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Exhibit 2.3
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into as of
July 28, 2000 by and among Student Advantage, Inc., a Delaware corporation
("Student Advantage"), ESL Acquisition Co., a Delaware corporation and wholly
owned subsidiary of Student Advantage (the "Buyer"), eStudentLoan, LLC, a
Maryland limited liability company (the "Seller"), xxxxxxxxxxxxxx.xxx, Inc., a
Texas corporation and the sole member of the Seller ("CollegeStudent"), and
XxxxxxxXxxx.xxx, Inc., a Delaware corporation and the sole stockholder of
CollegeStudent ("CollegeClub"). Student Advantage, the Buyer, the Seller,
CollegeStudent and CollegeClub are referred to collectively herein as the
"Parties."
This Agreement contemplates a transaction in which the Buyer will
purchase substantially all of the assets of the Seller.
Now, therefore, in consideration of the representations, warranties and
covenants herein contained, the Parties agree as follows.
ARTICLE I
THE PURCHASE
1.1 PURCHASE AND SALE OF ASSETS.
(a) Upon and subject to the terms and conditions of this
Agreement, the Buyer shall purchase from the Seller, and the Seller shall sell,
transfer, convey, assign and deliver to the Buyer, at the Closing (as defined in
Section 1.4(a)), for the consideration specified below in this Article I, all
right, title and interest in and to all of the assets of the Seller used in its
businesses (the "Businesses"), including without limitation, those assets listed
in Schedule 1.1(a) hereto (other than the Excluded Assets (as defined in Section
1.1(b)) existing as of the Closing (collectively, the "Acquired Assets"),
including without limitation:
(i) all inventories of raw materials, work in process, finish
goods, supplies, packaging materials, spare parts and similar items;
(ii) all machinery, equipment, tools and tooling, furniture,
fixtures, leasehold improvements and motor vehicles;
(iii) all leaseholds and subleaseholds in real property, and
easements, rights-of-way and other appurtenants thereto;
(iv) all (A) patents, patent applications, patent disclosures
and all related continuation, continuation-in-part, divisional, reissue,
re-examination, utility model,
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certificate of invention and design patents, patent applications,
registrations and applications for registrations, (B) trademarks, service
marks, trade dress, logos, tradenames and corporate names and
registrations and applications for registration thereof, (C) copyrights and
registrations and applications for registration thereof, (D) mask works and
registrations and applications for registration thereof, (E) computer software
(including without limitation, source code, object code, interpreted code, Java
byte code, firmware, middleware, programs, utilities, languages, subroutines or
routines), data, databases, compilations, documentation, data processing
systems, networks and network systems, website and other Internet and webcentric
systems and properties, domain names, content contained on any Internet or
intranet site, and descriptions, flowcharts and other work product used to
design, plan, organize and develop any of the foregoing, (F) trade secrets and
confidential business information, whether patentable or nonpatentable and
whether or not reduced to practice, know-how, manufacturing and product
processes and techniques, research and development information, copyrightable
works, financial, marketing and business data, pricing and cost information,
business and marketing plans and customer and supplier lists and information,
(G) other proprietary rights relating to any of the foregoing (including without
limitation remedies against infringements thereof and rights of protection of
interest therein under the laws of all jurisdictions) and (H) copies and
tangible embodiments thereof (collectively, "Intellectual Property");
(v) all rights under contracts, agreements or instruments to
which the Seller is a party (including without limitation any agreements or
instruments securing any amounts owed to the Seller, any leases or subleases for
real property, and any licenses or sublicenses relating to Intellectual
Property), except for any deposits made under any lease or sublease and any
advances made to any third party relating to services to be performed under such
contracts, agreement or instruments after the Closing (as defined below)
(collectively, the "Assigned Contracts");
(vi) all claims, prepayments, refunds, causes of action,
chooses in action, rights of recovery, rights of setoff and rights of
recoupment, including any such item relating to the payment of Taxes (as defined
in Section 2.6) and all rights under warranties arising after the Closing;
(vii) all permits, licenses, registrations, certificates,
orders, approvals, franchises, variances and similar rights ("Permits") issued
by or obtained from any governmental, regulatory or administrative authority or
agency, court or arbitrational tribunal (a "Governmental Entity");
(viii) all books, records, accounts, ledgers, files,
documents, correspondence, lists, architectural drawings or specifications,
employment records, manufacturing and procedural manuals, advertising and
promotional materials, studies, reports and other printed or written materials;
and
(ix) all insurance policies of the Seller, as well as all
proceeds which may be payable thereunder in connection with insurance claims
made after the Closing.
(b) Notwithstanding the provisions of Section 1.1(a), the
Acquired Assets shall not include the following assets (the "Excluded Assets"):
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(i) all cash, short-term investments, deposits, bank accounts
and other similar assets;
(ii) the certificate of formation, qualifications to conduct
business as a foreign limited liability company, arrangements with registered
agents relating to foreign qualifications, taxpayer and other identification
numbers, seals, minute books, transfer books and other documents relating to the
organization and existence of the Seller as a limited liability company;
(iii) any of the rights of the Seller under this Agreement or
the Ancillary Agreements (for purposes of this Agreement, "Ancillary Agreements"
shall mean the xxxx of sale and other instruments of conveyance referred to in
Section 1.4(b)(i) and the instrument of assumption and other instruments
referred to in Section 1.4(c)(i));
(iv) all trade and other accounts receivable and notes
receivable of the Seller accruing and earned (determined in accordance with
generally accepted accounting principles) prior to the Closing, including,
without limitation, those relating to the Acquired Assets (except as
specifically listed on Schedule 1.1(a) hereto); and
(v) those assets listed on Schedule 1.1(b) attached hereto.
1.2 ASSUMPTION OF LIABILITIES.
(a) Upon and subject to the terms and conditions of this
Agreement, the Buyer shall assume and become responsible for, from and after the
Closing, the obligations of the Seller listed on Schedule 1.2(a) attached hereto
(collectively, the "Assumed Liabilities").
(b) The Buyer shall not assume or become responsible for, and
the Seller shall remain liable for, any and all liabilities or obligations
(whether known or unknown, whether absolute or contingent, whether liquidated or
unliquidated, whether due or to become due, and whether claims with respect
thereto are asserted before or after the Closing) of the Seller which are not
Assumed Liabilities (collectively, the "Retained Liabilities"). The Retained
Liabilities shall include, without limitation, the following:
(i) all liabilities of the Seller for income, transfer, sales,
use or other Taxes arising in connection with the consummation of the
transactions contemplated by this Agreement;
(ii) all liabilities of the Seller for costs and expenses
incurred in connection with this Agreement or the consummation of the
transactions contemplated by this Agreement;
(iii) all liabilities or obligations of the Seller under this
Agreement or the Ancillary Agreements;
(iv) all liabilities of the Seller for any Taxes and any
liabilities for any Taxes of any Person under law, or as a transferee or
successor, by contract or otherwise incurred (including without limitation
deferred Taxes or Taxes measured by income of the Seller, any
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liabilities for federal or state income Tax and FICA taxes of employees of the
Seller which the Seller is legally obligated to withhold, any liabilities for
employer FICA and unemployment taxes incurred, and any liabilities for sales,
use or excise taxes or customs and duties incurred);
(v) all liabilities and obligations of the Seller under any
agreements, contracts, leases or licenses which are not Assigned Contracts;
(vi) all obligations of the Seller arising prior to the
Closing under the Assigned Contracts, and all liabilities for any breach, act or
omission by the Seller prior to the Closing under any Assigned Contract;
(vii) all obligations of the Seller for repair, replacement or
return of products sold prior to the Closing;
(viii) all liabilities and obligations of the Seller arising
out of events, conduct or conditions existing or occurring prior to the Closing
that constitute a material violation of or non-compliance with any law, rule or
regulation (including without limitation Environmental Laws (as defined in
Section 2.18)), any judgment, decree or order of any Governmental Entity, or any
Permit;
(ix) all liabilities or obligations of the Seller to pay
severance or any other benefits to any employee of the Seller whose employment
is terminated (or treated as terminated) in connection with the consummation of
the transactions contemplated by this Agreement and to whom the Buyer (or its
designee) has offered employment and all liabilities resulting from the
termination of employment of employees of the Seller prior to the Closing that
arose under any federal or state law or under any Employee Benefit Plan (as
defined in Section 2.17) established or maintained by the Seller;
(x) all liabilities of the Seller for injury to or death of
persons or damage to or destruction of property occurring prior to the Closing
(including without limitation any workers compensation claim); and
(xi) all liabilities of the Seller for medical, dental and
disability (both long-term and short-term benefits), whether insured or
self-insured, owed to employees or former employees of the Seller based upon (A)
exposure to conditions in existence prior to the Closing or (B) disabilities
existing prior to the Closing (including any such disabilities which may have
been aggravated following the Closing).
1.3 PURCHASE PRICE. The purchase price to be paid by the Buyer for
the Acquired Assets at the Closing shall be $910,000.00 (the "Purchase
Price"), payable by wire transfer or other delivery of immediately available
funds.
1.4 THE CLOSING.
(a) The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxx and Xxxx LLP
in Boston, Massachusetts, commencing at 9:00 a.m. local time on July 28, 2000
(the "Closing Date").
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(b) At or prior to the Closing, the Buyer shall have received
all such certificates, opinions, instruments or other documents as the Buyer may
reasonably request, including without limitation:
(i) an executed xxxx of sale in the form attached hereto as
EXHIBIT A and such other executed instruments of conveyance (e.g., a trademark
or domain name registration assignment) as the Buyer may request in order to
effect the sale, transfer, conveyance and assignment to the Buyer of valid
ownership of the Acquired Assets;
(ii) a certificate of the Secretary of State of the State of
Maryland as to the legal existence and good standing (including tax) of the
Seller in the State of Maryland;
(iii) a certificate of the sole Member of the Seller attesting
to the incumbency of the Manager, the authenticity of the resolutions
authorizing the transactions contemplated by this Agreement, and the
authenticity and continuing validity of its organizational documents; and
(iv) a cross-receipt executed by the Seller.
(c) At or prior to the Closing, the Seller shall have received
all such certificates, opinions, instruments or other documents as the Seller
may reasonably request, including without limitation:
(i) an executed instrument of assumption in the form attached
hereto as EXHIBIT B and such other executed instruments as the Seller may
request in order to effect the assumption by the Buyer of the Assumed
Liabilities;
(ii) a certificate of the Secretary of State of the State of
Delaware as to the legal existence and good standing (including tax) of the
Buyer in the State of Delaware;
(iii) a certificate of the Secretary of the Buyer attesting to
the incumbency of the officers of the Buyer and the authenticity of the
resolutions authorizing the transactions contemplated by this Agreement; and
(iv) a cross-receipt executed by the Buyer.
1.5 HOLDBACK. Notwithstanding the provisions of Section 1.3, at the
Closing, an amount equal to 15% of the Purchase Price otherwise payable
by the Buyer to the Seller at the Closing shall be withheld by the Buyer until
the later of (a) August 13, 2000 or (b) the date which is three business days
after the Seller has provided to the Buyer copies of the items listed on
Schedule 1.5 attached hereto (the "Holdback Period"). Such amount (the "Holdback
Amount"), less the aggregate amount of all claims (the "Claims Amount") for
indemnification made by the Buyer within the Holdback Period (the "Holdback
Claims") in accordance with Section 5.2, shall be paid by the Buyer to the
Seller promptly upon the expiration of the Holdback Period. In addition, the
Buyer shall pay to the Seller the excess, if any, of the Claims Amount over the
amount the Buyer is determined to be entitled to pursuant to the provisions of
Article V hereof upon final resolution of all of the Holdback Claims.
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1.6 ALLOCATION. The Buyer and the Seller agree to allocate the Purchase
Price (and all other capitalizable costs) among the Acquired Assets for all
purposes (including financial accounting and tax purposes) in accordance with
the allocation schedule attached hereto as Schedule 1.6.
1.7 FURTHER ASSURANCES. At any time and from time to time after the
Closing, at the request of the Buyer and without further consideration, the
Seller shall execute and deliver such other instruments of sale, transfer,
conveyance and assignment and take such action as the Buyer may reasonably
determine is necessary to transfer, convey and assign to the Buyer, and to
confirm Buyer's rights to, title in and ownership of, the Acquired Assets and to
place the Buyer in actual possession and operating control thereof.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller, CollegeStudent and CollegeClub, jointly and severally,
represent and warrant to Buyer that the statements contained in this Article I
are true and correct, except as set forth in the disclosure schedule attached
hereto (the "Disclosure Schedule"). The Disclosure Schedule shall be arranged in
paragraphs corresponding to the numbered and lettered paragraphs contained in
this Article II, and the disclosures in any paragraph of the Disclosure Schedule
shall qualify only the corresponding paragraph in this Article II, unless the
nature of any disclosure is such that it could reasonably be expected to apply
to another paragraph in this Article II.
2.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. The Seller is a
limited liability company duly formed, validly existing and in good standing
under the Limited Liability Company Act of the State of Maryland. Each of
CollegeStudent and CollegeClub is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation. The
Seller is duly qualified to conduct business and is in good standing under the
laws of each jurisdiction in which the Businesses or the ownership or leasing of
its properties relating to the Acquired Assets (the "Properties") requires such
qualification. The Seller has all requisite limited liability company power and
authority to carry on the Businesses in which it is engaged and to own and use
the Properties owned and used by it. The Seller has furnished to the Buyer true
and complete copies of its organizational documents, each as amended and as in
effect on the date hereof. The Seller is not in default under or in violation of
any provision of its organizational documents. The Seller has no subsidiaries
and does not control or own any equity interest in any other corporation or
entity. CollegeClub owns all of the outstanding capital stock of CollegeStudent.
2.2 MEMBERSHIP INTERESTS. Section 2.2 of the Disclosure Schedule sets forth
a true and complete list of all of the outstanding membership interests of the
Seller and the holders thereof. All of such issued and outstanding membership
interests have been duly authorized and are validly issued. Except as set forth
in Section 2.2 of the Disclosure Schedule, (i) no subscription, warrant, option,
convertible security, or other right (contingent or otherwise) to purchase or
acquire any membership interests is authorized or outstanding, (ii) the Seller
has no obligation (contingent or otherwise) to issue any subscription, warrant,
option, convertible security or other such right or to issue or distribute to
holders of any of its membership interests
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any evidences of indebtedness or assets of such Seller, (iii) the Seller
has no obligation (contingent or otherwise) to purchase, redeem or otherwise
acquire any membership interests or any interests therein or to pay any dividend
or make any other distribution in respect thereof, and (iv) there are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to the Seller. All the issued and outstanding membership interests
have been offered, issued and sold by the Seller in compliance with applicable
federal and state securities laws.
2.3 AUTHORITY. Each of the Seller, CollegeStudent and CollegeClub has all
requisite power and authority to execute and deliver this Agreement and the
Ancillary Agreements and to perform its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the performance by each of the Seller,
College Student and CollegeClub of this Agreement and the Ancillary Agreements
and the consummation by each of the Seller, College Student and CollegeClub of
the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary limited liability company or corporate action on the
part of the Seller, CollegeStudent and CollegeClub, as the case may be. This
Agreement and the Ancillary Agreements have been duly and validly executed and
delivered by each of the Seller, CollegeStudent and CollegeClub and constitute a
valid and binding obligation of each of the Seller, CollegeStudent and
CollegeClub respectively, enforceable against the Seller, CollegeStudent and
CollegeClub in accordance with their respective terms; provided however, such
enforceability is subject to (i) the effect of applicable bankruptcy,
insolvency, reorganization, receivership, conservatorship, fraudulent
conveyance, moratorium or other similar laws, (ii) the rights of creditors
generally (regardless of whether enforcement is considered in proceedings at law
or in equity) and (iii) the availability of equitable remedies (subclauses (i)
through (iii) hereof, collectively, the "Enforceability Exceptions").
2.4 NONCONTRAVENTION. Neither the execution and delivery of this Agreement
or the Ancillary Agreements by the Seller, CollegeStudent and CollegeClub nor
the consummation by the Seller, CollegeStudent or CollegeClub of the
transactions contemplated hereby or thereby, will (a) conflict with or violate
any provision of the organizational documents of the Seller, CollegeStudent or
CollegeClub, (b) require on the part of the Seller, CollegeStudent or
CollegeClub any filing with, or any permit, authorization, consent or approval
of, any Governmental Entity, except for such filings with, or permits,
authorizations, consents or approvals of, any Governmental Entity, the lack of
which, individually or in the aggregate, would not result in a material adverse
effect on the Acquired Assets (a "Material Adverse Effect"), (c) conflict with,
result in a breach of, constitute (with or without due notice or lapse of time
or both) a default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify or cancel, or require any notice, consent
or waiver under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest (as defined below) or other arrangement to which
the Seller, CollegeStudent or CollegeClub is a party or by which the Seller,
CollegeStudent or CollegeClub is bound or to which any of their assets is
subject, except for any conflict or default which, individually or in the
aggregate, would not result in a Material Adverse Effect, (d) result in the
imposition of any Security Interest upon any of the Acquired Assets or (e)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Seller, CollegeStudent or CollegeClub or any of their
properties or assets, except for any
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violations that, individually or in the aggregate, would not result in a
Material Adverse Effect. For purposes of this Agreement, "Security Interest"
means any mortgage, pledge, security interest, encumbrance, charge, or other
lien (whether arising by contract or by operation of law).
2.5 FINANCIAL INFORMATION
(a) Section 2.5 of the Disclosure Schedule sets forth the actual
statement of operations of the Seller for the five month period ended May 31,
2000, (the "May Statement") and the projected statement of operations of the
Seller for the seven month period ended December 31, 2000 and the twelve month
period ended December 31, 2001 of the Seller which were previously delivered to
the Buyer (together with the May Statement, the "Financial Information"). The
Financial Information was prepared by the Seller in good faith and, to the
knowledge of the Seller, CollegeStudent and CollegeClub, the May Statement
fairly presents the financial condition, the results of operations and cash
flows of the Seller for the periods covered therein.
(b) The Seller does not have any liability (whether known or unknown,
absolute or contingent, liquidated or unliquidated or due or to become due)
relating to the Acquired Assets, other than (i) the liabilities shown on the May
Statement, and (ii) contractual liabilities disclosed in any contract set forth
in Section 2.10 of the Disclosure Schedule to the extent payment or performance
is not yet due, which are not in the aggregate material.
(c) Since the date of the May Statement, there has been no occurrence
which has resulted in a Material Adverse Effect, nor has there occurred any
event or development which could reasonably be foreseen to result in such
Material Adverse Effect in the future.
(d) Since the date of the May Statement, the Seller has operated the
Businesses in the ordinary course of business consistent with past custom and
practice (including with respect to frequency and amount) ("Ordinary Course of
Business") and in compliance with all applicable laws and regulations and, to
the extent consistent therewith, has used all reasonable efforts to preserve
intact its business organization as of such date, kept its physical assets in
good working condition, kept available the services of its officers and
employees as of such date and preserved its relationships with customers,
suppliers and others having business dealings with it to the end that its
goodwill and ongoing business have not been impaired in any material respect.
(e) Since the date of the May Statement, the Seller has not taken, or
agreed to take, any of the following actions:
(i) acquired, sold, leased, encumbered or disposed of any of the
assets of the Seller necessary for the operation of the Businesses to any third
party, other than purchases and sales of assets in the Ordinary Course of
Business;
(ii) changed in any material respect its accounting methods,
principles or practices, except insofar as required by a generally applicable
change in generally accepted accounting principles;
(iii) discharged or satisfied any Security Interest, or paid any
obligation or liability other than in the Ordinary Course of Business;
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(iv) mortgaged or pledged any of the Acquired Assets or subjected
any such Acquired Assets to any Security Interest;
(v) sold, assigned, transferred or licensed any Intellectual
Property;
(vi) made or committed to make any capital expenditure individually
or in the aggregate in excess of $10,000, or
(vii) entered into, amended, terminated, took or omitted to take
any action that would constitute a violation of or default under, or waive any
rights under, any material Assigned Contract.
2.6 TAX MATTERS. The Seller has filed on a timely basis all federal,
state, local and foreign Tax (as defined below) returns that were required to be
filed, all of which returns were accurate and complete in all material respects.
The Seller has paid all Taxes which have become due and withheld and remitted
any Taxes required to be withheld by it. To the knowledge of Seller,
CollegeStudent and CollegeClub, no unsatisfied deficiencies have been asserted
or assessed against the Seller as a result of any audit by the Internal Revenue
Service or any state or local taxing authority, and no examination or audit by
any such authority is currently in progress or threatened. "Taxes" means all
taxes, charges, fees and similar assessments (including without limitation those
relating to income, receipts, excise, real property, personal property, sales,
use, transfer, withholding, employment, payroll and franchises) imposed by the
United States of America or any state, local or foreign government, or any
agency thereof.
2.7 OWNERSHIP AND CONDITION OF ASSETS.
(a) The Seller is the true and lawful owner, and has good title to, all
of the Acquired Assets, free and clear of all Security Interests, except as set
forth in Section 2.7 of the Disclosure Schedule. Upon execution and delivery by
the Seller to the Buyer of the instruments of conveyance referred to in Section
1.4(b)(i), and provided that the Buyer is a bone fide purchaser, the Buyer will
become the true and lawful owner of, and will receive good title to, the
Acquired Assets, free and clear of all Security Interests other than those set
forth in Section 2.7 of the Disclosure Schedule.
(b) The Acquired Assets constitute all of the assets of Seller used in
the Businesses and, except as set forth in Section 2.7 of the Disclosure
Schedule and except for those assets the lack of which individually or in the
aggregate would not have a Material Adverse Effect, all of the assets necessary
for the operation of the Businesses. Each tangible Acquired Asset is free from
material defects, has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear and
tear) and is suitable for the purposes for which it presently is used.
(c) Section 2.7 of the Disclosure Schedule lists (i) all Acquired
Assets which are fixed assets (within the meaning of GAAP), indicating the cost,
accumulated book depreciation (if any) and the net book value of each such fixed
asset as of June 30, 2000, and (ii) all other Acquired Assets of a tangible
nature (other than inventories) whose book value exceeds $5,000.
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2.8 OWNED REAL PROPERTY. The Seller does not own any real property.
2.9 INTELLECTUAL PROPERTY.
(a) The Seller owns or has the right to use all Intellectual Property
used in the Businesses, incorporated in its products sold in connection with the
Businesses or necessary for the operation of the Businesses (the "Company
Intellectual Property"). Each item of Company Intellectual Property will be
owned or available for use by the Buyer on identical terms and conditions
immediately following the Closing. The Seller has taken all reasonable measures
to protect the proprietary nature of each item of the Company Intellectual
Property, and to maintain in confidence all trade secrets and confidential
information, that it owns or uses. To the knowledge of the Seller,
CollegeStudent and CollegeClub, no other person or entity has any rights to any
of the Company Intellectual Property (except pursuant to agreements or licenses
specified in Section 2.9(c) or 2.9(d) of the Disclosure Schedule), and no other
person or entity is infringing, violating or misappropriating any of the Company
Intellectual Property that the Seller owns or uses. The Seller has made
available to the Buyer correct and complete copies of all written documentation
in the Seller's possession evidencing ownership of, and any licenses, claims or
disputes known to such Seller relating to, each item of Company Intellectual
Property.
(b) None of the activities of the Seller relating to the Businesses, or
conducted by the Seller in connection with the Businesses at any time within the
six years prior to the date of this Agreement, infringes or violates, or
constitutes a misappropriation of, any Intellectual Property rights of any other
person or entity. None of the Seller, CollegeStudent or CollegeClub has received
any complaint, claim or notice alleging any such infringement, violation or
misappropriation.
(c) Section 2.9(c) of the Disclosure Schedule identifies each patent or
registration which has been issued to the Seller with respect to any of the
Company Intellectual Property, identifies each pending patent application or
application for registration which the Seller has made with respect to any of
the Company Intellectual Property, and identifies each license or other
agreement pursuant to which the Seller has granted any rights to any third party
with respect to any of the Company Intellectual Property. The Seller has
delivered to the Buyer correct and complete copies of all such patents,
registrations, applications, licenses and agreements (as amended to date) and
has made available to the Buyer correct and complete copies of all other written
documentation evidencing ownership of, and any claims or disputes relating to,
each such item. Except as set forth in Section 2.9(c) of the Disclosure
Schedule, with respect to each item of the Company Intellectual Property that
the Seller owns:
(i) the Seller possesses all right, title and interest in and
to such item;
(ii) such item is not subject to any outstanding judgment,
order, decree, stipulation or injunction; and
(iii) the Seller has not agreed to indemnify any person or
entity for or against any infringement, misappropriation or other conflict with
respect to such item.
(d) Section 2.9(d) of the Disclosure Schedule identifies each item of
Company Intellectual Property that is owned by a party other than the Seller,
and the license or agreement
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pursuant to which the Seller uses it. Except as set forth in Section
2.9(d) of the Disclosure Schedule, with respect to each such item of Company
Intellectual Property:
(i) the license, sublicense or other agreement, covering such
item is legal, valid, binding, enforceable and in full force and effect;
(ii) such license, sublicense or other agreement is assignable
by the Seller to the Buyer without the consent or approval of any party and such
license, sublicense or other agreement will continue to be legal, valid,
binding, enforceable and in full force and effect immediately following the
Closing in accordance with the terms thereof as in effect prior to the Closing;
(iii) no party to such license, sublicense or other agreement
is in breach or default, and no event has occurred which with notice or lapse
of time would constitute a breach or default or permit termination, modification
or acceleration thereunder;
(iv) the underlying item of Company Intellectual Property is
not subject to any outstanding judgment, order, decree, stipulation or
injunction; and
(v) the Seller has not agreed to indemnify any person or entity
for or against any interference, infringement, misappropriation or other
conflict with respect to such item.
(e) Section 2.9(e) of the Disclosure Statement sets forth the Seller's
policy statement on internet privacy. The Seller is currently, and at all times
since its inception has been, operating the Businesses in compliance with such
internet privacy policy.
2.10 CONTRACTS. Section 2.10 of the Disclosure Schedule lists each
Assigned Contract. The Seller has previously delivered to the Buyer a complete
and accurate copy of each Assigned Contract. Each Assigned Contract is legal,
valid, binding and enforceable (except as such enforceability may be limited by
the Enforceability Exceptions) and in full force and effect. Each Assigned
Contract is assignable by the Seller to the Buyer without the consent or
approval of any party (except as set forth in Section 2.10 of the Disclosure
Schedule) and will continue to be legal, valid, binding and enforceable (except
as such enforceability may be limited by the Enforceability Exceptions) and in
full force and effect immediately following the Closing in accordance with the
terms thereof as in effect prior to the Closing. No party is in breach or
default, and no event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination, modification, or
acceleration, under any Assigned Contract.
2.11 ACCOUNTS. All accounts receivable that are Acquired Assets are
valid receivables subject to no setoffs or counterclaims and are current and
collectible (within 60 days after the date on which it first became due and
payable, net of the applicable reserve for bad debts shown on the most recent
balance sheet of the Seller provided to the Buyer. A complete list of all
accounts receivable that are Acquired Assets, showing the aging thereof, is
included in Section 2.11 of the Disclosure Schedule. All of the accounts payable
of the Seller were incurred in the Ordinary Course of Business.
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2.12 POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of the Seller in connection with the Businesses.
2.13 INSURANCE. The Seller maintains, and has maintained since its
inception, insurance with respect to its assets and business, the scope and
coverage amounts of which are adequate for the Businesses in the Seller's
reasonable judgment. No product liability or similar claim has ever been
asserted against the Seller in connection with the Businesses.
2.14 LITIGATION. Section 2.14 of the Disclosure Schedule identifies, and
contains a brief description of, (a) any unsatisfied judgment, order, decree,
stipulation or injunction relating to any of the Acquired Assets and (b) any
claim, complaint, action, suit, proceeding, hearing or investigation of or in
any Governmental Entity or before any arbitrator to which the Seller is a party
or, to the knowledge of the Seller, CollegeStudent and CollegeClub, is
threatened to be made a party and with respect to which any of the Acquired
Assets are subject. None of the complaints, actions, suits, proceedings,
hearings, and investigations set forth in Section 2.14 of the Disclosure
Schedule could result in the imposition of any liability on the Buyer or have a
Material Adverse Effect.
2.15 PRODUCT WARRANTY. No product or service sold, licensed, leased,
delivered, rendered or otherwise made available by the Seller in connection with
the Businesses is subject to any guaranty, warranty, right of return or other
indemnity beyond the applicable standard terms and conditions of sale or lease,
which are set forth in Section 2.15 of the Disclosure Schedule. Section 2.15 of
the Disclosure Schedule sets forth the aggregate expenses incurred by the Seller
in fulfilling its obligations under its guaranty, warranty, right of return and
indemnity provisions since January 1, 1997 in connection with the Businesses;
and the Seller knows of no reason why such expenses should materially increase
as a percentage of sales in the future.
2.16 EMPLOYEES.
(a) Section 2.16(a) of the Disclosure Schedule contains a list of all
employees of the Seller, along with the position and the annual rate of
compensation of each such person. Each such employee has entered into a
[confidentiality/assignment of inventions] agreement with the Seller, a copy of
which has previously been delivered to the Buyer. To the knowledge of the
Seller, CollegeStudent and CollegeClub, no key employee or group of employees
has any plans to terminate employment with the Seller (other than for the
purpose of accepting employment with the Buyer following the Closing). The
Seller is not a party to or bound by any collective bargaining agreement, nor
has it experienced any strikes, grievances, claims of unfair labor practices or
other collective bargaining disputes. The Seller has no knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Seller.
(b) Section 2.16(b) of the Disclosure Schedule discloses each: (i)
agreement with any director, executive officer, member, manager or other key
employee of the Seller (A) the benefits of which are contingent, or the terms of
which are materially altered, upon the occurrence of a transaction involving the
Seller of the nature of any of the transactions contemplated by this Agreement,
(B) providing any term of employment or compensation guarantee or (C) providing
severance benefits or other benefits after the termination of
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employment of such director, executive officer or key employee; and (ii)
agreement or plan binding the Seller, including without limitation any
stock option plan, stock appreciation right plan, restricted stock plan, stock
purchase plan, severance benefit plan, or any employee benefit plan, any of the
benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.
2.17 EMPLOYEE BENEFITS. Section 2.17 of the Disclosure Schedule
contains a list of all employee benefit plans or policies (including, without
limitation, "employee benefit plans" within the meaning of Section 3(3) of the
Employment Retirement Income Security Act of 1974, as amended, bonus programs,
insurance plans, policies relating to vacations, sick days and leaves of
absence, and pension or retirement plans) of the Seller (the "Employee Benefit
Plans"). The Seller has complied in all material respects with the terms of each
Employee Benefit Plan and with the provisions of all laws and regulations
applicable to each Employee Benefit Plan. The Seller has met its obligations
with respect to each Employee Benefit Plan and has made all required
contributions thereto. If the assets of all Employee Benefit Plan were to be
liquidated on the Closing, the proceeds of such liquidation would not be reduced
by any charges, including without limitation deferred sales charges, surrender
fees or back-end loads, but excluding reasonable brokerage commissions.
2.18 ENVIRONMENTAL MATTERS. The Seller has complied with, and the
operation of the Businesses as of the Closing Date is in compliance with, all
Environmental Laws (as defined below) in all material respects. For purposes of
this Agreement, "Environmental Law" means any federal, state, regional, county,
local or foreign law, statute, rule or regulation or the common law relating to
the environment or occupational health and safety, including without limitation
any statute, regulation or order pertaining to (i) treatment, storage, disposal,
generation or transportation of commercial, industrial, toxic or hazardous
substances or solid or hazardous waste; (ii) air, water and noise pollution;
(iii) groundwater or soil contamination; (iv) the release or threatened release
into the environment of commercial, industrial, toxic or hazardous substances,
or solid or hazardous waste, including without limitation emissions, discharges,
injections, spills, escapes or dumping of pollutants, contaminants, pesticides
or chemicals; (v) the protection of wildlife, marine sanctuaries or wetlands,
including without limitation all endangered or threatened species; (vi)
underground and other storage tanks or vessels, abandoned, disposed or discarded
barrels, containers and other receptacles; (vii) health and safety of employees
and other persons; and (viii) manufacture, processing, use, distribution,
treatment, storage, disposal, transportation or handling of pollutants,
contaminants, pesticides, chemicals or commercial, industrial, toxic or
hazardous substances or oil or petroleum products or solid or hazardous waste.
As used in this Section 2.18, the terms "release," "environment," "pollutant,"
"transportation," "contaminant" and "hazardous substances" shall have the
meaning set forth in the federal Comprehensive Environmental Compensation,
Liability and Response Act of 1980 ("CERCLA"), and the terms "solid waste" and
"hazardous waste" shall have the meanings set forth in the Resources
Conservation and Recovery Act.
2.19 LEGAL COMPLIANCE. The Seller, and the conduct and operations of
the Businesses, are in material compliance with each law (including rules and
regulations thereunder) of any federal, state, local or foreign government, or
any Governmental Entity, which (a) affects or
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relates to this Agreement or the transactions contemplated hereby or (b)
is applicable to the Businesses. None of the Seller, CollegeStudent or
CollegeClub has received any notice from any federal, state or local
governmental or regulatory authority indicating that it is or may be in
violation of any law.
2.20 PERMITS. Section 2.20 of the Disclosure Schedule sets forth a list
of all Permits (including without limitation those issued or required under
Environmental Laws and those relating to the occupancy or use of leased real
property) issued to or held by the Seller. Such listed Permits are the only
Permits that are required for the Seller to conduct the Businesses. Each such
Permit is in full force and effect and, to the knowledge of the Seller,
CollegeStudent and CollegeClub, no suspension or cancellation of such Permit is
threatened and there is no basis for believing that such Permit will not be
renewable upon expiration. Each such Permit is assignable by the Seller to the
Buyer without the consent or approval of any party and will continue in full
force and effect following the Closing.
2.21 CERTAIN BUSINESS RELATIONSHIPS WITH AFFILIATES. No employee, officer,
director, manager, member or Affiliate of the Seller owns any property or right,
tangible or intangible, which is used in the Businesses, or, to the knowledge of
the Seller, CollegeStudent or CollegeClub, has any claim or cause of action
against the Seller with respect to which any Acquired Asset is subject.
2.22 BROKERS' FEES. The Seller has no liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
2.23 BOOKS AND RECORDS. The books, records accounts, ledgers and files
of the Seller are accurate and complete in all material respects and have been
maintained in accordance with good business and bookkeeping practices. The
minute books and other similar records of the Seller contain true and complete
records of all actions taken at any meetings of the Seller's members, managers,
Board of Directors or any committee thereof and of all written consents executed
in lieu of the holding of any such meeting.
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2.24 CUSTOMERS AND SUPPLIERS. No unfilled customer order or commitment
obligating the Seller to process or deliver products or perform services under
an Assigned Contract will result in a material loss to the Seller upon
completion of performance. No purchase order or commitment of the Seller under
an Assigned Contract is in excess of normal requirements, nor are prices
provided therein in excess of current market prices for the products or services
to be provided thereunder. No material supplier of the Seller relating to the
Businesses has indicated to the Seller within the past year that it will stop,
or decrease the rate of, supplying materials, products, or services to them and
no material customer of the Seller relating to the Businesses has indicated
within the past year that it will stop, or decrease the rate of, buying
materials, products or services from them. Section 2.24 of the Disclosure
Schedule sets forth a list of (a) each customer that accounted for more than 1%
of the consolidated revenues of the Seller during the last full fiscal year or
the interim period through June 30, 2000 and the amount of revenues accounted
for by such customer during each such period and (b) each supplier that is the
sole supplier of any material product or component to the Seller.
2.25 DISCLOSURE. No representation or warranty by the Seller,
CollegeStudent or CollegeClub contained in this Agreement, and no statement
contained in the Disclosure Schedule or any other document, certificate or other
instrument delivered to or to be delivered by or on behalf of the Seller
pursuant to this Agreement, and no other statement made by the Seller,
CollegeStudent or CollegeClub or any of their respective representatives in
connection with this Agreement, contains or will contain any untrue statement of
a material fact or omit or will omit to state any material fact necessary, in
light of the circumstances under which it was or will be made, in order to make
the statements herein or therein not misleading. The Seller, CollegeStudent and
CollegeClub have either disclosed or made available to the Buyer all material
information relating to the business of the Seller or the transactions
contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
3.1 ORGANIZATION. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation.
3.2 AUTHORIZATION OF TRANSACTION. The Buyer has all requisite power and
authority to execute and deliver this Agreement and the Ancillary Agreements and
to perform its obligations hereunder and thereunder. The execution and delivery
of this Agreement and the Ancillary Agreements by the Buyer and the performance
of this Agreement and the consummation of the transactions contemplated hereby
and thereby by the Buyer have been duly and validly authorized by all necessary
corporate action on the part of the Buyer. This Agreement has been duly and
validly executed and delivered by the Buyer and constitutes a valid and binding
obligation of the Buyer, enforceable against it in accordance with its terms.
3.3 NONCONTRAVENTION. Neither the execution and delivery of this
Agreement or the Ancillary Agreements by the Buyer, nor the consummation by the
Buyer of the transactions
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contemplated hereby or thereby, will (a) conflict or violate any provision
of the charter or By-laws of the Buyer, (b) require on the part of the
Buyer any filing with, or permit, authorization, consent or approval of, any
Governmental Entity, except for such filings with, or permits, authorizations,
consents or approvals of, any Governmental Entity, the lack of which,
individually or in the aggregate, would not result in a Material Adverse Effect,
(c) conflict with, result in breach of, constitute (with or without due notice
or lapse of time or both) a default under, result in the acceleration of, create
in any party any right to accelerate, terminate, modify or cancel, or require
any notice, consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest or other arrangement to
which the Buyer is a party or by which it is bound or to which any of its assets
is subject, except for any conflict or default which, individually or in the
aggregate, would not result in a Material Adverse Effect or (d) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Buyer or any of its properties or assets, except for any violations that,
individually or in the aggregate, would not result in a Material Adverse Effect.
3.4 BROKER'S FEES. The Buyer has no liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement.
ARTICLE IV
POST-CLOSING COVENANTS
4.1 PROPRIETARY INFORMATION. From and after the Closing, the Seller,
CollegeStudent and CollegeClub shall hold in confidence, and shall use its best
efforts to have all of their Affiliates hold in confidence, all knowledge,
information and documents of a confidential nature or not generally known to the
public with respect to the Seller or the Businesses, or the Buyer or its
businesses (including without limitation the financial information, technical
information or data relating to the Seller's products and names of customers of
the Seller) and shall not disclose or make use of the same without the written
consent of the Buyer, except to the extent that such knowledge, information or
documents shall have become public knowledge other than through a breach of this
Agreement by the Seller.
4.2 SOLICITATION AND HIRING. For a period of two years after the
Closing Date, none of the Seller, CollegeStudent or CollegeClub shall, either
directly or indirectly as a stockholder, investor, partner, director, officer,
employee or otherwise, (a) solicit or attempt to induce any Restricted Employee
(as defined below) to terminate his employment with the Buyer or (b) hire or
attempt to hire any Restricted Employee. For purposes of this Agreement, a
"Restricted Employee" shall mean any person who was an employee of either the
Buyer or the Seller on the Closing Date.
4.3 NON-COMPETITION.
(a) For a period of two years after the Closing Date, none of the
Seller, CollegeStudent or CollegeClub shall either directly or indirectly as a
stockholder, investor, partner, director, officer, employee, consultant or
otherwise, (i) develop, market or sell any product or render any service which
is competitive with any product, sold or developed (or under
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development) or service rendered by the Seller in connection with the
Businesses on or prior to the Closing Date or (ii) engage in any business
competitive with the Businesses as conducted on the date of this Agreement or as
of the Closing Date, in the United States or any other country in which the
Seller conducted the Businesses during the two years prior to the Closing Date.
(b) Each of the Seller, CollegeStudent and CollegeClub agrees that the
duration and geographic scope of the non-competition provision set forth in this
Section 4.3 are reasonable. In the event that any court determines that the
duration or the geographic scope, or both, are unreasonable and that such
provision is to that extent unenforceable, the Parties agree that the provision
shall remain in full force and effect for the greatest time period and in the
greatest area that would not render it unenforceable. The Parties intend that
this non-competition provision shall be deemed to be a series of separate
covenants, one for each and every county of each and every state of the United
States of America and each and every political subdivision of each and every
country outside the United States of America where this provision is intended to
be effective.
4.4 TAX MATTERS. Any agreement between the Seller and any of CollegeStudent
or CollegeClub or any of their subsidiaries regarding allocation or payment of
Taxes or amounts in lieu of Taxes shall be deemed terminated at and as of the
Closing.
4.5 SHARING OF DATA.
(a) The Buyer shall have the right for a period of three years
following the Closing Date to have reasonable access to those books, records and
accounts, including financial and tax information, correspondence, production
records, employment records and other records that are retained by the Seller
pursuant to the terms of this Agreement to the extent that any of the foregoing
is needed by the Buyer in order to comply with its obligations under applicable
securities, tax, environmental, employment or other laws and regulations. The
Seller shall not destroy any such books, records or accounts retained by it
without first providing the other Party with the opportunity to obtain or copy
such books, records, or accounts.
(b) Promptly upon request by the Buyer made at any during the
three-year period following the Closing Date, the Seller shall authorize the
release to the Buyer of all files pertaining to the Seller, the Acquired Assets
or the business or operations of the Seller held by any federal, state, county
or local authorities, agencies or instrumentalities.
4.6 USE OF NAME. The Seller agrees not to use the name "eStudentLoan"
or any name reasonably similar thereto after the Closing Date in connection with
any business related to, competitive with, or an outgrowth of, the Businesses
conducted by the Seller on the date of this Agreement. The Seller shall amend
its Articles of Organization and other corporate records, if necessary, to
comply with this provision.
4.7 COOPERATION IN LITIGATION. For a period of three years after the
Closing, each Party shall reasonably cooperate with the other in the defense or
prosecution of any litigation or proceeding already instituted or which may be
instituted hereafter against or by such other Party relating to or arising out
of the conduct of the Businesses prior to or after the Closing Date (other than
litigation arising out the transactions contemplated by this Agreement). The
Party
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requesting such cooperation shall pay the actual expenses incurred in
providing such cooperation (including legal fees and disbursements) by the Party
providing such cooperation and by its officers, directors, employees and agents.
4.8 COLLECTION OF ACCOUNTS RECEIVABLE. The Seller agrees that it shall
forward promptly to the Buyer any monies, checks or instruments received by the
Seller after the Closing Date with respect to the accounts receivable accruing
after the Closing purchased by the Buyer from the Seller in connection with the
Acquired Assets pursuant to this Agreement. The Seller shall provide to the
Buyer such reasonable assistance as the Buyer may request with respect to the
collection of any such accounts receivable, provided the Buyer pays the
reasonable out-of-pocket expenses of the Seller and its officers, directors and
employees incurred in providing such assistance.
4.9 EMPLOYEES. Effective as of the Closing, the Seller shall terminate
the employment of each of its employees designated on Schedule 4.9 attached
hereto and the Buyer shall offer employment to each such employee, terminable at
the will of the Buyer, with compensation and benefit packages to be determined
by the Buyer and each such employee. The Seller hereby consents to the hiring of
such employees by the Buyer and waives, with respect to the employment by the
Buyer of such employees, any claims or rights the Seller may have against the
Buyer or any such employee under any non-competition, confidentiality or
employment agreement.
4.10 ENFORCEMENT OF INSURANCE CLAIMS. The Seller hereby assigns to the
Buyer the right to pursue and enforce, and hereby irrevocably appoints the Buyer
as its true and lawful attorney-in-fact with full power in the name of and on
behalf of the Seller for the purpose of pursuing and enforcing, any and all
rights of the Seller under any insurance policies of the Seller with respect to
any occurrence, claim or loss (including without limitation any product
liability claim) which is the subject of an indemnity obligation by the Seller
to the Buyer under Article V of this Agreement; provided that the Buyer may not
exercise such right or power unless the Seller fails to promptly and
expeditiously pursue and enforce its rights under its insurance policies with
respect to such occurrence, claim or loss. The power of attorney conferred upon
the Buyer by the Seller pursuant to this Section 4.10 is an agency coupled with
an interest and all authority conferred hereby shall be irrevocable, and shall
not be terminated by the dissolution or the liquidation of the Seller or any
other act of the Seller.
ARTICLE V
INDEMNIFICATION
5.1 INDEMNIFICATION. (a) The Seller, CollegeStudent and CollegeClub,
jointly and severally, shall indemnify the Buyer in respect of, and hold the
Buyer harmless against, any and all debts, obligations and other liabilities
(whether absolute, accrued, contingent, fixed or otherwise, or whether known or
unknown, or due or to become due or otherwise), monetary damages, fines, fees,
penalties, interest obligations, deficiencies, losses and expenses (including
without limitation amounts paid in settlement, interest, court costs, costs of
investigators, fees and expenses of attorneys, accountants, financial advisors
and other experts, and other expenses
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of litigation) ("Damages") incurred or suffered by the Buyer or any Affiliate
thereof resulting from, relating to or constituting:
(i) any misrepresentation, breach of warranty or failure to
perform any covenant or agreement of the Seller, CollegeStudent or CollegeClub
contained in this Agreement or in any Ancillary Agreement;
(ii) any Retained Liabilities;
(iii) the failure of the Buyer and the Seller, in connection
with the sale of the Acquired Assets by the Seller to the Buyer pursuant to this
Agreement, to comply with, and obtain for the Buyer the benefits afforded by
compliance with, any applicable bulk transfers laws;
(iv) any claim by a member or former member of the Seller, or
any other person or entity, seeking to assert, or based upon: (A) ownership or
rights to ownership of any securities of the Seller, (B) any rights of a member,
including without limitation, any option, preemptive rights or rights to notice
or to vote, (C) any rights under any organizational document of the Seller, or
(D) any claim that his, her or its membership interests were wrongfully
repurchased by the Seller;
(v) any claim (including without limitation, warranty and
product liability claims), suit, action, arbitration, proceeding, investigation
or other similar matter which relates to (A) services rendered or products
leased, licensed, sold or delivered by the Seller prior to the Closing or (B)
the Businesses of the Seller prior to the Closing; or
(vi) any claim, including without limitation claims of third
parties, employees or former employees of the Seller, or consultants or former
consultants to the Seller, relating to the Company Intellectual Property which
are based on events that occur prior to the Closing.
(b) The Buyer and Student Advantage, jointly and severally, shall
indemnify the Seller in respect of, and hold the Seller harmless against, any
and all Damages incurred or suffered by the Seller or any Affiliate thereof
resulting from, relating to or constituting:
(i) any Assumed Liabilities;
(ii) any claim (including without limitation, warranty and
product liability claims), suit, action, arbitration, proceeding, investigation
or other similar matter which relates to (i) services rendered or products
leased, licensed, sold or delivered by the Buyer after the Closing or (ii) the
Businesses of the Buyer after the Closing; or
(iii) any claim, including without limitation claims of third
parties relating to the Company Intellectual Property which are based upon
events that occur after the Closing.
5.2 METHOD OF ASSERTING CLAIMS.
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(a) All claims for indemnification by any indemnified party
pursuant to this Article V shall be made in accordance with the provisions of
this Section 5.2.
(b) If a third party asserts that an indemnified party is liable to
such third party for a monetary or other obligation which may constitute or
result in Damages for which the indemnified party may be entitled to
indemnification pursuant to this Article V, and the indemnified party reasonably
determines that it has a valid business reason to fulfill such obligation, then
(i) the indemnified party shall be entitled to satisfy such obligation, without
prior notice to or consent from the indemnifying party, (ii) the indemnified
party may make a claim for indemnification pursuant to this Article V, and (iii)
the indemnified party shall be reimbursed for any such Damages for which it is
entitled to indemnification pursuant to this Article V.
(c) The indemnified party shall give prompt written notification to the
indemnifying party of the commencement of any action, suit or proceeding
relating to a third party claim for which indemnification pursuant to this
Article V may be sought. Within 20 days after delivery of such notification, the
indemnifying party may, upon written notice thereof to the indemnified party,
assume control of the defense of such action, suit or proceeding with counsel
reasonably satisfactory to the indemnified party, provided each indemnifying
party acknowledges in writing to the indemnified party that any damages, fines,
costs or other liabilities that may be assessed against the indemnified party in
connection with such action, suit or proceeding constitute Damages for which the
indemnified party shall be entitled to indemnification pursuant to this Article
V. If no indemnifying party so assumes control of such defense, the indemnified
party shall control such defense. The Party not controlling such defense may
participate therein at its own expense; provided that if the indemnifying party
assumes control of such defense and the indemnified party reasonably concludes
that the indemnifying party and the indemnified party have conflicting interests
or different defenses available with respect to such action, suit or proceeding,
the reasonable fees and expenses of counsel to the indemnified party shall be
considered "Damages" for purposes of this Agreement. The Party controlling such
defense shall keep the other Party advised of the status of such action, suit or
proceeding and the defense thereof and shall consider in good faith
recommendations made by the other Party with respect thereto. The indemnified
party shall not agree to any settlement of such action, suit or proceeding
without the prior written consent of each indemnifying party, which shall not be
unreasonably withheld. No indemnifying party shall agree to any settlement of
such action, suit or proceeding without the prior written consent of each
indemnified party, which shall not be unreasonably withheld.
5.3 TREATMENT OF INDEMNITY PAYMENTS. Any payment made to the Buyer
pursuant to this Article V shall be treated as a reduction in the Purchase
Price. All indemnification by the Seller, CollegeStudent and CollegeClub
hereunder shall be effected promptly as Damages are incurred by payment cash,
delivery of a cashier's or certified check or wire transfer of immediately
available funds in the amount of the indemnification liability. Each of the
Seller, CollegeStudent and CollegeClub hereby agrees that any claim for
indemnification by the Buyer under this Agreement may, at the option of the
Buyer, be offset against any compensation or other remuneration (other than base
salary) due or to become due to the Seller, CollegeStudent or CollegeClub
(including without limitation the Holdback Amount), or anyone claiming through
or under the Seller, CollegeStudent or CollegeClub.
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5.4 LIMITATIONS OF LIABILITY. Notwithstanding anything in this
Agreement to the contrary, the Buyer will not be entitled to any indemnification
pursuant to Section 5.1(a)(i) unless and until the Damages exceed $15,000 in the
aggregate, in which case the Buyer will be entitled to the full $15,000,
together with the amount of all indemnification claims in excess thereof.
Further, the liability of the Seller, CollegeStudent and CollegeClub for
indemnification under Section 5.1(a)(i) will not exceed the net proceeds
received by the Seller under this Agreement.
5.5 SURVIVAL. The representations, warranties, covenants and agreements
of the Seller set forth in this Agreement shall survive the Closing and the
consummation of the transactions contemplated hereby and continue until July 27,
2001 and shall not be affected by any examination made for or on behalf of the
Buyer or the knowledge of any of the Buyer's officers, directors, stockholders,
employees or agents. Notwithstanding the foregoing, the representations
contained in Section 2.18 shall survive the Closing and the consummation of the
transactions contemplated thereby and continue until the date three years after
the Closing; the representations contained in Sections 2.6 and 2.17(a) shall
survive the Closing and the consummation of the transactions contemplated
thereby and continue until the expiration of the applicable statute of
limitations relating to such representations and the representations contained
in Section 2.3 shall survive without limit.
ARTICLE VI
REPURCHASE OPTION
6.1 RIGHT TO REPURCHASE BUYER STOCK. On or prior to September 26, 2000,
or such earlier date as mutually agreed between the parties (the "Option
Termination Date"), CollegeClub shall have the right to purchase (the
"Repurchase Right") all of the outstanding capital stock of the Buyer (the
"Buyer Stock") in exchange for the Repurchase Price (as defined in Section 6.2
below) by providing written notice of its election to exercise such right (the
"Repurchase Notice") prior to the Option Termination Date. CollegeClub shall
have 10 business days from the date of the Repurchase Notice to consummate the
purchase of the Buyer Stock as described herein and pay the Repurchase Price. If
the Repurchase Closing (as defined in Section 6.3 below) has not taken place
within said 10 business day period, CollegeClub's Repurchase Right shall
automatically terminate and be of no force and effect. The Repurchase Option may
not be assigned, or otherwise transferred, by operation of law or otherwise, by
CollegeClub without the prior written consent of the Buyer.
6.2 REPURCHASE PRICE. In the event CollegeClub provides a Repurchase
Notice in accordance with Section 6.1, the purchase price to be paid by
CollegeClub to the Buyer for the Buyer Stock at the Repurchase Closing shall be
$1,250,000.00, plus the amount by which the Buyer's operating expenses exceed
revenues received as of the date of the Repurchase Closing (the "Repurchase
Price"); provided that, notwithstanding anything herein to the contrary, the
Repurchase Price will in no event exceed $1,350,000.00 (the "Repurchase Price").
The Repurchase Price will be payable by wire transfer or other immediately
available funds.
6.3 REPURCHASE CLOSING.
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(a) The closing of the purchase of the Buyer Stock (the "Repurchase
Closing") shall take place at the offices of Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000 on a date to be mutually agreed to by CollegeClub
and the Buyer, but in no event more than 10 business days after the date of the
Repurchase Notice.
(b) At the Repurchase Closing, Student Advantage shall deliver to
CollegeClub a stock certificate representing all of the Buyer Stock, duly
endorsed or accompanied by duly executed instruments of transfer and assignment
and CollegeClub shall deliver to the Buyer the Repurchase Price, together with
such customary and reasonable representations, warranties and indemnities
relating to the Buyer, the Buyer Stock and the Acquired Assets, but in no event
shall such representations, warranties and indemnities be more favorable than
those provided by the Seller in this Agreement.
6.4 BUYER COVENANT. Until the earlier of the Option Termination Date or
the date CollegeClub's Repurchase Right is terminated pursuant to Section 6.1,
the Buyer hereby agrees (i) to operate its business after the Closing in the
Ordinary Course of Business, (ii) not to sell or otherwise dispose of any
material Acquired Assets, valued individually in excess of $5,000.00 or in
aggregate in excess of $10,000.00 (which amounts, if any such Acquired Assets
are sold or disposed, will be deducted from the Repurchase Price), and (iii) not
to incur any liabilities other than in the Ordinary Course of Business.
ARTICLE VII
DEFINITIONS
For purposes of this Agreement, each of the following defined terms is
defined in the Section of this Agreement indicated below.
DEFINED TERM SECTION
------------ -------
Acquired Assets 1.1(a)
Agreement Introduction
Ancillary Agreements 1.1(b)(ii)
Assigned Contracts 1.1(a)(v)
Assumed Liabilities 1.2(a)
Business 2.1
Buyer Introduction
Buyer Stock 6.1
CERCLA 2.18
Claims Amount 1.5
Closing 1.4(a)
Closing Date 1.4(a)
CollegeClub Introduction
CollegeStudent Introduction
Company Intellectual Property 2.9(a)
Damages 5.1
Disclosure Schedule Article II
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Employee Benefit Plans 2.17
Environmental Law 2.18
Excluded Assets 1.1(b)
Governmental Entity 1.1(a)(vii)
Holdback Amount 1.5
Holdback Claims 1.5
Holdback Period 1.5
Intellectual Property 1.1(a)(iv)
Material Adverse Effect 2.4
Option Termination Date 6.1
Ordinary Course of Business 2.5(d)
Party Introduction
Permit 1.1(a)(vii)
Properties 2.1
Purchase Price 1.3
Repurchase Closing 6.3(a)
Repurchase Notice 6.1
Repurchase Price 6.2
Repurchase Right 6.1
Restricted Employee 4.2
Retained Liabilities 1.2(b)
Security Interest 2.4
Seller Introduction
Student Advantage Introduction
Taxes 2.6
ARTICLE VIII
MISCELLANEOUS
8.1 PRESS RELEASES AND ANNOUNCEMENTS. Neither Party shall issue any
press release or announcement relating to the subject matter of this Agreement
without the prior written approval of the other Party; provided, however, that
either Party may make any public disclosure it believes in good faith is
required by law or regulation (in which case the disclosing Party shall advise
the other Party and provide it with a copy of the proposed disclosure prior to
making the disclosure).
8.2 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns.
8.3 ENTIRE AGREEMENT. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, that may have related in any way to the subject matter
hereof.
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8.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. Neither Party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other Party; provided that the Buyer may assign its rights,
interests and/or obligations hereunder to an Affiliate of the Buyer.
8.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8.6 HEADINGS. The Section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.7 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered two
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent via a reputable
nationwide overnight courier service, in each case to the intended recipient as
set forth below:
IF TO THE SELLER, COLLEGESTUDENT OR COLLEGECLUB: COPY TO:
----------------------------------------------- -------
c/o XxxxxxxXxxx.xxx, Inc. Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxxxx Xxxxxx 0 Xxxx Xxxxx
Xxxxx 000 Xxxxxx, XX 00000
Xxx Xxxxx, XX 00000 Attn: Xxxx X. Xxxxxxxx, Esq.
Attn: President
IF TO THE BUYER OR STUDENT ADVANTAGE COPY TO:
------------------------------------ -------
c/o Student Advantage, Inc. Xxxx and Xxxx LLP
000 Xxxxxx Xxxxxx 00 Xxxxx Xxxxxx
Xxxxxx, XX 00000 Xxxxxx, XX 00000
Attn: General Counsel Attn: Xxxx X. Xxxxxx, Esq.
Either Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the individual
for whom it is intended. Either Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Party notice in the manner herein set forth.
8.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State
of Delaware.
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8.9 AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by each
of the Parties. No waiver by either Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
8.10 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
8.11 EXPENSES. Each Party shall bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
8.12 SPECIFIC PERFORMANCE. Each Party acknowledges and agrees that the
other Party would be damaged irreparably in the event any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each Party agrees that the other Party
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any action instituted in any court of the United
States or any state thereof having jurisdiction over the Parties and the matter
(subject to the provisions of Section 8.13), in addition to any other remedy to
which it may be entitled, at law or in equity.
8.13 SUBMISSION TO JURISDICTION. Each Party (a) submits to the
jurisdiction of any state or federal court sitting in Boston, Massachusetts in
any action or proceeding arising out of or relating to this Agreement, (b)
agrees that all claims in respect of the action or proceeding may be heard and
determined in any such court, and (c) agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
Party hereby waives any defense of inconvenient forum to the maintenance of any
action or proceeding so brought and waives any bond, surety or other security
that might be required of the other Party with respect thereto. Either Party may
make service on the other Party by sending or delivering a copy of the process
to the Party to be served at the address and in the manner provided for the
giving of notices in Section 8.7. Nothing in this Section 8.13, however, shall
affect the right of either Party to serve legal process in any other manner
permitted by law.
8.14 CONSTRUCTION. The language used in this Agreement shall be deemed
to be the language chosen by the Parties hereto to express their mutual intent,
and no rule of strict construction shall be applied against either Party. Any
reference to any federal, state, local, or
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foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
8.15 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
ESL ACQUISITION CO.
By: /s/ Xxxxxxx X. Xxxxx, Xx.
------------------------------
Title: President
ESTUDENTLOAN, LLC
By: /s/ Xxxxx Xxxxx
-------------------------------
Title: Manager
XXXXXXXXXXXXXX.XXX, INC.
By: /s/ Xxxx Xxxxxx
-------------------------------
Title: President
XXXXXXXXXXX.XXX, INC.
By: /s/ Xxxxx Xxxx
-------------------------------
Title: SVP, Corporate Development
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* * * * * *
The undersigned is executing this Agreement solely for the purpose of
being bound by the provisions of Articles V and VI hereof.
STUDENT ADVANTAGE, INC.
By: /s/ Xxxxxxx X. Xxxxx, Xx.
-----------------------------
Title: President
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