of Columbia and West Virginia, (ix) each party
(other than Seller) to each Assumed Contract or Assumed Lease, (x) each person
or entity that has asserted a Lien on, or in, any of the Acquired Assets, and
(xi) any other person or entity that Buyer reasonably requests in writing be
served.
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(f) Order Approving Notice Procedures. Buyer and its legal
counsel have read and understand the motion and order of the Bankruptcy Court
approving the global bid procedures substantially in the form of Exhibit G (the
"BID PROCEDURES ORDER") which order will be filed with the Court after the date
hereof. Buyer agrees and understands this Agreement is subject to the Bid
Procedures Order and any other applicable order or act of the Court.
(g) Post-Closing Access to Records. Following Closing, Buyer
agrees to permit representatives of Seller to have access, at reasonable times
and in a manner so as not to interfere with the normal business operations of
Buyer and its Subsidiaries, to the books and records of Buyer (including all
books and records acquired from Seller hereunder) relating to the Acquired
Assets or the conduct of the Business prior to the Closing Date so as to enable
Seller to fulfill its duties as a debtor-in-possession and to prepare tax,
financial or court filings or reports, to respond to court orders, subpoenas or
inquiries, investigations, audits or other proceedings of Governmental
Authorities, to prosecute or defend legal actions or for other like proper
purposes. Buyer agrees to preserve such records in its possession for a period
of at least five (5) years from the Closing Date; provided that if Buyer desires
to dispose of any such business records prior to the expiration of such five (5)
year period, it shall, prior to such disposition, give Seller a reasonable
opportunity, at Seller's expense, to remove such of the records to be disposed
of as Seller may select.
(h) Access to Certain Employees. Seller shall have the right to
continue to use the services of the Hired Employees for a period commencing as
of the Effective Time and ending on the day which is one hundred and eighty
(180) days thereafter with Buyer's approval which shall not be unreasonably
withheld, so long as (i) Seller shall reimburse Buyer for such services in an
amount equal to a pro rata portion of Buyer's payroll and all other employee
related expenses for such Hired Employees, (ii) Seller shall reimburse Buyer for
any other reasonable expenses incurred by Buyer in connection with the provision
of such services, and (iii) Seller shall only use the services of the Hired
Employee to the extent that such use does not materially interfere with the
performance of their employment obligations to Buyer as determined in the
reasonable discretion of Buyer.
9. CONDITIONS TO CLOSING.
(a) Conditions to Obligation of Buyer. The obligation of Buyer to
pay the Purchase Price and to consummate the transactions to be performed by it
in connection with Closing is subject to satisfaction (or written waiver by
Buyer) of the following conditions:
(i) the representations and warranties of Seller set
forth in Section 5 above shall be true and correct in all respects (in the case
of any representation or warranty containing a materiality qualification) or in
all material respects (in the case of an representation and warranty without any
material qualification) at and as of the Closing Date;
(ii) Seller shall have performed and complied with all
of its covenants hereunder in all material respects through Closing;
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(iii) there shall not be any ruling, injunction,
judgment, order, decree, or charge in effect preventing consummation of any of
the transactions contemplated by this Agreement;
(iv) Seller shall have delivered to Buyer all of
Seller's Closing Documents, duly executed by Seller (as applicable);
(v) Seller shall have satisfied all obligations to
cure all defaults under any Acquired Contracts or Acquired Leases;
(vi) all actions, consents or approvals required to be
obtained from Governmental Authorities or any other Person in connection with
the consummation of the transactions contemplated by this Agreement or by the
Transaction Documents shall have been obtained and be in full force and effect,
including the Sale Order from the Court (provided that the Sale Order states
that it shall not be subject to any stay).
(vii) the Buyer shall have received the resignations,
effective as of the Closing, of each director and officer of the Seller's
Subsidiaries other than those whom the Buyer shall have specified in writing at
least five business days prior to the Closing; and
(viii) the Buyer shall have obtained financing necessary
to pay the Purchase Price;
(b) Conditions to Obligation of Seller. The obligation of
Seller to consummate the transactions to be performed by it in connection with
Closing is subject to satisfaction (or written waiver by Seller) of the
following conditions:
(i) the representations and warranties of Buyer set
forth in Section 6 above shall be true and correct in all material respects at
and as of the Closing Date;
(ii) Buyer shall have performed and complied with all of
its covenants in all material respects hereunder through Closing;
(iii) the Preliminary Purchase Price shall have been paid
by Buyer via wire transfer of immediately available funds to an account
designated by Seller;
(iv) there shall not be any injunction, judgment, order,
decree, ruling, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
(v) Buyer shall have delivered to Seller all of Buyer's
Closing Documents, duly executed by Buyer (as applicable); and
(vi) all actions, consents or approvals required to be
obtained from Governmental Authorities in connection with the consummation of
the transactions contemplated
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by this Agreement or by the Transaction Documents shall have been obtained and
be in full force and effect, including the Sale Order from the Court (provided
that the Sale Order states that it shall not be subject to any stay).
10. TERMINATION. The Parties may terminate this Agreement as
provided below.
(a) Mutual Agreement. Buyer and Seller may terminate this
Agreement by mutual written consent at any time prior to Closing.
(b) Adverse Development. Without prejudice to Buyer's rights
pursuant to Section 10(c), Buyer may terminate this Agreement by giving written
notice to Seller at any time prior to Closing in the event (i) (x) Seller has
within the ten (10) Business Days prior to Buyer's notice given Buyer notice
pursuant to Section 8(d) above or (y) Seller should have given such notice under
Section 8(d) but failed to do so and (ii) the development that is, or should
have been, the subject of the notice has had or is likely, in Buyer's reasonable
discretion, to have a Material Adverse Effect.
(c) Termination by Buyer. Buyer may terminate this Agreement
by giving written notice to Seller at any time prior to Closing:
(i) in the event Seller has breached in any material
respect any representation, warranty or covenant contained in this Agreement,
Buyer has notified Seller of the breach, and the breach has continued without
cure for a period of five (5) Business Days after the date the notice of breach
was given;
(ii) if Closing shall not have occurred on or before
April 30, 2001, by reason of the failure of any condition precedent under
Section 9(a) (unless the failure results primarily from Buyer itself breaching
any representation, warranty, or covenant contained in this Agreement); or
(iii) in accordance with Section 3(b)(iv) of this
Agreement.
(d) Termination by Seller. Seller may terminate this
Agreement by giving written notice to Buyer at any time prior to Closing:
(i) in the event Buyer has breached in any material
respect any representation, warranty or covenant contained in this Agreement,
Seller has notified Buyer of the breach, and the breach has continued without
cure for a period of five (5) Business Days after the date of the notice of
breach was given;
(ii) if Closing shall not have occurred on or before
April 30, 2001, (unless the failure results primarily from Seller itself
breaching any representation, warranty or covenant contained in this Agreement);
or
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(iii) by Seller, (A) if Seller receives an offer for the
Acquired Assets under the terms of the Bid Procedures Order which is higher
and/or better (as determined by the Seller) than the transaction contemplated
hereby, or (B) for any reason for which termination by Seller is authorized
pursuant to the Bid Procedures Order; and
(e) Effect of Termination. In the event of the termination of
this Agreement pursuant to this Section 10, this Agreement, except for the
provisions of Sections 3(b), 3(c), 11(b), 11(e) and 11(l) shall forthwith become
null and void and have no effect, without any liability on the part of either
Party or their respective directors, officers or stockholders. Nothing in this
Section 10 shall, however, relieve either party to this Agreement of liability
for breach of this Agreement occurring prior to such termination, or for breach
of any provision of this Agreement which specifically survives termination
hereunder.
11. MISCELLANEOUS.
(a) Survival of Representations and Warranties. None of the
representations and warranties of the Parties contained in this Agreement or in
any of the Transaction Documents shall survive Closing hereunder.
(b) Expenses and Fees. Each Party shall pay its own costs and
expenses incident to the preparation and negotiation of this Agreement and the
Transaction Documents, the consummation of the transactions contemplated hereby
and thereby and its compliance with all its agreements and conditions contained
herein or therein, including all legal and accounting fees and disbursements and
all costs of obtaining necessary consents.
(c) Transfer Taxes. The transfer of the Acquired Assets as
contemplated by this Agreement is being accomplished to further, and in
contemplation of, a confirmed plan under Section 1129 of the Bankruptcy Code. As
a consequence, pursuant to Section 1146(c) of the Bankruptcy Code, such transfer
of the Acquired Assets should be exempt from United States federal or state
transfer Taxes, including gains, transfer, conveyance, sales, documentary stamp
and similar taxes. However, in the event such exemption is not available, Seller
and Buyer shall each pay one-half of any applicable transfer Taxes.
(d) Waiver. No terms or provisions hereof, including the
terms and provisions contained in this sentence, shall be waived, modified or
altered so as to impose any additional obligations or liability or grant any
additional right or remedy, and no custom, payment, act, knowledge, extension of
time. favor or indulgence, gratuitous or otherwise, or words or silence at any
time, shall impose any additional obligation or liability or grant any
additional right or remedy or be deemed a waiver or release of any obligation,
liability, right or remedy except as set forth in a written instrument properly
executed and delivered by Seller and Buyer. No assent, express or implied, by
either party, or waiver by either party, to or of any breach of any term or
provision of this Agreement or of the Disclosure Letter shall be deemed to be an
assent or waiver to or of such or any succeeding breach of the same or any other
such term or provision.
21
26
(e) Press Releases and Public Announcements. No party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement prior to entry of a Sale Order without the prior
written approval of the other party; provided, however, that any party may make
any public disclosure it believes in good faith is required by applicable law or
any listing or trading agreement concerning its publicly-traded securities.
(f) Third-Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the parties and their
respective successors and permitted assigns.
(g) Entire Agreement; Amendment. This Agreement, the Exhibits
and the Disclosure Letter referred to herein and the Transaction Documents
contain the entire understanding of the Parties with respect to the subject
matter contained herein or therein and supersede in their entirety all prior or
concurrent oral or written agreements, offers, proposals and understandings
between the parties with respect to such subject matter. This Agreement may not
be amended in any respect whatsoever except by a further agreement, in writing,
fully executed by each of the parties; provided, however, that (i) this
Agreement may not be amended in any material manner after entry of a Sale Order
without Court approval, and (ii) the Disclosure Letter may be amended at any
time prior to the Effective Time to the extent that such amendmentsb are not
material.
(h) Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party; provided, however, that Buyer may (i) assign any or
all of its rights and interests hereunder to one or more of its Affiliates and
(ii) designate one or more of its Affiliates to perform its obligations
hereunder, in any or all of which cases Buyer nonetheless shall remain
responsible for the performance of all of its obligations hereunder. In the
event Buyer assigns or delegates any of its rights hereunder as provided in the
foregoing sentence, Buyer shall cause such Affiliate to be capitalized, or shall
guarantee or otherwise provide financial support for the obligations of any such
Affiliate to the extent such capitalization or financial support may be required
in order to avoid objection to the assignment of the Acquired Contracts or
Acquired Leases to such Affiliate under the provisions of Section 365 of the
Bankruptcy Code.
(i) Counterparts: and Facsimile Execution. This Agreement
may be executed in one or more counterparts, each of which shall be deemed an
original but all of which together will constitute one and the same instrument.
The Parties may execute this Agreement and transmit such executed copy by
facsimile and the recipient thereof shall be entitled to rely upon the same as
if it were the original executed version thereof.
(j) Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
22
27
(k) Notices. All notices, requests, demands or other
communications required or permitted by this Agreement: (i) shall be in writing;
(ii) shall be deemed to have been given, forwarded, made or delivered: (A) if
delivered in person or by overnight courier service, when so delivered, (B) if
sent by facsimile transmission, when received (provided a copy shall be sent the
same day via overnight mail), or (C) if sent by registered, certified or express
mail, return receipt requested and postage prepaid, on the date of receipt (or
on the date of attempted delivery if delivery is refused): and (iii) shall be
addressed as follows:
if to Buyer:
Network 1 Financial Corporation
0000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
XxXxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxx
Phone: (000) 000-0000
Facsimile: (000) 000-0000
With a Copy To:
Xxxxx Xxxx LLP
0000 Xxxxxxx Xxxx, Xxxxx 000
XxXxxx, XX 00000 Attn:
Xxxxxx X. XxXxx, Esq.
Phone: (000) 000-0000
Facsimile: (000) 000-0000
If to Seller:
CyberCash, Inc.
0000 Xxxxxx Xxxxxxx, Xxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Chief Executive Officer
Phone: (000) 000-0000
Facsimile: (000) 000-0000
With a Copy To:
Xxxxx Xxxxxxx Xxxxxxx & Xxxxx LLP
0000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Xx., Esq.
23
28
Phone: (000) 000-0000
Facsimile: (000) 000-0000
Each party may designate by notice in writing a new or additional address to
which any notice, request, demand or communication may thereafter be so given,
served or sent. Notices, requests, demands and other communications hereunder
may be given by the attorney of any party.
(l) Governing Law; Jurisdiction. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE
WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF, THE PARTIES
ACKNOWLEDGE AND AGREE THAT THE STATE AND FEDERAL COURTS OF THE STATE OF
DELAWARE, INCLUDING THE COURT, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE PARTIES HERETO (OR ANY OF SELLER'S
CREDITORS OR OTHER PARTIES IN INTEREST IN THE BANKRUPTCY CASE AFFECTED HEREBY)
PERTAINING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT OR TO ANY MATTER ARISING
HEREUNDER OR RELATED HERETO.
(m) Arbitration. In the event the Court declines
jurisdiction over any dispute concerning this Agreement, its effect, or the
transactions contemplated by it, or the Court is found not to have such
jurisdiction, the same shall be settled before a panel of three arbitrators in
accordance with the then applicable provisions of the American Arbitration
Association ("AAA") using the rules of procedure of the State of Delaware. Each
of Buyer on the one hand, and Seller on the other hand, will appoint one
arbitrator, and those two arbitrators will appoint a third arbitrator. In the
event that the two arbitrators cannot agree on a third arbitrator within ten
(10) days following the appointment of the second arbitrator, then the third
arbitrator shall be appointed by the AAA in accordance with its then applicable
rules. If either Buyer on the one hand, or Seller on the other hand, fails to
appoint an arbitrator within forty-five (45) days after written notice from one
Party to the other Party detailing the dispute, the arbitrator chosen by the
Party that has chosen an arbitrator shall act as sole arbitrator. Punitive or
exemplary damages shall not be permitted under any circumstances. All
determinations made by a majority of the arbitrators shall be final and binding
upon the Parties, with costs of arbitration to be allocated by the arbitration
panel.
(n) Confidentiality. Each of Seller and Buyer agrees to
maintain in strict confidence any and all information each Party learns or
discovers about the other or its respective Affiliates during the course of the
negotiation, execution and delivery of this Agreement and agrees to abide by the
terms and conditions set forth in the Mutual Confidentiality and Non-Disclosure
Agreement dated November 1, 2000 by and between the Parties.
(o) Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
24
29
(p) Incorporation of Disclosure Letter. The Disclosure
Letter identified in this Agreement is incorporated herein by reference and made
a part hereof.
{balance of page intentionally left blank}
25
30
IN WITNESS WHEREOF, intending to be legally bound hereby, the
parties hereto have executed this Agreement as of the date first above written.
NETWORK 1 FINANCIAL CORPORATION
By: /s/ Xxxxxxx X. Xxxx
----------------------------------------
Name: Xxxxxxx X. Xxxx
Title: President
CYBERCASH, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
Title: Exec. V.P. and Chief Financial Officer
31
EXHIBIT A
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Agreement') is
entered into as of 12:01 a.m. on [_________________], 2001, by and between
CyberCash, Inc., a Delaware corporation, ("ASSIGNOR"), and Network 1 Financial
Corporation, a Virginia corporation ("ASSIGNEE"). Capitalized terms used herein
and not otherwise herein defined are used as defined in that certain Asset
Purchase Agreement dated as of [________________], 2001 by and between Assignor
and Assignee (the "PURCHASE AGREEMENT").
WITNESSETH-
WHEREAS, Assignor owns and operates the Business; and
WHEREAS, in connection with the sale by Assignor to Assignee of
certain assets of Assignor used in connection with the operation of the Business
pursuant to the Purchase Agreement, the Parties contemplated and agreed that
Assignor would assign certain contracts, leases and other obligations related to
the Acquired Assets and the Business, and their rights and obligations
thereunder, to Assignee; and
WHEREAS, Assignor desires to assign the Acquired Contracts and
Acquired Leases, and its rights and obligations thereunder, to Assignee, subject
to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants herein contained, and for other good and valuable consideration
the receipt and sufficiency of which are hereby acknowledged, the Parties agree
as follows:
1. Assignment.
(a) Assignor hereby assigns, transfers and sets over to Assignee
all of Assignor's right, title and interest in and to the Acquired Contracts
identified on Attachment 1 hereto, and Assignor's rights and obligations
thereunder, effective as of 12:01 a.m. (Eastern Standard Time) on the Closing
Date (the "EFFECTIVE TIME").
(b) Assignor hereby assigns, transfers and sets over to Assignee
all of Assignor's right, title and interest in and to the Acquired Leases
identified on Attachment 2 hereto, and Assignor's rights and obligations
thereunder effective as of the Effective Time.
2. Assumption. Assignee hereby accepts the assignments referenced
in Section 1 hereof and assumes and agrees to perform the duties and obligations
under the Acquired
32
Contracts and Acquired Leases, as fully as if Assignee were the original party
thereto, accruing from and after the Effective Time.
3. Binding Effect, All of the terms, provisions and conditions of
this Agreement shall inure to the benefit of and be enforceable by Assignee and
its respective successors and assigns,
4. Entire Agreement. This Agreement and the Purchase Agreement
embody the entire agreement and understanding of the parties with respect to the
subject matter herein contained, and supersede all prior agreements,
correspondence, arrangements and understandings relating to the subject matter
hereof. No representation, promise, inducement or statement of intention has
been made by any party which has not been embodied in this Agreement or the
Purchase Agreement, and no party shall be bound by or be liable for any alleged
representation, promise, inducement or statement of intention not so set forth.
5. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without regard to the
conflicts of laws principles thereof.
* * * * *
{signatures on following page}
33
IN WITNESS WHEREOF, intending to be legally bound hereby, the
Parties have duly executed this Agreement as of the day and year first above
written.
ASSIGNOR:
CYBERCASH, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
---------------------------------
ASSIGNEE:
NETWORK 1 FINANCIAL CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
---------------------------------
34
ATTACHMENT 1
Acquired Contracts
35
ATTACHMENT 2
Acquired Leases
36
EXHIBIT B
XXXX OF SALE
KNOW ALL PERSONS BY THESE PRESENTS, that NETWORK 1 FINANCIAL
CORPORATION, a Virginia corporation, has entered into an Asset Purchase
Agreement dated [_________], 2001 (the "PURCHASE AGREEMENT") with CYBERCASH,
INC., a Delaware corporation ("SELLER"), providing, inter alia, for Seller's
sale to Buyer of certain of the assets associated with Seller's Business. Except
as otherwise defined herein, all initially capitalized terms used herein shall
have the same meaning as ascribed to such term in the Purchase Agreement.
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Seller does hereby sell, transfer, convey, grant,
bargain, confirm, assign and deliver to Buyer, its successors and assigns
forever, effective as of the Effective Time, all right, title and interest,
legal or equitable, of Seller in the Acquired Assets, including all property and
assets identified on Attachment 1 hereto, free and clear of all Liens, other
than Permitted Encumbrances.
TO HAVE AND TO HOLD all of such Acquired Assets unto Buyer, its
successors and assigns, forever. Seller will execute and deliver all such
further instruments of conveyance, assignment and further assurances, and shall
take all such further acts as may be reasonably deemed necessary by Buyer, in
order to vest, sell, transfer, convey, grant, bargain, confirm, assign and
deliver to Buyer all of Seller's right, title and interest in and to such
Acquired Assets.
Seller does hereby constitute and appoint Buyer, its successors and
assigns, the true and lawful attorney-in-fact of Seller, with full power of
substitution, in the name and stead of Seller, to demand and receive all right,
title and interest in and to the Acquired Assets to which this Xxxx of Sale
refers, and to do all other acts and things in relation thereto which Buyer, its
37
successors or assigns, may deem desirable, Seller hereby acknowledging that the
foregoing powers are coupled with an interest and accordingly are irrevocable.
This Xxxx of Sale is subject to all of the terms and conditions of
the Purchase Agreement. In the event of any conflict between the terms and
conditions of this Xxxx of Sale and the terms and conditions of the Purchase
Agreement, the terms and conditions of the Purchase Agreement shall control.
IN WITNESS WHEREOF, intending to be legally bound hereby, Seller
has duly executed this Xxxx of Sale as of [__________], 2001.
CYBERCASH, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
---------------------------------
38
ATTACHMENT I
Acquired Assets
39
EXHIBIT C
CERTIFICATE OF CYBERCASH, INC.
THE UNDERSIGNED, being the duly and validly elected and constituted Chief
Financial Officer of CYBERCASH, INC., a Delaware corporation ("CYBERCASH"), in
connection with the closing of the transactions contemplated by that certain
Asset Purchase Agreement, dated as of [__________], 2001 (the "PURCHASE
Agreement"), by and between CYBERCASH and NETWORK 1 FINANCIAL CORPORATION, a
Virginia corporation, does hereby certify to Network 1 Financial Corporation as
follows:
1. The representations and warranties of CyberCash made in the Purchase
Agreement, including the Disclosure Letter, and in the Transaction Documents
were true and correct in all material respects when made (subject to the
operation of Section 7(d) of the Purchase Agreement) and are true and correct in
all material respects on the Closing Date as though made on and as of the
Closing Date, and CyberCash has performed and compiled in all material respects
with the covenants and agreements required by the Purchase Agreement to be
performed or complied with by CyberCash prior to the Closing.
2. No documents of CyberCash affecting its Certificate of Incorporation
have been filed with the Secretary of State of the State of Delaware since
[____________], 2001.
3. Each of the officers of CyberCash named below is a duly elected
incumbent in the office indicated for him. and the signature set forth opposite
such person's name is the authentic signature of such person:
NAME TITLE SIGNATURE
Xxxx X. Xxxxxx Chief Financial Officer
----------------------
Xxxxxx X. Xxxxx Chairman and
Chief Executive Officer
----------------------
Except as otherwise defined herein, all initially capitalized terms used
herein shall have the same meaning as ascribed to such term in the Purchase
Agreement.
IN WITNESS WHEREOF, intending to be legally bound hereby, the undersigned
has executed this Certificate as of [___________], 2001
.
------------------------------------------------------------
Xxxx X. Xxxxxx, Chief Financial Officer of CyberCash, Inc.
40
EXHIBIT D
CERTIFICATE OF NETWORK 1 FINANCIAL CORPORATION
THE UNDERSIGNED, being the duly and validly elected and constituted
Secretary of NETWORK 1 FINANCIAL CORPORATION, a Virginia corporation ("NETWORK
1"), in connection with the closing of the transactions contemplated by that
certain Asset Purchase Agreement, dated as of [_____________], 2001 (the
"PURCHASE AGREEMENT"), by and between NETWORK 1 FINANCIAL CORPORATION and
CYBERCASH, INC., a Delaware corporation ("CYBERCASH"), does hereby certify as
follows:
1. The representations and warranties of Network 1 Financial Corporation
made in the Purchase Agreement, including the Disclosure Letter and in the
Transaction Documents were true and correct in all material respects when made
and are true and correct in all material respects on the Closing Date as though
made on and as of the Closing Date, and Network 1 Financial Corporation has
performed and complied in all material respects with all covenants and
agreements required by the Purchase Agreement to be performed or complied with
by it prior to the Closing.
2. No documents of Network 1 Financial Corporation affecting its
Articles of Incorporation have been filed with the State Corporation Commission
of the Commonwealth of Virginia since _________, 2000.
3. Each of the officers of the Network 1 Financial Corporation named
below is a duly elected incumbent in the office indicated for such person, and
the signature set forth opposite such person's name is the authentic signature
of such person:
NAME TITLE SIGNATURE
Xxxxxxx Xxxx Chief Executive Officer
------------------------
----------------------- --------------------- ------------------------
Capitalized terms not defined herein shall have the meanings ascribed
thereto in the Purchase Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
[___________], 2001.
By:
----------------------------------
Name:
--------------------------------
Title:
---------------------------------
41
EXHIBIT E
MOTION TO APPROVE SALE
(SEE ATTACHMENT)
42
EXHIBIT F
SALE ORDER
(SEE ATTACHMENT)
43
EXHIBIT G
BID PROCEDURES ORDER
(SEE ATTACHMENT)
44
EXHIBIT H
COLLECTION AGREEMENT
(SEE ATTACHMENT)
