EXHIBIT 1.1
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STOCK PURCHASE AGREEMENT
Dated as of May 17, 2001
By and Among
Direct Marketing Technologies, Inc.
24/7 Media, Inc.,
And
Xxxxxxx.xxx, Inc., a wholly owned subsidiary of 24/7 Media, Inc.
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TABLE OF CONTENTS
PAGE
ARTICLE I Sale and Purchase of Stock
1.1 Purchase of Stock...........................................1
1.2 Purchase Price..............................................1
1.3 Payment of Purchase Price...................................1
1.4 Transfer Taxes..............................................1
1.5 Closing.....................................................2
1.6 Escrow Fund.................................................2
ARTICLE II Representations and Warranties
2.1 Representations and Warranties of Seller....................2
2.2 Representations and Warranties of Purchaser.................15
ARTICLE III Additional Agreements
3.1 Access to Information; Confidentiality......................16
3.2 Reasonable Efforts..........................................17
3.3 Conduct of Business of Company..............................18
3.4 Employee Matters............................................19
3.5 Indemnification, Exculpation and Insurance..................20
3.6 Fees and Expenses...........................................20
3.7 Public Announcements........................................20
3.8 Litigation..................................................20
3.9 Tax Matters.................................................20
3.10 Resignations................................................24
3.11 No Solicitation.............................................24
3.12 Disclosure Supplements......................................24
3.13 Return of Receivables.......................................25
3.14 Assignment and Assumption of Contracts......................25
ARTICLE IV Conditions Precedent
4.1 Conditions to Each Party's Obligation To Effect the Sale....25
4.2 Conditions to Obligations of Purchaser......................26
4.3 Conditions to Obligations of Seller and the Company.........27
4.4 Frustration of Closing Conditions...........................27
ARTICLE V Termination, Amendment and Waiver
5.1 Termination.................................................28
5.2 Effect of Termination.......................................28
5.3 Amendment...................................................29
5.4 Extension; Waiver...........................................29
5.5 Procedure for Termination, Amendment, Extension or Waiver...29
ARTICLE VI Restrictive Covenants
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6.1 Restrictions................................................29
6.2 Non-competition.............................................29
6.3 Non Interference with Business Relations....................30
6.4 Confidential Information....................................30
6.5 Scope ......................................................31
6.6 Remedies....................................................31
ARTICLE VII Indemnification
7.1 Survival and Remedies.......................................31
7.2 Indemnification of Purchaser by the Seller..................32
7.3 Indemnification by Purchaser................................33
7.4 Indemnification Procedure for Third party Claims Against
Indemnified parties.........................................33
7.5 Failure to Give Timely Notice...............................34
7.6 Insurance...................................................34
ARTICLE VIII General Provisions
8.1 Notices.....................................................35
8.2 Definitions.................................................36
8.3 Interpretation..............................................37
8.4 Counterparts................................................38
8.5 Entire Agreement; No Third-Party Beneficiaries..............38
8.6 Governing Law...............................................38
8.7 Assignment..................................................38
8.8 Enforcement.................................................38
8.9 Severability................................................38
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THIS STOCK PURCHASE AGREEMENT (this "Agreement") dated as of May 17, 2001,
by and among Direct Marketing Technologies, Inc. ("Purchaser"), an Illinois
corporation, 24/7 Media, Inc., a Delaware corporation ("Seller"), and
Xxxxxxx.xxx, Inc. (the "Company"), a Delaware corporation and wholly owned
subsidiary of Seller.
WHEREAS, the respective Boards of Directors of Purchaser, Seller and the
Company have approved and declared advisable this Agreement and the sale of all
outstanding shares of the Company by Seller to Purchaser (the "Sale") upon the
terms and subject to the conditions set forth in this Agreement, and have each
determined that the Sale and the other transactions contemplated hereby are
consistent with, and in furtherance of, their respective business strategies and
goals;
WHEREAS, Purchaser, Seller and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Sale and also to prescribe various conditions to the Sale; and
WHEREAS, simultaneously with the execution and delivery of this Agreement,
Purchaser and certain individuals are entering into employment agreements (the
"Employment Agreements") pursuant to which Purchaser will agree to employ such
individuals following the Closing Date (as defined in Section 1.5).
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I.
SALE AND PURCHASE OF STOCK
1.1 PURCHASE OF STOCK. At the Closing (as defined in Section 1.5), Seller shall
sell to Purchaser, and Purchaser shall purchase from Seller, all of the
outstanding capital stock of the Company (the "Purchased Stock") in accordance
with this Agreement.
1.2 PURCHASE PRICE. The purchase price payable by Purchaser for the Purchased
Stock (the "Purchase Price") shall be $15,250,000.
1.3 PAYMENT OF PURCHASE PRICE. The Purchase Price less (x) $1,500,000 which
shall be deposited into escrow pursuant to Section 1.6 hereto (the "Escrow
Amount") and (y) $1,750,000 which shall be paid by Purchaser to the Company on
account of the prepayment due from Seller to Purchaser pursuant to the Service
Agreement referred to in Section 4.2(f) hereof shall be paid by Purchaser to
Seller on the Closing Date by wire transfer of immediately available funds to an
account or accounts to be designated by Seller.
1.4 TRANSFER TAXES. Any transfer taxes, stamp duties, filing fees, registration
fees, recordation expenses, or other similar taxes, fees, charges or expenses
incurred by Seller, the Company or any other party in connection with the
transfer of the Purchased Stock to Purchaser or in connection with any of the
other transactions contemplated by this Agreement shall be borne and paid
exclusively by Purchaser.
1.5 CLOSING. The closing of the transactions contemplated by Section 1 (the
"Closing") shall be held at the Colorado offices of Seller at 10:00 a.m.
(Colorado time) on the earlier to occur of June 15, 2001 or the date upon which
all conditions to Closing set forth in Article IV have been satisified, or at
such other place, time and/or date as may be jointly designated by Purchaser and
Seller (the "Closing Date").
1.6 ESCROW FUND. At the Closing, the Purchaser shall deposit the Escrow Amount
into an escrow (the "Escrow Account") with American National Bank and Trust
Company of Chicago (the "Escrow Agent") pursuant to the terms of an Escrow
Agreement, substantially in the form of EXHIBIT A hereto (the "Escrow
Agreement"). The Escrow Amount shall be held in escrow by the Escrow Agent and
distributed in accordance with the terms of the Escrow Agreement, for the
purpose of providing a source of payment with respect to claims for
indemnification made against the Seller pursuant to Section 7.2 hereof.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY. Except as set
forth on the Disclosure Schedule delivered by Seller and the Company to
Purchaser prior to the execution of this Agreement (the "Disclosure Schedule"),
Seller and the Company jointly and severally represent and warrant to Purchaser
as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER OF SELLER. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority to
carry on its business as now being conducted.
(b) ORGANIZATION, STANDING AND CORPORATE POWER OF COMPANY. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power and
authority to own, lease and operate its assets and properties and to carry on
its business as now being conducted. The Company is duly qualified or licensed
to do business and is in good standing in each jurisdiction in which the nature
of its business or the ownership, leasing or operation of its assets makes such
qualification or licensing necessary, except for those jurisdictions where the
failure to be so qualified or licensed or to be in good standing, individually
and in the aggregate, is not reasonably likely to have a material adverse effect
on the Company. Seller has delivered to Purchaser complete and accurate copies
of (a) the certificate of incorporation and bylaws of the Company in each case
amended to the date hereof and (b) the minute books or other corporate records
of the Company. The certificate of incorporation and bylaws of the Company
provided to the Purchaser are in full force and effect. The Company is not in
violation of any of the provisions of its certificate of incorporation or
bylaws.
(c) TITLE TO STOCK. On the Closing Date, Purchaser will acquire good title
to the Purchased Stock free of any Liens or other encumbrances, except for any
encumbrances created by or through Purchaser. The Purchased Stock was validly
issued to Seller, is fully paid and non-assessable and is without, and was not
issued to Seller in violation of, any preemptive rights, and was not issued to
Seller in violation of any federal or state securities laws.
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(d) SUBSIDIARIES. Except as set forth in the Disclosure Schedule, the
Company has no subsidiaries or any other equity interest or investment in any
other entity.
(e) CAPITAL STRUCTURE. The authorized capital stock of the Company
consists of 1,000 shares of Common Stock, par value $0.01 per share, all of
which are issued and outstanding and wholly owned by Seller. There are not
issued, reserved for issuance or outstanding (A) any other shares of capital
stock or other voting securities of the Company, (B) any securities of the
Company convertible into or exchangeable or exercisable for shares of capital
stock or other voting securities of, or other ownership interests in, the
Company, (C) any warrants, calls, options or other rights to acquire from the
Company, or any obligation of the Company to issue, any capital stock or other
voting securities of, or other ownership interests in, or any securities
convertible into or exchangeable or exercisable for any capital stock or other
voting securities of, or other ownership interests in, the Company or (D) any
stock appreciation rights, phantom stock, tracking stock or similar rights
related to the value of the Company's capital stock or its performance. There
are not any outstanding obligations of the Company to repurchase, redeem or
otherwise acquire any such securities or to issue, deliver or sell, or cause to
be issued, delivered or sold, any such securities.
(f) AUTHORITY; NONCONTRAVENTION. (i) Seller and the Company have all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Seller and the Company and the consummation by
Seller and the Company of the transactions contemplated by this Agreement have
been duly authorized by all necessary corporate action on the part of Seller and
the Company, and no other corporate proceedings on the part of the Company
and/or Seller are necessary to authorize such execution, delivery and
performance. The transactions contemplated hereby do not constitute, and are not
part of a series of transactions which constitute, a sale by Seller of all or
substantially all of its assets, pursuant to the Delaware General Corporation
Law. This Agreement has been duly executed and delivered by Seller and the
Company and, assuming the due authorization, execution and delivery by
Purchaser, constitutes a legal, valid and binding obligation of Seller and the
Company, enforceable against Seller and the Company in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar laws
affecting creditors' rights and subject to general equity principles and to
limitations on availability of equitable relief, including specific performance.
(ii) The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to the loss of a benefit under, or result in the creation of
any pledges, claims, liens, encumbrances, mortgages and security interests of
any kind or nature whatsoever (collectively, "Liens") upon the Purchased Stock
or any of the properties or assets of the Company under, (A) the certificate of
incorporation or by-laws of the Company or of Seller, (B) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other contract, agreement,
obligation, commitment, arrangement, understanding, instrument, permit,
concession, franchise, license or similar authorization (each, a "Contract")
applicable to the Company, Seller or their respective properties or assets or
(C) (1) any judgment, order or
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decree or (2) any statute, law, ordinance, rule or regulation, in each case
applicable to the Company, Seller or their respective properties or assets,
other than, in the case of clauses (B) and (C), any such conflicts, violations,
defaults, rights, losses or Liens that, individually and in the aggregate, are
not reasonably likely to (w) have a material adverse effect on the Company or
its properties and assets, (x) impair the ability of the Company or the Seller
to perform its obligations under this Agreement, or (y) prevent or materially
delay the consummation of the transactions contemplated by this Agreement. No
consent, approval, order or authorization of, action by or in respect of, or
registration, declaration or filing with, any federal, state, local or foreign
government, any court, administrative, regulatory or other governmental agency,
commission or authority or any non-governmental self-regulatory agency,
commission or authority (each a "Governmental Entity") is required by or with
respect to Seller or the Company in connection with the execution and delivery
of this Agreement by Seller or the Company or the consummation by Seller or the
Company of the transactions contemplated by this Agreement.
(g) FINANCIAL STATEMENTS. Except as set forth therein and in the
Disclosure Schedule, the unaudited financial statements delivered to the
Purchaser present fairly, in all material respects, the financial position of
the Company as of December 31, 2000 and March 31, 2001, respectively, and the
results of its operations for the year then ended and have been prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods indicated and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended. The
year end financial statements referred to in the foregoing sentences are the
same financial statements which were used by the Seller in connection with the
preparation of the Seller's consolidated financial statements for the year ended
December 31, 2000, which consolidated financial statements have been audited by
KPMG LLP in accordance with generally accepted auditing standards. Except as set
forth in the Disclosure Schedule, the Company does not have any material
liabilities or obligations (whether accrued, contingent or otherwise) of a
nature required to be disclosed on a balance sheet or in the related notes to
the financial statements prepared in accordance with GAAP (each, a "Liability")
other than any such Liability which (i) is reflected in the Company's balance
sheet as of December 31, 2000, or (ii) has arisen since December 31, 2000, in
the ordinary course of business consistent with past practice, or consistent
with industry practice, or (iii) which has arisen in connection with this
Agreement or the transactions contemplated hereby. The accounts receivable of
the Company arose in the ordinary course of business for goods or services
delivered or rendered and constitute valid claims.
(h) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby and except as disclosed in the Disclosure Schedule, from March 31, 2001
to the date of this Agreement, the Company has conducted its business only in
the ordinary course, and during such period there has not been (1) any material
adverse change in the Company, (2) any declaration, setting aside or payment of
any dividend redemption, purchase, acquisition, call or other distribution
(whether in cash, stock or property) with respect to any of the Company's
capital stock, (3) any split, combination or reclassification of any of the
Company's capital stock or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for shares of
the Company's capital stock, (4) (A) any granting by the Company to any current
or former director, consultant, executive officer or other employee of the
Company of any increase in compensation,
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bonus or other benefits, except for normal increases in cash compensation in the
ordinary course of business consistent with past practice or as was required
under any employment agreements in effect as of the date of the most recent
audited financial statements, (B) any granting by the Company to any such
current or former director, consultant, executive officer or employee of any
increase in severance or termination pay, or (C) any entry by the Company or
Seller into, or any amendments of, any Company Benefit Agreement, (5) except
insofar as may have been required by a change in GAAP, any change in accounting
methods, principles or practices by the Company materially affecting their
respective assets, liabilities or businesses, (6) any tax election that
individually or in the aggregate is reasonably likely to adversely affect in any
material respect the tax liability or tax attributes of the Company, (7) any
settlement or compromise of any material income tax liability, (8) any creation
or suffering the existence of any Liens with respect to any of the Company's
assets; (9) other than in the ordinary course of business, consistent with past
practices, any sale, lease to others, license to others, disposition of, or
other transfer of any of the assets or properties of the Company; (10) any loss,
or interruption in use, of any material asset or property of the Company
(whether or not covered by Insurance) on account of fire, flood, riot, strike or
other hazard or act of God; (11) any waiver of any material rights relating to
the Company's business or arising under or in connection with any of the assets
of the Company; (12) any acquisition of any assets or properties other than in
the ordinary course of business consistent with past practice; (13) any merger,
consolidation, recapitalization or other business combination or reorganization
involving the Company; (14) any loans, advances or capital contributions made to
or investments in any person or entity (other than advances to employees in
respect of expenses in the ordinary course of business consistent with past
practice); (15) any acceleration of the collection of receivables ahead of the
terms of such receivables valued at more than $10,000 individually or $30,000 in
the aggregate; (16) any action or omission by the Company which has had a
material adverse affect on the relationship of the Company to any of its
material customers or suppliers; (17) any material purchase commitment made
other than in the ordinary course of business; (18) any material change made in
the Company's selling, pricing, advertising or personnel practices inconsistent
with its prior practice; or (19) without limiting the foregoing, entered into
any material transaction, agreement or commitment (except as expressly
contemplated by this Agreement) affecting any of the assets of the Company or
its business, operations, prospects or financial condition other than in the
usual and ordinary course of business consistent with past practice. Except for
liabilities incurred in connection with this Agreement or the transactions
contemplated hereby and except as disclosed in the Disclosure Schedule, since
December 31, 2000 there has not been any material adverse change in the Company.
(i) LITIGATION. Except as set forth in the Disclosure Schedule, as of
the date hereof, there is no suit, action or proceeding pending or, to the
knowledge of the Company or Seller, threatened against or affecting the Company
nor is there any material judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company.
(j) COMPLIANCE WITH APPLICABLE LAWS.
(i) The Company holds all material permits, licenses, variances,
exemptions, orders, registrations and approvals of all Governmental Entities
(the "Company Permits") that are required for it to own, lease or operate its
assets and to carry on its businesses. The Company
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is in compliance in all material respects with the terms of the Company Permits
and all applicable federal, state, local and foreign statutes, laws, ordinances,
rules and regulations, which have or reasonably could have a material effect on
the Company, its properties, financial conditions or operations. As of the date
hereof, no action, demand, requirement or investigation by any governmental
entity and no suit, action or proceeding by any other person or entity, in each
case with respect to the Company or any of its properties is pending or, to the
knowledge of the Company, threatened. The Company and its officers and agents
have not made any illegal or improper payments to, or provided any illegal or
improper benefit or inducement for, any governmental official, supplier,
customer or other person in an attempt to influence any such action relating to
the Company.
(ii) To Seller's or the Company's knowledge, there have been no
Releases of any Hazardous Materials at, on or under any facility or property
currently or formerly owned, leased, or operated by the Company that,
individually or in the aggregate, are reasonably likely to have a material
adverse effect on the Company. The Company is not the subject of any pending or,
to the Seller's or the Company's knowledge, threatened investigation or
proceeding under Environmental Law relating in any manner to the treatment,
storage or disposal of any Hazardous Materials generated at any facility or
property currently or formerly owned, leased or operated by the Company. The
Company has not received any communication (written or oral) from a governmental
authority, citizens group or otherwise that alleges that the Company is not or
was not in compliance with any Environmental Law. The Seller has provided
Purchaser with accurate and complete copies of all environmental audits and
similar reports in the possession of the Company with respect to each parcel of
real property currently or previously owned, used, leased or subleased by the
Company. The term "Environmental Law" means any and all applicable laws or
regulations or other requirements of any governmental entity concerning the
protection of human health or the environment. The term "Hazardous Materials"
means all explosive or radioactive materials, hazardous or toxic substances,
wastes or chemicals, petroleum (including crude oil or any fraction thereof) or
petroleum distillates, asbestos or asbestos-containing materials, and all other
materials or chemicals regulated under any Environmental Law. The term "Release"
means any spill, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching, emanation or migration in, into, onto, or
through the environment.
(k) BENEFIT PLANS.
(i) Set forth in the Disclosure Schedule is a true and complete list
of each bonus, pension, stock option, stock purchase, stock bonus, welfare,
benefit, profit sharing, retirement, disability, vacation, severance,
hospitalization, insurance, incentive, deferred compensation and other similar
fringe or employee benefit plans, funds, programs or arrangements, all
employment contracts or executive compensation agreements, and all collective
bargaining agreements whether written or oral and whether formal or informal and
each other "employee benefit plan" (within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) providing
benefits to any current or former employee, officer, consultant or director of
the Company (whether or not such person is or was directly employed by the
company or employed by the Seller to provide services to the Company)
(collectively, the "Company Benefit Plans").
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(ii) None of the Company Benefit Plans is a voluntary employees'
beneficiary association as defined in Section 501(c)(9) of the Code. Neither the
Company nor any of its ERISA Affiliates (as defined below) maintains, has ever
maintained, or has any liability with respect to an employee benefit plan as
defined in Section 3(3) of ERISA that is subject to Title IV of ERISA, Section
302 of ERISA or Section 412 of the Code. No Plan is intended to qualify under
Section 423 of the Code. For the purposes hereof, the term "ERISA Affiliate"
shall mean any corporation or other Person which is a member of the same
controlled group (within the meaning of Section 414(b) of the Code) of
corporations or other Persons as the Company, or which is under common control
(within the meaning of Section 414(c) of the Code) with the Company, or any
corporation or other Person which is a member of an affiliated service group
(within the meaning of Section 414(m) of the Code) with the Company, or any
corporation or other Person which is required to be aggregated with the Company
pursuant to Section 414(o) of the Code or the regulations promulgated under
Sections 414(b), (c), (m) or (o) of the Code.
(iii) Each of the Company Benefit Plans is in compliance with the
requirements provided by all applicable laws, statutes, regulations and rules,
including ERISA, the Code, and any other laws or regulations applicable to such
Plans. Each Company Benefit Plan and its related trust intended to qualify under
Section 401(a) and Section 501(a) of the Code is so qualified and has heretofore
been determined by the Internal Revenue Service to so qualify, and, to the
Company's and Seller's knowledge, nothing has occurred and no condition exists
that could cause the loss of such qualification. All reports and notices,
legally required to be filed and/or distributed with respect to the Company
Benefit Plans, have been timely filed and distributed. Neither the Company nor
any ERISA Affiliate maintains, contributes to, or has any liability for any
welfare benefits for terminated employees (other than any welfare benefits
provided in compliance with the Consolidated Omnibus Budget Reconciliation Act
or other similar law (collectively "COBRA Laws")).
(iv) With respect to the Company Benefit Plans, all applicable
contributions, payments and insurance premiums for all periods ending prior to
Closing have been made in full. The consummation of the transactions
contemplated by this Agreement will not accelerate the time of payment or
vesting or increase the amount of compensation due any employee or officer of
the Company or any ERISA Affiliate.
(v) With respect to each Company Benefit Plan (i) no prohibited
transaction as defined in Section 406 of ERISA or Section 4975 of the Code has
occurred and no prohibited transaction will occur by virtue of the consummation
of the transactions contemplated by this Agreement, (ii) no claim (other than
routine claims for benefits made in the ordinary course of plan administration)
is pending, or, to the knowledge of the Company and Seller, threatened or
imminent with respect to any of the Company Benefit Plans, the Company, any
ERISA Affiliate, and (iii) none of the Company or the ERISA Affiliates of any of
the Company Benefit Plans has any knowledge of any facts which could give rise
to any claim or liability for failure to comply with ERISA or the Code.
(vi) The Company is not a party to any employment, consulting,
deferred compensation, indemnification, severance or termination agreements or
arrangements between the Company and any current or former employee, officer,
consultant or director of the Company.
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(l) LABOR MATTERS. The Company is in compliance in all material respects
with all federal, state, and local and foreign requirements regarding employment
which have a material effect on the Company's relationship with its employees,
officers, consultants or directors. The Company is not and never has been a
party to any collective bargaining or other labor union contract applicable to
persons employed by the Company and no collective bargaining agreement is being
negotiated by the Company. There is no labor dispute, strike or work stoppage
against the Company pending or, to the knowledge of the Company, threatened
which may interfere with the business activities of the Company. As of the date
of this Agreement, to the knowledge of the Company, none of the Company or any
of its representatives or employees has committed an unfair labor practice in
connection with the operation of the business of the Company, and there is no
charge or complaint against the Company by the National Labor Relations Board or
any comparable governmental agency pending or threatened in writing.
(m) TAXES.
(i) The Company has filed all tax returns and reports required to be
filed by it, or with respect to it, either separately or as a member of a group
of corporations, under applicable laws and regulations and all such returns and
reports are complete and correct in all material respects. The Company has
timely paid all taxes (whether or not shown or required to be shown on such
returns to be due), and no taxes are delinquent, and the most recent financial
statements delivered to Purchaser reflect an adequate reserve for all taxes
payable by the Company for all taxable periods and portions thereof accrued
through the date of such financial statements. No claim has ever been made by
any governmental body in any jurisdiction in which a tax return has not been
filed for the Company that the Company may be subject to tax in that
jurisdiction. The Company and/or Seller have withheld with respect to all
employees of the Company and/or Seller performing services for the Company all
taxes required to be withheld by them under the Federal Insurance Contributions
Act, as amended, the Federal Unemployment Tax Act, as amended, and other taxes
required to be withheld from amounts paid or owing to any employee or other
person (including, without limitation, to the extent withholding is required,
any person considered a consultant by the Company) and have or will timely remit
the same to the applicable taxing authorities. The Company is not obligated to
make any payment, nor is it a party to any agreement (other than agreements
entered into by the Company at Purchaser's direction in connection with the
Closing) that under certain circumstances could obligate it to make any payment,
that is not deductible under Section 162(m) or 280G of the Code; nor is the
Company obligated to pay or reimburse any person for excise taxes under Section
4999 of the Code. Except as set forth in the Disclosure Schedules, neither the
Seller nor the Company has requested or been granted an extension of the time
for filing any tax return.
(ii) No deficiencies for any taxes are outstanding or have been
proposed, asserted or assessed against the Company that are not adequately
reserved for, except for deficiencies that individually or in the aggregate are
not reasonably likely to have a material adverse effect on the Company. No
federal, state or foreign tax return or report or any other material tax return
or report of the Company is currently under audit and no written or unwritten
notice of any such audit or similar examination has been received by the
Company. There is no currently effective agreement or other document extending,
or having the effect of extending, the period of assessment or collection of any
taxes nor has there been any request for any such
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extension. To the knowledge of the Company and Seller, there is no basis for the
assertion of any claim relating to the failure to pay or the improper payment of
taxes.
(iii) The Company is not and never has been a party to or bound by
any tax indemnity, tax sharing or tax allocation agreement.
(iv) None of the assets of the Company is treated as "tax-exempt use
property" within the meaning of Section 168(h) of the Xxxx.Xx consent to the
application of Section 341(f) of the Code has been filed with respect to the
Company nor shall any such consent be filed on or prior to the Closing Date.
(v) Seller has not elected to retain any of the net operating loss
carryovers of capital loss carryovers of the Company for state, local or foreign
income tax purposes.
(vi) Except as provided in the Disclosure Schedules, the Seller and
the Company have not had an "ownership change" within the meaning of Code
Section 382 during the period in which the Company has been a member of Sellers
affiliated group.
(vii) The Company does not have any liability for taxes of any
person other than the Company (A) under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local or foreign law), (B) as a transferee or
successor, (C) by contract or (D) otherwise.
(viii) All material elections with respect to taxes (including
without limitation any elections under Sections 108(b)(5), 338(g), 565, 936(a),
or 936(e) of the Code, or Treasury Regulation Sections 1.1502-20(g) or
1.1502-32(f)(2) (as in effect before January 1, 1995)) affecting or made by the
Company and in effect as of the date hereof are described in the Disclosure
Schedules.
(ix) Neither the Company nor Seller has received, made any request
for, or entered into, any tax rulings, closing agreements or changes of
accounting method requested by the Company or Seller that could materially
affect the Company's tax liability for any period after the Closing Date. There
will not be includible in the Company's gross income for any taxable period
after the Closing any amount attributable to a prior tax period as a result of
any of the following methods of accounting: installment, open transaction,
completed contract, long-term contract, cash or as a result of (A) the
application of Section 481 of the Code or comparable provisions of state, local
or foreign tax law, (B) any "closing agreement" as described in Section 7121 of
the Code, (C) deferred intercompany gain or excess loss account described in
Section 1502 of the Code (or any corresponding or similar provision of state or
local law) or (D) prepaid amount received on or before the Closing Date..
(x) There are no material liens for taxes (other than for current
taxes not yet due and payable) on the assets of the Company.
(xi) The Company has not been and is not a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii).
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(xii) The Company has not constituted either a "distributing
corporation" or a "controlled corporation" in a distribution of stock described
in Section 355 of the Code (x) in the two years prior to the date of this
Agreement or (y) in a distribution which could otherwise constitute part of a
"plan" or "series of related transactions" (within the meaning of Section 355(e)
of the Code) in conjunction with the transactions described in this Agreement.
(xiii) As used in this Agreement, "tax" or "taxes" shall include all
(A) federal, state, local or foreign income, gross receipts, franchise,
estimated, alternative minimum, add-on minimum, real property, personal
property, sales, use ,excise, natural resource, environmental, severance, stamp,
occupation, premium, windfall profit, capital stock, social security,
unemployment, disability, payroll, license, employee or other withholding,
customs, duties, value added and any other taxes or similar governmental charges
of any kind, including any interest, penalties or additions with respect
thereto, and (B) liability for the payment of any amounts as a result of being a
member of a consolidated, combined or unitary tax group or being a party to any
tax sharing agreement or as a result of any express or implied obligation to
indemnify any other person with respect to the payment of any amounts of the
type described in clause (A); and "tax return" shall include all returns,
declarations, reports, information returns, or other documents filed or required
to be filed in connection with the determination, assessment, or collection of
taxes of any person or the administration of any laws, regulations or
administrative requirements relating to any taxes
(n) BROKERS. No broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Seller or the
Company, other than a broker, investment banker, financial advisor or other
person, the fees and expenses of which will be paid by Seller
(o) INTELLECTUAL PROPERTY.
(i) As used herein, "Intellectual Property Rights" shall mean all
trademarks, service marks, trade names, brands, copyrights and patents, all
applications for registration and registrations for such trademarks, registered
copyrights and patents and all mask works, trade secrets, confidential and
proprietary information, compositions of matter, formulas, designs, proprietary
rights, know-how and processes; and "Company Intellectual Property Rights" shall
mean all Intellectual Property Rights owned by or licensed to or used by
Company. A list and brief description of all Company Intellectual Property
Rights that are material to the conduct of the business of Company, and all
licenses, contracts, rights and arrangements with respect to the foregoing, are
set forth in the Disclosure Schedule. All the Company Intellectual Property
Rights which are material to the conduct of its business are valid, enforceable
and in full force and effect. The Company owns, free and clear of all Liens, or
is validly licensed or otherwise has the legally enforceable right to use, all
the Company Intellectual Property Rights which are material to the conduct of
its business as currently conducted.
(ii) The Company has not misappropriated or, to the Seller's and the
Company's knowledge, interfered with, infringed upon or otherwise come into
conflict with any Intellectual Property Rights or other proprietary information
of any other person. Neither Seller nor the Company has received any written
charge, complaint, claim, demand or notice alleging any such interference,
infringement, misappropriation or other conflict (including any claim that
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the Company must license or refrain from using any Intellectual Property Rights
or other proprietary information of any other person) which has not been settled
or otherwise fully resolved, except for such charges, complaints, claims,
demands or notices that, individually and in the aggregate, are not reasonably
likely to have a material adverse effect on the Company. To Seller's and the
Company's knowledge, no other person has materially interfered with, infringed
upon, misappropriated or otherwise come into conflict with any Company
Intellectual Property Rights.
(iii) As the business of the Company is presently conducted, to the
Seller's knowledge, Purchaser's or the Company's use after the Closing of the
Company Intellectual Property Rights which are material to the conduct of the
business of the Company will not interfere with, infringe upon, misappropriate
or otherwise come into conflict with the Intellectual Property Rights or other
proprietary information of any other person.
(iv) The Company has taken, and until the Closing Date the Company
will take, all steps reasonably necessary to preserve the Company's legal rights
in all the material Company Intellectual Property Rights except for such steps
the failure of which to be taken, individually and in the aggregate, are not
reasonably likely to materially diminish the value, protectability or use of the
material Company Intellectual Property Rights. In addition, each employee,
agent, consultant or contractor who has materially contributed to or
participated in the creation or development of any copyrightable, patentable or
trade secret material on behalf of the Company or any predecessor-in-interest
thereto either (x) is a party to a "work-for-hire" relationship under which the
Company is deemed to be the original owner/author of all property rights therein
or (y) has executed an assignment or an agreement to assign in favor of the
Company or such predecessor-in-interest, as applicable, all right, title and
interest in such material.
(p) CONTRACTS. Except for Contracts set forth on the Disclosure
Schedule, the Company is not a party to or bound by, and none of its properties
or assets is bound by or subject to, any written or oral:
(i) Contract not made in the ordinary course of business;
(ii) Contract pursuant to which the Company has agreed not to
compete with any person or to engage in any activity or business, or pursuant to
which any benefit is required to be given or lost as a result of so competing or
engaging;
(iii) Contract pursuant to which the Company is restricted or
otherwise impaired in any material respect in the development, marketing or
distribution of its products or services;
(iv) license or franchise granted by the Company pursuant to which
the Company has agreed to refrain from granting license or franchise rights to
any other person;
(v) Contract under which the Company has (i) incurred any
indebtedness that is currently owing or (ii) given any guarantee in respect of
indebtedness, in each case having an aggregate principal amount in excess of
$250,000;
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(vi) material Contract that requires consent, approval or waiver of,
or notice to, a third party in the event of or, with respect to, the Sale,
including in order to avoid termination of or a loss of material benefit under
any such Contract;
(vii) Contract or other agreement, whether written or oral, that
contains any guarantees as to the Company's future revenues;
(viii) Contract providing for payments of royalties to third
parties;
(ix) Contract granting a third party any license to Intellectual
Property Rights that is not limited to the internal use of such third party;
(x) Contract providing confidential treatment by the Company of
third party information other than non-disclosure agreements and provisions
entered into by Seller in the ordinary course of business consistent with past
practice; or
(xi) Contract which (i) has aggregate future sums due from the
Company in excess of $250,000 and is not terminable by the Company for a cost of
less than $250,000 or (ii) is otherwise material to the business of the Company
as presently conducted or as proposed to be conducted.
The Company and Seller have provided the Purchaser with true and complete copies
of each Contract listed in the Disclosure Schedules (or, in the case of any oral
contract, complete and accurate summary thereof). Each Contract of the Company
is in full force and effect and is a legal, valid and binding agreement of the
Company and, to the knowledge of the Company and Seller, of each other party
thereto, enforceable against the Company and the Seller and, to the knowledge of
the Company and Seller, against the other party or parties thereto, in each case
in accordance with its terms, except for such failures to be in full force and
effect or enforceable that, individually and in the aggregate, are not
reasonably likely to have a material adverse effect on the Company. The Company
has performed or is performing all material obligations required to be performed
by it under its Contracts and is not (with or without notice or lapse of time or
both) in breach or default in any material respect thereunder, and, to the
knowledge of the Company, no other party to any of its Contracts is (with or
without notice or lapse of time or both) in breach or default in any material
respect thereunder except, in each case, for such breaches that, individually
and in the aggregate, are not reasonably likely to have a material adverse
effect on the Company.
(q) TITLE TO PROPERTIES.
(i) The Disclosure Schedule sets forth a true and complete list, as
of the date of this Agreement, of all real property and leasehold property owned
or leased by the Company. The Company has good and valid title to, or valid
leasehold interests in or valid rights to, all its material properties and
assets except for such as are no longer used or useful in the conduct of its
businesses or as have been disposed of in the ordinary course of business and
except for defects in title, easements, restrictive covenants and similar
encumbrances that, individually and in the aggregate, do not materially
interfere with its ability to conduct its business as currently conducted. All
such material assets and properties, other than assets and properties in which
the Company has a leasehold interest, are free and clear of all Liens except for
Liens that,
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individually and in the aggregate, do not materially interfere with the ability
of the Company to conduct its business as currently conducted. The property and
assets of the Company currently owned or leased by the Company are sufficient to
permit the current operations of the Company, and, except as set forth in the
Transition Services Agreement, the Company does not require any material assets
or services from the Seller or any of its affiliates in order to permit it to
continue to operate in accordance with its current practices.
(ii) The Company has complied in all material respects with the
terms of all leases to which it is a party and under which it is in occupancy,
and all such leases are in full force and effect. The Company enjoys peaceful
and undisturbed possession under all such leases, except for failures to do so
that, individually and in the aggregate, are not reasonably likely to have a
material adverse effect on the Company.
(r) PRIVACY POLICIES. The Company has provided true and complete copies
of all privacy policies adopted by the Company in connection with the Company's
operations. The Company and its employees and agents have (i) complied with all
applicable federal, state and foreign privacy laws regarding the disclosure of
data, (ii) not violated the Company's applicable privacy policies posted on the
Company's Web site, (iii) taken all commercially reasonable steps to protect and
maintain the confidential nature of the personal information provided to the
Company by persons who do not consent to the disclosure of such information to
third parties or have otherwise expressly requested that the Company not
disclose such information. All personal data collected by Company from time to
time has been used in accordance with the then-applicable privacy policy of the
Company. Company does not sell, rent or otherwise make available to third
parties any personal data of its customer's subscribers, unless (a) the customer
and the applicable list owner have obtained consent of the subscriber to do so,
and (b) the customer has asked the Company to do so.
(s) CUSTOMERS. The Disclosure Schedules include an accurate and complete
list of all of the current customers of the Company. No customer has cancelled,
terminated or threatened within the last twelve (12) months to cancel or
otherwise terminate or has notified the Seller or the Company that it intends to
cancel, terminate or otherwise modify materially its relationship with the
Company, including, without limitation, as a result of this Agreement or the
transactions contemplated hereby. Since December 31, 2000, the Company has not
offered to any customer any material cash discount, profit participation, stock
adjustment or other rebate or premium in connection with or on account of the
purchase of goods or services from the Company.
(t) TRANSACTIONS WITH RELATED PARTIES. For purposes of this Agreement,
the term "Related Party" shall mean (i) any past or present director or
executive officer of the Company, (ii) any Affiliate (as defined in Rule 405
promulgated under the Securities Act of 1933), spouse or child of any person or
entity listed in (i). Except as set forth in the Disclosure Schedules, during
the past three years no Related Party has been a director or officer of, or has
had any material direct or indirect interest in, any person or entity, which
during such period has been a supplier or customer of products or services or
sales agent of the Company or otherwise done business with the Company. Except
as set forth in the Disclosure Schedules, no Related Party owns, directly or
indirectly, in whole or in part, any tangible or intangible property of the
Company or that the Company uses in the conduct of its business. Except as set
forth in the
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Disclosure Schedules, no Related Party owes any money or other amounts to, nor
is any Related Party owed any money or other amounts by, the Company other than
salaries, bonuses and commissions payable for services actually performed in
amounts in keeping with past practice and in the ordinary course of business and
not in violation of any other provision of this Agreement.
(u) CURRENT LIABILITIES. The current liabilities of the Company as of
April 30, 2001 (as determined in accordance with GAAP, but excluding any
acquisition cost reserves, accrued restructuring costs, accrued old disputed
items, deferred revenues, deferred rent, accrued construction in progress and
any liabilities relating to accounts payables to Centerre/Liebert), shall not
exceed $1,661,942.
(v) FAIR VALUE. The Purchase Price in the context of all of the
transactions contemplated hereby, including, without limitation, the
transactions contemplated by the Services Agreement referred to in Section
4.2(f), constitutes fair value for the Shares and was arrived at based upon arms
length negotiations between the parties with each party represented by counsel
and with the Seller assisted by its financial advisor.
(w) SEC DOCUMENTS. Each of the reports, schedules, forms, statements and
other documents (including exhibits and all other information incorporated
therein) filed with the Securities and Exchange Commission by Seller since its
acquisition of the Company (the "Seller SEC Reports") contained all material
disclosure regarding the Company required to be included therein by the
Securities Act of 1933 or the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder and applicable to such Seller SEC Reports.
None of the Seller SEC Reports when filed contained any untrue statement of fact
related to the Company, its business, assets, financial condition or operations
which was material to the Seller ("Company Facts") or omitted to state a Company
Fact required to be stated therein or necessary in order to make the statements
therein regarding Company Facts accurate, in light of the circumstances under
which they were made.
2.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
warrants to Seller as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is incorporated and has the requisite corporate
power and authority to carry on its business as now being conducted. Purchaser
is duly qualified or licensed to do business and is in good standing (with
respect to jurisdictions which recognize such concept) in each jurisdiction in
which the nature of its business or the ownership, leasing or operation of its
assets makes such qualification or licensing necessary, except for those
jurisdictions where the failure to be so qualified or licensed or to be in good
standing, individually and in the aggregate, is not reasonably likely to have a
material adverse effect on Purchaser.
(b) AUTHORITY; NONCONTRAVENTION. (i) Purchaser has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement by Purchaser and the consummation by Purchaser of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of Purchaser. This Agreement has been
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duly executed and delivered by Purchaser and, assuming the due authorization,
execution and delivery by each of the other parties hereto, constitutes a legal,
valid and binding obligation of Purchaser, enforceable against each of them in
accordance with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar
laws affecting creditors' rights and subject to general equity principles and to
limitations on availability of equitable relief, including specific performance.
(ii) The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of a benefit under, or result in the creation of any Lien
upon any of the properties or assets of Purchaser under, (A) (1) the certificate
of incorporation or by-laws of Purchaser, (2) any Contract applicable to
Purchaser or its respective properties or assets or (3) any judgment, order or
decree or (2) any statute, law, ordinance, rule or regulation, in each case
applicable to Purchaser or any of its subsidiaries or their respective
properties or assets, other than, in the case of clauses (2) and (3), any such
conflicts, violations, defaults, rights, losses or Liens that, individually and
in the aggregate, are not reasonably likely to (x) have a material adverse
effect on Purchaser, (y) impair the ability of Purchaser to perform its
obligations under this Agreement or (z) prevent or materially delay the
consummation of the transactions contemplated by this Agreement. No consent,
approval, order or authorization of, action by or in respect of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Purchaser in connection with the execution and delivery of
this Agreement by Purchaser or the consummation by Purchaser of the transactions
contemplated by this Agreement.
(c) ACCESS. Purchaser has been given full access to the assets, books,
records, contracts and employees of the Company, and has been given the
opportunity to meet with officers and other representatives of Seller and the
Company for the purpose of investigating and obtaining information regarding the
Company's business, operations and legal affairs provided that neither of such
access nor any actual investigation conducted by the Purchaser (including,
without limitation, any matters disclosed in connection therewith) shall in any
way limit the effect of any of the representations and warranties made herein by
the Seller and/or the Company, or any remedy which the Purchaser shall have in
connection with any breach thereof.
(d) BROKERS. Purchaser has not retained any broker or finder in
connection with any of the transactions contemplated by this Agreement, and
Purchaser has not incurred or agreed to pay, or taken any other action that
would entitle any Person to receive, any brokerage fee, finder's fee or other
similar fee or commission with respect to any of the transactions contemplated
by this Agreement.
(e) FAIR VALUE. Assuming the accuracy of the representations and
warranties set forth in Section 2.1, the Purchase Price, in the context of all
of the transactions contemplated hereby, including, without limitation, the
transactions contemplated by the Services Agreement referred to in Section
4.2(f), constitutes fair value for the Shares and was arrived at based upon arms
length negotiations between the parties with each party represented by counsel
and with the Seller assisted by its financial advisor.
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(f) ACQUISITION OF PURCHASED STOCK. Purchaser is acquiring the Purchased
Stock for its own account and for investment, and not with a view to, or for
sale in connection with, any distribution of any of such Purchased Stock.
ARTICLE III.
ADDITIONAL AGREEMENTS
3.1 ACCESS TO INFORMATION; CONFIDENTIALITY. Upon reasonable notice, Seller
shall, and shall cause the Company to, afford to Purchaser and to its officers,
employees, accountants, counsel, financial advisors and other representatives,
full access during normal business hours during the period prior to the Closing
Date to all its properties, books, contracts, commitments, personnel and records
of the Company and, during such period, Seller shall, and shall cause the
Company to, furnish promptly to Purchaser (a) a copy of each report, schedule,
registration statement and other document filed by the Company and/or Seller
during such period pursuant to the requirements of federal or state securities
laws and (b) all other information concerning the Company's business, properties
and personnel as Purchaser may reasonably request (including the Company's
outside accountant's work papers to the extent permitted, assuming the
permission of the Company and Seller, under the outside accountant's policies).
Neither the Seller nor the Company shall be required to provide access to or
disclose information where such access or disclosure would contravene any law,
rule, regulation, order or decree. No review pursuant to this Section 3.1 shall
have an effect for the purpose of determining the accuracy of any representation
or warranty given by either party hereto to the other party hereto. Purchaser
will hold, and will cause its officers, employees, accountants, counsel,
financial advisors and other representatives and affiliates to hold, any
nonpublic information in accordance with the terms of the Confidentiality
Agreement.
3.2 REASONABLE EFFORTS.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use commercially reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Sale and the other transactions contemplated by this
Agreement, including using reasonable efforts to accomplish the following: (i)
the taking of all reasonable acts necessary to cause the conditions to Closing
to be satisfied as promptly as practicable; (ii) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations and filings; (iii) the
obtaining of all necessary consents, approvals or waivers from third parties;
(iv) the defending of any lawsuits or other legal proceedings, whether judicial
or administrative, challenging this Agreement or the consummation of the
transactions contemplated by this Agreement, including seeking to have any stay
or temporary restraining order entered by any court or other Governmental Entity
vacated or reversed; and (v) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement.
(b) In connection with and without limiting the foregoing, Seller and
the Company and their respective Boards of Directors and Purchaser and its Board
of Directors shall (i) take all
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action necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to the Sale, this Agreement or any other
transactions contemplated by this Agreement and (ii) if any state takeover
statute or similar statute or regulation becomes applicable to the Sale, this
Agreement or any other transaction contemplated by this Agreement, take all
action necessary to ensure that the Sale and the other transactions contemplated
by this Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such
statute or regulation on the Sale and the other transactions contemplated by
this Agreement.
3.3 CONDUCT OF BUSINESS OF COMPANY. From the date hereof through the Closing
Date, the Company shall, and the Seller shall cause the Company, except as
expressly contemplated or permitted by this Agreement or to the extent that
Purchaser shall otherwise consent in writing (such consent not to be
unreasonably withheld or delayed), use commercially reasonable efforts to carry
on its business and affairs in such a manner so that the representations and
warranties contained in Section 2.1 shall continue to be true and correct in all
material respects on and as of the Closing as if made again by the Company on
the Closing Date, and the Company shall carry on its business in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted, and use commercially reasonable efforts to preserve intact its
present business organization, keep available the services of its present
officers and employees and preserve its relationships with customers, suppliers
and others having business dealings with them. Without limiting the generality
of the foregoing, prior to the Closing, and except as expressly contemplated or
permitted by this Agreement, the Company will not, without the prior written
consent of Purchaser:
(a) split, combine or reclassify any shares of its capital stock or
other equity interests, declare, pay or set aside for payment any dividend or
other distribution in respect of its capital stock or other equity interests, or
directly or indirectly, redeem, purchase or otherwise acquire any shares of its
capital stock or other securities;
(b) issue, sell, pledge, dispose of, encumber or deliver (whether
through the issuance or granting of any options, warrants, commitments,
subscriptions, rights to purchase or otherwise) any stock or other equity
interests of any class of the Company or any securities convertible into or
exercisable or exchangeable for shares of stock or other equity interests of any
class of the Company;
(c) incur any liability or obligation other than in the ordinary and
usual course of business and consistent with past practice, issue any debt
securities, make, create, incur, assume or suffer to exist any Lien on its
assets, or assume, guarantee, endorse or otherwise as an accommodation become
responsible for the liabilities of any other person or entity;
(d) acquire (by merger, consolidation, acquisition of stock or assets or
otherwise) any corporation, partnership or other business organization or
division or significant assets thereof or acquire, directly or indirectly, any
equity interest in any person or entity;
(e) amend, modify or waive compliance with the Certificate of
Incorporation or Bylaws of the Company;
-17-
(f) sell, lease, license, encumber or otherwise dispose of any assets
with a book or fair market value in excess of $100,000 individually or $250,000
in the aggregate other than sales of inventory in the ordinary course of
business;
(g) make any change in financial or tax accounting methods, principles
or practices or make or cause to be made any elections on tax returns of the
Company;
(h) enter into, amend or terminate, or agree to enter into, amend or
terminate, any Contract other than in the ordinary course of business unless, in
each case, such amendment, termination, or agreement, singly or together with
other such actions, will not have a material adverse effect on the Company;
(i) fail to maintain and keep in full force and effect all insurance on
assets and property or for the benefit of employees of the business, all
liability and other casualty insurance, and all bonds on personnel, presently
carried, fail to present all claims under such insurance policies in a proper
and timely manner or breach any obligation under such insurance policies;
(j) fail to maintain its books, accounts and records in the usual,
regular and ordinary manner on a basis consistent with prior years;
(k) directly or indirectly engage in any transaction with any officer,
director or stockholder or any Affiliate of any such person which is not at
arm's length;
(l) adopt, amend or terminate any Company Benefit Plan, other than
changes in employee welfare or benefit arrangements with respect to officers and
employees of the Company made in the ordinary course consistent with past
practice;
(m) grant, or become obligated to grant, any increase in the
compensation of officers or employees of the Company, including any such
increase pursuant to any Company Benefit Plan (except for increases in
compensation in the ordinary course of business consistent with past practice);
(n) enter into any employment, severance, stay bonus or similar
agreement or arrangement with any employee of the Company or any independent
contractor to provide services to the Company; or
(o) agree, in writing or otherwise, to do any of the foregoing.
3.4 EMPLOYEE MATTERS.
(a) Seller shall use commercially reasonable efforts to cause employees
who perform services for the Company which are listed on EXHIBIT B hereto (the
"Transferred Employees") to accept employment with the Company and/or the
Purchaser after the Closing; it being understood that currently the Company does
not have any of its own employees, but rather has services performed on its
behalf by employees of the Seller (even though certain such employees spend all
or a substantial portion of their working time on Company matters). All other
employees of the Seller who perform services for the Company shall not be
offered employment by the Company and/or the Purchaser ("Non-Transferred
Employees"), and the Seller shall not
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cause any such Non-Transferred Employee to become an employee of the Company
prior to the Closing.
(b) Purchaser shall provide, or cause to be provided, from the Closing
Date through December 31, 2001, to Transferred Employees of the Company who
continue employment through the Closing Date and who become employees of the
Purchaser (the "Company Employees"), employee benefits that are, in the
aggregate, no less favorable than the employee benefits provided to similarly
situated employees of Purchaser.
(c) For purposes of eligibility and vesting (but not benefit accrual)
under the employee benefit plans of Purchaser and its subsidiaries providing
benefits to Company Employees, Purchaser shall credit each Company Employee with
his or her years of service with Company before the Closing Date, to the same
extent as such Company Employee was entitled immediately prior to the Closing
Date to credit for such service under any similar Company Benefit Plan. To the
extent permitted by Purchaser's employee benefit plans and applicable law,
Purchaser shall waive any pre-existing condition limitations, waiting periods or
similar limitations applicable to Company Employees and their covered dependents
(other than limitations or waiting periods that are already in effect with
respect to such employees and dependents and that have not been satisfied as of
the Closing Date) under such employee benefit plans of Purchaser and shall
provide each such Company Employee with credit for any co-payments previously
made and any deductibles previously satisfied.
(d) Nothing contained in this Section 3.4 or elsewhere in this Agreement
shall be construed to prevent the termination of employment of any individual
Company Employee or any change in the employee benefits available to any
individual Company Employee or the amendment or termination of any particular
Company Benefit Plan or Company Benefit Agreement to the extent permitted by its
terms as in effect immediately prior to the Closing Date and the Company
Employees shall not be third party beneficiaries hereof.
3.5 INDEMNIFICATION, EXCULPATION AND INSURANCE.
(a) Purchaser agrees that all rights to indemnification, advancement of
expenses and exculpation from liabilities for acts or omissions occurring at or
prior to the Closing Date now existing in favor of the current or former
directors or officers of Company as provided in its certificate of incorporation
or by-laws and any indemnification agreements of Company (as each is in effect
on the date hereof), the existence of which does not constitute a breach of this
Agreement, shall continue to be liabilities of the Company after the Closing
Date and shall survive the Sale and shall continue in full force and effect in
accordance with their terms.
(b) In the event that the Company or any of its successors or assigns
(i) consolidates with or merges into any other person and is not the continuing
or surviving corporation or entity of such consolidation or sale or (ii)
transfers or conveys all or substantially all of its properties and assets to
any person, or otherwise dissolves, then, and in each such case, Purchaser shall
cause proper provision to be made so that the successors and assigns of the
Company assume the obligations set forth in this Section 3.5.
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(c) The Company shall comply, and Purchaser shall cause the Company to
comply, with the provisions of Section 5.08(c) of that certain Agreement and
Plan of Merger dated as of February 29, 2000 by and between Seller and the
Company.
(d) The provisions of this Section 3.5 are intended to be for the
benefit of, and will be enforceable by, each indemnified party, his or her heirs
and his or her representatives and are in addition to, and not in substitution
for, any other rights to indemnification or contribution that any such person
may have by contract or otherwise.
3.6 FEES AND EXPENSES. All fees and expenses incurred in connection with the
Sale, this Agreement, and the transactions contemplated by this Agreement shall
be paid by the party incurring such fees or expenses, whether or not the Sale is
consummated; provided that, in the event the Sale is consummated, any fees or
expenses incurred by the Company in connection with the transaction contemplated
hereby (or any alternate termination which the Company and Seller may have
contemplated) shall be deemed to be fees and expenses of the Seller (and not of
the Company). Purchaser shall file any return with respect to, and shall pay,
any state or local taxes (including any penalties or interest with respect
thereto), if any, which are attributable to the transfer of the beneficial
ownership of the Company's real property (collectively, the "Real Estate
Transfer Taxes") as a result of the Sale. Seller shall cooperate with Purchaser
in the filing of such returns including, in the case of Seller, supplying in a
timely manner a complete list of all real property interests held by the Company
and any information with respect to such property that is reasonably necessary
to complete such returns. The fair market value of any real property of the
Company subject to the Real Estate Transfer Taxes shall be as agreed to between
Purchaser and Seller.
3.7 PUBLIC ANNOUNCEMENTS. Purchaser, Seller and the Company will consult with
each other before issuing, and provide each other the opportunity to review,
comment upon and concur with, any press release or other public statements with
respect to the transactions contemplated by this Agreement, including the Sale,
and shall not issue any such press release or make any such public statement
prior to such consultation, except to the extent a party may determine that by
applicable law, the SEC, court process or obligations pursuant to any listing or
quotation agreement with any national securities exchange or national trading
system. The parties agree that the initial press release to be issued with
respect to the transactions contemplated by this Agreement shall be in the form
heretofore agreed to by the parties.
3.8 LITIGATION. Seller shall give Purchaser the reasonable opportunity to
participate, at its expense, in the defense of any litigation against the
Seller, Company and/or their respective directors relating to the transactions
contemplated by this Agreement.
3.9 TAX MATTERS.
(a) TAX SHARING AGREEMENTS. Any tax sharing agreement between the
Company and any other party shall be terminated as of the Closing Date and will
have no further effect for any taxable year (whether the current year, a future
year, or a past year).
(b) INCOME TAX RETURNS FOR TAX PERIODS THROUGH THE CLOSING DATE. Seller
will include the income of the Company (including any deferred income triggered
into income by Treasury Regulation Sections 1.1502-13 and 1.1502-14 and any
excess loss accounts taken into
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income under Treasury Regulation Section 1.1502-19) on Seller's consolidated
federal and state income tax returns for all periods or portions thereof ending
on or prior to the Closing Date and pay any taxes attributable to such income.
Subject to the next sentence (concerning Seller's right to redact certain
information), Seller will allow Purchaser an opportunity to review and comment
upon income tax returns (including any amended returns) that relate to or affect
the Company and any tax elections to the extent that they relate to the Company
by providing Purchaser within ten (10) business days prior to filing such
returns and elections, the final, prepared version of such returns and elections
if available, or if a final version is not then available, the most current
draft of such returns and elections available at such time. Notwithstanding
anything else in this paragraph to the contrary, Seller shall have the right to
redact on such returns and elections 1) any information that relates to Seller
or any affiliate of Seller that is not related to the Company, (2) any
information as to which any member of Seller's affiliated group is entitled to
assert the protection of any privilege (other than information related to the
Company), or (3) any information as to which any member of Seller's affiliated
group is subject to an obligation with a third-party to maintain the
confidentiality of such information (other than information related to the
Company). Except as set forth in Section 3.9(f) below, Seller will take no
position on such tax returns that relate to the Company that would adversely
affect the Company or the Purchaser after the Closing Date. The income of the
Company will be apportioned to the period up to and including the Closing Date
and the period after the Closing Date by closing the books of the Company as of
the end of the Closing Date.
(c) OTHER TAX RETURNS FOR TAX PERIODS ENDING ON OR BEFORE THE CLOSING
DATE. Purchaser shall prepare or cause to be prepared and file or cause to be
filed all tax returns of the Company for all periods ending on or prior to the
Closing Date which are required to be filed after the Closing Date other than
income tax returns with respect to periods for which a consolidated, unitary or
combined income tax return of Seller will include the operations of the Company.
Purchaser shall permit Seller to review and comment on each such tax returns
described in the preceding sentence prior to filing. Seller shall reimburse
Purchaser for taxes of the Company with respect to such periods ending on or
before the Closing Date within fifteen (15) days after payment by the Purchaser
or the Company of such taxes to the extent such taxes are not reflected in the
reserve for tax liability (rather than any reserve for deferred taxes
established to reflect timing differences between book and tax income) shown on
the of the face of the most recent financial statements (as opposed to in the
footnotes) of the Company provided to Purchaser.
(d) OTHER TAX RETURNS FOR TAX PERIODS BEGINNING BEFORE AND ENDING AFTER
THE CLOSING DATE. Purchaser shall prepare or cause to be prepared and file or
cause to be filed any tax returns of the Company for tax periods which begin
before the Closing Date and end after the Closing Date. Seller shall pay to
Purchaser within (15) days after the date on which taxes are paid with respect
to such periods an amount equal to the portion of such taxes which relates to
the portion of such taxable period ending on the Closing Date to the extent such
Taxes are not reflected in the reserve for Tax liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) shown on the face of the most recent financial statements
(as opposed to in the footnotes) of the Company provided to Purchaser. For the
purposes of this Section, in case of any taxes that are imposed on a periodic
basis and are payable for a period that includes (but does not end on) the
Closing Date, the portion of such tax which relates to the portion of such
period ending on the Closing Date shall (a) in the case of any
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taxes other than taxes based upon or related to income or receipts, be deemed to
be the amount of such tax for the entire period multiplied by a fraction the
numerator of which is the number of days in the portion of such period ending on
the Closing Date and the denominator of which is the number of days in the
entire period, and (b) in the case of any tax based upon or related to income or
receipts be deemed equal to the amount which would be payable if the relevant
period ended on the Closing Date. Any credits relating to a period that begins
before and ends after the Closing Date shall be taken into account as though the
relevant period ended on the Closing Date. All determinations necessary to give
effect to the foregoing allocations shall be made in a manner consistent with
prior practices of the Company.
(e) COOPERATION ON TAX AND ACCOUNTING MATTERS.
(i) Purchaser, Seller and Company shall cooperate fully, as and to
the extent reasonably requested by the other party, in connection with the
filing of tax returns pursuant to this Section and to the preparation of
financial statements in the ordinary course of business, and any audit,
litigation or other proceeding with respect to taxes or the preparation of such
financial statements. Such cooperation shall include the retention and (upon the
other party's request) the provision of records and information which are
reasonably relevant to the preparation of any tax returns or financial
statements or to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. The Company and
Seller agree (i) to retain all books and records with respect to tax matters and
financial accounting pertinent to the Company relating to any taxable period
beginning before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by Purchaser, any extensions thereof)
of the respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (ii) to give the other
party reasonable written notice prior to transferring, destroying or discarding
any such books and records and, if the other party so requests, the Company or
Seller, as the case may be, shall allow the other party to take possession of
such books and records.
(ii) Purchaser, Seller and Company further agree, upon request, to
use their best efforts to obtain any certificate or other document from any
governmental body or any other person as may be necessary to mitigate, reduce or
eliminate any tax that could be imposed (including, but not limited to, with
respect to the transactions contemplated hereby).
(iii) Seller will, upon request by Purchaser, permit Purchaser
and/or its agents, at such time as reasonably requested by them, to review copy
and use the tax returns described in paragraph (b) above and associated back-up
data, schedules and other relevant information or records, relating to the net
operating losses of Company or for any other purpose as reasonably requested by
Purchaser. Seller shall provide a copy of such tax returns within fifteen (15)
business days after filing such returns.
(iv) Notwithstanding anything in this paragraph 3.9(e) to the
contrary, Seller shall have the right to redact from any information provided to
Purchaser or any affiliate of or advisor to Purchaser under this paragraph
3.9(e): (1) any information that relates to Seller or any affiliate of Seller
that is not related to the Company, (2) any information as to which any member
of Seller's affiliated group is entitled to assert the protection of any
privilege (other than information related to the Company) or (3) any information
as to which any member of Seller's
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affiliated group is subject to an obligation with a third-party to maintain the
confidentiality of such information (other than information related to the
Company).
(f) NET OPERATING LOSS CARRYOVERS. Seller may elect for federal income
tax purposes to retain any or all net operating loss carryovers and capital loss
carryovers of the Company under Treasury Regulation Section 1.1502-20(g) and may
also elect under Treasury Regulation Section 1.1502-32(b)(4) to treat as having
expired for federal income tax purposes any or all of the Company's net
operating loss carryovers and capital loss carryovers from the period prior to
Seller's acquisition of the Company. Seller will not elect to retain any net
operating loss carryovers or capital loss carryovers of the Company under any
state, local or foreign law. If there was an ownership change of Seller under
Section 382(g) of the Code and the corresponding provisions of the relevant
states' income tax law subsequent to Seller's acquisition of the Company, and if
Seller determines, in its sole discretion, that the consolidated limitation of
Seller under Section 382 of the Code (and the corresponding provision of such
states' income tax law) as a result of such ownership change exceeds zero, then
Seller shall, if permitted under state law, elect for state income tax purposes
only (and not for federal tax purposes) to apportion to the Company a portion of
Seller's consolidated limitation under the provisions state tax law
corresponding to Section 382 of the Code. The aggregate amount of such
limitation apportioned to the Company for state tax purposes shall be equal to
the total amount of such limitation multiplied by a fraction, the numerator of
which is the fair market value of the Company as of the time of such ownership
change and the denominator of which is the total fair market value of Seller's
consolidated group as of the time of such ownership change, in each case as
determined by Seller in its sole discretion. Such limitation shall, if
necessary, be further apportioned among the relevant states in accordance with
applicable state law. Notwithstanding anything herein to the contrary, Seller
shall have sole discretion concerning whether to apportion to the Company (i)
any portion of Seller's consolidated "net unrealized built-in gain" for state
income tax, federal income tax, or any other tax purpose, and (ii) any portion
of its consolidated Section 382 limitation for federal income tax purposes.
(g) SCHEDULE OF NET OPERATING LOSSES. Seller shall provide in the
Disclosure Schedules a reasonable estimate of the amount and year of origin of
any net operating loss carryforwards allocable to the Company for federal and
state income tax purposes as of the Closing Date.
(h) AUDITS. Seller will allow Purchaser to participate in any audits of
consolidated federal and state income tax returns to the extent that such
returns relate to the Company. Seller will not settle any such audits in a
manner which would adversely affect the Purchaser or Company after the Closing
Date without the prior written consent of Purchaser, which consent shall not be
unreasonably withheld.
(i) CARRYBACKS. Seller will immediately pay to Purchaser any tax refund
(or reduction in tax liability to Seller) resulting from a carryback of a
postaquisition tax attribute of the Company in the Seller tax return, when such
refund or reduction is realized by Seller. Seller will cooperate with the
Purchaser and the Company in obtaining such refunds (or reduction in tax
liability), including through the filing of amended tax returns or refund
claims.
3.10 RESIGNATIONS. Prior to the Closing Date, Seller shall cause each member of
the Company's Board of Directors to execute and deliver a letter effectuating
his or her resignation as a director of such Board effective immediately prior
to the Closing Date.
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3.11 NO SOLICITATION. Neither the Company nor the Seller shall, and each shall
cause their respective Affiliates, officers, partners, directors, employees,
representatives and agents, not to, directly or indirectly, encourage, solicit,
initiate, engage or participate in discussions or negotiations with or provide
any information to any person or entity other than Purchaser and its Affiliates
(a "Third Party") in connection with any exchange offer, merger, consolidation,
sale of substantial or material assets, sale of securities, acquisition of
beneficial ownership of or the right to vote securities, liquidation,
dissolution or similar transaction involving the Company (such proposals,
announcements or transactions being referred to herein as "Acquisition
Proposals"). The Company and the Seller shall promptly inform Purchaser of any
written (or to the extent the Company or Seller has knowledge, any oral) inquiry
(including the terms thereof and the identity of the Third Party making such
inquiry) which any one of them may receive in respect of an Acquisition Proposal
and furnish to Purchaser a copy of any such written inquiry.
3.12 DISCLOSURE SUPPLEMENTS. From the date hereof through the Closing Date, the
Company and the Seller shall promptly deliver to Purchaser in writing any
information which, if existing, occurring or known at the date of this
Agreement, would have been required to be set forth or described in any
Disclosure Schedule hereto or which is necessary to correct any information in
any Disclosure Schedule which has been rendered inaccurate thereby.
3.13 RETURN OF RECEIVABLES. The Purchaser agrees to pay to Seller one-half of
the amount of any payments actually received on account of the receivables
referred to in Section 4.2(i) which were billed on or before March 31, 2001. The
payments by Purchaser under this Section 3.13 shall be made by delivery of a
check to Seller by the fifteenth day of each month for all such receivables paid
during the preceding month, with such amounts to be paid in U.S. dollars
(calculated applying the exchange rate as listed in the Wall Street Journal as
of the last day of the month in which the receivables were paid).
3.14 ASSIGNMENT AND ASSUMPTION OF CONTRACTS. The Purchaser shall use
commercially reasonable efforts to obtain the consent of the parties to the
contracts set forth in Schedule 2.1(p)(12) to the assignment of such contracts,
effective as of the Closing or the date of such consent, from Seller (or in the
case of the contract listed in Schedule 2.1(p)(12)(b), 24/7 Exactis) to the
Company and the Company agrees to assume all obligations under such contracts
effective as of the Closing Date. With respect to each such contract, effective
upon the earlier of the Closing and the date of receipt of the consent of the
applicable third parties, each such contract shall be assigned by the Company
(or 24/7 Exactis, as the case may be) to the Company, without the payment of any
further or additional consideration. In the event that as of the Closing any
such consent has not been obtained, then with respect to any such contract which
has not been assigned, the Seller shall cooperate in any reasonable arrangement
requested by Purchaser to provide to the Company the benefits thereof subject to
the performance by the Company or Purchaser of Seller's obligations arising or
to be performed after the Closing thereunder provided, however, that nothing
herein shall require Purchaser to close the transactions contemplated hereby in
the event the failure to obtain any such consent or assign any such contract
would constitute a failure to satisfy any of the conditions contained in Section
4.2 hereof.
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ARTICLE IV.
CONDITIONS PRECEDENT
4.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE SALE. The respective
obligation of each party to effect the Sale is subject to the satisfaction or
waiver on or prior to the Closing Date of the following conditions:
(a) NO LITIGATION. No judgment, order, decree, statute, law, ordinance,
rule or regulation, entered, enacted, promulgated, enforced or issued by any
court or other Governmental Entity of competent jurisdiction or other legal
restraint or prohibition (collectively, "Restraints") shall be in effect, and
there shall not be pending or threatened any suit, action or proceeding by any
Governmental Entity (i) preventing the consummation of the Sale or (ii)
prohibiting or limiting the ownership or operation by Seller, the Company or
Purchaser and Purchaser's subsidiaries of any material portion of the business
or assets of Seller, the Company or Purchaser and Purchaser's subsidiaries taken
as a whole, or compelling Seller, the Company or Purchaser and Purchaser's
subsidiaries to dispose of or hold separate any material portion of the business
or assets of Seller, the Company or Purchaser and Purchaser's subsidiaries taken
as a whole, as a result of the Sale or any of the other transactions
contemplated by this Agreement; PROVIDED, HOWEVER, that each of the parties
shall have used its commercially reasonable efforts to prevent the entry of any
such Restraints and to appeal as promptly as possible any such Restraints that
may be entered.
(b) Purchaser, Seller and the Escrow Agent shall have executed and
delivered the Escrow Agreement, which agreement shall become effective at the
Closing.
(c) Purchaser, Seller and the Company shall have executed and delivered
a Transition Services Agreement, substantially in the form of EXHIBIT C hereto,
which agreement shall become effective at the Closing.
4.2 CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligation of Purchaser to
effect the Sale is further subject to satisfaction or waiver of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Seller and the Company set forth in this Agreement shall be true
and correct in all material respects as of the date hereof and as of the Closing
Date, with the same effect as if made at and as of such time (except to the
extent such representations and warranties were expressly made as of an earlier
date, in which case such representations and warranties shall be true and
correct as of such earlier date). Purchaser shall have received a certificate
signed on behalf of the Company by an authorized representative of the Company
to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF SELLER AND THE COMPANY. Seller and the
Company shall have performed in all material respects all obligations required
to be performed by each of them under this Agreement at or prior to the Closing
Date. Purchaser shall have received a certificate signed on behalf of Seller by
the chief executive officer of Seller to such effect.
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(c) CERTIFIED DOCUMENTS. Seller shall have delivered to the Purchaser
copies of (i) the resolutions duly adopted by the Company's and the Seller's
board of directors authorizing the execution, delivery (or filing, as the case
may be) and performance of this Agreement, and the consummation of all other
transactions contemplated by this Agreement, and (ii) the Certificate of
Incorporation and By-laws, each as in effect at the Closing, of the Company and
the Seller, in each case certified by an appropriate officer of the Seller or
the Company, as applicable.
(d) GOOD STANDING CERTIFICATES. Purchaser shall have received (i) good
standing certificates, dated within a reasonable period prior to the Closing
Date, showing that the Company is organized in good standing in the State of
Delaware (in long form) and that it is qualified as a foreign corporation and in
good standing in the state of Colorado, and (ii) such other documents and
certificates as Purchaser may reasonably request.
(e) INDIMI AGREEMENT. The Company and Indimi, Inc. shall have entered
into a services agreement in form and substance acceptable to the Purchaser.
(f) SELLER SERVICES AGREEMENTS. The Company and Seller shall have
entered into the Services Agreements substantially in the forms set forth in
EXHIBIT D attached hereto and made a part hereof.
(g) RESIGNATIONS. The Purchaser shall have received written
resignations, effective as of the Closing Date, of the directors of the Company
and such officers of the Company as the Purchaser may have requested in writing
not less than three days prior to the Closing Date.
(h) REQUIRED CONSENTS. The Company and Seller shall have received the
consents, authorizations and approvals from governmental and non-governmental
third parties, in form reasonably acceptable to Purchaser, set forth in EXHIBIT
E hereto.
(i) EUROPEAN RECEIVABLES. The Seller shall have assigned, or caused to
be assigned, to the Company the accounts receivable identified in EXHIBIT F
hereto.
(j) CONTRACTS. The Seller shall have assigned, or cause to be assigned,
to the Company, the agreements identified on EXHIBIT G hereto.
(k) ASSIGNMENT OF DOMAIN NAMES. The Seller shall have assigned to the
Company the domain names listed on Schedule 2.1(p)(13).
4.3 CONDITIONS TO OBLIGATIONS OF SELLER AND THE COMPANY. The obligation of
Seller and the Company to effect the Sale is further subject to satisfaction or
waiver of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Purchaser set forth in this Agreement shall be true and correct in
all material respects as of the date hereof and as of the Closing Date, with the
same effect as if made at and as of such time (except to the extent such
representations and warranties were expressly made as of an earlier date, in
which case such representations and warranties shall be true and correct as of
such
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earlier date). Seller shall have received a certificate signed on behalf of
Purchaser by an authorized signatory of Purchaser to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PURCHASER. Purchaser shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date. Seller shall have
received a certificate signed on behalf of Purchaser by an authorized signatory
of Purchaser to such effect.
4.4 FRUSTRATION OF CLOSING CONDITIONS. Neither Purchaser nor Seller nor the
Company may rely on the failure of any condition set forth in Section 4.1, 4.2
or 4.3, as the case may be, to be satisfied if such failure was caused by such
party's failure to use reasonable efforts to consummate the Sale and the other
transactions contemplated by this Agreement, as required by and subject to
Section 3.2.
ARTICLE V.
TERMINATION, AMENDMENT AND WAIVER
5.1 TERMINATION. This Agreement may be terminated at any time prior to the
Closing Date:
(a) by mutual written consent of Purchaser, Seller and the Company;
(b) by either Purchaser or Seller or the Company:
(i) if the Sale shall not have been consummated by June 15, 2001;
PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant to this
Section 5.1(b)(i) shall not be available to any party whose failure to perform
any of its obligations under this Agreement results in the failure of the Sale
to be consummated by such time; or
(ii) if any Restraint having any of the effects set forth in Section
4.1(a) shall be in effect and shall have become final and nonappealable;
PROVIDED that the party seeking to terminate this Agreement pursuant to this
Section 5.1(b)(ii) shall have used commercially reasonable efforts to prevent
the entry of and to remove such Restraint;
(c) by Purchaser, if Seller and/or the Company shall have breached or
failed to perform in any material respect any of its representations,
warranties, covenants or other agreements contained in this Agreement, which
breach or failure to perform (A) would give rise to the failure of a condition
set forth in Section 4.1 or 4.2 and (B) is incapable of being or has not been
cured by Seller within 30 calendar days after giving written notice to Seller of
such breach or failure to perform; or
(d) by Seller or the Company, if Purchaser shall have breached or failed
to perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform (A) would give rise to the failure of a condition set forth
in Section 4.1 or 4.3, and (B) is incapable of being or has not been cured by
Purchaser within 30 calendar days after giving written notice to Purchaser of
such breach or failure to perform.
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5.2 EFFECT OF TERMINATION. In the event of termination of this Agreement by
either Seller or Purchaser as provided in Section 5.1(a) or (b), this Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of Purchaser, Seller or the Company, or their respective
officers, directors and stockholders, other than the provisions of 2.1(n),
Section 3.1, Section 3.6, Section 3.7, this Section 5.2 and Article VIII, which
provisions survive such termination, and except to the extent that such
termination results from the willful and material breach by a party of any of
its representations, warranties, covenants or agreements set forth in this
Agreement.
5.3 AMENDMENT. This Agreement may be amended by the parties at any time prior to
the Closing Date by an instrument in writing signed on behalf of each of the
parties.
5.4 EXTENSION; WAIVER. At any time prior to the Closing Date, a party may (a)
extend the time for the performance of any of the obligations or other acts of
the other parties, (b) waive any inaccuracies in the representations and
warranties of the other parties contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the proviso of Section
5.3, waive compliance by the other party with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.
5.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. A termination of
this Agreement pursuant to Section 5.1, an amendment of this Agreement pursuant
to Section 5.3 or an extension or waiver pursuant to Section 5.4 shall, in order
to be effective, require, in the case of Purchaser, Seller or the Company,
action by its Board of Directors or, with respect to any amendment to this
Agreement, the duly authorized committee of its Board of Directors to the extent
permitted by law.
ARTICLE VI.
RESTRICTIVE COVENANTS.
In consideration of the Purchase Price, Seller covenants with the Company
as follows:
6.1 RESTRICTIONS. Seller acknowledges that Purchaser will be paying valuable
consideration for the Company, and that a significant portion of that value can
be attributable to the Company's customer and supplier lists, distribution
records, know-how, goodwill and other proprietary business information and trade
secrets of the Company. The use by Seller of these relationships and such
confidential information in a business or activity which competes with the
Company would provide the competing business with an unfair advantage over the
Company. Accordingly, subject to the other provisions of this Article VI,
Purchaser wishes to restrict Seller's use of such information and Seller's
ability to compete with the Company. Seller agrees, for the Purchase Price, to
comply from and after the Closing Date with the terms of this Article, all of
which are reasonable and necessary to protect the confidential business
information and trade secrets of the Company and to prevent any unfair advantage
from being conferred upon a competing business of the Company, as set forth
below.
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6.2 NON-COMPETITION. For a period of two years from and after the Closing Date,
Seller agrees that it shall not, directly or indirectly, either alone or as a
stockholder, partner, consultant, owner, agent, creditor, co-venturer of any
other Person, or in any other capacity, directly or indirectly, engage in the
Business (as defined below) anywhere in the world; provided, that this Section
6.2 shall not apply to (i) any entity that acquires an equity interest in the
Seller, so long as such entity does not engage in the Business through the
Seller as a standalone entity; provided, however, that this Section 6.2 shall
not prohibit such entity from merging the Seller's business with and into the
business of such entity; and (ii) any entity engaged in the Business, of which,
after the Closing Date, the Seller acquires an equity interest, provided that
less than twenty percent (20%) of the gross revenue of such entity during the
twelve month period preceding the Seller's acquisition of such entity is derived
from the Business; and provided further that nothing herein shall prohibit
Seller from being an owner of less than five percent (5%) of the outstanding
stock of any class of a corporation which is publicly traded, so long as neither
Seller nor any of its affiliates actively participates in the Business of such
corporation. For the purposes hereof, the "Business" shall mean the business of
e-mail distribution on a service bureau or hosted basis.
6.3 NON INTERFERENCE WITH BUSINESS RELATIONS. For a period of two years after
the Closing Date, Seller shall not, directly or indirectly, (i) solicit, induce
or attempt to solicit or induce any employee (including without limitation any
Company Employee), customer, supplier, licensee or other business relation of
the Company to cease doing business with the Company, or in any way interfere
with any such business relation of Purchaser or its Affiliates, (ii) sell to or
solicit sales of services constituting part of the Business to any customer or
account which was a customer or account of the Company as of the Closing Date or
within the one-year period prior thereto, or (iii) (other than through, or as a
result of, general, non targeted advertisements) solicit, hire, attempt to
solicit or hire, or participate in any attempt to solicit or hire any Company
Employee without the consent of the Chief Executive Officer of the Company
granted in writing at any time after the Closing Date.
6.4 CONFIDENTIAL INFORMATION. Seller recognizes that the Purchaser's business
interests require the fullest practical protection and confidential treatment of
all Company information not generally known within the relevant trade group or
by the public, including all documents, writings, memoranda, business plans,
illustrations, designs, plans, processes, programs, inventions, computer
software, reports, sources of supply, customer lists, supplier lists, trade
secrets and all other valuable or unique information and techniques acquired,
developed or used by the Company relating to its businesses, operations,
employees and customers (hereinafter collectively termed "Protected
Information"). Seller expressly acknowledges and agrees that Protected
Information constitutes trade secrets and confidential and proprietary business
information of Purchaser. Protected Information shall not include information
which is or becomes part of the public domain through no breach of this
Agreement by any Seller. Seller acknowledges that Protected Information is
essential to the success of the Company's Business, and it is the policy of
Purchaser to maintain as secret and confidential Protected Information which
gives Purchaser a competitive advantage over those who do not know the Protected
Information and is expressly and implicitly protected by Purchaser from
unauthorized disclosure. Accordingly, Seller agrees to hold, and cause its
officers, directors, employees and agents to hold, such Protected Information in
a fiduciary capacity, to keep secret and to treat confidentially and not to, and
not to permit any other Person to, directly or indirectly, appropriate, divulge,
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disclose or otherwise disseminate to any other Person nor use in any manner for
any Seller or any other Person's purposes or benefit any Protected Information,
and not to use or aid others in using any such Protected Information in
competition with the Company except to the extent that disclosure is required by
law; provided, however, that Seller shall provide Purchaser with notice as far
in advance of any required disclosure as is practicable in order for Purchaser
to obtain an order or other assurance that any information required to be
disclosed will be treated as Protected Information and Seller shall use all
reasonable efforts to cooperate with Purchaser in connection therewith and in
furtherance thereof. This obligation of non-disclosure of information shall
continue to exist for so long as such information remains Protected Information.
6.5 SCOPE. If, at the time of enforcement of this Article VI, a court shall hold
that the duration, scope or area restrictions stated herein are unreasonable
under circumstances then existing, the parties agree that the maximum duration,
scope or area reasonable under such circumstances shall be substituted for the
stated duration, scope or area.
6.6 REMEDIES. Seller agrees that if it shall commit or threaten to commit a
breach of any of the covenants contained in this Article VI, then Purchaser
shall have the right to obtain all appropriate injunctive and other equitable
remedies therefor, in addition to any other rights and remedies that may be
available at law, it being acknowledged and agreed that any such breach would
cause irreparable injury to Purchaser and that money damages would not provide
an adequate remedy therefor.
ARTICLE VII.
INDEMNIFICATION
7.1 SURVIVAL AND REMEDIES. All representations and warranties of each of the
parties hereto contained in this Agreement and the schedules hereto, including
all statements contained in any bring-down, Closing or similar certificate
delivered pursuant hereto, shall be deemed to be representations and warranties
within the meaning of this Section 7.1, as the case may be, and shall survive
the Closing until the fifteen (15) month anniversary thereof, except in the case
of representations and warranties set forth in Sections 2.1(c), 2.1(e), 2.1(f)
(i), 2.1(j), 2.1(k), 2.1(m) and 2.2(b)(i), as to which claims may be made at any
time prior to the expiration of the applicable statute of limitations with
respect thereto (regardless of whether the facts giving rise to such claim are
also the subject of any expired representation or warranty) (the representations
and warranties included in this exception are referred to as the "Unlimited
Representations"). Notwithstanding anything to the contrary in the previous
sentence, any claim for indemnification relating to a breach of any such
representation or warranty asserted in a writing (stating the nature of the
claim, the identity of the underlying claimants, if applicable, and an estimate
of the amount of the claim, if known, and the basis for the claim) on or before
the expiration of the relevant time period shall survive, and the
representations and warranties referenced in such claim shall survive for
purposes of such claim, until resolved or judicially determined. All of the
covenants and agreements of each of the parties hereto contained in this
Agreement and the schedules hereto or in any bring-down, Closing or similar
certificate delivered pursuant to this Agreement shall survive the Closing, and
claims for indemnification relating to a breach of any such covenant or
agreement must be made before the fifteenth (15th) month anniversary of the
Closing Date other than claims based on Article VI which may be made at any
time. In the event
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of a breach of any of such representations, warranties, covenants and
agreements, the party to whom such representation, warranty, covenant or
agreement has been made shall have all rights and remedies for such breach
available to it under the provisions of this Agreement, or otherwise, whether of
law or in equity, regardless of any disclosure to, or investigation made by or
on behalf of such party on or before the Closing Date, other than disclosures
contained in the Disclosure Schedule. Claims for indemnification under this
Article VII are the sole and exclusive remedy of the parties in connection with
this Agreement for any and all loss, damage, expense (including court costs,
amounts paid in settlement, judgments, attorneys' fees and other expenses for
investigating and defending), claim, deficiency, and liability, except with
respect to claims (i) pursuant to Article VI hereto, (ii) based upon any fraud
committed by any party hereto in connection herewith and/or (iii) based upon any
intentional breach by any party hereto of its obligations hereunder.
7.2 INDEMNIFICATION OF PURCHASER BY THE SELLER.
(a) Subject to Section 7.2(b), the Company and the Seller, jointly and
severally in the event the Closing hereunder does not occur, or the Seller,
alone, in the event the Closing does occur shall, to the extent not covered and
promptly paid by applicable insurance, indemnify, defend and hold harmless
Purchaser and its past, present and future directors, officers, employees,
agents, subsidiaries and Affiliates (the "Purchaser Indemnified Parties") for
any and all loss, damage, expense (including court costs, amounts paid in
settlement, judgments, reasonable attorneys' fees and other reasonable expenses
for investigating and defending), claim, deficiency, liability or obligation
("Liabilities") related to, resulting from, caused by or arising from: (i) any
inaccuracy in or breach of any representation or warranty made by the Company
and/or the Seller herein or in any bring-down, Closing or similar certificate
delivered by the Company or Seller pursuant hereto, (ii) any failure to perform
or breach by the Seller (or, if prior to the Closing, the Company) of any
covenant or agreement made by the Seller herein which is taken in bad faith or
is the result of recklessness, (iii) the employment, engagement or retention by
the Seller (or, if prior to Closing, the Company) of any person other than the
Company Employees, except as provided for in the Transition Services Agreement,
(iv) any Company Benefit Plan in effect prior to Closing (except as provided in
the Transition Services Agreement), or (iv) benefits payable under any COBRA Law
to any Company Employee resulting from the reassignment of any such Company
Employee from Seller to the Company or the Purchaser at the Closing
(collectively, the "Damages").
(b) Notwithstanding anything to the contrary contained in Section
7.2(a), however, no indemnification shall be required to be made under Section
7.2 (a)(i) (except as a result of a breach of any Unlimited Representations or
of Section 2.2(u)) except to the extent that the aggregate amount of all Damages
under Section 7.2(a)(i) exceeds $300,000 (the "Threshold Amount").
Notwithstanding anything herein, the maximum liability of the Seller on account
of Section 7.2(a)(i) (excluding for all purposes any liability thereunder on
account of any Unlimited Representations) shall not exceed $6,000,000.
(c) After the Closing, Purchaser shall satisfy any claim for Damages
under this Section 7.2 by withdrawing from the Escrow, in accordance with the
terms of the Escrow Agreement,; PROVIDED, HOWEVER, to the extent the claims for
such Damages cannot be satisfied in full from the Escrow, Purchaser shall be
liable for the remaining portion of such Damages.
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Subject to and in accordance with the Escrow Agreement, the balance, if any, of
the Escrow remaining on the Distribution Date (as defined in the Escrow
Agreement) shall be distributed to the Seller.
(d) The foregoing in no way shall limit any remedy provided for herein
or at law or equity resulting from a breach of any obligation under Article VII
hereunder.
7.3 INDEMNIFICATION BY PURCHASER. Purchaser shall, to the extent not covered and
promptly paid by applicable insurance, indemnify, defend and hold harmless
Seller and its past, present and future directors, officers, employees, agents,
subsidiaries and Affiliates (the "Seller Indemnified Parties"), for any and all
Liabilities related to, resulting from, caused by or arising from: (a) any
inaccuracy or breach of any representation or warranty made by the Purchaser
herein or in any bring-down, Closing or similar certificate delivered by
Purchaser pursuant hereto, (b) any failure to perform or breach of any covenant
or agreement made by the Purchaser herein which is taken in bad faith or is the
result of recklessness, and (c) the employment of any Company Employee after the
Closing (other than any matters identified in Section 7.2(a)(iv) or (v)).
Notwithstanding anything to the contrary contained in this Section 7.3, no
indemnification shall be required to be made under this Section 7.3(a) (except
as a result of a breach of any Unlimited Representations) except to the extent
by which the aggregate amount of all damages under Section 7.3(a)(except as a
result of a breach of any Unlimited Representations) exceeds the Threshold
Amount.
7.4 INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS AGAINST INDEMNIFIED
PARTIES.
(a) In the event that subsequent to the Closing any person or entity
("Indemnified Party") asserts a claim for indemnification or receives notice of
the assertion of any claim or of the commencement of any action or proceeding by
any entity which is not a party to this Agreement (including any governmental
authority) (a "Third Party Claim") against such Indemnified Party, with respect
to which a party (an "Indemnifying Party") is required to provide
indemnification under this Agreement, the Indemnified Party shall give written
notice together with a statement of any available information regarding such
claim (the "Notice of Claim") to the Indemnifying Party promptly after learning
of such claim. Provided that the Indemnifying Party (i) agrees in writing to its
indemnity obligations hereunder for all damages or claims in connection with
such matter and (ii) has sufficient financial resources to pay any reasonably
possible damages, expenses or other costs in connection therewith (as determined
in the reasonable discretion of the Indemnified Party), the Indemnifying Party
shall have the right, upon written notice to the Indemnified Party (the "Defense
Notice") promptly after receipt from the Indemnified Party of the Notice of
Claim, to conduct at its expense the defense against such claim in its own name,
or, if necessary, in the name of the Indemnified Party; PROVIDED, HOWEVER, that
the Indemnified Party shall have the right to approve the defense counsel
representing the Indemnifying Party, which approval shall not be unreasonably
withheld. The Indemnifying Party shall not settle or compromise any Third Party
Claim for which it has assumed the defense pursuant to this Section 7.4(a)
without the Indemnified Party's prior written consent thereto, unless the terms
of such settlement or compromise discharge and release the Indemnified Party
from all Liabilities and obligations thereunder and do not involve a remedy
other than the payment of money by the Indemnifying Party.
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(b) In the event that the Indemnifying Party shall fail to give the
Defense Notice within the time and as prescribed by Section 7.4(a), or if such
claim involves a claim for injunctive or other equitable relief, then in any
such event the Indemnified Party shall have the right to conduct such defense,
at the Indemnifying Party's expense, in good faith with counsel reasonably
acceptable to the Indemnifying Party, but the Indemnified Party shall be
prohibited from compromising or settling the claim without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld. In the event that the Indemnified Party conducts the defense pursuant
to this Section 7.4(b), the Indemnifying Party will, at its expense, make
available to the Indemnified Party such assistance and materials as the
Indemnified Party may reasonably request. The Indemnifying Party may participate
in such defense at its own expense.
(c) In the event that the Indemnifying Party does deliver a Defense
Notice and thereby elects to conduct the defense of the subject Third Party
Claim, the Indemnified Party will cooperate with and make available to the
Indemnifying Party such assistance and materials as it may reasonably request,
all at the expense of the Indemnifying Party. Regardless of which Party defends
such claim, the other Party shall have the right at its expense to participate
in the defense assisted by counsel of its own choosing. Notwithstanding the
foregoing and in the event that the Indemnifying Party delivers a Defense Notice
and thereby elects to conduct the defense of the subject Third Party Claim but
does not proceed diligently to defend or settle such Third Party Claim within a
reasonable time after its receipt of notice of the assertion or commencement
thereof, then (a) the Indemnified Party shall have the right, but not the
obligation, to undertake at the expense of the Indemnifying Party the defense or
settlement of such Third Party Claim for the account and at the risk of the
Indemnifying Party, and (b) the Indemnifying Party shall be bound by any defense
or settlement that the Indemnified Party may make as to such Third Party Claim.
No delivery of a Defense Notice by an Indemnifying Party in connection with a
Third Party Claim shall prejudice any right of such Indemnifying Party to
challenge whether the Indemnified Party is entitled to indemnification hereunder
with respect to such Third Party Claim.
(d) Any judgment entered or settlement agreed upon in the manner
provided herein shall be binding upon the Indemnifying Party, and shall be
conclusively deemed to be an obligation with respect to which the Indemnified
Party is entitled to prompt indemnification hereunder, subject to the
Indemnifying Party's right to appeal an appealable judgment or order.
7.5 FAILURE TO GIVE TIMELY NOTICE. A failure by an Indemnified Party to give
timely, complete or accurate notice as provided in this Article VII will not
affect the rights or obligations of any party hereunder except and only to the
extent that, as a result of such failure, any party entitled to receive such was
actually damaged as a result of such failure to give timely notice.
Notwithstanding the foregoing, the parties hereby acknowledge and agree that
nothing in this Section 7.5 shall be deemed to extend any of the time periods
set forth in Section 7.1 with respect to the survival of representations and
warranties.
7.6 INSURANCE. If an Indemnified Party both collects proceeds from any insurance
company and receives a payment from the Indemnifying Party hereunder, and the
sum of such proceeds and payment is in excess of the damages or losses with
respect to the matter that is the subject of
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the indemnity, then the Indemnified Party shall promptly refund to the
Indemnifying Party the amount of such excess.
ARTICLE VIII.
GENERAL PROVISIONS
8.1 NOTICES. All notices, requests, claims, demands and other communications
under this Agreement shall be in writing and shall be deemed given if delivered
personally, telecopied (which is confirmed) or sent by overnight courier
(providing proof of delivery) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to Purchaser, to
Direct Marketing Technologies, Inc.
c/o Experian
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxx Xxxxxx
with a copy to:
Experian
000 Xxxx Xxxxxxx Xxxx
00xx Xxxxx
Xxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: General Counsel
And with a copy to:
Xxxxxxxxxxxx Xxxx and Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
(000) 000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx
(b) if to Seller, to
24/7 Media, Inc.
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxx X. Xxxxx
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with a copy to:
Xxxxxx Godward LLP
000 Xxxxxxxxxxx Xxxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxx C. T. Linfield
(c) if to Company, to
24/7 Media, Inc.
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxx X. Xxxxx
with a copy to:
Xxxxxx Godward LLP
000 Xxxxxxxxxxx Xxxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxx C. T. Linfield
8.2 DEFINITIONS. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person, where "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a person, whether through the ownership
of voting securities, by contract, as trustee or executor, or otherwise;
(b) "knowledge" of any person which is not an individual means the
actual knowledge of such person's executive officers;
(c) "material adverse change" or "material adverse effect" means, when
used in connection with Seller, Purchaser or the Company, any change, effect,
event, occurrence, condition or development or state of facts that is materially
adverse to the business (viewed in its entirety), results of operations or
financial condition of such party and its subsidiaries taken as a whole, other
than any change, effect, event, occurrence, condition, development or state of
facts (i) relating to the economy or securities markets in general, (ii)
relating to the industries in which such party operates in general, or (iii)
resulting from this Agreement or the transactions contemplated hereby or the
announcement thereof;
(d) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity; and
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(e) a "subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person.
8.3 INTERPRETATION. When a reference is made in this Agreement to an Article,
Section or Exhibit, such reference shall be to an Article or Section of, or an
Exhibit to, this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". The words
"hereof", "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. All terms defined in this Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such term. Any agreement, instrument or statute defined or referred
to herein or in any agreement or instrument that is referred to herein means
such agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments incorporated
therein. References to a person are also to its permitted successors and
assigns. Any representation or warranty which is qualified by the Disclosure
Schedules shall only be so qualified to the extent the applicable portion of the
Disclosure Schedules expressly refer to the representation or warranty so
qualified or to the extent the exception is sufficiently clear and specific on
its face to communicate the specific representations and warranties which it
qualifies and the scope of such qualification. In the case of the executory
portion of any Contract referred to in the Disclosure Schedules, reference to
such Contract shall be deemed disclosure of the nature and amount of the
liabilities thereunder only if (a) Purchaser has received a complete and
accurate copy of such Contract (or a complete and accurate summary thereof, if
an oral Contract) and (b) such liability does not involve any breach or default
under such Contract, unless such breach or default is accurately and fully
disclosed in the Disclosure Schedules.
8.4 COUNTERPARTS. This Agreement may be executed via facsimile or in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
8.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement (including
the documents and instruments referred to herein), the Escrow Agreement and the
Seller Services Agreement, (a) constitute the entire agreement, and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter of this Agreement and (b) except for
the provisions of Section 3.5, are not intended to confer upon any person other
than the parties any rights or remedies.
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8.6 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.
8.7 ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties hereto without the prior
written consent of the other parties, provided that notwithstanding the
foregoing, Purchaser may assign this Agreement to any of its affiliates without
the need for any consent by the Company or Seller. Any assignment in violation
of the preceding sentence shall be void. Subject to the preceding two sentences,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.
8.8 ENFORCEMENT. Each of the parties hereto agrees that irreparable damage would
occur and that the parties would not have any adequate remedy at law in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any federal court located in the
State of New York or in Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (a) consents to submit itself to the personal jurisdiction
of any federal court located in New York County in the State of New York or any
New York state court in New York County in the event any dispute arises out of
this Agreement or any of the transactions contemplated by this Agreement, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court and (c) agrees that it
will not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal court sitting
in New York County in the State of New York or a New York state court located in
New York County.
8.9 SEVERABILITY. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
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IN WITNESS WHEREOF, Purchaser, Seller and Company have caused this Agreement to
be signed by their respective officers thereunto duly authorized, all as of the
date first written above.
PURCHASER:
DIRECT MARKETING TECHNOLOGIES, INC.
By:
--------------------------------
Name:
Title:
SELLER:
24/7 MEDIA, INC.
By:
--------------------------------
Name:
Title:
COMPANY:
XXXXXXX.XXX, INC.
By:
--------------------------------
Name:
Title:
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EXHIBITS
EXHIBIT A--ESCROW AGREEMENT
EXHIBIT B--TRANSFERRED EMPLOYEES
EXHIBIT C--TRANSITION SERVICES AGREEMENT
EXHIBIT D--SELLER SERVICES AGREEMENTS
EXHIBIT E--REQUIRED CONSENTS
EXHIBIT F--EUROPEAN RECEIVABLES
EXHIBIT G--CONTRACTS
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EXHIBIT A--ESCROW AGREEMENT
-40-
EXHIBIT B--TRANSFERRED EMPLOYEES
-41-
EXHIBIT C--TRANSITION SERVICES AGREEMENT
-42-
EXHIBIT D--SELLER SERVICES AGREEMENTS
-43-
EXHIBIT E--REQUIRED CONSENTS
1. The Prudential Insurance Company of America
-44-
EXHIBIT F--EUROPEAN RECEIVABLES
Any and all accounts receivable, trade receivables, notes receivables and other
receivables of the Business from the following customers of the Business:
BBC
Capital One
xxxxxxxx.xxx
Economist
Xxx.xxx
Financial Times
Freeserve
Genie Internet
Xxxxxxxxxx.xxx
ModemMedia
XxXxxxxx.xxx
QXL
Xxxxxx.xxx
Tempest Online Marketing
XxxxXxx.xxx
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EXHIBIT G--CONTRACTS
1. Lease Agreement between The Prudential Insurance Company of America and
Xxxxxxx.xxx, Inc., dated January 19, 2000, as amended on April 7, 2001 and
as further amended on June 27, 2000.
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