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EXHIBIT 10.2
EXECUTION COPY
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT ("Agreement") dated as of June 18, 1999,
between Blockstackers, Inc., a Michigan corporation ("Seller") and Andover
Advanced Technologies, Inc., a Massachusetts corporation ("Purchaser"). Seller
and Purchaser are sometimes individually or collectively referred to as "Party"
or "Parties."
WHEREAS, Seller desires to sell and transfer to Purchaser, and
Purchaser desires to acquire from Seller, subject to the terms and conditions of
this Agreement, the Acquired Assets (as defined herein).
NOW, THEREFORE, in consideration of the promises and the mutual
covenants set forth in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
"Acquired Assets" means the assets described in EXHIBIT A, and all
proprietary rights therein, including all patent, copyright and trade secret
rights, all patent applications, if any, relating thereto, and all technical
information, documents, data, content, designs, prototypes and software
necessary for the operation of the Website. The Acquired Assets shall not
include the Excluded Assets.
"Assignment and Assumption Agreement" means an Assignment and
Assumption Agreement, dated as of the Closing Date, in a form to be mutually
acceptable to Purchaser and Seller.
"Xxxx of Sale" means a Xxxx of Sale, dated as of the Closing Date, in a
form to be mutually acceptable to Purchaser and Seller.
"Closing" and "Closing Date" are defined in Section 3.1.
"Court Order" means any judgement, decree, injunction, order, writ,
award, determination or ruling of any Governmental Entity or arbitrator.
"Excluded Assets" is defined in Section 2.5.
"Governmental Entity" means any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign.
"Governmental Rule" is defined in Section 4.3.
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"Intellectual Property" means any and all patents, patent applications,
copyrights, trademarks, applications for trademark registration, service marks,
applications for service xxxx registration, proprietary information and data,
source code, confidential information and data, trade secrets, all other
recognizable intellectual property rights, inventions, creations, technical
documentation, protectable subject matter, and all claims and rights to the
foregoing.
"Intellectual Property Rights" is defined in Section 4.10(a).
"Lien" means any mortgage, claim, charge, lien, security interest,
easement, right of way, pledge, restriction or other encumbrance.
"Person" means any individual, corporation, partnership, joint venture,
trust, business, association or other entity.
"Retained Liabilities" is defined in Section 2.4.
"Taxes" means all Federal, state, local and foreign taxes, charges,
fees, levies and other assessments, including any income, alternative or add-on
minimum tax, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, withholding, payroll, employment, excise, stamp, property,
environmental or other tax, together with all interest, penalties and additions
with respect thereto.
"Third Party Intellectual Property" means any and all software (in any
form), databases or other Intellectual Property owned by a third party, licensed
to Seller and utilized in the business of the Seller, including any software
used in or included in the use of the Acquired Assets.
"Transferred Contracts" means the contracts listed on Schedule 4.4, all
of which are to be assigned by Seller to Purchaser.
"Website" mean the internet Website known as Slashdot, located at the
URL "xxx.xxxxxxxx.xxx."
ARTICLE II
PURCHASE AND SALE OF ACQUIRED ASSETS
2.1 PURCHASE AND SALE. Subject to the terms and conditions of this
Agreement, Seller shall sell, assign, transfer, convey and deliver to Purchaser,
effective as of the Closing (as defined below), and Purchaser shall purchase,
acquire and assume, as of the Closing, all of Seller's right, title and interest
in, to and under the Acquired Assets.
2.2 PURCHASE PRICE. Upon the terms and subject to the conditions
contained in this Agreement, and in consideration of the sale, assignment,
transfer and delivery of the Acquired Assets, Purchaser will deliver to the
Company the consideration in the amounts and at the times specified in SCHEDULE
1 attached hereto and incorporated herein (the "Purchase Price").
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2.3 DELIVERY OF ACQUIRED ASSETS. (a) At Closing, Seller shall\
deliver to Purchaser: (i) a master copy of all content and any software (in both
source and object code form) that is included among the Acquired Assets in
electronic form; and (ii) all system and user documentation in Seller's
possession pertaining to the Acquired Assets, including without limitation
design or development specifications. The Seller shall not have any obligation
to deliver the Excluded Assets to the Purchaser.
(b) The Acquired Assets shall specifically include, and Seller
shall deliver to Purchaser at or prior to Closing, a list of all material
required to run the Website. To the extent that such information has not been
reduced to writing, the Seller will make the necessary persons available to
provide such information to Purchaser at or prior to Closing.
(c) Notwithstanding anything to the contrary in this Agreement, to
the extent that the assignment hereunder of any of the Acquired Assets shall
require the consent of any other party (or in the event that any of the same
shall be non-assignable), neither this Agreement nor any action taken pursuant
to its provisions shall constitute an assignment or an agreement to assign if
such assignment or attempted assignment would constitute a breach thereof or
result in the loss or diminution thereof; provided, however, that in each such
case, Seller shall use all reasonable efforts to obtain the consent of such
other party to an assignment to Purchaser. If such consent is not obtained prior
to the Closing, (i) Purchaser shall not be obligated to close the transactions
contemplated hereby unless and until such consent or assignment is obtained,
although Purchaser may waive such requirement (it being agreed that this clause
(i) shall only apply to the agreements by and between the Seller and each of CMP
Media, Inc., Red Hat Software, Inc. and Xxx Xxxxx Xxxx), (ii) if Purchaser
elects to consummate the Closing despite the failure to obtain such consent or
assignment, Seller shall continue to use all reasonable efforts to obtain such
consent after the Closing and, until such consent is obtained, to cooperate with
Purchaser to provide Purchaser with the same economic benefits as if such
consent or assignment had been obtained.
2.4 ASSUMED OBLIGATIONS. At the Closing, the Purchaser will assume
those liabilities of the Seller (the "Assumed Liabilities") specifically set
forth on EXHIBIT 2.4 attached hereto, as well as those liabilities which arise
from the ownership, use and operation of the Acquired Assets, including the
Website, after the Closing. The Seller expressly understands and agrees that,
except for the Assumed Liabilities and the obligations under this Agreement, the
Purchaser has not agreed to pay, will not be required to assume and will have no
liability or obligation for any liabilities of the Seller, whether known or
unknown and whether existing as of the Closing or arising thereafter, which
liabilities will remain the sole responsibility of, and will be satisfied by,
the Seller (the "Retained Liabilities").
2.5 EXCLUDED ASSETS. Purchaser acknowledges that Seller has other
property which it is not selling or assigning to Purchaser at the Closing (the
"Excluded Assets"). For purposes of this Agreement, the term "Excluded Assets"
means the "Ad-Fu adserver" and all other assets set forth on EXHIBIT D.
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ARTICLE III
THE CLOSING
3.1 CLOSING DATE. The consummation of the sale and transfer of the
Acquired Assets as contemplated in this Agreement shall take place at the
offices of Xxxxxxxx, Xxxxxxx & Xxxxxxx, A Professional Corporation located at
000 Xxxxxxx Xxxxxx, Xxxxxx, XX 00000 on June 28, 1999, at 10:00 a.m., or at such
other time, date and place as shall be fixed by agreement among the Parties (the
"Closing," such date of the Closing being the "Closing Date").
3.2 EXECUTION AND DELIVERY OF DOCUMENTS BY SELLER. At the Closing,
Seller shall execute and deliver to Purchaser: (a) the Xxxx of Sale; (b) the
Assignment and Assumption Agreement; and (c) such other documents as Purchaser
or its counsel may reasonably request to demonstrate compliance with the
provisions set forth in this Agreement.
3.3 EXECUTION AND DELIVERY OF DOCUMENTS BY PURCHASER. At the
Closing, Purchaser shall: (a) execute and deliver to Seller the Xxxx of Sale;
(b) the Assignment and Assumption Agreement; (c) deliver the Purchase Price as
provided on SCHEDULE 1 attached hereto; and (d) shall execute and deliver such
other documents as Seller or its counsel may reasonably request to demonstrate
compliance with the provisions set forth in this Agreement
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants, except as set forth on the
Disclosure Schedules hereto (it being agreed that any matter disclosed on any
schedule is deemed disclosed for all schedules for which it is reasonably
apparent that such information is relevant), as of the date hereof to and for
the benefit of Purchaser as follows:
4.1 ORGANIZATION, STANDING AND POWER. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Michigan, and has the requisite power and authority to own, operate and transfer
its properties. Seller is qualified or registered to do business and is in good
standing in each state in which property is owned or operated if registration or
qualification is required.
4.2 AUTHORITY AND ENFORCEABILITY OF AGREEMENT. Seller has the full
corporate power and authority to enter into and execute this Agreement and any
ancillary agreements required by this Agreement and to carry out the
transactions contemplated hereby in accordance with its terms. Except for the
Assumed Liabilities, Seller is not a party to any outstanding contracts,
demands, commitments or other agreements or arrangements under which Seller is
or may become obligated to sell, transfer or assign any of the Acquired Assets
to any party other than to Purchaser, nor has Seller made any representations or
entered into any contracts, commitments or other agreements with third parties
which purport to so bind or obligate Purchaser. The execution, delivery and
performance of this Agreement and all of the transactions required hereunder to
be performed by Seller have been duly and validly authorized and approved by all
necessary corporate and stockholder action. This Agreement has been duly and
validly executed and delivered on behalf of Seller by duly authorized officers.
This Agreement constitutes the
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valid and legally binding obligation, subject to general equity principles, of
Seller, enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting the
rights of creditors generally.
4.3 NO VIOLATION. Except as set forth on Schedule 4.3, the
execution, delivery and performance of this Agreement by Seller does not, and
the consummation of the transactions contemplated hereby and the compliance with
the terms hereof will not: (a) violate any law, judgement, order, decree,
statute, ordinance, rule or regulation of any governmental subdivision or agency
applicable to it ("Governmental Rule"); (b) conflict with any provision of
Seller's Articles of Incorporation or Bylaws; or (c) require any consent,
approval, order or authorization of, or the registration, declaration or filing
with, any Governmental Entity or other entity or Person.
4.4 TRANSFERRED CONTRACTS. Schedule 4.4 sets forth the contracts
necessary for the operation of the Website as presently operated (the
"Transferred Contracts"). The Seller intends to assign all of the Transferred
Contracts to the Purchaser at the Closing.
4.5 INTENTIONALLY OMITTED.
4.6. INTENTIONALLY OMITTED.
4.7 ABSENCE OF CHANGES. Except as set forth on Schedule 4.7
attached hereto, since December 31, 1998, the Seller has owned and operated the
Acquired Assets in the ordinary course of business and consistent with past
practice. Without limiting the generality of the foregoing, subject to the
foregoing exceptions:
(a) the Seller has not suffered any material loss,
damage, destruction of property or Acquired Assets or other casualty to
property or Acquired Assets (whether or not covered by insurance); and
(b) the Seller has not suffered any loss of officers,
directors, partners, employees, dealers, distributors, independent
contractors, customers or suppliers which had or may reasonably be
expected to result in a material adverse effect on the Seller.
4.8 TITLE TO AND CONDITION OF ACQUIRED ASSETS. Except as set forth
on Schedule 4.8 attached hereto, the Seller has good and marketable title to all
of the Acquired Assets, free and clear of any Lien. The Seller has full right
and power to, and at the Closing will, deliver to the Purchaser good title to
all of the Acquired Assets, free and clear of any Liens, other than those Liens
which are Assumed Liabilities. The tangible Acquired Assets are in good
operating condition and repair, normal wear and tear excepted, and fit for the
intended purposes thereof, and no material maintenance, replacement or repair
has been deferred or neglected.
4.9 LITIGATION. There are no material actions, suits, claims,
demands or proceedings pending or, to the knowledge of Seller, threatened
against or by Seller relating directly to the Acquired Assets in any court or
before any arbitrator, private alternative dispute resolution system or
governmental agency, nor has Seller been charged with, nor, to the knowledge of
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Seller, is it under investigation with respect to any charge concerning any
violation of any provision of any federal, state or other applicable law, rule,
regulation, ordinance, order, decree or governmental restriction with respect to
the Acquired Assets. There are no unsatisfied judgments against Seller or any
consent decrees, writs, restraining orders, or preliminary or permanent
injunctions to which any of the Acquired Assets are subject.
4.10 INTELLECTUAL PROPERTY RIGHTS.
(a) Schedule 4.10 contains a listing of all (i) patents, patent
applications (collectively the "Patents"), (ii) registered copyrights (the
"Copyrights"), (iii) tradenames, registered and common law trademarks, trademark
applications (the "Trademarks"), (iv) service marks, service xxxx applications
(the "Service Marks"), and (v) computer programs and other computer software,
trade secrets, plans and specifications, inventions, know-how, technology,
proprietary processes and formulae (the "Trade Secrets") used in connection with
the Acquired Assets and necessary for the operation of the Website (the Patents,
Copyrights, Trademarks, Service Marks and Trade Secrets are collectively
referred to as "Intellectual Property Rights"). The Intellectual Property
Rights, together with the Acquired Assets, are sufficient to operate the Website
as presently operated.
(b) Except as set forth on Schedule 4.10, the Seller owns, has the
unrestricted right to use and has sole and exclusive possession of and has good
and valid title to, or sufficient license or other rights to, all of the
Intellectual Property Rights, free and clear of all Liens. Except as set forth
on Schedule 4.10, no Person other than Seller owns, has any rights in, or claims
any ownership of, any of the Intellectual Property Rights. The use of all
Intellectual Property Rights necessary or required for the operation of the
Website as presently conducted does not and will not infringe or violate any
trade secrets, patents, copyrights, tradenames, registered and common law
trademarks, trademark applications, service marks, service xxxx applications,
computer programs and other computer software, inventions, know-how, technology,
proprietary processes and formulae or other intellectual property rights of any
other person or entity (the "Third Party Intellectual Property Rights"). The
Seller is not using any confidential information or trade secrets of others in
the operation of the Website.
(c) All Intellectual Property Rights which are registered are in
compliance with formal legal requirements (including the payment of filing,
examination and maintenance fees and proofs of working or use), are valid,
enforceable and subsisting and are not subject to any maintenance fees or taxes
or actions falling due within 90 days after the Closing Date. All Patents are
valid, enforceable and subsisting and no Patents have been or are now involved
in any interference, reissue, reexamination, opposition, declaratory judgment or
other invalidating proceeding, nor, to the Seller's knowledge is any such action
threatened with respect to any of the Patents. To the Seller's knowledge, no
application for a potentially infringing patent has been filed and no
potentially infringing patent has been issued. No Trademarks have been or are
involved in any opposition, invalidation or cancellation proceeding and, there
is no basis for the commencement of any such proceeding. The Trademarks are
valid and enforceable, no person holds any infringing or potentially infringing
trademark and, to the Seller' knowledge, no application for any infringing or
potentially infringing trademark has been made.
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(d) A copy of all documentation relating to the Trade Secrets have
been furnished to the Purchaser. Such documentation is current, accurate,
complete in all material respects and in sufficient detail and content to
explain all material aspects of the Trade Secrets and to allow its full and
proper use without reliance on the memory of others. To the Seller's knowledge,
the Trade Secrets are not part of the public domain or literature nor have they
been used, divulged or appropriated for the benefit of any person or entity
other than the Seller or to the detriment of the Seller. The Seller has taken
reasonable measures and precautions to protect the secrecy, confidentiality and
value of the Trade Secrets.
(e) All agreements relating to licenses of Intellectual Property
Rights granted by or to the Seller are set forth on Schedule 4.10. All such
licenses are in good standing, valid and effective in accordance with their
respective terms and there is not, under any of such licenses, any existing
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default, or would constitute a basis for a claim of
force majeure or other claim of excusable delay or non-performance), in each
case by either the Seller or to the Seller's knowledge, by any other party
thereto. There are no outstanding and, to the Seller's knowledge, no threatened
disputes or disagreements with respect to any such agreement.
(f) Except as set forth on Schedule 4.10, the Seller is not
obligated to make any payments by way of royalties, fees or otherwise to any
owner of, licensor of, or other claimant to, any Intellectual Property Rights or
Third Party Intellectual Property Rights.
(g) Except as set forth on Schedule 4.10, to the Seller's
knowledge, the software and hardware which are a part of the Acquired Assets, as
well as the software, hardware and firmware used by the Seller's suppliers,
vendors and customers is Year 2000 Compliant. The term "Year 2000 Compliant" as
used in the preceding sentence, means that no operational, financial, data
transmission, communication or process is materially affected or materially
interrupted by dates prior to, during or after the Year 2000, and in particular,
without prejudice to the generality of the foregoing that: (i) no value for
current date will cause any interruption in operation; (ii) all manipulation of
time related data will produce the required results for all valid date values
prior to, during and after the Year 2000; (iii) if the date elements in
interfaces and data storage specify the century, they will permit specifying the
correct century either explicitly or by unambiguous algorithms or inferencing
rules; and where any date element is represented without a century, the correct
century shall be unambiguous for all manipulations involving that element; and
(iv) Year 2000 must be recognized as a leap year.
(h) Neither Seller nor, to the Seller's knowledge, any of the
employees of Seller are in violation of any non-competition, non-disclosure or
other similar agreements which would prohibit (i) Seller from entering into or
consummating the transactions contemplated hereby or (ii) any employee of Seller
from becoming an employee of Purchaser.
(i) Except as reflected in any documentation of any Intellectual
Property Rights, neither Seller nor the Website have any submission policy or
privacy policy and Seller makes no representation or warranty regarding the
existence of any such submission policy or privacy policy or Seller's rights in
or to items submitted to the Website.
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4.11 COMPLIANCE WITH LAWS. The assets, properties, business and
operations of the Seller relating to the Website, are and have been in
compliance in all material respects with all laws applicable thereto. Except as
set forth on Schedule 4.5, the Seller does not require the consent of any person
or entity to permit it to operate the Website in the manner in which it is
presently being operated. The Seller possesses all permits, licenses and other
authorizations from all persons or entities necessary to permit it to operate
the Website in the manner in which it presently is conducted.
4.12 BROKERS AND FINDERS. Neither the Seller nor any of the
Seller's directors, officers, shareholders or employees have employed any
broker, finder, or financial advisor or incurred any liability for any brokerage
fee or commission, finder's fee or financial advisory fee, in connection with
the transactions contemplated hereby, nor is there any basis known to the Seller
for any such fee or commission to be claimed by any person or entity.
4.13 ACCURACY OF INFORMATION. No representation or warranty made by
the Seller in this Agreement, the disclosure schedules attached hereto, or in
any agreement, instrument, document, certificate, statement or letter furnished
or to be furnished to the Purchaser at the Closing by or on behalf of the Seller
in connection with any of the transactions contemplated by this Agreement
contains or will contain any untrue statement of material fact or omit or will
omit to state any material fact necessary in order to make the statements herein
or therein not misleading in light of the circumstances in which they are made,
and all of the foregoing completely and correctly present the information
required or purported to be set forth herein or therein.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants as of the date hereof to and
for the benefit of Seller as follows:
5.1 ORGANIZATION, STANDING AND POWER. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
state of Delaware. Purchaser is qualified or registered to do business and is in
good standing in each state in which property is owned or operated if
registration or qualification is required. Purchaser has all requisite corporate
power and authority to carry on its business as now being conducted and to own,
operate and lease its properties and assets. Purchaser is qualified or
registered to do business and is in good corporate standing in each state or
other jurisdiction in which such qualification or registration is required.
5.2 CAPITALIZATION. All of the issued and outstanding shares of
capital stock of Purchaser are duly authorized, validly issued, and are without,
and were not issued in violation of, preemptive rights, and are owned free and
clear of any lien, security interest, pledge, charge, claim, option, right to
acquire, restriction on transfer or encumbrance of any nature whatsoever. There
are no outstanding rights to purchase or acquire any capital stock of the
Purchaser or any securities convertible into or exchangeable for such capital
stock and there are no contracts,
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commitments, understandings, arrangements or restrictions by which the Purchaser
is bound to issue or to acquire any additional securities or other rights to
purchase or acquire any capital stock of the Purchaser.
5.3 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on the
Financial Statements, other than in the ordinary course of business, the
Purchaser does not have any debt, liability or obligation, known or unknown,
secured or unsecured, whether accrued, absolute, contingent, unasserted or
otherwise, of any nature whatsoever, including without limitation any foreign or
domestic tax liabilities or deferred tax liabilities incurred in respect of or
measured by the Purchaser's income, or any other debts, liabilities or
obligations relating to or arising out of any act, omission, transaction,
circumstance, sale of goods or services, state of facts or other condition which
occurred or existed on or before the date hereof, whether or not known, due or
payable.
5.4 ABSENCE OF CHANGES. Since December 31, 1998:
(a) the Purchaser has not suffered any material loss,
damage, destruction of property or other casualty to property (whether
or not covered by insurance); and
(b) the Purchaser has not suffered any loss of officers,
directors, partners, employees, dealers, distributors, independent
contractors, customers or suppliers which had or may reasonably be
expected to result in a material adverse effect on the Purchaser.
5.5 AUTHORITY. Purchaser has the corporate power and authority to
execute this Agreement and the ancillary agreements to which it is or will be a
party and to consummate the transactions contemplated thereby and by this
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby and thereby have been (or by Closing will
be) duly authorized by all necessary corporate action on the part of Purchaser.
5.6 NO VIOLATION. The execution, delivery and performance by
Purchaser of this Agreement and the consummation of the transaction contemplated
by this Agreement do not: (a) violate any law, judgement, order, decree,
statute, ordinance, rule or regulation applicable to it; (b) conflict with any
provision of Purchaser's organizational documents; (c) conflict in any material
respect with any contract or permit to which Purchaser is a party.
5.7 CONSENTS AND APPROVALS. No Consent of any individual or entity
is required in connection with the execution, delivery or performance of this
Agreement by the Purchaser or the consummation by the Purchaser of the
transactions contemplated herein.
5.8 LITIGATION. There are no material actions, suits, claims,
demands or proceedings pending or, to the knowledge of Purchaser, threatened
against or by Purchaser in any court or before any arbitrator, private
alternative dispute resolution system or governmental agency, nor has Purchaser
been charged with, nor, to the knowledge of Purchaser, is it under investigation
with respect to any material charge concerning any violation of any provision of
any federal, state or other applicable law, rule, regulation, ordinance, order,
decree or governmental
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restriction. There are no unsatisfied judgments against Purchaser or any consent
decrees, writs, restraining orders, or preliminary or permanent injunctions to
which Purchaser is subject.
5.9 COMPLIANCE WITH LAWS. The assets, properties, business and
operations of the Purchaser, are and have been in compliance in all material
respects with all laws applicable to the Purchaser's assets, properties,
business and operations. The Purchaser does not require the consent of any
person or entity to permit it to operate in the manner in which it is presently
being operated. The Purchaser possesses all permits, licenses and other
authorizations from all persons or entities necessary to permit it to operate
its business in the manner in which it presently is conducted and the
consummation of the transactions contemplated by this Agreement will not prevent
the Purchaser from being able to continue to use such permits and operating
rights.
5.10 BROKERS AND FINDERS. Neither the Purchaser nor any of the
Purchaser's directors, officers, shareholders or employees have employed any
broker, finder, or financial advisor or incurred any liability for any brokerage
fee or commission, finder's fee or financial advisory fee, in connection with
the transactions contemplated hereby, nor is there any basis known to the
Purchaser for any such fee or commission to be claimed by any person or entity.
5.11 FINANCIAL STATEMENTS. The Purchaser has provided the Seller
with true and complete copies of audited balance sheets of the Purchaser as of
December 31, 1997 and 1998, and the related statements of operations (or income
or loss), changes in cash flow for each of the respective fiscal years then
ended, and the report thereon of Xxxxxx Xxxxxxxx, LLP, independent certified
public accountants. Except as disclosed therein, the foregoing financial
statements (i) are in accordance with the books and records of the Purchaser and
have been prepared in conformity with generally accepted accounting principals
applied on a consistent basis ("GAAP"); and (ii) fairly present the financial
position of the Purchaser as of the respective dates thereof, and the results of
operations (or income or loss) and changes in cash flow for the periods then
ended, all in accordance with GAAP.
5.12 ACCURACY OF INFORMATION. No representation or warranty made by
the Purchaser in this Agreement, the disclosure schedules attached hereto, or in
any agreement, instrument, document, certificate, statement or letter furnished
or to be furnished to the Purchaser at the Closing by or on behalf of the
Purchaser in connection with any of the transactions contemplated by this
Agreement contains or will contain any untrue statement of material fact or omit
or will omit to state any material fact necessary in order to make the
statements herein or therein not misleading in light of the circumstances in
which they are made, and all of the foregoing completely and correctly present
the information required or purported to be set forth herein or therein.
ARTICLE VI
COVENANTS
6.1 COVENANTS OF THE SELLER. The Seller shall keep, perform and
fully discharge the following covenants and agreements:
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(a) INTERIM CONDUCT OF BUSINESS. From the date hereof
until the Closing, the Seller shall operate its business as a going concern
consistent with prior practice and in the ordinary course of business.
(b) ACCESS. From the date hereof until the Closing, the
Seller shall, upon reasonable notice, give Purchaser and its representatives
full and free access to all properties, assets, books, contracts, commitments
and records of the Seller relating to the Website during reasonable business
hours and shall promptly furnish Purchaser with all financial and operating data
and other information as to the history, ownership, business, operations and
properties of the Website as the Purchaser may from time to time reasonably
request.
(c) NO SOLICITATION, CONFIDENTIALITY, ETC. Prior to the
termination of this Agreement pursuant to Article XI hereof, the Seller shall
not solicit or negotiate with respect to any inquiries or proposals relating to
(x) the possible direct or indirect acquisition of any shares of the capital
stock of the Seller or of all or a portion of the Acquired Assets or its
business or (y) any merger, consolidation, joint venture or business combination
with the Seller. Prior to the termination of this Agreement pursuant to Article
XI hereof, neither Purchaser nor Seller will discuss or disclose either the
existence of this Agreement or other confidential information pertaining to the
other party with any Person (except as may be required by law or except as may
be required in connection with the transactions contemplated by this Agreement
to officers, directors, employees and agents of the other party or any of its
stockholders) without the prior written approval of the other party.
(d) ACCURACY OF REPRESENTATIONS AND WARRANTIES. Without
the prior written consent of Purchaser, the Seller will not take any action from
the date hereof to the Closing Date that would cause any representation or
warranty of the Seller contained in this Agreement to become untrue or cause the
breach of any agreement hereof or covenant contained herein. The Seller will
promptly bring to the attention of Purchaser any facts which come to its
attention that would cause any of the representations and warranties of the
Seller to be untrue in any material respect.
6.2 COVENANTS OF THE PURCHASER.
(a) VALIDITY OF SHARES. Purchaser will take all necessary
actions to permit it to make the Stock Payments required pursuant to SCHEDULE 1.
The shares of common stock to be issued pursuant to SCHEDULE 1 will, when
issued, be validly issued, fully paid and nonassessable, free and clear of any
Lien and no shareholder of Purchaser has or will have any rights of subscription
or purchase in respect thereof.
(b) INTERIM CONDUCT OF BUSINESS. From the date hereof
until the Closing, the Purchaser shall operate its business as a going concern
consistent with prior practice and in the ordinary course of business.
(c) ACCURACY OF REPRESENTATIONS AND WARRANTIES. Without
the prior written consent of Seller, the Purchaser will not take any action from
the date hereof to the Closing Date that would cause any representation or
warranty of the Purchaser contained in this Agreement to
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become untrue or cause the breach of any agreement hereof or covenant contained
herein. The Purchaser will promptly bring to the attention of Seller any facts
which come to its attention that would cause any of the representations and
warranties of the Purchaser to be untrue or materially misleading in any
respect.
(d) INITIAL PUBLIC OFFERING. It is the present intention
of the Purchaser to pursue an initial public offering of its common stock (the
"IPO") within the next 12 months and shall take all actions reasonable in light
of the facts and circumstances to pursue such public offering.
(e) BOARD OF DIRECTORS. Following the Closing and until
the consummation of the IPO, in the event that either Xxx Xxxxx, Xxxx Xxxxx or
such other designee of the Seller as is reasonably acceptable to the Purchaser
is no longer serving on the Purchaser's Board of Directors (unless such failure
to serve is at the direction of the Seller), the Milestones set forth on
Schedule 1 attached hereto shall be deemed to have been achieved.
6.3 NON-COMPETITION AND NON-SOLICITATION.
(a) For a period of five (5) years from the Closing Date,
the Seller will not anywhere in the world engage or participate in, directly or
indirectly, as principal, agent, employee, employer, consultant, investor or
partner, or assist in the management of, or own any stock or any other ownership
interest in, any business which is Competitive (as defined below); provided that
the ownership of not more than 5% of the outstanding securities of any class
listed on an exchange or regularly traded in the over-the-counter market shall
not constitute a violation of this Section 6.3(a). For purposes of this
Agreement, a business shall be considered "Competitive" only if it involves a
real-time or contemporaneous news website. The parties agree that Seller is
specifically permitted to continue to develop "XX Xxxxxxxxx," "Ad-Fu" and
"Everything" which activities the Purchaser agrees are not Competitive.
(b) For a period of two (2) years from the Closing Date
(the "Non-Solicitation Period"), Seller will not solicit, or attempt to solicit,
any officer, director, consultant or employee of the Purchaser or any of its
subsidiaries or affiliates engaged in the operations relating to the Website to
leave his or her engagement with the Purchaser or such subsidiary or affiliate
nor will it call upon, solicit, divert or attempt to solicit or divert from the
Purchaser or any of its affiliates or subsidiaries any of their customers or
suppliers, provided, however, that nothing in this Section 6.3(b) shall be
deemed to prohibit the Seller from calling upon or soliciting a customer or
supplier during the Non-Solicitation Period if such action relates solely to a
business which is not Competitive with the Purchaser; and provided, further,
however, that nothing in this Section 6.3(b) shall be deemed to prohibit the
Seller from placing advertisements in newspapers or other media of general
circulation advertising employment opportunities.
(c) It is specifically understood and agreed that any
breach of the provisions of this Section 6.3 is likely to result in irreparable
injury to the Purchaser and that the remedy at law alone will be an inadequate
remedy for such breach, and that in addition to any other remedy it may have,
the Purchaser shall be entitled to enforce the specific performance of this
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Agreement by the Seller and to seek both temporary and permanent injunctive
relief (to the extent permitted by law) without the necessity of proving actual
damages.
6.4 AD-FU ADSERVER LICENSE. Seller hereby grants to Purchaser a
perpetual, fully paid up, unlimited use license for the Ad-Fu adserver.
Purchaser hereby agrees that it will pay for the charges related to bandwidth
requirements for the Ad-Fu adserver.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER. The
obligation of the Purchaser to consummate the purchase of the Acquired Assets
under this Agreement is subject to the fulfillment, prior to or at the Closing,
of each of the following conditions:
(a) All representations and warranties of the Seller to
the Purchaser contained in this Agreement or in any schedule, certificate, or
document delivered by the Seller to the Purchaser pursuant to the provisions
hereof shall be true and correct in all material respects as of the time of the
Closing with the same effect as though made at and as of that time; and the
Seller shall have delivered to Purchaser a certificate executed on behalf of the
Seller dated the Closing Date to such effect;
(b) The Seller shall have performed and complied in all
material respect with all obligations and covenants required by this Agreement
to be performed or complied with by the Seller prior to or at the Closing;
(c) On the Closing Date, no action is threatened or
pending challenging or otherwise relating to the transactions provided for
herein or which may affect the business of the Seller in a manner which is
materially adverse;
(d) The Seller shall have delivered to Purchaser:
(i) a certificate of the Secretary of the Seller
certifying (x) the incumbency and genuineness of signatures of all
officers of the Seller executing this Agreement, any document delivered
by the Seller at the Closing and any other document, instrument or
agreement executed in connection herewith and (y) the truth and
correctness of resolutions of the Seller and the Seller's stockholders,
if applicable, authorizing the entry by the Seller into this Agreement
and the transactions contemplated hereby; and
(ii) a certificate of corporate good standing and
legal existence of the Seller as of a recent date from the Secretary of
State of the State of Michigan.
(e) The Seller shall have received all consents,
approvals, assignments, licenses, permits, orders and other authorizations
necessary to consummate the transactions contemplated by this Agreement
including the sale of the Acquired Assets, and the transfer of the Transferred
Contracts, unless waived by Purchaser.
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(f) Each of Xxxxxxx Xxxxx and Xxxxxx Malda shall have
executed and delivered to Purchaser an employment agreement in substantially the
form of EXHIBIT E attached hereto (the "Employment Agreements").
7.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER. The
obligation of the Seller to consummate the sale of Acquired Assets under this
Agreement is subject to the fulfillment, prior to or at the Closing, of each of
the following conditions (any or all of which may be waived by the Seller in
writing);
(a) All representations and warranties of the Purchaser
to the Seller contained in this Agreement or in any schedule, certificate, or
document delivered by the Purchaser to the Seller pursuant to the provisions
hereof shall be true and correct in all material respects at and as of the time
of the Closing with the same effect as though those representations and
warranties had been made at and as of that time; and the Purchaser shall have
delivered to Seller a certificate executed on behalf of the Purchaser dated the
Closing Date to such effect;
(b) The Purchaser shall have performed and complied in
all material respects with all obligations and covenants required by this
Agreement to be performed or complied with by Purchaser prior to or at the
Closing;
(c) On the Closing Date, no action is threatened or
pending challenging or otherwise relating to the transactions provided for
herein or which may affect the business of the Purchaser in a manner which is
materially adverse;
(d) The Purchaser shall have delivered to Seller:
(i) a certificate of the Clerk or Assistant
Clerk of the Purchaser certifying (x) the incumbency and genuineness of
signatures of all officers of the Purchaser executing this Agreement,
any document delivered by the Purchaser at the Closing and any other
document, instrument or agreement executed in connection herewith and
(y) the truth and correctness of resolutions of the Purchaser
authorizing the entry by the Purchaser into this Agreement and the
transactions contemplated hereby; and
(ii) a certificate of corporate good standing and
legal existence of the Purchaser as of a recent date from the Secretary
of State of the Commonwealth of Massachusetts;
(e) The Purchaser shall have executed and delivered to
each of Xxxxxxx Xxxxx and Xxxxxx Malda an Employment Agreement;
(f) The Board of Directors and shareholders of Purchaser
shall have approved the expansion of the Board of Directors by one (1) member
and Xxx Xxxxx shall have been elected as the person to fill the vacancy so
created; and
(g) The Purchase Price shall be paid to the Seller as set
forth on SCHEDULE 1.
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ARTICLE VIII
MUTUAL COVENANTS
8.1 FURTHER ASSURANCES. Each Party agrees, at any time and from
time to time, upon the request of the other Party, to do, execute, acknowledge
and deliver, or to cause to be done, executed, acknowledged and delivered, all
such further acts, assignments, transfers and conveyances as may be reasonably
required, without enlarging or extending any obligation or liability of any
Party beyond what is otherwise contemplated by this Agreement, to facilitate the
transactions contemplated by this Agreement.
8.2 EXPENSES. All expenses incurred by Purchaser or Seller in
connection with the negotiation, authorization, preparation, execution and
performance of this Agreement, including, without limitation, all fees and
expenses of agents, representatives, counsel and accountants for Purchaser or
Seller as applicable, shall be paid by the Party incurring such expense.
ARTICLE IX
TAX MATTERS
9.1 GENERAL. Notwithstanding anything to the contrary in this
Agreement, Purchaser shall pay any and all sales, use, transfer, documentary,
registration, and similar Taxes relating to the Acquired Assets that arise by
reason of the transactions contemplated by this Agreement. Seller shall be
responsible for and pay all income tax liability attributable to it as a result
of the sale of the Acquired Assets. Each party shall be responsible for filing
its own tax returns of whatever sort deemed appropriate and necessary by the
filing party.
9.2 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the Acquired Assets as set forth in Schedule 1 attached hereto.
The Purchaser and Seller shall be bound by such allocation for all purposes and
to account for and report the purchase and sale contemplated hereby for all
financial, accounting and tax purposes in accordance with such allocation.
ARTICLE X
INDEMNIFICATION
10.1 INDEMNIFICATION OF PURCHASER. Seller agrees to indemnify,
defend and hold harmless Purchaser and its officers, directors, employees and
agents from and against any and all losses, damages of any kind, liabilities,
costs, and expenses, including without limitation all fines, penalties, amounts
paid in settlement, and reasonable attorneys' fees (collectively, "Losses")
incurred or sustained by Purchaser as a result of:
(a) any breach by Seller of any of its representations or
warranties in this Agreement;
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(b) any breach or nonfulfillment or non-performance,
partial or total, of any covenant or any agreement of Seller contained in this
Agreement or in any ancillary agreement delivered to Purchaser by or on behalf
of Seller pursuant to the express provisions of this Agreement;
(c) except for the Assumed Liabilities, all obligations
and liabilities of Seller, whether direct or indirect, fixed or contingent,
known or unknown; or
(d) except for the Assumed Liabilities, any claims
arising from the Seller's use of the Acquired Assets prior to the Closing Date.
10.2 INDEMNIFICATION OF SELLER. Purchaser agrees to indemnify,
defend and hold harmless Seller, its affiliates and their respective officers,
directors, employees and agents from and against any and all losses, damages of
any kind, liabilities, costs, and expenses, including without limitation all
fines, penalties, amounts paid in settlement and reasonable attorneys' fees
(collectively, "Losses") incurred or sustained by Seller as a result of:
(a) any breach by Purchaser of any of its representations
or warranties made in this Agreement;
(b) any breach or nonfulfillment or non-performance,
partial or total, of any covenant or any agreement of Purchaser contained in
this Agreement or in any ancillary agreement delivered to Seller by or on behalf
of Purchaser pursuant to the express provisions of this Agreement;
(c) the failure of Purchaser to perform any of the
agreements or undertakings made by Purchaser in this Agreement; or
(d) any claims arising from Purchaser's use of the
Acquired Assets after Closing Date.
10.3 LIMITATIONS ON INDEMNIFICATION. Rights to indemnification
hereunder are subject to the following limitations:
(a) If Purchaser has knowledge of facts which would form
the basis for a claim for indemnification as described in Section 10.1, and
closes the transaction contemplated hereto, Purchaser shall be deemed to have
waived Purchaser's right to assert any claim for indemnification with respect to
such matter after the Closing.
(b) If Seller has knowledge of facts which would form the
basis for a claim for indemnification as described in Section 10.2 and closes
the transaction contemplated hereto, Seller shall be deemed to have waived
Seller's right to assert any claim for indemnification with respect to such
matter after the Closing.
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(c) Any claim for indemnification hereunder which is not
asserted by notice given as herein provided which identifies a breach and the
underlying facts and actual or reasonably estimated Losses related thereto in
the time periods set forth in Section 10.5 hereof may not be pursued and shall
be deemed irrevocably waived after such time.
(d) The maximum liability of Seller for Purchaser's
claims for indemnification under this Agreement shall be limited to the
aggregate purchase price received by Seller. Nothing contained herein shall
limit the Purchaser's rights to pursue an action in, or recover damages for.
fraud.
(e) Neither party shall be entitled to indemnification
hereunder with respect to any claim for indemnification unless the aggregate
amount of all Losses with respect to such claim or claims exceeds $25,000, in
which event the party seeking indemnification shall be entitled to receive only
those Losses in excess of $25,000.
10.4 COOPERATION. Notwithstanding anything to the contrary
contained in this Article X, the parties shall cooperate with each other to
maximize the availability of insurance coverage for claims or actions by third
parties which may be subject to indemnification pursuant to this Article X, and
if any insurance carrier for any Party agrees to defend such claim or action,
such defense shall be tendered to such insurance carrier and the rights of the
Parties between themselves regarding the assumption and control of such defense
shall be subject to the reasonable requirements of such insurance carrier.
10.5 SURVIVAL. The representations and warranties of the parties
contained in this Agreement or in any writing delivered pursuant to the express
provisions of this Agreement shall survive any investigation heretofore or
hereafter made by Purchaser or Seller and the consummation of the transactions
contemplated herein and shall continue in full force and effect for the period
(a "Survival Period") beginning on the Closing Date and continuing until the
expiration of eighteen (18) months thereafter; provided, however, that the
Survival Period shall be extended automatically to include any time period
necessary to resolve a specific claim for indemnification which was made before
expiration of the Survival Period but not resolved prior to its expiration; and
provided, further, that any such extension shall apply as to claims asserted and
not so resolved within the Survival Period; provided further, that the
representations in Sections 4.1, 4.2, 4.8, 5.1 and 5.5 shall continue without
limitation.
ARTICLE XI
TERMINATION
11.1 TERMINATION OF AGREEMENT. This Agreement and the transactions
contemplated hereby may (at the option of the party having the right to do so)
be terminated at any time on or prior to the Closing Date:
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(a) MUTUAL CONSENT. By mutual written consent of
Purchaser and the Seller;
(b) COURT ORDER. By Purchaser or the Seller if any court
of competent jurisdiction shall have issued an order pursuant to the request of
a third party restraining, enjoining or otherwise prohibiting the consummation
of the transactions contemplated by this Agreement;
(c) FAILURE TO CLOSE BY JULY 15, 1999. By Purchaser or
the Seller if the transactions contemplated hereby shall not have been
consummated on or before July 15, 1999, provided, however, that such right to
terminate this Agreement shall not be available to any party whose failure to
fulfill any obligation of this Agreement has been the cause of, or resulted in,
the failure of the transactions contemplated hereby to be consummated on or
before such date.
(d) BREACH OF REPRESENTATION OR WARRANTY. (i) By
Purchaser, if Seller has breached in any material respect any representation or
warranty contained in Article IV or any covenant or undertaking contained
herein, and any such breach has not been cured by the close of business on the
10th day after the date on which Seller has been notified in writing of such
breach, provided that if the Seller informs the Purchaser in writing within such
10 day period that the Seller is working diligently and in good faith to cure
such breach but that such breach cannot be cured within such 10 day period, the
cure period may be extended as necessary to cure the breach.
(ii) By Seller if Purchaser has breached in any
material respect any representation or warranty contained in Article V or any
covenant or undertaking contained herein, and any such breach has not been cured
by the close of business on the 10th day after the date on which Purchaser has
been notified in writing of such breach, provided that if Purchaser informs
Seller in writing within such 10 day period that Purchaser is working diligently
and in good faith to cure such breach but that such breach cannot be cured
within such 10 day period, the cure period may be extended as necessary to cure
the breach.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 AMENDMENT AND WAIVER. This Agreement may be amended, modified
and supplemented only by written agreement of each of the Parties hereto. By an
instrument in writing, either Party may waive compliance by the other Party with
any term or provision of this Agreement that such other Party was or is
obligated to comply with or perform.
12.2 NOTICES. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand or mailed, first class
certified mail with postage paid:
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If to Seller:
Blockstackers, Inc.
00000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxx & Xxxxxxxxx LLP
0000 Xxxxxxxx Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Purchaser:
Andover Advanced Technologies, Inc.
00 Xxxxx Xxxxxx Xxxx
Xxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx, President
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxx, Xxxxxxx & Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other person or address as any Party hereto shall furnish to the
other Parties hereto in writing pursuant to this Section 12.2.
12.3 ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of the Parties hereto and their respective successors and permitted
assigns. This Agreement may not be assigned by either party hereto without the
prior written consent of the other; provided however, that the Purchaser may
assign its rights and obligations under this Agreement to any person who
acquires all or substantially all of the assets, stock or business of the
Purchaser (whether by sale, merger or otherwise) without the consent of Seller;
provided further however that such assignee assumes all obligations of the
Purchaser hereunder. Following the Closing, the Seller may assign its rights
hereunder without the Purchaser's prior written consent.
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12.4 GOVERNING LAW. This Agreement shall be governed by the law of
the Commonwealth of Massachusetts regardless of the laws that might otherwise
govern applicable conflicts of laws.
12.5 COUNTERPARTS; FACSIMILE. This Agreement may be signed and
delivered either originally or by facsimile, and in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
12.6 HEADINGS. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
12.7 INTERPRETATION. When a reference is made in this Agreement to
a Section or Exhibit, such reference shall be to a Section or Exhibit of 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
"included," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the phrase "without limitation." When used in this
Agreement, the word "primarily" shall be deemed to be followed by the phrase "or
exclusively". All accounting terms not defined in this Agreement shall have the
meanings determined by GAAP.
12.8 ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding of the Parties hereto in respect of the subject matter
contained herein. This Agreement supersedes all prior agreements and
understandings among the Parties hereto with respect to such subject matter.
12.9 THIRD PARTIES. Except for the indemnity provisions of
Article X, which are also for the benefit of the Parties identified therein,
nothing in this Agreement, whether express or implied, is intended to: (a)
confer any rights or remedies on any person other than the Seller and Purchaser,
and their respective successors and permitted assignees; (b) relieve or
discharge the obligation or liability of any third party; or (c) give any third
party any right of subrogation or action against Seller or Purchaser.
12.10 PUBLICITY OF TRANSACTION. So long as this Agreement is in
effect, neither Seller nor Purchaser shall issue or cause the publication of any
press release or other public announcement with respect to the transactions
contemplated by this Agreement, including any statement as to the terms and
conditions of this Agreement, without the prior written consent of the other
Party, except that such prior approval shall not be required as to any
disclosure required under law nor shall this prohibition limit Purchaser from
normal and customary advertisement of its business. In the event that any
disclosure is required by law, the disclosing party will notify the other party
of the required disclosure at least five (5) business days prior to disclosure
in
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order to give the other party an opportunity to seek protective orders or other
lawful preventive or restrictive measures.
12.11 EXHIBITS. All Exhibits referred to herein are intended to be
and hereby are specifically made a part of this Agreement.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Parties, acting through their duly authorized
representative, have executed this Agreement as of the day and year first above
written.
ANDOVER ADVANCED TECHNOLOGIES, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
Title: President
BLOCKSTACKERS, INC.
By: /s/ Xxxxxx Malda
-----------------------------
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EXHIBIT A
Acquired Assets
The assets necessary for the operation of the website known as
"Slashdot," located at the URL "xxx.xxxxxxxx.xxx" (the "Website"), including the
URL xxx.xxxxxxxx.xxx., all trademarks attached to such URL, all content
including text and graphics (to the extent Seller has the rights to the same),
all design elements including look and feel, all advertising systems and
advertising information including banners and site statistics, all software code
(including source and object code) including HTML code, Java scripts, CGI
scripts and links (to the extent Seller has the rights to the same), and all
brands and commercial identification including logos, trademarks, service marks
and trade names. All rights in income related to the Website, including without
limitation advertising revenues. Notwithstanding the foregoing, the Acquired
Assets do not include the Excluded Assets.
The domain name "xxxxxxxx.xxx" and the trademark or service xxxx
"SLASHDOT" and all rights and interests of Seller therein, together with the
goodwill of all business symbolized by such xxxx.
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EXHIBIT 2.4
ASSUMED LIABILITIES
1. Transferred Contracts
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SCHEDULE 1
CONSIDERATION
1. CASH CONSIDERATION
(a) At Closing, Purchaser shall pay to Seller a cash
payment of $1,500,000. In addition, following Closing, the Purchaser shall pay
to Seller an additional aggregate amount equal to $3,500,000 on the following
schedule: (i) $1,500,000 on the date that is seven (7) months after the Closing;
(ii) $1,000,000 on the date that is twelve (12) months after the Closing; and
(iii) $1,000,000 on the date that is twenty-four (24) months after the Closing.
All such payments shall be made by wire transfer of immediately available funds.
(b) If, as of the time of the payments described in
clauses (i), (ii) and (iii) of Section 1(a) above, the employment of either Xxxx
Xxxxx or Xxx Xxxxx with the Purchaser has been terminated "for Cause" (as that
term is defined in the Employment Agreements between the Purchaser and each such
individual) or voluntarily by the individual, such payments shall be reduced as
follows:
(i) if the employment of Xx. Xxxxx has so ceased, the
payments described in Section 1(a)(i), (ii) or (iii),
as the case may be shall be decreased by 25%.
(ii) if the employment of Mr. Malda has so ceased, the
payments described in Section 1(a)(i), (ii) or (iii),
as the case may be shall be decreased by 75%.
In the event that the employment of both Xx. Xxxxx and Mr. Malda has
been terminated for Cause, or voluntarily by the individual, the Purchaser shall
have no obligation to make any of the remaining payments described in clauses
(i), (ii) or (iii) of Section 1(a) above. In all other instances, including the
death of either Xx. Xxxxx or Mr. Malda, the payments set forth above shall be
made.
(c) On the 1st day of each month following the Closing
until the date which is twelve (12) months following the Closing, Purchaser
shall pay to Seller an amount equal to 50% of the total rent due for the
Seller's office space.
2. STOCK CONSIDERATION.
(a) In the event that the Purchaser completes an initial
public offering of its common stock (the "Offering"), in addition to the
consideration set forth above, the Purchaser shall issue shares of its common
stock to the Seller with an aggregate value as set forth below (each, a "Stock
Payment"). The number of shares of common stock to be issued to the Seller in
Stock Payments shall be calculated using the price per share initially offered
to the public in the Offering:
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AGGREGATE VALUE TIMING
--------------- ------
$2,000,000 Upon closing of Offering
$1,000,000 Seven (7) Months after closing of Offering
$ 666,667 Twelve (12) Months after closing of Offering
$1,333,333 Twelve (12) Months after closing of Offering;
provided that the Milestones (as defined below) are
achieved
$ 666,667 Twenty-four (24) Months after closing of Offering
$1,333,333 Twenty-four (24) Months after closing of Offering;
provided that the Milestones are achieved
(b) If, as of the time of the Stock Payments described in
Section 2(a) above, the employment of either Xxxx Xxxxx or Xxx Xxxxx with the
Purchaser has been terminated "for Cause" (as that term is defined in the
Employment Agreements between the Purchaser and each such individual) or
voluntarily by the individual, the remaining Stock Payments shall be reduced as
follows:
(i) if the employment of Xx. Xxxxx has so ceased, the
Stock Payments described in Section 2(a) shall be
decreased by 25%.
(ii) if the employment of Mr. Malda has so ceased, the
Stock Payments described in Section 2(a) shall be
decreased by 75%.
In the event that the employment of both Xx. Xxxxx and Mr. Malda has
been terminated for Cause, or voluntarily by the individual, the Purchaser shall
have no obligation to make any of the remaining Stock Payments. In all other
instances, including the death of either Xx. Xxxxx or Mr. Malda, the Stock
Payments set forth above shall be made.
(c) MILESTONES. The Stock Payments are subject to the
achievement of the following (the "Milestones"):
(i) Forty percent (40%) of each Stock Payment
subject to the achievement of Milestones
shall be due and payable provided that both
Xx. Xxxxx and Mr. Malda remain employed by
the Purchaser; provided however that unless
both Xx. Xxxxx and Mr. Malda have been
terminated for Cause, or voluntarily by the
individual, this Milestone shall be deemed
to have been achieved.
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(ii) An additional thirty percent (30%) of each
Stock Payment subject to the achievement of
Milestones shall become due and payable in
the event that the average number of stories
posted on the Website are maintained at
least at the level as of Closing.
(iii) An additional thirty percent (30%) of each
Stock Payment subject to the achievement of
Milestones shall become due and payable in
the event that (A) in the first year after
Closing, the One Year Amount (as defined
below) is 150% of the Base Amount (as
defined below) and (b) in the second year
after Closing, the Two Year Amount is 225%
of the Base Amount. For purposes hereof, the
number of page views to the Website in the
two weeks preceding the Closing and the two
weeks after the Closing shall be the
"Monthly Base Amount." The number of page
views to the Website for the one year period
after the Closing divided by 12 shall be the
"One Year Amount." The number of page views
to the Website for the two year period after
the Closing divided by 24 shall be the "Two
Year Amount."
If traffic during the applicable period
increases by less than the fifty percent
(50%), the applicable Stock Payment shall be
reduced by 2% for each 1% by which the
target is missed. This Milestone will not be
achieved if the traffic growth is less than
twenty-five percent (25%) in any applicable
period.
(c) Purchaser will take all good faith efforts (including
commitment of reasonable resources) to permit the Website to achieve the
foregoing Milestones. Messrs. Xxxxx and Malda will retain creative control over
the vision, look and feel of the Website ("Creative Control"). Creative Control
shall include editorial control over the content of the Website and full
discretion in making decisions regarding the content, vision, look and feel of
the Website. Notwithstanding the foregoing, if the Purchaser determines to
change its strategic focus or otherwise alter the Website or remove Creative
Control from Messrs. Xxxxx and Malda, all of the Milestones in Section 2(b) will
be deemed to have been achieved. In addition, Messrs. Malda and Xxxxx shall have
the authority to hire, on behalf of the Purchaser, the following individuals at
the following annual salaries: Xxxx Xxxxx, $60,000; Xxxxxx Xxxxxx, $20,000;
Xxxxxxx Xxxxx, $20,000; and Xxxxx Xxxxxxxx, $20,000.
3. ALTERNATE CASH CONSIDERATION. In the event that an Offering
does not occur within eighteen (18) months from the Closing, the Seller shall
have a one time option which must be exercised in writing not less than eighteen
(18) months after the Closing and not more than twenty-one (21) months after the
Closing, to forgo the consideration set forth in Section 2 above and to receive
in lieu thereof the following cash payments: (i) $1,500,000 paid on the date
which
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is 5 days following the receipt by the Purchaser of the Seller's election
hereunder; (ii) $1,500,000 to be paid on the date which is twenty-four (24)
months after the Closing; and (iii) $2,000,000 on the date which is thirty
months after the Closing. In all cases, forty percent (40%) of the foregoing
cash payments shall be made provided that Xxxx Xxxxx and Xxx Xxxxx remain
employed by the Purchaser and the remaining sixty percent (60%) of such payment
shall be subject to the Milestones in Section 2(b) above.
4. PURCHASE PRICE ALLOCATION.
To be agreed upon by the parties prior to the Closing.
5. The parties agree that all payments hereunder shall be deemed
purchase price payable for the purchase of the Acquired Assets and not
compensation to any shareholder of the Seller.
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