Exhibit 10.47
ASSET PURCHASE AGREEMENT
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ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of July 24, 2006,
by and between Xxxx Web Development, Inc., a Florida corporation, ("Buyer"), and
xXxxxxx.xxx, Inc., a Florida corporation and wholly-owned subsidiary of Xxxxxx,
Inc. ("eCalton" or "Seller").
WHEREAS, Buyer and eCalton deem it advisable and in the best interests
of their respective stockholders to consummate, and approve, the transaction
provided for herein pursuant to which Buyer will acquire substantially all of
the assets of eCalton (the "Purchase");
WHEREAS, eCalton is in the business of providing Internet business
services, including Website development and hosting, consulting, and programming
(the "Business");
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF ASSETS
Section 1.01. SALE AND PURCHASE OF ASSETS. Subject to the terms and
conditions of this Agreement, at the closing referred to in Section 2.02 (the
"Closing"), eCalton shall sell, assign, transfer, convey and deliver to Buyer,
and Buyer shall purchase, acquire and accept from eCalton, all of eCalton's
right, title and interest in and to all of the assets, properties and goodwill
owned by eCalton constituting or used in the Business (but excluding those
assets referred to in Section 1.02 and listed in Section 1.02 of the eCalton
Disclosure Schedule annexed hereto as Exhibit 1.01 (the "eCalton Disclosure
Schedule"), with such changes, deletions or additions thereto as may occur from
the date hereof to the Closing in the ordinary course of business and consistent
with the terms and conditions of this Agreement (the "Assets") including,
without limitation, the following:
(a) all the furnishings, furniture, office supplies, tools,
machinery and equipment and other fixed assets owned by eCalton and used in the
Business (the "Equipment");
(b) all quantities of inventory, including component parts and work
in progress and any warranty associated therewith (the "Inventory");
(c) all contracts, agreements, leases, arrangements and/or
commitments of any kind, whether oral or written, which relate to the Business
or Assets, including without limitation those contracts listed in Section 1.01
(c) of the eCalton Disclosure Schedule (the "Contracts"); Buyer shall receive a
credit against the Purchase price specified in Section 2.01 for the unearned
portion of any prepaid customer deposits for work not yet completed on
Contracts, including the unearned portion of deposits for web development
projects and pre-paid web hosting fees calculated on a percentage of completion
basis. Buyer shall also be entitled to collect the unearned portion of any
accounts receivable associated with Contracts executed for which deposits have
not been received by Seller calculated on a percentage of completion basis. If
Buyer collects receivables earned by Seller prior to closing, Buyer agrees to
remit Seller's portion to Seller upon receipt.
(d) all customer lists, files and documents (including credit
information) relating to customers and vendors of the Business, and other
business and financial records, files, books and documents relating to the
Assets and/or the Business;
(e) company Web sites and domain names, including without limitation
xxxxxxx.xxx, xxxxxxxxxx.xxxxxxx.xxx, xxxxxxxx.xxx, xxxxxxxxxxxx.xxx and
xxxxxxxxxxx.xxx.
(f) all patents, trademarks and trade names and applications
therefore which are owned by eCalton and used in the Business;
(g) municipal, state and federal franchises, licenses,
authorizations and permits of the Business (collectively, the "Permits");
(h) all computers, computer programs, computer databases, hardware
and software owned or licensed by eCalton and used in the Business;
Section 1.02. EXCLUDED ASSETS. The parties to this Agreement expressly
understand and agree that eCalton is not selling, assigning, transferring or
conveying to Buyer the assets, rights and properties described in Section 1.02
of the eCalton Disclosure Schedule, which shall be excluded from the
transactions contemplated by this Agreement (the "Excluded Assets"). Buyer shall
be acquiring the right to use the name "xXxxxxx.xxx, Inc." for a period of two
years after Closing. Buyer shall cease using such name upon the second
anniversary of the Closing Date. Notwithstanding the foregoing, immediately
following the Closing Date, Buyer shall notify all then existing clients,
customers, and vendors, and shall prominently display in all printed matter,
stationary, and web advertising the fact that eCalton and xXxxxxx.xxx are no
longer affiliated with Xxxxxx, Inc. Buyer shall not be acquiring any bank
account, credit or charge card account, or electronic payment service account
(i.e. "Paypal") of Seller. If Buyer wishes to use any account of this type, it
must establish new accounts to be effective upon Closing.
Section 1.03. ASSIGNMENT OF CONTRACTS AND PERMITS. eCalton shall assign
to Buyer, and Buyer shall assume, as of the Closing, all of the rights and
obligations of eCalton under the Contracts and the Permits.
Section 1.04. CERTAIN LIABILITIES ASSUMED BY BUYER. Buyer assumes the
liability for all Contracts for which a prepaid customer deposit is received
under Section 1.01(c). Buyer also assumes all Contracts executed for which
deposits have not yet been received by Seller under Section 1.01(c). Buyer
agrees to indemnify and hold eCalton harmless from any and all liability in
connection with the Contracts so assumed by Buyer.
Section 1.05. EXCLUDED LIABILITIES. Except to the extent specifically
assumed hereunder and subject to the indemnification provisions of Article VII
hereof, the parties to this Agreement expressly understand and agree that Buyer
is not assuming and shall not be liable for any of the liabilities and
obligations of eCalton, including but not limited to the following, which are
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expressly excluded from the liabilities and obligations being assumed by Buyer
hereunder (hereinafter referred to as "Excluded Liabilities"):
(a) any obligation or liability of eCalton arising out of this
Agreement, any agreement entered into in connection herewith or the transactions
contemplated hereby or thereby;
(b) any liabilities or obligations of eCalton for the fees and
expenses of its counsel, accountants and other experts and all other expenses
incurred by eCalton incident to the negotiation, preparation and execution of
this Agreement and the performance by eCalton of its obligations hereunder;
(c) any liabilities or obligations under any Benefit Plans (as
defined in Section 3.01(g));
(d) any liabilities or obligations of eCalton arising out of or
resulting from any business, activity, course of conduct, action or omission
before, on or after the Closing Date not specifically assumed hereunder by
Buyer;
(e) any liability for (i) severance pay or other remuneration or
liability due to employees of eCalton by reason of termination of their
employment or (ii) amounts payable to employees of eCalton in respect of
operations of eCalton prior to the Closing Date, including amounts payable
pursuant to employee benefit plans (including pension plans) of eCalton or under
federal or state laws governing such plans, and employee expense accounts
relating to the operations of eCalton prior to the Closing Date;
(f) any liability for indebtedness owed to Shareholders; and
(g) any liability or obligation incurred prior to the Closing Date.
Section 1.06. FURTHER ASSURANCES.
(a) From and after the Closing, upon request of Buyer, eCalton shall
do, execute, acknowledge and deliver all such further acts, assurances, deeds,
assignments, transfers, conveyances and other instruments and papers as may be
required to sell, assign, transfer, convey and deliver to and vest in Buyer, and
protect its right, title and interest in and employment of, all the Assets
intended to be sold, assigned, transferred, conveyed and delivered to Buyer
pursuant to this Agreement, and as otherwise may be appropriate to carry out the
transactions contemplated in this Agreement.
(b) From and after the Closing, upon request of eCalton, Buyer shall
do, execute, acknowledge and deliver all such further acts, assurances,
assumptions, assignments and other instruments and papers as may be reasonably
required to assume and vest in Buyer all the Assumed Liabilities, and as
otherwise may be appropriate to carry out the transactions contemplated in this
Agreement. eCalton agrees to cooperate with Buyer to effect such assumption.
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Section 1.07 EMPLOYEES. Seller will not interfere with Buyer's efforts
to hire Seller's employees assigned to the Business (the "Business Employees").
Seller will offer all Business Employees the option of either receiving the
value of any accrued paid time off as of the Closing Date paid to them in cash
or having Buyer assume the obligation of such employee's accrued paid time off.
For those employees who elect to have Buyer assume their accrued paid time off,
Seller shall apply a credit to Buyer against the Purchase Price hereunder equal
to the accrued paid time off of such employees as of the Closing date. Buyer
shall then be obligated to honor the accrued time off for those employees who
elected to have Buyer assume such obligation.
Section 1.08 FINANCING CONTINGENCY. Buyer and Seller agree that Buyer's
obligation hereunder will be contingent upon obtaining a loan guaranteed by the
United States Small Business Administration (SBA) in order to fund a portion of
the amount due at Closing and to provide working capital. Buyer has completed
all applications required for such loan and has requested that the lender (1)
notify Seller, in writing, of the fact that the application has been completed;
and (2) notify the Seller in writing, that the application has been approved.
Following Buyer's submission of Buyer's loan application, Seller will
cooperate with Buyer in providing information required by the lender, provided,
however, that if the lender requests information that requires additional
efforts on the part of Seller's outside auditors or accountants, Seller agrees
to consent to use of Seller's information in order to provide such information,
however, Buyer shall be required to separately engage the services of such
auditors or accountants in order to compile such information.
Section 1.09 AGREEMENT NOT TO COMPETE. eCalton agrees that it will not,
directly or indirectly, engage in any Competitive Activity (as hereafter
defined) until three (3) years following the Closing Date. For purposes hereof,
"COMPETITIVE ACTIVITY" means (i) the manufacture, sale, distribution or
provision, directly or indirectly, of products or services related to the
Business being purchased by Buyer , (ii) the solicitation or inducement of any
employee of the Buyer to leave his or her employment with the Buyer or the
hiring of any such employee and (iii) requesting or advising any Customer to
withdraw, curtain or cancel its business with the Buyer. As used herein,
"CUSTOMER" means any person or entity that is or has been a customer of the
Seller at any time since July 1, 1996, but does not include Xxxxxx, Inc. or any
of its Affiliates. Customer also includes any prospective customer to whom a
formal business presentation or proposal was made within a period of ONE (1)
YEAR prior to the Closing Date.
The invalidity or nonenforceability of this Section 1.09 in any respect
shall not affect the validity or enforceability of this Section 1.09 in any
other respect, or of any other provision of this Agreement. In the event that
any provision of this Section 1.09 shall be held invalid or unenforceable by a
court of competent jurisdiction by reason of the scope or the duration thereof
or for any other reason, such invalidity or uneforceability shall attach only to
the particular aspect of such provision found invalid or unenforceable as
applied and shall not affect or render invalid or unenforceable any other
provision of this Section 1.09 enforcement of such provision in other
circumstance, and, to the fullest extent permitted by law, shall be construed as
if the scope or the duration of such provision or other basis on which such
provision has been challenged had been more narrowly drafted so as not to be
invalid or unenforceable.
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ARTICLE II
PURCHASE PRICE; CLOSING
Section 2.01. PURCHASE PRICE. The purchase price (the "Purchase Price")
for the Assets shall be $250,000, minus the credits specified in Sections
1.01(c) and 1.07. The final amount of the credits and the amount payable at
closing will be determined no later than the close of business on July 25, 2006,
and will be included in a separately signed addendum to this agreement. The
purchase price shall be allocated to the assets being sold and purchased as
specified in Schedule A attached hereto.
Section 2.02. DATE OF CLOSING. The Closing shall take place on July 31,
2006 (or at such other place as the parties may agree in writing) on a date
mutually designated by eCalton and Buyer. The date on which the Closing is held
is referred to in this Agreement as the "Closing Date." The closing shall be
effective as of 12:01 a.m. on the day following the closing date. Such time
shall be referred to as the "Effective Time."
Section 2.03. DEPOSIT. Buyer has placed with the law firm of Rossway
Xxxxx & Xxxxxx ("Escrow Agent") a deposit in the amount of $20,000. Such deposit
shall be held by the Escrow Agent and applied towards the purchase price at
Closing. In the event that Buyer applies for, but is not approved for a loan
referred to in paragraph 1.08, such deposit shall be returned to Buyer upon
showing proof of the loan denial.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. REPRESENTATIONS AND WARRANTIES OF ECALTON. Except as set
forth in the corresponding sections or subsections of the eCalton Disclosure
Schedule, eCalton represents and warrant to Buyer, that:
(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. eCalton is a
corporation duly organized and validly existing under the laws of the State of
Florida. eCalton has all requisite power and authority to own and operate its
properties and assets and to carry on its business as presently conducted and is
qualified to do business and is in good standing in each jurisdiction where the
ownership or operation of its properties or conduct of its business requires
such qualification, except where the failure to be so qualified or in good
standing is not, when taken together with all other such failures, reasonably
likely to have a material adverse effect on it.
(b) AUTHORITY; APPROVAL. eCalton has all requisite power and
authority and has taken all action necessary in order to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby. eCalton has duly executed this Agreement. This Agreement
is a valid and binding agreement of eCalton enforceable against eCalton in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, fraudulent conveyance, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles (the "Bankruptcy and
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Equity Exception"). The Board of Directors of eCalton has unanimously approved
this Agreement and the transactions contemplated hereby.
(c) GOVERNMENTAL FILINGS; NO VIOLATIONS.
(i) The execution, delivery and performance of this
Agreement by eCalton does not, and the consummation by eCalton of the
transactions contemplated hereby will not, constitute or result in (A) a breach
or violation of, or a default under, eCalton's Organizational Documents, (B) a
breach or violation of, or a default under, the acceleration of any obligations
or the creation of a lien, pledge, security interest or other encumbrance on
eCalton's assets (with or without notice, lapse of time or both) pursuant to,
any agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation ("Contracts") binding upon eCalton or any Law (as defined in Section
3.01(i)) or governmental or non-governmental permit or license to which eCalton
is subject or (C) any change in the rights or obligations of eCalton under any
of its Contracts.
(d) FINANCIAL STATEMENTS. eCalton has delivered to Buyer copies of
the following financial statements: consolidated balance sheets of eCalton at
November 30, 2003, 2004 and 2005 and April 30, 2006, consolidated statements of
income of eCalton for the year ended November 30, 2003, 2004 and 2005 and the
five months ended April 30, 2006 and consolidated statements of cash flow for
the year ended November 30, 2003, 2004 and 2005 and the five months ended April
30, 2006 (the "eCalton Financial Statements"). The eCalton Financial Statements
have been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly present the financial position
of eCalton as of the dates thereof and the results of its operations and cash
flows for the periods indicated.
(e) ABSENCE OF CERTAIN CHANGES. To eCalton's knowledge, there has
not been (i) any change in the financial condition, properties, prospects,
business or results of operations of eCalton, except those changes that are not,
individually or in the aggregate, reasonably likely to have a material adverse
effect on it; (ii) any damage, destruction or other casualty loss with respect
to any asset or property owned, leased or otherwise used by it, whether or not
covered by insurance, which damage, destruction or loss is reasonably likely,
individually or in the aggregate, to have a material adverse effect on eCalton;
or (iii) any change by eCalton in accounting principles, practices or methods.
Since April 30, 2006, there has not been any increase in the compensation
payable or that could become payable by eCalton to officers or key employees or
any amendment of any of its Benefit Plans other than increases or amendments in
the ordinary course.
(f) LITIGATION AND LIABILITIES. To eCalton's knowledge, there are no
(i) civil, criminal or administrative actions, suits, claims, hearings,
investigations or proceedings pending or, to eCalton's knowledge, threatened
against eCalton or any of its Affiliates (which term, as used in this Agreement,
shall be as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as
amended) or (ii) obligations or liabilities, whether or not accrued, contingent
or otherwise, including those relating to matters involving any Environmental
Law (as defined in Section 3.01(i)), or any other facts or circumstances, in
either such case, of which eCalton has
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knowledge that is reasonably likely to result in any claims against or
obligations or liabilities of it or any of its Affiliates.
(g) EMPLOYEES AND EMPLOYEE BENEFITS. To eCalton's knowledge, the
consummation of transactions contemplated by this Agreement will not (x)
accelerate the time of payment or vesting or trigger any payment of compensation
or benefits under, increase the amount payable or trigger any other material
obligation pursuant to, any of its Benefit Plans or (y) result in any breach or
violation of, or a default under, any of eCalton's Benefit Plans.
(h) COMPLIANCE WITH LAWS. To eCalton's knowledge, the business of
eCalton has not been, and is not being, conducted in violation of any law,
statute, ordinance, regulation, judgment, order, decree, injunction, arbitration
award, license, authorization, opinion, agency requirement or permit of any
Governmental Entity or common law (collectively, "Laws"). No investigation or
review by any Governmental Entity with respect to eCalton is pending or, to
eCalton's knowledge, threatened, nor has any Governmental Entity indicated an
intention to conduct the same. To eCalton's knowledge, no material change is
required in eCalton's processes, properties or procedures in connection with any
such Laws, and it has not received any notice or communication of any material
noncompliance with any such Laws that has not been cured as of the date hereof.
eCalton has all permits, licenses, franchises, variances, exemptions, orders and
other governmental authorizations, consents and approvals (collectively,
"Permits"), necessary to conduct its business as presently conducted. Each of
such Permits is listed in Section 3.01(h) of the eCalton Disclosure Schedule.
(i) ENVIRONMENTAL MATTERS. To eCalton's knowledge, except for such
matters that, alone or in the aggregate, are not reasonably likely to have a
material adverse effect on it: (i) eCalton has complied with all applicable
Environmental Laws (as defined below); (ii) the properties currently owned or
operated by eCalton (including soils, groundwater, surface water, buildings or
other structures) are not contaminated with any Hazardous Substances (as defined
below); (iii) the properties formerly owned or operated by eCalton were not
contaminated with Hazardous Substances during the period of ownership or
operation by it or any of its Subsidiaries; (iv) eCalton is not subject to
liability for any Hazardous Substance disposal or contamination on any third
party property; (v) eCalton has not been associated with any release or threat
of release of any Hazardous Substance; (vi) eCalton has not received any notice,
demand, letter, claim or request for information alleging that it may be in
violation of or liable under any Environmental Law; (vii) eCalton is not subject
to any orders, decrees, injunctions or other arrangements with any Governmental
Entity or is subject to any indemnity or other agreement with any third party
relating to liability under any Environmental Law or relating to Hazardous
Substances; and (viii) there are no circumstances or conditions involving
eCalton that could reasonably be expected to result in any claims, liability,
investigations, costs or restrictions on the ownership, use, or transfer of any
of its properties pursuant to any Environmental Law.
As used herein, the term "Environmental Law" means any Law relating to
pollution (or the clean up of the environment), or the protection of air,
surface water, groundwater, drinking water, land (surface or subsurface), human
health, the environment or any other natural resource or the use, storage,
recycling, treatment, generation, processing, handling, production or disposal
of Hazardous Materials, including the Comprehensive Environmental Response,
Compensation
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and Liability Act of 1980, as amended, 42 USC ss.ss.9601 ET SEQ. and 40 CFR
ss.ss.302.1 ET SEQ., and regulations thereunder; the Federal Clean Air Act, as
amended, 42 USC ss.ss.7401 ET SEQ., and regulations thereunder; the Resource
Conservation and Recovery Act, 42 USC ss.ss.6901 ET SEQ., as amended, And
regulations thereunder; and the Federal Water Pollution Control Act, 33 USC
ss.ss.1251 ET SEQ., as amended, And regulations thereunder.
As used herein, the term "Hazardous Substance" means any asbestos
containing materials, mono- and polychlorinated biphenyls, urea formaldehyde
products, radon, radioactive materials, any "hazardous substance", "hazardous
waste", "pollutant", "Toxic Pollutant", "oil" or "contaminant" as used in, or
defined pursuant to any Environmental Law, and any other substance, waste,
pollutant, contaminant or material, including petroleum products and
derivatives, the use, transport, disposal, storage, treatment, recycling,
handling, discharge, release, threatened release, discharge or emission of which
is regulated or governed by any Environmental Law.
(j) TAXES. eCalton has prepared in good faith and duly and timely
filed (taking into account any extension of time within which to file) all
material Tax Returns (as defined below) required to be filed by it and all such
filed tax returns are complete and accurate in all material respects and: (i)
eCalton has paid all Taxes (as defined below) that are shown as due on such
filed Tax Returns or that eCalton is obligated to withhold from amounts owing to
any employee, creditor or third party, except with respect to matters contested
in good faith or for such amounts that, alone or in the aggregate, are not
reasonably likely to have a material adverse effect on it; (ii) as of the date
hereof, there are not pending or, to eCalton's knowledge, threatened, any
audits, examinations, investigations or other proceedings in respect of Taxes or
Tax matters; and (iii) there are not, to eCalton's knowledge, any unresolved
questions or claims concerning eCalton's Tax liability that are reasonably
likely to have a material adverse effect on it. eCalton has no liability with
respect to Taxes in excess of the amounts accrued in respect thereof that are
reflected in its consolidated balance sheet as of November 30, 2005.
As used in this Agreement, (i) the term "Tax" (including, with
correlative meaning, the terms "Taxes", and "Taxable") includes all federal,
state, local and foreign income, profits, franchise, gross receipts,
environmental, customs duty, capital stock, severance, stamp, payroll, sales,
employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of any
nature whatsoever, together with all interest, penalties and additions imposed
with respect to such amounts and any interest with respect to such penalties and
additions, and (ii) the term "Tax Return" includes all returns and reports
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be supplied to a Tax authority relating to
Taxes.
(k) LABOR MATTERS. To eCalton's knowledge, eCalton is not the
subject of any proceeding asserting that it has committed an unfair labor
practice or is seeking to compel it to bargain with any labor union or labor
organization nor is there pending or, to the knowledge of its executive
officers, threatened, nor has there been for the past five years, any labor
strike, dispute, walkout, work stoppage, slow-down or lockout involving it.
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(l) SECURITIES LAW COMPLIANCE. Each outstanding share of eCalton's
capital stock has been issued pursuant to applicable exemptions from
registration under the Securities Act of 1933 or applicable state "blue sky"
laws.
(m) NO DEFAULT. To eCalton's knowledge, eCalton is not and currently
does not expect to be in the future, in violation or breach of or in default
under, and no conditions exist that, with the giving of notice or the lapse of
time or both, would constitute a default under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which eCalton is a party or by
which it or any of its properties or assets may be bound.
(n) PROPERTY. To eCalton's knowledge, Section 3.01(n) of the eCalton
Disclosure Schedule lists all leases of real and personal property to which
eCalton is a party, except for leases of personal property which are not
material to its operations. eCalton (i) has good and marketable title in fee
simple to, or valid existing leases for, all real property used in the operation
or conduct of its business and (ii) owns, leases or rents all the machinery,
equipment, furniture, fixtures and all other capital assets used in the conduct
of its business and has good and marketable title or valid existing leases for
all such machinery, equipment, furniture and fixtures. To eCalton's knowledge,
except as disclosed in Section 3.01(n) of the eCalton Disclosure Schedule, all
real and personal properties owned by eCalton are owned by it free and clear of
all mortgages, liens, charges or encumbrances of any nature whatsoever. To
eCalton's knowledge, all leases to which eCalton is a party are valid and
effective in accordance with their terms and except as set forth in Section
3.01(n) of the eCalton Disclosure Schedule or defaults not reasonably likely to
have a material adverse effect on it, there is not, under any leases for real or
personal property, any existing default by eCalton or, to the best knowledge of
eCalton, by any other party, nor to the best knowledge of eCalton, is there any
event which with notice or lapse of time or both would constitute such a
default. Each such parcel of real property owned or leased by eCalton is in
compliance with all applicable zoning, building, health and safety laws,
ordinances, and regulations and all applicable Environmental Laws. To eCalton's
knowledge, all real property and fixtures and all personal property and assets,
excluding inventory, used by eCalton in its operations and business are and at
the Closing will be sufficient to operate the business of eCalton, as the case
may be, as conducted on the date hereof, and, except for normal wear and tear,
will be in as good condition and repair as they were on the date hereof.
(o) INTELLECTUAL PROPERTY RIGHTS. To eCalton's knowledge, Section
3.01(o) of the eCalton Disclosure Schedule contains an accurate and complete
description of all domestic and foreign patents, trademarks, trademark
registration, service marks, service marks registration, logos, trade names,
assumed names, copyrights and copyright registrations and all applications
therefore, presently owned or held by eCalton or under which eCalton owns or
holds any license, or in which eCalton owns or holds any direct or indirect
interest, and no others are necessary for the conduct of the present business of
eCalton. To eCalton's knowledge, no products, sold by eCalton, nor any patents,
formulae, know-how, secrets, trademarks, trademark registrations, service marks,
service marks registration, logos, trade names, assumed names, copyrights,
copyright registrations, or designation used or licensed for use in eCalton's
business, infringe on any patents, trademarks, licenses, or copyrights, or any
other rights, of any Person. To eCalton's
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knowledge, eCalton is the sole owner of, has the sole and exclusive right to
use, has the right and power to sell, and has taken all reasonable measures to
maintain and protect, the patents, trademarks, trademark registrations, logos,
trade names, assumed names, copyrights, copyright registrations, service marks
and service xxxx registrations listed in Section 3.01(o) of the eCalton
Disclosure Schedule. To eCalton's knowledge, except as set forth in Section
3.01(o) of the eCalton Disclosure Schedule, no claims have been asserted against
eCalton in writing by any person and received by it challenging the use of any
such patents, trademarks, trademark registrations, service marks, service xxxx
registrations, logos, trade names, assumed names, copyrights and copyright
registrations or challenging or questioning the validity or effectiveness of any
such license or agreement, or the use of any formula, know-how or secrets used
in its business and, to eCalton's knowledge, there is no valid basis for any
such claims. To eCalton's knowledge, except as set forth in Section 3.01(o) of
the eCalton Disclosure Schedule, no other party is infringing on the patents,
trademarks, trademark registrations, logos, trade names, assumed names,
copyrights copyright registrations, service marks and service xxxx registrations
listed in Section 3.01(o) of the eCalton Disclosure Schedule.
(p) RECEIVABLES. To eCalton's knowledge, all of the accounts
receivable reflected on eCalton's consolidated balance sheet as of April 30,
2006 and all accounts receivable of it arising since April 30, 2006, other than
accounts receivable collected since then in the ordinary course of business (a)
arose from bona fide transactions, (b) represent bona fide indebtedness of the
respective debtors, (c) are valid and do not have original payment terms in
excess of 45 days, and (d) to the best of its knowledge of eCalton, are not
subject to any defense or offset.
(q) INSURANCE POLICIES. To eCalton's knowledge, Section 3.01(q) of
the eCalton Disclosure Schedule contains a true and complete list of all
policies of fire, liability, workers' compensation and other forms of insurance
owned by or held by eCalton, and eCalton has made available for inspection by
the other party true and complete copies of all of such policies. To eCalton's
knowledge, all such policies are in full force and effect, all premiums with
respect thereto covering all periods to the date of this Agreement have been
paid, and no notice of cancellation or termination has been received with
respect to any such policy. To eCalton's knowledge, such policies (a) are
sufficient for compliance with all requirements of law and all agreements to
which it is a party, (b) are valid, outstanding and enforceable policies, (c)
will remain in full force and effect through the Effective Time and (d) will not
in any way be affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement. To eCalton's knowledge, except as set forth in
Section 3.01(q) of the eCalton Disclosure Schedule, eCalton has not made any
material claims under such insurance policies.
(r) CONTRACTS. (A) To eCalton's knowledge, except as set forth in
Section 3.01(r) of the eCalton Disclosure Schedule, eCalton is not a party to or
bound by any written or oral Contract (i) for the employment of any officer or
individual employee; (ii) with any labor union; (iii) for the purchase of
materials, supplies or equipment involving more than $10,000; (iv) for the
provision of services by eCalton involving more than $10,000; (v) in the nature
of a confidentiality agreement, royalty or license or an agreement for the
acquisition of intangible property rights; (vi) with a governmental agency;
(vii) for the purchase of products for which there is no alternative source of
supply; (viii) in the nature of a non-competition agreement which
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in any way restricts the right of eCalton to conduct business; (ix) in the
nature of a management agreement; (x) for any quantity discount, volume
purchase, rebate or billback sales arrangement that will continue after the
Closing Date and involves more than $10,000; (xi) which provides for the
provision of services by eCalton, (xii) in the nature of a note, bond, mortgage,
indenture or loan agreement, or (xiii) relating to any matter which is material
to it. To eCalton's knowledge except as set forth in Section 3.01(r) of the
eCalton Disclosure Schedule, eCalton, as of the date hereof, is not a party to
or bound by any contract or contracts which, in its judgment as of the date
hereof, either separately or in the aggregate are contracts which are, or will,
adversely affect the business, operations or financial condition of eCalton.
(s) SUBSIDIARIES. eCalton has no subsidiaries and does not own an
interest in any partnership, limited liability company, joint venture or other
entity.
(t) BROKER AND FINDERS. Neither eCalton nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finder's fees in connection
with the transactions contemplated by this Agreement.
(u) INVENTORY. To eCalton's knowledge, all inventories of raw
materials, supplies, work in progress and finished goods of eCalton are of good,
usable and merchantable quality. In addition, to eCalton's knowledge (i) all
such inventories are of such quality as to meet its quality control standards
and any applicable governmental quality control standards, (ii) all such
finished goods are saleable as current inventories at its current prices in the
ordinary course of business, (iii) all such inventories are recorded on the
books at the lower of cost or market value determined in accordance with GAAP
and (iv) no write-down in inventory has been made or should have been made
pursuant to GAAP during the past two years.
(v) OWNERSHIP AND VOTING OF STOCK. All of the outstanding shares of
capital stock of eCalton is owned by Xxxxxx, Inc. both beneficially and of
record, free of any security interest, lien, claim, charge, restriction, option,
right of first refusal or any other encumbrance. There are no shareholder
agreements among the Board of Directors of Xxxxxx, Inc. and eCalton.
(w) NO CONFLICT WITH SHAREHOLDER CONTRACTS. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby and thereby, do not and will not conflict with, contravene,
result in a violation or breach of or a default under (with or without the
giving of notice or the lapse of time or both), create in any other Person a
right or claim of termination, amendment, or require modification, acceleration
or cancellation of, or result in the creation of any lien, charge or encumbrance
under (i) any law applicable to such Shareholder or eCalton or any of their
respective properties or assets, (b) any provision of the eCalton Organizational
Documents or (c) any Contract, or any other agreement or instrument to which
eCalton or any Shareholder is a party or by which any of their respective
properties or assets may be bound.
Since Xxxxxxx X. Xxxx has been functioning as Vice President of
Operations of eCalton, and is also the owner and President of Buyer, Xx. Xxxx
and Buyer may be in the best position to understand the condition and operations
of eCalton. Therefore, the foregoing representations and warranties made by
eCalton are only being made with respect to information to which Xx. Xxxx
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does not have access in his role as Vice President of Operations of eCalton.
eCalton is not representing or warranting any fact or condition of eCalton that
has resulted from the acts or omissions of Xxxxxxx X. Xxxx, nor is it making any
representations or warranties with respect to facts of which Xx. Xxxx has or
should have knowledge as a result of his role as Vice President of Operations of
eCalton.
Section 3.02. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby
jointly and severally represents and warrants to eCalton that:
(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. Buyer is a
corporation duly organized and validly existing under the laws of its state of
incorporation. Buyer has all requisite power and authority to own and operate
its properties and assets and to carry on its business as presently conducted
and is qualified to do business and is in good standing in each jurisdiction
where the ownership or operation of its properties or conduct of its business
requires such qualification, except where the failure to be so qualified or in
good standing is not, when taken together with all other such failures,
reasonably likely to have a material adverse effect on it.
(b) CORPORATE AUTHORITY; APPROVAL. Buyer has all requisite power and
authority and has taken all action necessary in order to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby. Buyer has duly executed this Agreement. This Agreement is a
valid and binding agreement of Buyer enforceable against Buyer in accordance
with its terms, subject to the Bankruptcy and Equity Exception. The Board of
Directors of Buyer and its sole shareholder have unanimously approved this
Agreement and the transactions contemplated hereby.
(c) GOVERNMENTAL FILINGS; NO VIOLATIONS.
(i) Other than the filings described in Section 1.01, no
notices, reports or other filings are required to be made by Buyer with, nor are
any consents, registrations, approvals, permits or authorizations required to be
obtained by Buyer from any Governmental Entity, in connection with the execution
and delivery of this Agreement by Buyer and the consummation by Buyer of the
transactions contemplated hereby.
(ii) The execution, delivery and performance of this
Agreement by Buyer do not, and the consummation by Buyer of the transactions
contemplated hereby will not, constitute or result in (A) a breach or violation
of, or a default under, the Organizational Documents of Buyer, (B) a breach or
violation of, or a default under, the acceleration of any obligations or the
creation of a lien, pledge, security interest or other encumbrance on the assets
of Buyer (with or without notice, lapse of time or both) pursuant to, any
Contract binding upon Buyer, or governmental or non-governmental permit or
license to Buyer is subject or (C) any change in the rights or obligations of
Buyer under any of its Contracts.
(d) LIABILITIES OF BUYER. Buyer has no material obligations or
liabilities and there are no civil, criminal or administrative actions, suits,
claims, hearings, investigations or proceedings pending or, to the knowledge of
Buyer, threatened against Buyer. There are no facts
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or circumstances of which Buyer has knowledge that are reasonably likely to
result in any claims against Buyer or obligations or liabilities of Buyer.
ARTICLE IV
COVENANTS
Section 4.01. COVENANTS. Except as expressly contemplated or permitted
by this Agreement, or to the extent that Buyer shall otherwise consent in
writing, during the period from the date of this Agreement and continuing until
the Closing, eCalton agrees as to itself to comply with the following covenants,
provided, however, that any action caused by Xxxxxxx X. Xxxx, acting in his role
as Vice President of Operations of eCalton, which results in a failure to comply
with any of the following covenants shall not be considered a failure of eCalton
to comply with any such covenant:
(a) ORDINARY COURSE. eCalton shall carry on its business in
the usual, regular and ordinary course in substantially the same manner as
heretofore conducted and use all reasonable efforts to preserve intact its
present business organizations, keep available the services of its present
officers and employees and preserve its relationships with customers, suppliers
and others having business dealings with it so that its goodwill and ongoing
business shall not be impaired in any respect at the Closing.
(b) DIVIDENDS; CHANGES IN STOCK. Except to the extent
contemplated by this Agreement, eCalton shall not, nor shall eCalton propose to,
(i) declare or pay any dividends on or make other distributions in respect of
any of its capital stock or other outstanding securities or interests, (ii)
split, combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in replacement of, in lieu of or in
substitution for shares of its capital stock, or (iii) repurchase, redeem or
otherwise acquire any shares of its capital stock.
(c) ISSUANCE OF SECURITIES. eCalton shall not issue, deliver
or sell, or authorize or propose the issuance, delivery or sale of, any shares
of its capital stock of any class, any Voting Debt or any securities convertible
into, or any rights, warrants, calls, subscriptions or options to acquire, any
such shares, Voting Debt or convertible securities.
(d) GOVERNING DOCUMENTS. eCalton shall not amend or propose
to amend its Organizational Documents, except as may be required by this
Agreement.
(e) NO ACQUISITIONS. eCalton shall not acquire or agree to
acquire by merging or consolidating with, or by purchasing an equity interest in
or portion of the assets of, or by any manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets.
(f) NO DISPOSITIONS. eCalton shall not sell, lease, license,
encumber or otherwise dispose of, or agree to sell, lease, license, encumber or
otherwise dispose of any of its assets, except in the ordinary course of
business.
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(g) INDEBTEDNESS. Except for borrowings in the ordinary
course of business under credit arrangements existing on the date of this
Agreement, eCalton shall not incur (which shall be deemed to include entering
into credit agreements, lines of credit or similar arrangements) any
indebtedness for borrowed money or guarantee any such indebtedness or issue or
sell any debt securities or warrants or rights to acquire any debt securities of
it or guarantee any debt securities of others.
(h) OTHER ACTIONS. eCalton shall not take any action that
would or is reasonably likely to result in any of its representations and
warranties set forth in this Agreement being untrue or in its failure to perform
covenants it is obliged to perform hereunder or in any of the conditions set
forth in Article V not being satisfied. eCalton will use its best efforts to
complete the transactions contemplated by this Agreement and obtain the
satisfaction of the conditions specified in Article V.
(i) ADVICE OF CHANGES; FILINGS. eCalton shall confer on a
regular and frequent basis with Buyer, report on operational matters and
promptly advise Buyer in writing of any change or event having (in either case),
or which, insofar as can reasonably be foreseen could have (in either case), a
material adverse effect on it (financial or otherwise) or its businesses,
properties, prospective results of operations or net worth. eCalton shall
promptly disclose to Buyer in writing any information in the eCalton Disclosure
Schedule which no longer is correct and any information of the nature of that
set forth in the eCalton Disclosure Schedule which arises after the date hereof
and which would have been required to be included in the eCalton Disclosure
Schedule if such information had been obtained on the date hereof. eCalton shall
promptly provide Buyer (or its counsel) copies of all filings made by eCalton
with any Federal, state or foreign Governmental Entity in connection with this
Agreement and the transactions contemplated hereby or which are material to the
operation of the business conducted by eCalton.
(j) EMPLOYEE BENEFIT PLANS. eCalton will not, without the
prior written consent of Buyer, (i) enter into, adopt, amend (except as may be
required by law or otherwise permitted or contemplated by this Agreement) or
terminate any Benefit Plan or other employee benefit plan or any agreement,
arrangement, plan or policy between eCalton and one or more of its directors,
officers or employees; or (ii) increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any benefit not required by
any plan and arrangement as in effect as of the date hereof (including, without
limitation, the granting of stock options, stock appreciation rights or
performance units) or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
(k) ACQUISITIONS OF PROPERTY. During the period from the
date of this Agreement until the Closing, eCalton agrees that it will not,
without the prior written consent of Buyer, acquire or lease any additional real
or personal property, including, without limitation, capital equipment or
inventories, except for real or personal property which will not exceed $10,000
in the aggregate and that inventory may be acquired in the ordinary course of
the business as conducted on the date hereof.
(l) CONSENTS WITHOUT ANY CONDITION. eCalton shall not make
any agreement or reach any understanding not approved in writing by the other
party as a condition for obtaining
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any consent, authorization, approval, order, license, certificate, or permit
required for the consummation of any of the transactions contemplated by this
Agreement.
(m) NO RELATED TRANSACTION. Except for a web hosting and
consulting agreement with Xxxxxx, Inc., eCalton shall not enter into or become a
party to any contract, lease, agreement or transaction with any member of its
board of directors, any of its officers or management employees or with any
business organization owned or controlled by any of them, from the date of the
execution of this Agreement to the Closing except in the ordinary course of
business.
(n) LEGAL REQUIREMENTS. eCalton will take all reasonable
actions necessary to comply promptly with all legal requirements which may be
imposed on with respect to this Agreement and the transactions contemplated
hereby and will promptly cooperate with and furnish information to Buyer in
connection with any such requirements imposed upon it in connection with this
Agreement and the transactions contemplated hereby. eCalton will take all
reasonable actions necessary to obtain (and will cooperate with Buyer obtaining)
any consent, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party, required to be
obtained or made by eCalton in connection with this Agreement or the taking of
any action contemplated thereby.
(o) ACCESS TO INFORMATION. Upon reasonable notice and
subject to restrictions contained in confidentiality agreements to which eCalton
is subject, eCalton shall afford to the officers, employees, accountants,
counsel and other representatives of Buyer, access, during normal business hours
during the period prior to the Closing, to all of its properties, books,
contracts, commitments and records and during such period, it shall furnish
promptly to Buyer all information concerning its business, properties and
personnel as Buyer may reasonably request.
(p) BEST EFFORTS. eCalton will use its best efforts to take,
or cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including cooperating fully with Buyer.
Section 4.02. ACQUISITION PROPOSALS. From and after the date hereof,
eCalton will not, directly or indirectly, and will instruct its officers,
directors, employees, agents or advisors or other representatives or consultants
not to, directly or indirectly, solicit or initiate any proposals or offers from
any person relating to any acquisition or purchase of all or a material amount
of the assets of, or any securities of, or any merger, consolidation or business
combination with, eCalton (any such proposal or offer being referred to herein
as an "eCalton Acquisition Proposal"), and shall immediately cease and cause to
be terminated any existing activities, discussions or negotiations with any
persons conducted heretofore with respect to any such eCalton Acquisition
Proposal.
Section 4.03. CHANGE OF NAME. As soon as reasonably practicable after
the Closing, (i) eCalton shall change its name to a name satisfactory to Xxxx
Web Development and (ii) Buyer shall change its name to "eCalton, Inc."
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Section 4.04. COVENANTS OF BUYER. Except as expressly contemplated or
permitted by this Agreement, or to the extent that eCalton shall otherwise
consent in writing, during the period from the date of this Agreement and
continuing until the Effective Time, Buyer agrees that:
(a) LEGAL REQUIREMENTS. Buyer will take all reasonable
actions necessary to comply with all legal requirements which may be imposed on
it with respect to this Agreement and the transactions contemplated hereby and
will promptly cooperate with and furnish information to eCalton in connection
with any such requirements imposed upon it in connection with to this Agreement
and the transactions contemplated hereby. Buyer will take all reasonable actions
necessary to obtain (and will cooperate with eCalton in obtaining) any consent,
authorization, order, approval of, or any exemption by, any Governmental Entity
or other public or private third party, required to be obtained or made by Buyer
in connection with this Agreement or the taking of any action contemplated
thereby.
(b) BEST EFFORTS. Buyer will use its best efforts to take,
or cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including cooperating fully with eCalton.
ARTICLE V
CONDITIONS
Section 5.01. CONDITIONS OF OBLIGATIONS OF BUYER. The obligations of
Buyer to effect the transactions contemplated by this Agreement are subject to
the satisfaction of the following conditions unless, to the extent permitted
below, waived by Buyer:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of eCalton set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement, and (except to the
extent such representations and warranties speak as of an earlier date) as of
the Closing Date as though made on and as of the Closing Date, except as
otherwise contemplated by this Agreement, and Buyer shall have received a
certificate signed by eCalton to such effect.
(b) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Purchase shall be in effect.
(c) PERFORMANCE OF OBLIGATIONS OF ECALTON. eCalton shall
have performed in all material respects all obligations, covenants and
agreements required to be performed by them under this Agreement at or prior to
the Closing Date, and Buyer shall have received a certificate signed by eCalton
to such effect.
(d) TRANSFER DOCUMENTS. eCalton shall have delivered to
Buyer at the Closing, in form satisfactory to Buyer, (i) executed deeds, bills
of sale or certificates of title, dated the Closing Date, transferring to Buyer
all of eCalton's right, title and interest in and to the Assets together with
possession of the Assets, (ii) documents evidencing the assignment and
assumption
16
of the Contracts and Permits referred to in Section 1.03 and (iii) such other
documents as may be reasonably requested by Buyer in accordance with the
provisions of this Agreement.
(e) BOARD APPROVAL. This Agreement and the transactions
contemplated hereby shall have been approved by the Buyer's Board of Directors.
Section 5.02. CONDITIONS OF OBLIGATIONS OF ECALTON. The obligation of
eCalton to effect the Purchase is subject to the satisfaction of the following
conditions unless waived by eCalton:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations speak as of an earlier date) as of the Closing Date as
though made on and as of the Closing Date, except as otherwise contemplated by
this Agreement and eCalton shall have received a certificate signed on behalf of
Buyer by the President of Xxxx Web Development to such effect.
(b) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Purchase shall be in effect.
(c) PERFORMANCE OF OBLIGATIONS OF BUYER. Buyer shall have
performed in all material respects all obligations required to be performed by
them under this Agreement at or prior to the Closing Date, and eCalton shall
have received a certificate signed on behalf of Buyer by the President of Xxxx
Web Development to such effect.
(d) ADDITIONAL AGREEMENTS. Prior to Closing, Buyer and
eCalton will enter into a web hosting agreement, whereby Buyer will continue to
host the website of Xxxxxx, Inc., as well as an information technology services
agreement, whereby Buyer will provide information technology services to Xxxxxx,
Inc. in the manner that such services has previously been provided by eCalton.
ARTICLE VI
TERMINATION AND AMENDMENT
Section 6.01. TERMINATION. This Agreement may be terminated at any time
prior to the Closing, whether before or after approval of the matters presented
in connection with this Agreement by the stockholders of eCalton:
(a) By mutual consent of Buyer and eCalton;
(b) by either Buyer or eCalton (i) if there shall have been
a material breach of any representation, warranty, covenant, obligation or
agreement on the part of the other party set forth in this Agreement which
breach shall not have been cured, in the case of a representation or warranty,
prior to the Closing, or in the case of a covenant, obligation or agreement,
within two (2) business days following receipt by the breaching party of notice
of such breach; or (ii) if any permanent injunction or other order of a court or
other competent authority preventing the
17
consummation of the transactions contemplated by this Agreement shall have
become final and non-appealable.
(c) By Buyer or eCalton by written notice to the other after
5:00 p.m., Eastern Daylight time on July 31, 2006 if the transactions
contemplated hereby shall not have been consummated pursuant hereto, unless such
date is extended by the mutual written consent of the eCalton Parties and Xxxx
Web Development; provided, however, that no party may terminate this Agreement
pursuant to this Section 6.01(c) if it is then in breach of this Agreement.
Section 6.02. EFFECT OF TERMINATION. In event of a termination of this
Agreement by either eCalton or Buyer as provided in Section 6.01, this Agreement
shall forthwith become void, except with respect to the obligations under
Section 8.01; provided, however that no such termination shall relieve any party
hereto from any liability for breach of this Agreement.
Section 6.03. REMEDIES NOT EXCLUSIVE; LIMITATIONS. No remedy conferred
by any of the specific provisions of this Agreement is intended to be exclusive
of any other remedy, and each and every remedy shall be cumulative and shall be
in addition to every other remedy given under this Agreement or now or hereafter
existing at law or in equity or by statute or otherwise, including, without
limitation, the remedy of specific performance. The election of any one or more
remedies by Buyer or eCalton shall not constitute a waiver of the right to
pursue other available remedies.
ARTICLE VII
INDEMNIFICATION
Section 7.01. INDEMNIFICATION BY ECALTON. eCalton covenants and agrees
to defend, indemnify and hold harmless Buyer and its respective officers,
directors, employees, agents, advisers and representatives (collectively the
"Buyer Indemnitees") from and against, and pay or reimburse the Buyer
Indemnitees for, any and all claims, demands, liabilities, obligations, losses,
fines, costs, expenses, royalties, litigation, deficiencies or damages (whether
absolute, accrued or otherwise and whether or not resulting from third party
claims), including interest and penalties with respect thereto and out-of-pocket
expenses and reasonable attorneys' and accountants' fees and expenses incurred
in the investigation or defense of any of the same or in asserting, preserving
or enforcing any of their respective rights hereunder (collectively, "Losses",
and each individually, a "Loss"), resulting from or arising out of:
(a) any material inaccuracy of any representation or
warranty when made or deemed made by eCalton herein or in connection herewith;
(b) any failure of eCalton to perform any covenant or
agreement hereunder or fulfill any other obligation in respect hereof or
thereof; or
(c) any transaction, liability or obligation of eCalton that
occurs or arises out of actions or events occurring prior to the Closing Date.
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Section 7.02. INDEMNIFICATION BY BUYER. Buyer covenants and agrees to
defend, indemnify and hold harmless eCalton and its respective officers,
directors, employees, agents, advisers and representatives (collectively the
"eCalton Indemnitees") from and against , and pay or reimburse the any and all
Losses resulting from or arising out of (i) any inaccuracy in any representation
or warranty when made or deemed made by Buyer or in connection herewith; or (ii)
any failure of Buyer to perform any covenant or agreement hereunder or fulfill
any other obligation in respect hereof or thereof or (iii) any transaction,
liability or obligation of Buyer that occurs or arises out of actions or events
occurring after the Closing Date.
Section 7.03. INDEMNIFICATION PROCEDURES. In the case of any claim
asserted by a third party against a party entitled to indemnification under this
Agreement (the "Indemnified Party"), notice shall be given by the Indemnified
Party to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and the Indemnified Party shall permit the
Indemnifying Party (at the expense of such Indemnifying Party) to assume the
defense of any claim or any litigation resulting therefrom, PROVIDED, that (i)
counsel for the Indemnifying Party who shall conduct the defense of such claim
or litigation shall be reasonably satisfactory to the Indemnified Party, and the
Indemnified Party may participate in such defense at such Indemnified Party's
expense, and (ii) the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its indemnification
obligation under this Agreement except to the extent that such failure results
in a lack of actual notice to the Indemnifying Party and such Indemnifying Party
is materially prejudiced as a result of such failure to give notice. Except with
the prior written consent of the Indemnified Party, no Indemnifying Party, in
the defense of any such claim or litigation, shall consent to entry of any
judgment or enter into any settlement that provides for injunctive or other
nonmonetary relief affecting the Indemnified Party or that does not include as
an unconditional term thereof the giving by each claimant or plaintiff to such
Indemnified Party of a release from all liability with respect to such claim or
litigation. In the event that the Indemnified Party shall in good faith
determine that the Indemnified Party may have available to it one or more
defenses or counterclaims that are inconsistent with one or more of those that
may be available to the Indemnifying Party in respect of such claim or any
litigation relating thereto, the Indemnified Party shall have the right at all
times to take over and assume control over the defense, settlement, negotiations
or litigation relating to any such claim at the sole cost of the Indemnifying
Party, PROVIDED, that if the Indemnified Party does so take over and assume
control, the Indemnified Party shall not settle such claim or litigation without
the written consent of the Indemnifying Party, such consent not to be
unreasonably withheld. In the event that the Indemnifying Party does not accept
the defense of any matter as above provided, the Indemnified Party shall have
the full right to defense against any such claim or demand, and shall be
entitled to settle or agree to pay in full such claim or demand, subject to the
written consent of the Indemnifying Party such consent not to be unreasonably
withheld. In any event, except to the extent that they have an interest adverse
to the other, the parties hereto shall cooperate in the defense of any claim or
litigation subject to this Article VII and the records of each shall be
available to the other with respect to such defense.
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Section 7.04. SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. The
representations, warranties and covenants contained in this Agreement shall
survive for a period of two years following the Closing Date.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. EXPENSES. Except as set forth below in this Section 8.01
or as otherwise specifically provided for in this Agreement, eCalton on the one
hand, and Xxxx Web Development, on the other hand, shall bear their respective
expenses, costs and fees (including attorneys', auditors' and financial
advisors' fees) in connection with the transactions contemplated hereby,
including the preparation, execution and delivery of this Agreement and
compliance herewith, whether or not the transactions contemplated hereby shall
be consummated.
Section 8.02. AMENDMENT; WAIVERS, ETC. No amendment, modification or
discharge of this Agreement, and no waiver hereunder, shall be valid or binding
unless set forth in writing and duly executed by the party against whom
enforcement of the amendment, modification, discharge or waiver is sought. Any
such waiver shall constitute a waiver only with respect to the specific matter
described in such writing and shall in no way impair the rights of the party
granting such waiver in any other respect or at any other time. Neither the
waiver by any of the parties hereto of a breach of or a default under any of the
provisions of this Agreement, nor the failure by any of the parties, on one or
more occasions, to enforce any of the provisions of this Agreement or to
exercise any right or privilege hereunder, shall be construed as a waiver of any
other breach or default of a similar nature, or as a waiver of any of such
provisions, rights or privileges hereunder. The rights and remedies herein
provided are cumulative and none is exclusive of any other, or of any rights or
remedies that any party may otherwise have at law or in equity. The rights and
remedies of any party based upon, arising out of or otherwise in respect of any
inaccuracy or breach of any representation, warranty, covenant or agreement or
failure to fulfill any condition shall in no way be limited by the fact that the
act, omission, occurrence or other state of facts upon which any claim of any
such inaccuracy or breach is based may also be the subject matter of any other
representation, warranty, covenant or agreement as to which there is no
inaccuracy or breach. The representations and warranties of eCalton shall not be
affected or deemed waived by reason of any investigation made by or on behalf of
Buyer (including but not limited to by any of its advisors, consultants or
representatives) or by reason of the fact that Buyer or any of such advisors,
consultants or representatives knew or should have known that any such
representation or warranty is or might be inaccurate.
Section 8.03. NOTICES. All notices and other communications to be given
hereunder shall be in writing and shall be deemed given if delivered personally,
mailed by registered or certified mail return receipt requested with proper
postage prepaid, by facsimile electronically confirmed, or by overnight courier
on the actual receipt of such notice to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
20
(a) if to Xxxx Web Development or Buyer, to
Xxxx Web Development, Inc.
000 00xx Xxxxxx
Xxxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxx
with a copy to
E. Xxxxxx Xxxxx
0000 Xxxxx Xxxxx
XX Xxx 0000
Xxxx Xxxxx, XX 00000
Fax (000) 000-0000
and
(b) if to eCalton, to
Xxxxxx, Inc.
0000 00xx Xxx, Xxxxx 0
Xxxx Xxxxx, Xxxxxxx 00000
Fax (000) 000-0000
Attention: Xxxxx Xxxxxx
with a copy to
Xxxx X. Xxxxx
Rossway, Moore, and Xxxxxx
0000 Xxx X0X, Xxx 000
Xxxx Xxxxx, Xx 00000
Section 8.04. INTERPRETATION. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement they shall be deemed to be followed by the words "without
limitation".
Section 8.05. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart. The parties agree to accept and
be bound by signature pages delivered by the parties hereto by means of
facsimile transactions, with original signatures to follow.
21
Section 8.06. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement (including the documents and the instruments referred to herein) (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Article VII, is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
Section 8.07. GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Florida without regard to
any applicable conflicts of law.
Section 8.08. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein unless the effect thereof would materially alter the benefits
or burdens hereof to the parties.
Section 8.09. PUBLICITY. Except as otherwise required by law, Buyer
shall not issue or cause the publication of any press release or other public
announcement with respect to the transactions contemplated by this Agreement
without the prior written consent of eCalton, which consent shall not be
unreasonably withheld. Except as otherwise required by law, eCalton shall not
issue or cause the publication of any press release or other public announcement
with respect to the transactions contemplated by this Agreement without the
prior written consent of Buyer, which consent shall not be unreasonably
withheld.
Section 8.10. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties; provided, however, that Buyer may assign its
rights and obligations to another subsidiary of Xxxx Web Development. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
Section 8.11. BULK SALES COMPLIANCE. Buyer hereby waives compliance by
eCalton with the provisions of the Bulk Sales Law of any state which may be
applicable to the transaction. In consideration of such waiver, eCalton agrees
to defend and indemnify Buyer against and hold it harmless from any and all
loss, liability, claims, damage or expense (including reasonable attorneys'
fees) arising out of or resulting from such noncompliance.
22
IN WITNESS WHEREOF, Xxxx Web Development and eCalton have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
as of the date first written above.
XXXX WEB DEVELOPMENT, INC.
By:__________________________
Name: Xxxxxxx X. Xxxx
Title: President
XXXXXXX.XXX, INC.
By:__________________________
Name: Xxxxxxx X. Xxxxxxxxx
Title: President
23
EXHIBIT 1.01 - ECALTON DISCLOSURE SCHEDULE
1.01(a) - Furnishings, Equipment, etc.
NAME SERVICE TAG/ SERIAL # NOTES
EQUIPMENT AT AT&T DATA CENTER
PowerEdge 1850 1YZG2B1 new pop server
Windows 2003 web edition
Imail 2006 Unlimited
PowerEdge 2650 3HNJZ51 ec-sql2
Windows 2000 server
SQL Server 2000, dual
processor license
PowerEdge 2450 7GBL501 Linux-web1
PowerEdge 2650 FTNWM41 ec-web1
Windows 2003 web edition
ColdFusion MX 7
Serv-U FTP
PowerEdge 2650 810HF41 ec-web2
Windows 2003 web edition
ColdFusion MX 7
Serv-U FTP
Generic ec-web3
Windows 2000 server
PowerEdge 2550 3S9RM01 ec-web4
Windows 2000 server
ColdFusion MX 6.1
Serv-U FTP
PowerEdge 1750 JLGCY41 old pop server
Windows 2000 server
PowerEdge 2550 9NW2B11 ec-stats
Windows 2000 server
DeepMetrix LiveStats v8
Generic ns3
Generic ns4
Generic ec-nas2
Generic ec-nas3
2 firewalls
2 network switches
3 8-port KVM w/cables
15 inch monitor
misc network cables, etc.
EQUIPMENT AT MELBOURNE OFFICE
PowerEdge 1425SC 2QHXQ91 WebDev-MX7
Windows 2003 web edition
ColdFusion MX 7
PowerEdge 1300 7CMV101 SqlDev
Windows 2000 server
Generic ec-home
Windows 2000 server
Dimension B460001 Xxxxx
PowerEdge 1650 BZY2Y21 WebDev-MX
Windows 2000 server
Dimension XPS C01EV Ec-MailMan
PowerEdge 800 CFBLK71 EC-MAIL
Windows 2003 standard
edition
PowerEdge 2450 DWX240B Ec-Sql1
Windows 2000 server
Dimension XPS EQWZI ec-fax
Windows 2000 professional
Generic ec-nas1
PowerEdge 4300 ec-prime/
antivirus
Windows 2000 server
Dimension XPS 45YAT conference room
Windows 2000 professional
Dimension XPS DN121OB intermapper
Windows 2000 professional
Intermapper Monitoring
Software
Dimension XPS 5TEMG server monitor
Windows 2000 professional
Dimension XPS EQWZE xxxx mlb pc
Windows 2000 professional
Elite 4 slim line pc xxxxxxx home
monitor
Mac Mini YM5490SSTA8
4 network switches
2 8-port KVM w/cables
4 rack mount UPS for servers
5 desk mount UPS for servers
misc small software utilities
misc network cables, etc.
2 APC NetShelter cabinets
EMPLOYEE WORKSTATIONS
All workstations include monitor, keyboard, mouse, UPS, Windows XP Pro,
or Windows 2000 Pro, and antivirus software
Dimension 2400 1CQ0741 Xxxx Xxxx
Adobe Photoshop
Adobe Illustrator
Macromedia Studio
Dimension 2400 1M58961 Xxxxx Xxxxxx
Dimension 3000 4CC2961 Xxxxxxx Xxxx
Dimension 2400 4LLMY41 Spare
Workstation-Melb
Macromedia Homesite
Adobe Illustrator
Dimension 3000 6BVSS71 Xxxxx Xxxxxx
Macromedia Homesite
Dimension 2400 6GKCR41 Xxxxx Xxxx
Macromedia Homesite
Dimension 3000 70WDZ61 Xxxxxxx Xxxxxxxx
Dimension 2400 BSMWX41 Xxxxx Xxxxxxx
Adobe Photoshop
Adobe Illustrator
Macromedia Studio
Dimension 3000 CSWKM71 Xxxx Xxxx
Macromedia Homesite
Inspiron 1000 DYFJL41 Xxxxx Xxxx
7 linksys vpn routers
PRINTERS
Dell Photo 922 D9WW271 Xxxxx Xxxxxx
Dell 720 Printer BFYQ061 Xxxxx X'Xxxxx
Dell 720 Printer 8MXVJ51 Xxxxxxx Xxxx
Xxxx 0000X XXX0000 Xxxxxxxxx Office
Dell A960 Printer 14VMX31 Xxxxx Xxxx
Dell AIO 962 86JXY41 Xxxx Xxxx
HP Color LaserJet 8550N Melbourne Office
TRADESHOW MATERIALS
trade show booth
glass shelves
2 display easels
round table w/ 2 barstools
8x10 area rug
2 small folding tables
brochures and posters
OFFICE FURNITURE
2 bookcases
metal supply cabinet
3 4x6 ft whiteboards
5 desk chairs
7 cubicle drawer units
MISCELLANEOUS
2 graphics tablets
2 hp scanners
JVC super VHS VCR
handtruck
polycom viewstation video conferencing system
copy paper, toner, misc office supplies
misc programming reference books
1.01(c) - Contracts with Customers
Development Contracts
o A.B. Design Group - New Site (ABDGRP-0001)
o Americas First Home - New Site (AMERFH-0001)
x Xxxxxxx Advertising - BBA New Homes site (BORADV-0001)
o Cammac Construction Group - New Site (CAMMAC-001)
x Xxxxxxx Homes - New Site (DAVHOM-0001)
o Xxxxx Xxxxx Homes - May 06 Site Updates (DONBRK-0004)
o Downtown Davie - March 2006 Site Updates (DOWNTN-0001)
o Essian Construction - New Site (ESSIAN-0001)
o Franciscus Homes - New Site (XXXXXX-0001)
o Hawthorne Development - New Site (HAWDEV-0001)
o Xxxxxxx Xxxxxx Xxxxxx - Spring 2006 Updates (LBG-0002)
x Xxxxxxxx Brothers - Online Sales Consultant page (MATBRO-0002)
o PMD Builders - New Site (PMBBLD-0001)
o Precision Construction - New Site (PRECIS-0001)
o Scripps Park Assoc - Woodbridge Estates New Site (XXXXXX-0001)
o Xxxxxx Xxxxxxx Homes - Texas Customer Survey (TWHOME-0026)
o US Fish and Wildlife - New Site (USFIWL-0001)
o VIP Homes - new site (VIPHOM-0001)
o Harvey's Xxxxxx - email marketing project
o Devcon/Sunland Homes - Old Hammock Cove site
o Devcon/Sunland Homes - Xxxxxxxx Green site
Hosting Contracts for the following sites:
o xxxxxxxxxxx.xxx
o xxxxxxxxxx.xxx
o alliedrichardbertram email
o xxxxxxxxxxxx.xxx
o xxxxxxxx-xxxxxxxxxx.xxx
o xxxxxxxxxxxxxxxx.xxx
o xxxxxxxxxxxxxxxxxxxxx.xxx
o xxxxxxxxxx.xxx
o xxxxxxxxxxxxxxxxxx.xxx
o xxx-xxxx.xxx
o xxxxxxxxxxxxxx.xxx
o xxxxxxxxxxxx.xxx
o xxxxxxxxxxx.xxx
o xxxxxxxxxxxxxxxxxxxxx.xxx
o xxxxxxxxxxxx.xxx
o xxxxxxxxxx.xxx
o xxxxxxxxxx.xxx
o xxxxxxxxxxxxxxx.xxx
o xxxxxxxxxxxxxx.xxx
o xxxxxxxxxxxxx.xxx
o xxxxxxxxxx.xxx
o xxxxxxxxxxxxxxxxxx.xxx
o xxxxxxxxxxxxxxxxxxx.xxx
o xxxxxxxXxxxxxxx.xxx
o xxxxxxxxxxxxxxxx.xxx
o xxxxxxxxx.xxx
o xxxxxx.xxx
o xxxxxxxxxxxx.xxx
o xxxxxxxxxxxxx.xxx
o x0xxxxxx.xxx
o xxxxxxxxxx.xxx
o xxxxxxxxxxxxxxxxxxxxx.xxx
o xxxxxxxXxxxxx.xxx
o xxxxxxxxxxx.xxx
o xxxxxx.xxx
o xxxxxxxxxxxx.xxx
o xxxxxxxxxxxxxxxxxx.xxx
o xxxxxxxxxxx.xxx
o xxxxxxxxxxxxxxxxxx.xxx
o xxxxxxxxxx.xxx
o xxx.xxx
o xxxxxxxxxx.xxx
o xxxxxxxxxxx.xxx
o xxxxxxxxx.xxx
o xxxxxxxxx.xxx
o xxxxxxxxxxxxxxxx.xxx
o xxxxxxxx.xxx
o xxxxxxxxxxxxx.xxx
o xxxxxxxxxxxxxx.xxx
o xxxxxxxxxxx.xxx
o xxxxxxxxxxxxxxx.xxx
o xxxxxxxxxxx.xxx
o xxxxxxxxxxx.xxx
o xxxxxxxxxxxx0.xxx
o xxxxxxxxxxxxxxx.xxx
o xxxxxxxxxxxx.xxx
o xxxxxxx.xxx
o xxxxxxxxxxxxxxxxx.xxx
o xxxxxxxx.xxx
o xxxxxxxxxxxx.xxx
o xxxxxx.xxx
o xxxxxxxxxxxxxxxxx.xxx
o xxxxxxxxxxxxxxxxxx.xxx
o xxxxxxxxxxx.xxx
o xxxxx.xxxxxxxxx.xxx
o xxxxxxxxxx.xxxxxxxxxxxxx.xxx
o xxxxxxxxxxxx.xxx
o xxxxxxxxxxxxxxxxxxxx.xxx
o xxxxxxxxxxxxxxx.xxx
o xxxxxxXxxxxxxx.xxx
o xxxxxxxxxxxx.xxx
o xxxxxxxx.xxx
o xxxxxxxxxxx.xxx
o xxxxxxxxxxxx.xxxxxxxxxxxxx.xxx
o xxxxxxxxxxxxxx.xxx
o xxxxxxxxxxxxx.xxx
o xxxxxxxxxxxx.xxxxxxxxxxxx.xxx
o xxxxxxxxxxxxxxxx.xxx
o xxxxxxxxxx.xxx
o xxxxxxxxxxxxxxx.xxx
o xxxxxxxxx.xxxxxxxxxxxxx.xxx
1.01(e) - Company Web Sites and Domain Names
o xxx.xXxxxxx.xxx marketing site
o Xxxxxxxxxx.xXxxxxx.xxx project management site
o xxx.XxxxXxxx.xxx site
o xxx.XxxxxxxxXxxxx.xxx sales demo site
o xxx.XxxxxxxXxxxx.xxx sales demo site
o xxx.XxxxxxxxxXX.xxx site
o xxx.xxxxx.xxx site
o xxx.XxXxxxxxxxx.xxx site
o xxxx-xxxxxx.xxx domain name
o xxxxxxxx.xxx domain name
o x-xxxxxx.xxx domain name
o xxxxxxxxxxxxxxx.xxx domain name
o xxxxxxxxxxx.xxx domain name
o xxxxxxx.xxxx domain name
o xxxxxxx.xxx domain name
o xxxxxxx.xxx domain name
o xxxxxxxx.xxx domain name
o xxxxxxxx.xxx domain name
1.02 - Excluded Assets
o All accounts receivable for completed and earned work
o All insurance policies
3.01(h) - List of Permits
o Permit of Occupancy for the office at 0000 X. Xxxxxxxx Xxx,
Xxxxx 000, Xxxxxxxxx, XX 00000
3.01(n) - Property and Equipment Leases and other contracts
o AT&T Data Center Hosting contract
o AT&T T1 Line contract
o 000-000-0000 phone number
o Weather News weather data feed contract
3.01(o) - Trademarks, Patents, Logos, etc.
o All Trademarks associated with the XxxxXxxx.xxx characters
o eCalton corporate logo
3.01(q) - Insurances Held
o General Liability Insurance
x Xxxxxxx'x Compensation Insurance
o Business Asset and Property Insurance
3.01(r) - Contracts with employees, labor unions, etc.
o None
