Exhibit 10.1
ACQUISITION AGREEMENT
BY AND BETWEEN
CANDENT CORPORATION,
AS SELLER,
AND
INCODE CORPORATION,
AS PURCHASER,
AND
INTRANCE CORPORATION
AS PURCHASER'S WHOLLY-OWNED SUBSIDIARY,
DATED AS OF SEPTEMBER 1, 2004
V.9.01.04
ASSET PURCHASE AGREEMENT
THIS AGREEMENT IS MADE AS OF THE 1ST DAY OF SEPTEMBER, 2004
AMONG:
INCODE CORPORATION, a company formed pursuant to the laws of
the State of Delaware and having an office for business
located at 000 Xxxxxx Xxxx, Xxxxx 000, Xxxxx Xxxxxxxxx, Xxx
Xxxxxx 00000 ("Purchaser")
AND:
INTRANCE CORPORATION, a wholly-owned subsidiary of the
Purchaser formed pursuant to the laws of the State of Delaware
and having an office for business located at 000 Xxxxxx Xxxx,
Xxxxx 000, Xxxxx Xxxxxxxxx, Xxx Xxxxxx 00000 ("Intrance")
AND:
CANDENT CORPORATION, a company formed pursuant to the laws of
the State of Delaware and having an office for business
located at XX Xxx 000, Xxxxx Xxxxxxxxx, Xxx Xxxxxx 00000
("Seller")
WHEREAS:
A. The Purchaser is in the business of acquiring, developing and
commercializing innovative and profitable subscription-based
eBusinesses in the online dating, information, retail, industrial, and
financial services sectors;
B. The Purchaser's growth plans are to consolidate one or more existing
operating businesses and to bring itself public through a reverse
merger transaction with an existing publicly-traded company;
C. The Seller is engaged in the business of providing technology
development and other related services (collectively, the "Business")
incidental to which it has certain assets including but not limited to
the following:
(a) Certain internet-based online dating, information, retail,
industrial, and financial services and portals;
(b) Certain intellectual property and other rights associated with
such services and portals;
(c) Certain other assets associated with such services and
portals; and,
(d) Certain material agreements with third parties pertaining to
the above assets; and,
D. The Purchaser desires to purchase and acquire and the Seller desires to
sell, convey, assign and transfer, or cause to be sold, conveyed,
assigned and transferred, to the Purchaser, the Seller's Assets.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises
and the mutual covenants, agreements, representations and warranties contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the terms below shall have the following meanings:
(a) "Accounts Receivable" has the meaning set forth in Section
2.1(a)(i).
(b) "Acquisition" has the meaning set forth in the Recitals.
(c) "Affiliate" of a Person means any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned Person.
(d) "Agreement" has the meaning set forth in the Preamble.
(e) "Assumed Liabilities" has the meaning set forth in Section 2.3.
(f) "Balance Sheet" means the balance sheet of the Business.
(g) "Business" has the meaning set forth in the Recitals.
(h) "Closing" has the meaning set forth in Section 3.1.
(i) "Closing Date" has the meaning set forth in Section 3.1.
(j) "Customer" has the meaning set forth in Section 6.7.
(k) "Customer Contracts" has the meaning set forth in Section
2.1(b)(ii)(A).
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(l) "Escrow Agent" means the escrow agent under the Escrow Agreement
the Purchaser.
(m) "Excluded Liabilities" means any liabilities and obligations with
respect to, arising out of or relating to, the ownership, possession or use of
the Seller's Assets and the operation of the Business prior to the Closing Date
except those liabilities expressly assumed pursuant to Section 2.3 hereunder.
(n) "Financial Statements" has the meaning set forth in Section 4.5.
(o) "GAAP" means United States generally accepted accounting principles
as in effect from time to time.
(p) "Governmental Entity" means any federal, state, provincial, local,
county or municipal government, governmental, judicial, regulatory or
administrative agency, commission, board, bureau or other authority or
instrumentality, domestic or foreign.
(q) "Interests" has the meaning set forth in Section 2.1(a).
(r) "Person" means an individual, corporation, partnership,
association, limited liability company, trust, joint venture, unincorporated
organization, other entity or group (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended).
(s) "Purchase Price" has the meaning set forth in Section 2.5
(t) "Purchaser" has the meaning set forth in the Preamble.
(u) "Seller" has the meaning set forth in the Preamble.
(v) "Seller's Assets" has the meaning set forth in Section 2.1.
ARTICLE II
PURCHASE AND SALE OF ASSETS
Section 2.1 Acquired Assets.
On the terms and subject to the conditions set forth in this Agreement, at the
Closing the Seller shall sell, assign, transfer, convey, and deliver to the
Purchaser free and (where applicable) clear of all liens, claims, interests and
encumbrances of any nature, and the Purchaser shall purchase and accept from the
Seller the assets of the Seller (the "Seller Assets") as hereinafter described
(collectively, the assets set forth in this Section 2.1 are referred to as
"Seller's Assets"). Any liens or encumbrances assumed by Purchaser are
identified in Schedule 2.2:
(a) all legal and beneficial right, title, and interest of the Seller,
whether prospective or actual, in and to the Seller Assets, whether tangible or
intangible, real, personal or mixed, wherever situated, owned, held or used by
the Seller or in which the Seller has any right, title or interest that is
owned, directly or indirectly, leased or otherwise held primarily for use in the
Business and specifically including the following:
(i) all accounts receivable arising out of the operation of
the Business existing on the date hereof including, without limitation, those
listed or described on Schedule 2.1(b)(i), or arising in the ordinary course
under the Customer Contracts after the date hereof (the "Accounts Receivable");
(ii) all rights and incidents of interest of the Seller and
any Seller Subsidiary to:
(A) all of the services agreements between the Seller
and a customer in any way relating to the Business (the "Customer Contracts")
existing on the date hereof or arising in the ordinary course after the date
hereof and listed or described on Schedule 2.1(b)(ii)(A) (which Schedule will be
provided by Purchaser prior to the Closing Date);
(B) the agreements, contracts and arrangements
between the Seller and a vendor or other third party providing goods or services
relating to the Business listed on Schedule 2.1(b)(ii)(B) (which Schedule will
be provided by the Purchaser prior to the Closing Date);
(C) all of the rights of the Seller regarding
confidentiality and/or non-competition with respect to the Transferred Employees
and former employees; and
(iv) all trade names, trademarks, registered copyrights,
service marks, trademark registrations and applications, service xxxx
registrations and applications, copyright registrations and applications,
internet addresses and other internet related assets used primarily in the
operation of the Business as are listed or described on Schedule 2.1(b)(iv) (the
"Intellectual Property");
(v) all rights and claims under all contracts, warranties,
representations and guarantees made by suppliers, manufacturers and contractors
in connection with the Seller's Assets and all rights and claims relating to
Assumed Liabilities except those shown or described on Schedule 2.1(b)(v);
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(ix) all books and records of the Business;
(xii) all goodwill primarily related to the Business; and,
(xiii) to the extent assignable, rights of indemnification
from all non-affiliated third parties for liabilities and obligations relating
to the Business or the Seller's Assets.
Section 2.2 Encumbrances.
The sale and transfer of the Seller's Assets at the time of the Closing shall be
free and clear of all obligations, security interests, liens and encumbrances,
except as identified above and described in Schedule 2.2 and other schedules
attached hereto, or unless expressly assumed in writing by the Purchaser.
Section 2.3 Assumed Liabilities.
On the terms and subject to the conditions set forth in this Agreement, at the
Closing, the Purchaser shall assume from the Seller and thereafter pay, perform
or otherwise discharge in accordance with their terms all of the liabilities and
obligations of the Seller with respect to, arising out of or relating to, the
ownership, possession or use of the Seller's Assets and the operation of the
Business other than the Excluded Liabilities, including liabilities and
obligations with respect to, arising out of or relating to, the ownership,
possession or use of the Seller's Assets and the operation of the Business, as
well as accounts payable, accruals for expected accounts payable, notes payable,
accrued salaries and wages, and other accrued miscellaneous expenses associated
with the Business, as shown in Schedule 2.3.
Section 2.4 Excluded Liabilities.
Notwithstanding anything to the contrary contained in this Agreement, and except
as set forth in Section 2.3 above and as set forth on Schedule 2.3 hereto,
Purchaser shall not assume or agree to pay, perform or otherwise discharge or
have any liability whatsoever for any Excluded Liabilities or any other
liabilities, obligations or expenses, if any, of Seller whatsoever other than
the Assumed Liabilities.
Section 2.5 Purchase Price.
Purchase Price. In consideration for the Seller's Assets, the Purchaser shall
issue to Seller two hundred and seventy five thousand shares (275,000) of a
non-voting class of preferred equity in Intrance ("the Subsidiary Preferred
Stock"), with a par value of $0.01. Subsidiary Preferred Stock holders will
receive a quarterly dividend equal to ten percent (10%) of Intrance's aggregate
operating income until such time as the Subsidiary Preferred Stock is redeemed
or converted. Shares of Subsidiary Preferred Stock shall be redeemable, either
in total or in part on a pro rated basis, by Purchaser at the rate of ten
dollars $10.00 per share, and shall be convertible into the Purchaser's common
stock at the rate of ten cents ($0.10) per common share.
(a) Adjustment Upon Conversion. The Subsidiary Preferred Stock shall be
subject to adjustment upon conversion such that the percentage of the
Purchaser's issued and outstanding common stock represented by the shares of
Subsidiary Preferred Stock as if fully converted upon the issuance date of the
shares of Subsidiary Preferred Stock, shall remain constant until the date of
conversion. Furthermore, the Subsidiary Preferred Stock shall include
price-protection rights such that the Purchaser shall issue additional shares of
its common stock to the extent of any difference between the redemption price
above and the ultimate proceeds realized in the event of any sales of the
Purchaser's common stock received by Seller hereunder, and on the basis of the
then-current market price of the Purchaser's common stock.
ARTICLE III
THE CLOSING
Section 3.1 Closing.
The consummation of the transactions contemplated by this Agreement (the
"Closing") shall take place on or before October 31, 2004 at the offices of
Purchaser's attorney (the date of Closing being herein referred to as the
"Closing Date").
Section 3.2 Deliveries at Closing.
(a) At the Closing, the Seller shall deliver and cause the Selling
Subsidiaries to deliver to the Purchaser:
(i) duly executed instruments or other evidence sufficient to
transfer to Purchaser the Interests;
(ii) duly executed bills of sale, substantially in the form of
Exhibit B attached hereto, transferring Seller's Assets to Purchaser;
(iii) all other conveyance documents reasonably necessary to
transfer to Purchaser Seller's Assets;
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(iv) Seller's Assets (as set forth on Schedule 2.1), by making
Seller's Assets available to Purchaser at their locations as of the Closing
Date; and,
(v) any documents or certificates that are necessary to
transfer to Purchaser good, clear and marketable title all of the Assets and
assignments of all Company Contracts, and (ii) all opinions, certificates and
other instruments and documents required by the terms of this Agreement to be
delivered by Seller at or prior to Closing or otherwise required in connection
with the Acquisition.
(b) At the Closing, the Purchaser shall deliver to the Seller the note
described in Section 2.5 and all other documents required to be delivered by
Purchaser to Seller at or prior to the Closing Date in connection with this
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Seller represents and warrants that as of the date hereof and as of the Closing
Date, the following representations shall be true and correct and in full force
and effect:
Section 4.1 Organization and Good Standing.
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the State of New Jersey and has the corporate power and
authority to own, lease and operate the Assets used in the Business and to carry
on the Business as now being conducted. Seller is duly qualified to do business
and is in good standing as a foreign corporation or otherwise in the states and
jurisdictions set forth on Schedule L and in each other jurisdiction where
qualification as a foreign corporation or otherwise is required to conduct the
Business.
Section 4.2 Authority, Approvals and Consents.
Except as set forth on Schedule N hereto, Seller has the corporate power and
authority to enter into this Agreement and to perform their obligations
hereunder. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
and validly approved by the Board of Directors of Seller and by their respective
stockholders and no other corporate or other proceedings on the part of Seller
are necessary to authorize and approve this Agreement and the transactions
contemplated hereby. Seller hereby expressly represents that they have fully and
properly complied with all aspects of applicable New Jersey corporate law in
entering into this Agreement and for consummating the transactions contemplated
hereunder. This Agreement has been duly executed and delivered by, and
constitutes a valid and binding obligation of Seller, enforceable against Seller
in accordance with its terms. The execution, delivery and performance of this
Agreement by Seller and the consummation of the transactions contemplated hereby
do not and will not:
(i) contravene any provisions of the Certificate or
Articles of Incorporation or Formation or By-Laws or other organizational
documents of Seller;
(ii) conflict with, result in a breach of any
provisions of, constitute a default under, result in the modification or
cancellation of, or give rise to any right of termination or acceleration in
respect of any Company Agreement (as defined hereinbelow) or, except as set
forth on Schedule N hereto, require any consent or waiver of any party to any
Company Agreement.
(iii) result in the creation of any Security Interest
upon, or any person obtaining any rights to acquire, the Assets;
(iv) violate or conflict with any Legal Requirements
(as defined hereinbelow) applicable to the Business or any of the Assets; or
(v) require any authorization, consent, order,
permit, or approval of, or notice to, or filing, registration or qualification
with, any governmental, administrative or judicial authority (except for state
or federal environmental regulatory agency requirements and those set forth on
Schedule N hereto).
Except as set forth or referred to above on Schedule N hereto, no authorization,
consent, order, permit or approval of, or notice to, or filing, registration or
qualification with, any governmental, administrative or judicial authority is
necessary to be obtained or made by Seller to enable Purchaser to continue to
conduct the Business and use the Assets after the Closing in a manner which is
in all material respects consistent with that in which the Business is presently
conducted and as the Assets are currently utilized. Furthermore, no
authorization, consent, order, permit or approval of, or notice to, or filing,
registration or qualification with, any governmental, administrative or judicial
authority, creditor or other party is necessary to be obtained or has not been
obtained by Seller prior to Closing to effectively convey to Purchaser good,
clear and marketable title to the Assets, free of any and all claims of any
party with respect thereto (except as set forth in Section 4.4 hereinbelow and
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provided in Schedule____). Seller does hereby expressly disclaim any
representation or warranty as such may relate to compliance with state or
Federal securities laws.
Section 4.4 Consents and Approvals.
No consent, approval, or authorization of, or declaration, filing, or
registration with, any Governmental Entity will be required to be made or
obtained by Seller in connection with the execution, delivery, and performance
of this Agreement and the consummation of the transactions contemplated hereby,
except as set forth on Schedule N hereto. Excluded from the foregoing are any
and all state or federal environmental regulatory agency requirements or filings
which shall be Purchaser's sole responsibility; provided, however, that Seller
does hereby agree to provide reasonable cooperation to assist Purchaser's
satisfaction of such requirements.
Section 4.5 Financial Information.
Schedule O contains an unaudited Balance Sheet and income statement prepared by
the finance and accounting staff of Seller for the Business as of June 30, 2004,
with the representation that they have been prepared in accordance with GAAP
(the "Financial Statements") on a review (not audited) basis (with exception for
footnotes, summaries and statements of cash flows). The Financial Statements
were prepared by Sellers and have not been reviewed by an independent certified
public accounting firm. Except as set forth on Schedule O hereto, the Financial
Statements are in accordance with the books and records of the Seller and fairly
and accurately present the financial position, results of operations,
stockholder's equity and cash flows of Seller as of the dates and for the
periods indicated, in each case in conformity with GAAP, consistently applied
(with exception for footnotes , summaries and statements of cash flows). The
statements of income included in the Financial Statements do not contain any
items of special or nonrecurring income except as expressly specified therein,
and the balance sheets included in the Financial Statements do not reflect any
write-up or revaluation increasing the book value of any Assets. The books and
accounts of Seller are complete and correct and fully and fairly reflect all of
the transactions of Seller and are presently located solely at the offices of
Seller and not at any other location.
Section 4.6 Title to Property/Assets.
(a) Except as set forth in Schedule P attached hereto and
incorporated herein by this reference verbatim and at length, the sale of the
Assets by Seller pursuant hereto will effectively convey to Purchaser all of the
Assets, including all tangible and intangible assets and properties of Seller,
as specified on Schedule A. Seller has good, clear and marketable title to all
of the Assets and to all other properties reflected on the Financial Statements
or acquired after the date thereof (other than properties and assets sold or
otherwise disposed of after the date thereof in the ordinary course of
business), and each such Asset is held free and clear of (i) all leases,
licenses and other rights to occupy or use such property and (ii) all Security
Interests, rights of way, easements, restrictions, exceptions, variances,
reservations, covenants or other title defects or limitations of any kind,
except (with respect to all such properties) those set forth on Schedule P
hereto, none of which has a Material Adverse Effect on such property or its
present or contemplated use in the Business.
Section 4.7 Absence of Material Adverse Change; Conduct of Business.
Since December 31, 2003, there has been no Material Adverse Effect and there is
no condition, development or contingency of any kind existing or in prospect
which, so far as reasonably can be foreseen at this time, may result in any
Material Adverse Effect to the Business or which would violate Section 6.1
hereof. With the exception of transactions listed on Schedule 4.7, since
December 31, 2003:
(a) Seller has not sold or transferred any assets that are
material to the Business other than in the ordinary course of business;
(b) the has been no labor dispute, strike, union
organizational activity allegation or other similar occurrence which might
reasonably be expected to materially and adversely affect the Business; and
(c) Seller has not taken any actions which would adversely
effect the Financial Statements or any Company Agreements and has not obtained
any information relative to the Financial Statements or any Company Agreements
which has not been disclosed to Purchaser.
Section 4.8 No Undisclosed Liabilities.
Seller has not incurred any liabilities or obligations that would both be
required to be reflected or provided for in a Balance Sheet prepared in
accordance with the policies, procedures and methods used to prepare the
Financial Statements.
Section 4.9 No Violations.
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Neither the execution, delivery, or performance of this Agreement by Seller, nor
the consummation by Seller of the transactions contemplated hereby, nor
compliance by Seller with any of the provisions hereof will (a) conflict with or
result in any breach of any provisions of the certificate of incorporation or
bylaws of the Seller, (b) result in a violation, or breach of, or constitute
(with or without due notice or lapse of time) a default (or give rise to any
right of termination, cancellation, vesting, payment, exercise, acceleration,
suspension or revocation) under any of the terms, conditions or provisions of
any contract, agreement or arrangement that is included as an Asset or any
material note, bond, mortgage, deed of trust, security interest, indenture,
license, contract, agreement, plan or other instrument or obligation to which
Seller is a party or by which the properties or Assets related to the Business
may be bound or affected or (c) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Seller or the Assets, except in the
case of clauses (b) or (c) for violations, breaches, defaults, terminations,
cancellations, accelerations, creations, impositions, suspensions or revocations
that would not be reasonably likely to have a Material Adverse Effect.
Section 4.10 Absence of Litigation/Legal Matters.
Except as set forth on Schedule Q attached hereto and incorporated herein by
this reference verbatim and at length (said Schedule Q having been presented to
Purchaser and its counsel in final form well prior to Closing), (i) there is no
claim, action, suit, litigation, investigation, inquiry, review, or proceeding
pending against, or, to the Best Knowledge of Seller, threatened against or
affecting, Seller in regard, including, but not limited to, the Business or the
Assets, before or by any court, arbitrator, panel, agency or other governmental,
administrative or judicial entity in the United States of America or elsewhere,
and (ii) Seller is not subject to any judgment, decree, writ, injunction or
order of any governmental, administrative or judicial authority in the United
States of America or elsewhere. To the Best Knowledge of Seller, the Business is
being conducted in full compliance with all laws, ordinances, codes, rules,
regulations, standards, judgments, decrees, writs, rulings, injunctions, orders
and other requirements of all governmental, administrative or judicial entities
in the United States of America or elsewhere (collectively, "Legal
Requirements") applicable to the Business and the Assets. Seller holds all
licenses, franchises, permits, registrations, certificates, consents, approvals,
rights or authorizations (collectively "Permits") required by all applicable
Legal Requirements, (iii) Seller owns or holds all Permits material to the
conduct of the Business and (iv) no event has occurred and is continuing which
permits, or after notice or lapse of time or both would permit, any modification
or termination of any Permit or violation of any Legal Requirement. Seller (A)
has not received any notice asserting any noncompliance with any Legal
Requirements or Permit, or (B) is not subject to any Legal Requirements or
Permit which if enforced against or complied with by Seller would have a
Material Adverse Effect on the Business. No governmental, administrative or
judicial authority has given notice of any intention to initiate any
investigation, inquiry or review involving Seller or the Business.
Section 4.11 Taxes.
Seller, and for any period during all or part of which the tax liability of any
other corporation or other entity was determined to be on a combined or
consolidated basis with Seller, such other corporation or other entity (as such
relates to the Business), have timely filed all federal, state, local and
foreign tax returns, information reports and declarations required to be filed
(or have obtained or timely applied for an extension with respect to such
filing(s) and have disclosed same to Purchaser) and have paid, or made adequate
provision for the payment of, all Taxes (as defined below) which are due
pursuant to said returns or pursuant to an assessment(s) received by Seller or
any such other corporation or entity. As used herein, "Taxes" shall mean all
taxes, fees, levies or other assessments including, but not limited to, income,
excise, property, sales, use, franchise, foreign, withholding, Social Security
and unemployment taxes imposed by the United States, any state, county, local or
foreign government or any agency or subdivision thereof or taxing authority
therein, and any interest, penalties or additions to tax relating to such taxes,
charges, fees, levies or other assessments.
Section 4.12 Insurance.
All of Seller's Assets utilized in the Business which are of an insurable
character are insured by Seller against loss or damage by fire and other risks
to the extent and in the manner customary for companies engaged in similar
businesses or owning similar assets. Set forth on Schedule T attached hereto and
incorporated herein by this reference verbatim and at length is a list of all
policies for such insurance and Seller previously have furnished to Purchaser
true and complete copies of all such policies. All such policies are in full
force and effect and Seller represent that they have not received any
notification of cancellation or claim with respect thereto.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller as follows:
Section 5.1 Organization.
Purchaser is a corporation duly organized and validly existing and in good
standing under the laws of the State of Delaware, and has full power and
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authority to carry on its current business and to own, use and sell its assets
and properties.
Section 5.2 Authority, Approvals and Consents.
Purchaser has the corporate power and authority to enter into this Agreement and
to perform its obligations hereunder. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized and validly approved by the Board of Directors of Purchaser
and no other corporate or other proceedings on the part of Purchaser are
necessary to authorize and approve this Agreement and the transactions
contemplated hereby. Purchaser hereby expressly represents that they have fully
and properly complied with all aspects of applicable Delaware and Connecticut
corporate law in entering into this Agreement and for consummating the
transactions contemplated hereunder. This Agreement has been duly executed and
delivered by, and constitutes a valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms.
Section 5.3 Binding Nature.
This Agreement shall be, when duly executed and delivered, a legally binding
obligation of the Purchaser enforceable in accordance with its terms.
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business by the Seller Pending the Closing.
The Seller hereby covenants, represents and warrants to the Purchaser that
pending completion of the Closing unless otherwise agreed to in writing by the
Purchaser:
(a) the Seller shall not engage in any sale, enter into any
transaction, contract or commitment, incur liability or obligation or make any
disbursement not in the ordinary course of the Business, including, without
limitation, the payment, of any kind and in any amount, to the Seller's
shareholders (or their affiliates), and the declaration and/or payment of any
dividends, purchase, redemption or other distributions with respect to the
Seller's capital stock;
(b) the Seller shall carry and continue in force through the Closing,
all existing insurance coverages including without limitation to theft,
liability and other insurance as set forth in Schedule 6.1(b). For any loss
occurring between the date of this Agreement and the Closing Date, the parties
rights and liabilities thereunder shall be determined as follows:
(i) Casualty Prior to Closing. The risk of any loss,
destruction or other damage, other than ordinary wear and tear, between the date
of execution hereof and the completion of the Closing, shall be solely that of
the Seller. If before the completion of the Closing, any of the Seller's
machinery or equipment which is the subject of this Agreement is damaged by
fire, casualty or any other cause: (A) if the replacement or repair cost is
$10,000 or more, the Purchaser may either: (x) terminate this Agreement without
liability or (y) complete the Closing hereunder in which event the Purchaser
shall be entitled to a credit to the insurance proceeds arising with respect to
such damage, and (B) if such replacement or repair cost, as the case may be, is
less than $10,000, the Purchaser shall be obligated to complete the Closing
hereunder and shall be entitled to the insurance proceeds arising with respect
to such damage.
(c) the Seller shall not amend, modify or terminate any agreement
related to the Business to which it is a party except in the ordinary course of
business;
(d) the Seller shall use its best efforts to preserve the Business and
maintain all of its equipment and records in good order and keeping the same
available for the Purchaser and further to preserve for the Purchaser the
goodwill of suppliers, customers and others having business relationships with
the Seller; and,
(e) the Seller shall give the Purchaser prompt notice of all events
prior to Closing which may materially relate to any term of this Agreement.
Section 6.2 Access and Information.
The Seller shall afford to the Purchaser and to the Purchaser's financial
advisors, legal counsel, accountants, consultants, financing sources and other
authorized representatives reasonable access during normal business hours
throughout the period prior to the Closing Date to the books, records,
properties and personnel of the Seller, the Selling Subsidiaries and the
Transferred Subsidiaries relating to the Business and, during such period, shall
furnish reasonably promptly to the Purchaser such information as the Purchaser
reasonably may request. All such information disclosed to the Purchaser shall
remain subject to the Confidentiality Agreement. Without limitation of the other
provisions of this Section 6.2, the Seller shall permit the Purchaser or its
consultant, in accordance with a mutually acceptable confidentiality agreement
entered into by the Purchaser, the Seller and, if relevant, the Purchaser's
consultant, to migrate any data concerning the Business which the Purchaser
shall deem appropriate onto a server maintained by the Purchaser or its
consultant but using the Purchaser's software programs. It is the Purchaser's
intent that if the Closing shall occur, the Purchaser shall have immediate
access to such migrated data in order to operate the Business and comply with
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the Purchaser's reporting obligations for the combined operations of the
Purchaser and the Business under applicable securities laws. If the Closing
shall not occur, such consultant shall destroy all of such migrated data in
compliance with such confidentiality agreement.
Section 6.3 Additional Matters.
Subject to the terms and conditions herein provided, each of the parties hereto
agrees to use all reasonable 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.
Section 6.4 Additional Financial Information.
On or prior to the Closing Date, the Purchaser shall have received from the
Seller the Financial Statements as of December 31, 2003, December 31, 2002, and
December 31, 2001. The Seller will provide the Purchaser with monthly Financial
Statements and income statements for the Business as prepared in the ordinary
course and consistent with past practice by the finance and accounting staff of
the Business for each month after December 2003 until the Closing for which the
Seller has closed the accounting books of the Business, which statements shall
be delivered within forty-five (45) days after each such closing.
Section 6.5 Indemnification.
The Parties shall indemnify each other as set forth below:
(i) Seller shall indemnify and hold harmless
Purchaser and each of its affiliates or other related entities from and against
any and all losses, damages, liabilities and claims (including legal fees and
costs) arising out of, based upon or resulting from any inaccuracy as of the
date hereof or as of the Closing Date of any representation or warranty of
Seller which are contained in or made pursuant to this Agreement or any breach
by Seller of any obligations contained in or made pursuant to this Agreement
including, without limitation, with respect to all liabilities, commitments and
obligations of Seller.
(ii) Purchaser shall indemnify and hold harmless
Seller from any and all losses, damages, liabilities and claims arising out of,
based upon or resulting from any inaccuracy as of the date hereof or as of the
Closing Date of any representation or warranty of Purchaser which is contained
in or made pursuant to this Agreement or any breach by Purchaser of any of its
obligations contained in or made pursuant to this Agreement.
(iii) As a material inducement to Purchaser entering
into and consummating the transaction contemplated hereunder, Seller does hereby
agree to hold Purchaser completely free and harmless and indemnify Purchaser
from and against any and all claims which Seller has or may have against any
stockholder, member, director, officer, agent or other Person related to Seller
whatsoever. Purchaser shall have no obligation whatsoever to participate in any
litigation or other action between Seller and any stockholder, member, director,
officer, agent or other Person related to Seller , and if Purchaser is forced to
participate in any such action, Seller shall be solely responsible for any and
all costs incurred by Purchaser in connection therewith, including, without
limitation, all economic costs incurred by Purchaser and payment of reasonable
attorneys fees and costs.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions Precedent to Obligation of the Seller.
The obligation of Seller to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver at or prior to the
Closing Date of the following additional conditions:
(a) the Purchaser shall have performed in all material respects its
obligations under this Agreement required to be performed by the Purchaser at or
prior to the Closing Date;
(b) the Purchaser shall have (x) filed with the Secretary of State of
Delaware the Certificate of Designation for Intrance Corporation's Subsidiary
Preferred Stock, with the rights and privileges provided for in Section 2.5
hereof, (y) provided a certified resolution of its board of directors
authorizing an irrevocable instruction to Purchaser's transfer agent relative to
the rights and privileges attached to the Subsidiary Preferred Stock as defined
in Section 2.5 hereof, and (z) issued to the Seller two hundred and seventy five
thousand shares (275,000) of the Subsidiary Preferred Stock; and,
(c) each of the representations and warranties of the Purchaser
contained in this Agreement shall be true and correct as of the Closing Date as
if made at and as of such date, except where the failure of such representation
and warranty to be true and correct would not have a material adverse effect on
the Purchaser or the transactions contemplated by this Agreement.
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Section 7.2 Conditions Precedent to Obligation of the Purchaser.
The obligation of the Purchaser to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver at or prior to the
Closing Date of the following additional conditions:
(a) the Seller shall have performed in all material respects its
obligations under this Agreement required to be performed by the Seller at or
prior to the Closing Date;
(b) each of the representations and warranties of the Seller contained
in this Agreement shall be true and correct as of the Closing Date as if made at
and as of such date;
(c) the successful completion by the Purchaser of that level of due
diligence the Purchaser deems reasonably required;
(d) the Seller's Assets are fee and clear of all perfected, filed and
recorded liens, charges and encumbrances except those noted in Schedule 2.2. The
instruments of assignment, transfer and xxxx of sale of Seller's Assets to the
Purchaser will comply in all respects with the terms of this Agreement and are
sufficient to vest in the Purchaser all of the Seller's right, title and
interest in respect to all of the Seller's Assets being sold and/or transferred
hereunder; and,
(e) Opinion of Sellers' Counsel. Purchaser shall have been furnished
with the opinion of Xxxxxx Xxxx, Esq., attorneys at law, counsel for Seller,
dated the Closing Date, in form and substance satisfactory to Purchaser and
Purchasers' counsel, as to the following (i) the good standing and authority of
Seller to carry on the Business and own the Assets, (ii) that all appropriate
corporate or business entity actions necessary to complete the transactions
contemplated hereunder have been taken, (iii) Seller's proper execution and
delivery of this Agreement, the schedules hereto and any other documents
required or necessary hereunder and the validity and binding legal effect
thereof and of Seller's obligations hereunder, (iv) Seller's good and marketable
title to the Assets, (v) disclosure of litigation, proceedings or investigations
pending or threatened against Seller or which Seller's counsel is aware, (vi)
that this Agreement does not violate any other agreement of which Seller's
counsel is aware, and (vii) that the documents conveying title to Seller's
interest in the Assets are valid and legally binding. In rendering the foregoing
opinions, such counsel may rely as to factual matters upon certificates or other
documents furnished by officers and directors of Purchaser and by government
officials and upon such other documents and data as such counsel deems
appropriate as a basis for their opinions. Such counsel may specify the
jurisdiction or jurisdictions in which they are admitted to practice, that they
are not admitted to the Bar in any other jurisdiction or experts in the law of
any other jurisdiction and that such opinions are limited accordingly.
ARTICLE VIII
TERMINATION, AMENDMENT, AND WAIVER
Section 8.1 Termination Events.
This Agreement may be terminated at any time prior to the Closing Date as
follows:
(a) by mutual written agreement of the Purchaser and the Seller;
(b) by the Seller (provided that the Seller is not then in material
breach of any representation, warranty, covenant or other agreement contained
herein for which the Purchaser shall have previously notified the Seller), if
there has been a breach by the Purchaser of any of its representations,
warranties, covenants or agreements contained in this Agreement, or any such
representation and warranty shall have become untrue, and such breach or
condition has not been promptly cured within 30 days following receipt by the
Purchaser of written notice of such breach;
(c) by the Purchaser (provided that the Purchaser is not then in
material breach of any representation, warranty, covenant or other agreement
contained herein for which the Seller shall have previously notified the
Purchaser), if there has been a breach by the Seller of any of its
representations, warranties, covenants or agreements contained in this
Agreement, or any such representation and warranty shall have become untrue, and
such breach or condition has not been promptly cured within 30 days following
receipt by the Seller of written notice of such breach; and,
(d) by the Purchaser (provided that the Purchaser is not then in
material breach of any representation, warranty, covenant or other agreement
contained herein) at or prior to the Closing Date, if the Purchaser is not
satisfied with its due diligence review of the Business.
Section 8.2 Effect of Termination and Abandonment.
In the event of termination of this Agreement pursuant to this Article VIII,
written notice thereof shall be given as promptly as practicable to the other
party to this Agreement and this Agreement shall terminate and the transactions
contemplated hereby shall be abandoned, without further action by any of the
parties hereto. If this Agreement is terminated as provided herein (a) there
shall be no liability or obligation on the part of the Seller, the Purchaser, or
their respective officers, directors and Affiliates, and all obligations of the
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parties shall terminate, except for (i) the obligations of the parties pursuant
to the Confidentiality Agreement, and (ii) that a party that is in material
breach of its representations, warranties, covenants, or agreements set forth in
this Agreement shall be liable for damages occasioned by such breach, including
without limitation any expenses, including the reasonable fees and expenses of
attorneys, accountants and other agents, incurred by the other party in
connection with this Agreement and the transactions contemplated hereby;
provided, however, that the Purchaser shall not be deemed to be in material
breach of this Agreement solely by reason of its inability to satisfy one or
more of the conditions set forth in Section 7.2 if the Purchaser is attempting
to satisfy such conditions in good faith.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Expenses.
Each of the Parties hereto shall pay its own fees and expenses (including the
fees of any attorneys, accountants, or others engaged by such Party) in
connection with this Agreement and the transactions contemplated hereby whether
or not the transactions contemplated hereby are consummated.
Section 9.2 Paragraph Headings and Language Interpretations.
The paragraph headings contained herein are for reference only and shall not be
considered substantive provisions of this Agreement. The use of a singular or
plural form shall include the other form, and the use of a masculine, feminine
or neuter gender shall include the other genders, as applicable.
Section 9.3 Notices.
All notices, claims, demands, and other communications hereunder shall be in
writing and shall be deemed given upon (a) confirmation of receipt of a
facsimile transmission, (b) confirmed delivery by a standard overnight carrier
or when delivered by hand, or (c) the expiration of five (5) business days after
the day when mailed by registered or certified mail (postage prepaid, return
receipt requested), addressed to the respective parties at the following
addresses (or such other address for a party as shall be specified by like
notice):
(a) If to the Purchaser, to:
Incode Corporation
XX Xxx 000
Xxxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxx Xxxxxxx, President and Chief Financial Officer
with a copy to:
Xxxxx Xxxxxxxx, Esq.
Xxxxxxxxxx, Xxx Xxxxxx 00000
and,
(b) If to the Seller, to:
Candent Corporation
000 Xxxxxx Xxxxxxxxx
Xxxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx Xxxxxxxx, President
with a copy to:
Xxxxxx Xxxx, Esq.
Xxxx Xxxxxxxx, Xxx Xxxxxx 00000
Section 9.4 Assignments.
This Agreement and all of the provisions hereof shall be binding upon and inure
to the benefit of the Parties hereto and their respective successors and
permitted assigns; provided, however, that neither this Agreement nor any of the
rights, interests, or obligations hereunder may be assigned by any of the
Parties hereto without the prior written consent of the other Party, except that
this Agreement and such rights, interests and obligations may be assigned by
Purchaser to one (1) or more Affiliates. Purchaser agrees that any such
assignment shall not relieve Purchaser of its obligations hereunder.
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Section 9.5 Entire Agreement.
This Agreement (including the Schedules and any Exhibits hereto) embodies the
entire agreement and understanding of the Parties with respect to the
transactions contemplated hereby and supersedes all prior written or oral
commitments, arrangements, understandings and agreements with respect thereto.
There are no restrictions, agreements, promises, warranties, covenants or
undertakings with respect to the transactions contemplated hereby other than
those expressly sat forth herein.
Section 9.6 Modifications, Amendments and Waivers.
At any time prior to the Closing, to the extent permitted by law, (i) Purchaser
and Seller may, by written agreement, modify, amend or supplement any term or
provision of this Agreement and (ii) any term or provision of this Agreement may
be waived in writing by the Party which is entitled to the benefits thereof.
Section 9.7 Counterparts.
This Agreement may be executed in two (2) or more counterparts, all of which
shall be considered one (1) and the same agreement and each of which shall be
deemed an original. Each Party shall receive a fully signed copy of this
Agreement.
Section 9.8 Governing Law.
This Agreement shall be governed by the laws of the State of New Jersey and the
United States of America (regardless of the laws that might be applicable under
principles of conflicts of law or international law) as to all matters
including, but not limited to, matters of validity, construction, effect and
performance.
Section 9.9 Accounting Terms.
All accounting terms used herein which are not expressly defined in this
Agreement shall have the respective meanings given to them in accordance with
generally accepted accounting principles on the date hereof.
Section 9.10 Severability.
If any one (1) or more of provisions of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality or enforceability of
the remaining provisions of this Agreement shall not be affected thereby. To the
extent permitted by applicable law, each party waives any provision of law which
renders any provision of this Agreement invalid, illegal or unenforceable in any
respect.
Section 9.11 Specific Performance.
Purchaser and Seller recognize that any breach of the terms this Agreement may
give rise to irreparable harm for which money damages would not be an adequate
remedy, and accordingly agree that any non-breaching party shall be entitled to
enforce the terms of this Agreement by a decree of specific performance without
the necessity of proving the inadequacy as a remedy of money damages. If
specific performance is elected as a remedy hereunder, the electing Party shall
be deemed to have waive any claim for other damages, except reasonable attorneys
fees, costs of suit and expenses related to the enforcement of specific
performance.
Section 9.12 Consent to Jurisdiction.
Seller and Purchaser hereby submit and consent to the exclusive venue and
jurisdiction of the Superior Court of the State of New Jersey, County of Bergen,
in respect of the interpretation and enforcement of the provisions of this
Agreement, and hereby waive and agree not to assert as a defense in any action,
suit or proceeding for the interpretation or enforcement of this Agreement, that
it is not subject thereto or that such action, suit or proceeding may not be
brought or is not maintainable in said courts or that this Agreement may not be
enforced in or by said courts or that its property is exempt or immune from
execution, that the suit, action or proceeding is brought in an inconvenient
forum, or that the venue of the suit, action or proceeding is improper. Seller
and Purchaser agree that service of process may be made in any manner permitted
by the laws of the State of New Jersey or the federal laws of the United States
in any such action, suit or proceeding against Seller or Purchaser with respect
to this Agreement, and Seller and Purchaser hereby irrevocably designate and
appoint Xxxxx X. Xxxxxx, Esq., and Xxxxxxx Xxxxxxx, Esq., as their respective
authorized agents upon which process may be served in any such action, suit or
proceeding, it being understood that such appointment and designation shall
become effective without any further action on the part of Seller or Purchaser.
Service of process upon such authorized agent shall be deemed, in every respect,
effective service of process upon Seller or Purchaser and shall remain effective
until Seller or Purchaser shall appoint another agent for service or process
acceptable to the other Party. Seller and Purchaser agree that final judgment
(with all right of appeal having expired or been waived) against it in any such
action, suit or proceeding shall be conclusive and that the other Party is
entitled to enforce such judgment in any other jurisdiction by suit on the
judgment, a certified copy of which shall be conclusive evidence of the fact and
amount of indebtedness arising from such judgment.
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Section 9.13 U.S. Currency.
All payments made under this Agreement at any time shall be made in the lawful
currency of the United States of America.
Section 9.14 Risk of Loss.
(i) The risk of loss or damage to the Assets to be
sold to Purchaser hereunder shall be borne by Seller until title or right to
possession shall have passed to Purchaser on the Closing Date.
(ii) If, prior to the Closing Date, any of the Assets
shall be damaged or destroyed, the Purchase Price shall be adjusted for the
value of the Assets so damages or destroyed and in such case Seller shall be
solely entitled to any insurance proceeds paid or payable thereon.
(iii) If, prior to the Closing Date, any of the
Assets shall be damaged or destroyed or taken in condemnation proceedings or if
the Business is materially affected to an extent which will materially adversely
affect operations similar to those heretofore carried on by Seller, Purchaser,
at its option, may (A) elect to become entitled to any proceeds of condemnation
or insurance with respect to such loss or (B) cancel this Agreement. If so
canceled, this Agreement will be of no force and effect, and in such event no
Party hereto, or any of its officers, directors, employees, agents, consultants,
stockholders or principals shall have any further liability obligation hereunder
with respect thereto other than as specified herein.
Section 9.15 Transfer Documents.
Seller agrees that the sale and transfer hereunder of the Assets shall be made
on the Closing Date, as of the Closing Date, by bills of sale, assignments or
other instruments of transfer as shall be appropriate to vest in Purchaser good,
clear and marketable title to the Assets subject to liabilities expressly
assumed by Purchaser pursuant to Section 2.3. From and after the Closing Date,
upon the request of Purchaser, Seller shall do, execute, acknowledge and deliver
all such further acts, assignments, transfers, instruments and conveyances as
may reasonably be required to convey to and vest in Purchaser and protect its
right, title and interest in and enjoyment of any of the Assets, and as may be
appropriate to otherwise carry out the transactions contemplated by this
Agreement. To the extent that the assignment of any of the Assets shall require
the consent of other parties, this Agreement shall not constitute an assignment
or agreement to assign the same if such action would constitute a breach of any
contract or agreement relating to any of the Assets. Each of Seller and
Purchaser agree to use its Best Efforts to obtain the consents of other parties
to the sale and assignment hereunder to Purchaser. If any such consent is not
obtained, Seller and Purchaser shall cooperate with each other in a reasonable
arrangement designed to provide for Purchaser the benefits thereof and to permit
the performance of remaining unfulfilled obligations thereunder by Purchaser.
Failure of a Party to cooperate shall be actionable to the extent that said
Party is responsible for act or omission complained of by the other Party.
Section 9.16 Allocation of Purchase Price.
The Parties shall allocate the Purchase Price as their respective accountants
shall mutually determine and shall execute and file identical IRS Forms 8594,
Asset Acquisition Statement under Section 1060, of the Internal Revenue Code of
1986, as amended.
Section 9.17 THE PARTIES ACKNOWLEDGE THAT THEY HAVE EACH RECEIVED A COPY OF THIS
AGREEMENT, THAT THEY HAVE READ AND FULLY UNDERSTAND THIS AGREEMENT, AND THAT
THEY HAVE BEEN ADVISED TO SEEK AND HAVE EITHER SOUGHT OR WAIVED INDEPENDENT
LEGAL COUNSEL OF THEIR CHOICE TO AID IN THEIR UNDERSTANDING HEREOF.
Section 9.18 Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, successors, legal representatives and
assigns.
Section 9.19 Parties in Interest.
Nothing in this Agreement, express or implied, is intended to confer upon any
Person not a Party to this Agreement any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
Section 9.20 Furnishing Information; Announcements.
Sellers shall not issue any press releases or otherwise make any statement,
public or otherwise, to any third party with respect to the transactions
contemplated hereby without the prior written consent of Purchaser. Any
notification of Sellers' employees of the transactions contemplated hereby shall
be subject to prior approval by Purchaser. Any notices or other information to
be disseminated shall be submitted to Purchaser prior to distribution or
dissemination.
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Section 9.21 Force Majeure.
Neither Party hereto shall be liable for failure to perform any obligation under
this Agreement if such failure to perform is caused by the occurrence of any
contingency beyond the reasonable control of such Party, including, without
limitation, fire, flood, strike or other industrial disturbance, failure of
transport, accident, war, riot, insurrection, act of God or order of
governmental agency or act of terrorism. Performance shall be resumed as soon as
is possible after cessation of such cause. However, if such inability to perform
continues for more than Ninety (90) days, the other Party may terminate this
Agreement without penalty and without further notice.
IN WITNESS WHEREOF the parties have executed this Agreement effective as of the
day and year first above written.
INCODE CORPORATION
By: /s/Xxxxx Xxxxxxx
----------------------------
Xxx Xxxxxxx
President and Chief Financial Officer
INTRANCE CORPORATION
By: /s/ Xxxxx Xxxxxxx
----------------------------
Xxx Xxxxxxx
President and Chief Financial Officer
CANDENT CORPORATION
By: /s/ Xxxxxxx Xxxxxxxx
----------------------------
Xxxxxxx Xxxxxxxx
President
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