ASSET PURCHASE AGREEMENT AMONG ROO HD, Inc., Wurld Media, Inc., Gregory Kerber, AND KIRK FEATHERS Dated as of JULY 12, 2007
AMONG
ROO
HD, Inc.,
Wurld
Media, Inc.,
Xxxxxxx
Xxxxxx,
AND
XXXX
XXXXXXXX
Dated
as of JULY 12, 2007
TABLE
OF CONTENTS
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ARTICLE
I.
|
PURCHASE
AND SALE OF ASSETS.
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1
|
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1.1.
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Sale
of Assets
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1
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1.2.
|
Excluded
Assets
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2
|
|
1.3.
|
Assumed
Liabilities; Excluded Liabilities; Employees.
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2
|
|
1.4.
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Purchase
Price.
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3
|
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1.5.
|
Purchase
Price Allocation
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5
|
|
1.6.
|
Records
and Contracts
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5
|
|
1.7.
|
Further
Assurances
|
5
|
|
1.8.
|
Sales
and Transfer Taxes
|
5
|
|
1.9.
|
Transfer
of Subject Assets
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5
|
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ARTICLE
II.
|
CLOSING
AND TERMINATION
|
5
|
|
2.1.
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Closing
Date
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5
|
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2.2.
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Termination
of Agreement
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6
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2.3.
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Procedure
Upon Termination
|
6
|
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2.4.
|
Effect
of Termination
|
6
|
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ARTICLE
III.
|
REPRESENTATIONS
AND WARRANTIES OF THE SELLER AND THE OWNERS
|
6
|
|
3.1.
|
Organization
and Good Standing
|
6
|
|
3.2.
|
Authorization
of Agreement
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7
|
|
3.3.
|
Ownership
of Seller
|
7
|
|
3.4.
|
No
Subsidiaries
|
7
|
|
3.5.
|
Conflicts;
Consents of Third Parties.
|
7
|
|
3.6.
|
Ownership
and Transfer of Assets
|
8
|
|
3.7.
|
Financial
Statements
|
8
|
|
3.8.
|
No
Undisclosed Liabilities
|
8
|
|
3.9.
|
Absence
of Certain Developments
|
8
|
|
3.10.
|
Taxes.
|
10
|
|
3.11.
|
Real
Property.
|
12
|
|
3.12.
|
Tangible
Personal Property.
|
12
|
|
3.13.
|
Intangible
Property
|
13
|
|
3.14.
|
Material
Contracts
|
14
|
|
3.15.
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Employee
Benefits.
|
14
|
|
3.16.
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Labor.
|
15
|
|
3.17.
|
Litigation
|
15
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|
3.18.
|
Compliance
with Laws; Permits.
|
16
|
|
3.19.
|
Environmental
Matters
|
16
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|
3.20.
|
Insurance
|
17
|
|
3.21.
|
Inventories;
Receivables; Payables.
|
17
|
|
3.22.
|
Customers
and Suppliers
|
17
|
|
3.23.
|
Banks
|
17
|
|
3.24.
|
No
Misrepresentations
|
17
|
|
3.25.
|
Financial
Advisors
|
18
|
-i-
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3.26.
|
Investment
Intention
|
18
|
|
3.27.
|
Investment
Experience
|
18
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|
3.28.
|
Disclosure
of Information
|
18
|
|
3.29.
|
Legends
|
18
|
|
3.30.
|
Patriot
Act
|
18
|
|
|
||
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ARTICLE
IV.
|
REPRESENTATIONS
AND WARRANTIES OF PURCHASER AND PURCHASER
|
19
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|
4.1.
|
Organization
and Good Standing.
|
19
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|
4.2.
|
Authorization
of Agreement.
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19
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|
4.3.
|
Conflicts;
Consents of Third Parties.
|
20
|
|
4.4.
|
Litigation
|
20
|
|
4.5.
|
Financial
Advisors
|
20
|
|
4.6.
|
Patriot
Act
|
20
|
|
4.7.
|
No
Knowledge of Breaches
|
20
|
|
|
||
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ARTICLE
V.
|
COVENANTS
|
21
|
|
5.1.
|
Access
to Information
|
21
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5.2.
|
Conduct
of the Business Pending the Closing.
|
21
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5.3.
|
Consents
|
22
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5.4.
|
Other
Actions
|
23
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5.5.
|
No
Solicitation
|
23
|
|
5.6.
|
Provisions
for Liabilities Not Assumed
|
23
|
|
5.7.
|
Preservation
of Records
|
24
|
|
5.8.
|
Continued
Cooperation23
|
|
|
5.9
|
Release
of Personal Guarantees24 5.10 Publicity
|
24
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5.11
|
Use
of Name24
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|
|
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||
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ARTICLE
VI.
|
CONDITIONS
TO CLOSING
|
24
|
|
6.1.
|
Conditions
Precedent to Obligations of Purchaser
|
24
|
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6.2.
|
Conditions
Precedent to Obligations of the Seller and Owners
|
25
|
|
|
|
|
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ARTICLE
VII.
|
DOCUMENTS
TO BE DELIVERED
|
26
|
|
7.1.
|
Documents
to be Delivered by the Seller
|
26
|
|
7.2.
|
Documents
to be Delivered by the Purchaser
|
27
|
|
|
|
|
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ARTICLE
VIII.
|
INDEMNIFICATION
|
27
|
|
8.1.
|
Indemnification.
|
27
|
|
8.2.
|
Indemnification
Procedures.
|
28
|
|
ARTICLE
IX.
|
MISCELLANEOUS
|
29
|
|
9.1.
|
Payment
of Sales, Use or Similar Taxes
|
29
|
|
9.2.
|
Survival
of Representations and Warranties
|
30
|
|
9.3.
|
Expenses
|
30
|
|
9.4.
|
Specific
Performance
|
30
|
|
9.5.
|
Further
Assurances
|
30
|
|
9.6.
|
Submission
to Jurisdiction; Consent to Service of Process
|
30
|
|
9.7.
|
Entire
Agreement; Amendments and Waivers
|
31
|
|
9.8.
|
Table
of Contents and Headings
|
31
|
|
9.9.
|
Notices
|
31
|
|
9.10.
|
Severability
|
32
|
|
9.11.
|
Binding
Effect; Assignment
|
32
|
-ii-
ASSET
PURCHASE AGREEMENT, dated as of July 12, 2007 (the “Agreement”), among ROO HD,
Inc., a New York corporation (the “Purchaser”), Wurld Media, Inc., a Delaware
corporation (the “Seller”), Xxxx Xxxxxx (“Xxxxxx”), and Xxxx Xxxxxxxx
(“Feathers,” with Feathers and Xxxxxx together being referred to as the
“Owners”).
W
I T N E S S E T H:
WHEREAS,
Seller specializes in the P2P distribution of music, movies, games, TV shows
and
other audio, video, and/or audio/video content (the “Business”);
WHEREAS,
subject to the terms and conditions hereof, Seller desires to sell, transfer
and
assign to Purchaser, and Purchaser desires to purchase from Seller, certain
selected assets relating to the Business;
NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, the parties hereby agree as
follows:
ARTICLE
I.
PURCHASE
AND SALE OF ASSETS.
1.1. Sale
of Assets.
Seller
agrees to sell, assign, transfer and deliver to Purchaser, and Purchaser agrees
to purchase from Seller, all of Seller’s right, title and interest in and to
certain assets relating to the Business (specifically excluding the Excluded
Assets, as defined below)as follows:
(a) Equipment.
All
equipment of any kind or nature (whether leased or owned), including, without
limitation, all fixed assets, equipment, furniture, fixtures and leasehold
improvements located within the Seller’s office located at 00 Xxxxxx Xxxxxx,
Xxxxx#000, Xxxxxxxx Xxxxxxx, Xxx Xxxx, inventory, office materials, software,
supplies and other tangible personal property of every kind and description
owned by Seller and used or held for use in connection with the Business, all
as
set forth on Schedule 1.1(a) attached hereto (“Equipment”);
(b) Contracts.
All of
the rights of Seller under, and interest of Seller in and to, certain contracts
relating to the Business, as determined by Purchaser in its sole discretion
prior to the Closing (the “Selected Contracts”). A true, correct and complete
list of all unsecured contracts (the “Contracts”), all outstanding amounts due
and owing under each Contract, and contact information for the other party
to
such Contract is attached hereto as Schedule 1.1(b). It is acknowledged and
agreed, without otherwise limiting, expanding or otherwise affecting any other
liability of Purchaser, that Purchaser shall have no liability of any nature
whatsoever with regard to any Contract that is not a Selected Contract.
Purchaser assumes responsibility for satisfying and/or compromising any amounts
due and owing under the Selected Contracts (the “Selected Liabilities”).
(c) Proprietary Rights.
All
formulas, know-how, patents, patent rights, patent applications, trademarks,
service marks, trademark and service xxxx registrations and registration
applications, trade names, trade name registrations, logos, trade dress,
copyrights, copyright registrations, technology, know-how, trade secrets,
inventions, models, processes, formulas, techniques, designs, licenses, pricing
policies, information as to the identities or requirements of customers or
potential customers, market information, market analyses, marketing plans,
operating or management policies, procedures and forms, computer software and
computer operating procedures and all other proprietary rights of the Seller
used or useful or developed or acquired for use in the Business as set forth
on
Schedule 1.1(c) attached hereto (collectively the “Intellectual
Property”).
-1-
(d) Goodwill.
All of
the goodwill of Seller in, and the going concern value of, the Business, and
all
of the business and customer lists and accounts, proprietary information,
marketing materials and trade secrets related to the Business;
(e) Claims.
All
claims, entitlements, rebates, refunds, settlements, awards or other rights
related to any Assets (as hereinafter defined) or the operation of the Business
prior to the Closing Date; and
(f) Records.
All of
Seller’s customer logs, location files and records, and other business files and
records, in each case relating to the Business.
The
assets, properties and business of Seller being sold to and purchased by
Purchaser under this Section 1.1 are referred to herein collectively as the
“Assets.”
1.2. Excluded
Assets.
There
shall be excluded from the Assets and retained by Seller, all
assets identified on Schedule 1.2(a) attached hereto, and all other assets
of
Seller which are not used or held for use in connection with the Business or
otherwise necessary to the operation of the Business (the “Excluded
Assets”).
1.3. Assumed
Liabilities; Excluded Liabilities; Employees.
(a) Assumed
Liabilities.
Subject
to the obligation of the Seller to indemnify the Purchaser with respect to
certain obligations and liabilities of the Seller pursuant to Article 8,
the Purchaser shall assume, and hereby agrees to pay, perform, fulfill and
discharge the following (collectively, the “Assumed Liabilities”):
|
(i)
|
the
liabilities (including interest, costs and fees) identified on Schedule
1.3(a)(i) attached hereto, each of which arises out of a lease (each
a
“Lease”) of personal property (the “Leased Asset”) entered into by Seller.
Notwithstanding the foregoing, if Purchaser is unable to discharge
the
liabilities associated with each the Leased Asset at a cost equal
to one
hundred and five (105%) percent or less of the aggregate dollar amount
listed on Schedule 1.3(a)(i), or if Purchaser is unable to continue
leasing pursuant to the applicable Lease (or obtain ownership of
the
Leased Asset or if the applicable lease has expired, enter into a
new
lease at terms acceptable to it, as determined in its sole discretion)
then, in such event: (x) Purchaser shall have no obligation to discharge
the liability associated with the Leased Asset, and (y) Purchaser
shall
have the right, in its sole and absolute discretion to terminate
this
Agreement immediately upon written notice to the Seller.
|
-2-
| (iii) | all fees, including fees for professional services rendered, and expenses owed which are identified on Schedule 1.3(a)(iii) incurred in connection with the Seller’s Intellectual Property and necessary for the Purchaser to avail itself of all rights and interests to the Intellectual Property. |
| (ii) | the liabilities listed on Schedule 1.3(a)(ii) |
|
(iv)
|
fees
for professional services rendered by Xxxx Xxxxxxxx listed on Schedule
1.3(a)(iv).
|
The
assumption of the Assumed Liabilities by Purchaser hereunder shall not enlarge
any rights of third parties under contracts or arrangements with Purchaser
or
Seller or any of their respective affiliates or subsidiaries.
(b) Excluded
Liabilities.
It is
expressly understood that, except for the Assumed Liabilities, Purchaser shall
not assume, pay or be liable for any liability or obligation of Seller of any
kind or nature at any time existing or asserted, whether, known, unknown, fixed,
contingent or otherwise, not specifically assumed herein by Purchaser, including
without limitation any liability or obligation relating to, resulting from
or
arising out of (i) the Excluded Assets, (ii) the employees of the Business
or
(iii) any fact existing or event occurring prior to, or relating to the
operation of the Business prior to, the date hereof, collectively the “Excluded
Assets.”
(c) Employees,
Wages and Benefits.
(i) Purchaser
specifically reserves the right, on or after the date hereof, to employ or
reject any of Seller’s employees or other applicants in its sole and absolute
discretion. Except as otherwise expressly agreed to herein nothing in this
Agreement shall be construed as a commitment or obligation of Purchaser to
accept for employment, or otherwise continue the employment of, any of Seller’s
employees, and no employee shall be a third party beneficiary of this
Agreement.
(ii) Seller
shall pay all wages, salaries, commissions, and the cost of all fringe benefits
provided to its employees which shall have become due for work performed as
of
and through the Closing Date, and Seller shall collect and pay all Taxes in
respect of such wages, salaries, commissions and benefits.
(iii) Seller
acknowledges and agrees that Purchaser shall not acquire any rights or interests
of Seller in, or assume or have any obligations or liabilities of Seller under,
any benefit plans maintained by Seller, or for the benefit of any employees
of
Seller, including, without limitation, obligations for severance.
1.4. Purchase
Price In
consideration of the sale by Seller to Purchaser of the Assets and satisfaction
of the conditions contained herein, the purchase price shall be as
follows:
(a)
$800,000,
which has been advanced to the Seller, pursuant to that certain Secured
Promissory Note issued by the Seller to ROO Group, Inc.(“ROO Group”) dated
February 26, 2007;
-3-
(b) such
amounts necessary to fully satisfy and/or compromise the Assumed Liabilities
consistent with Paragraph 1.3(a) hereof, including all costs incurred by
Purchaser in connection therewith;
(c) any
amounts paid or advanced by ROO Group, to, or, on behalf of Seller or any of
the
Owners prior to the Closing;
(d) such
amounts necessary to fully satisfy and compromise the Selected Liabilities
consistent with Paragraph 1.1(b) hereof, including all costs incurred by
Purchaser in connection therewith;
(e)
[INTENTIONALLY LEFT BLANK]
(f) an
aggregate of Four Hundred Fifty Six Thousand Eighty Seven Dollars ($456,087)
(the “Escrow Funds”) which shall be held in escrow, pursuant to the terms of an
escrow agreement in substantially the form set forth on Exhibit A
(the “Compensation Escrow Agreement”)
to
settle outstanding amounts of up to forty (40%) percent of the gross wages
plus
such amount which shall constitute employer’s contribution (less statutory
payroll deductions, less advances previously made to the employees) owed to
the
employees identified on Schedule 1.4(f). Any Employee as defined in Section
2.2(d) not hired by Purchaser shall prior to Closing be added to Schedule 1.4(f)
by an amendment and shall be treated in the same manner as those employees
listed on said schedule at the time of the execution of the Agreement. The
Escrow Funds shall be utilized solely for the purpose set forth in this Section
1.4(f) and may not be released to the Sellers until all claims by the employees
listed on Schedule 1.4(f) have been fully settled and compromised and the
employees have executed and delivered to the Seller, a release in the form
set
forth on Exhibit
A-1
to the
Escrow Agreement. A copy of said release shall be furnished to the Purchaser
simultaneously with the Seller’s receipt from each employee.
(g) Such
amount as may be necessary to pay the statutory payroll deductions and the
employer’s contributions with respect to those employees of the Seller with whom
the Purchaser has entered into a satisfactory arrangement for employment by
the
Purchaser. Such employees are included in Schedule 2.2(d). It is the intention
of the parties that loans or advances to all current and former employees of
the
Seller be “grossed up” and that all withholding taxes and employer contributions
be paid by Purchaser.
(h) six
hundred thousand (600,000) shares of common stock $0.0001 par value per share
of
ROO Group(the “Securities”), which shall be held in escrow for a period of one
(1) year after the Closing Date pursuant to the terms of an escrow agreement
in
substantially the form set forth on Exhibit B
(the
“Escrow
Agreement”).
Purchaser shall have the right to set-off against the Securities held in escrow:
(A) such amounts incurred by the Purchaser, including, but not limited to,
legal
fees and any other costs to satisfy and/or defend any and all claims that may
arise in connection with the Assets acquired by Purchaser hereunder or otherwise
in connection with this Agreement; (B) any amounts in excess of 105% of the
dollar amount listed on Schedule 1.3(a)(i) for any individual Assumed Liability
that Purchaser may be required to pay to discharge any one or more of the
Assumed Liabilities. The parties hereto agree that the value to be ascribed
to
each
share held in escrow shall be the closing price of the common stock of ROO
Group
as quoted on the OTCBB on the Closing Date.
-4-
1.5. Purchase
Price Allocation.
Purchaser and Seller shall mutually agree on the allocation of the Purchase
Price. Such allocation shall be binding upon Purchaser and Seller for all
purposes (including financial accounting purposes, financial and regulatory
reporting purposes and tax purposes). Purchaser and Seller each further agree
to
file their Federal income tax returns and their other tax returns reflecting
such allocation, Form 8594 and any other reports required by Section 1060 of
the
Internal Revenue Code of 1986, as amended (the “Code”).
1.6. Records
and Contracts.
Seller
shall deliver to Purchaser all of the Selected Contracts, with such assignments
thereof and consents to assignments as are necessary to assure Purchaser of
the
full benefit of the same. Seller shall also deliver to Purchaser all of Seller’s
files and records constituting and/or relating to Assets.
1.7. Further
Assurances.
Seller
shall, from time to time after the consummation of the transactions contemplated
herein, at the request of Purchaser and without further consideration, execute
and deliver further instruments of transfer and assignment and take such other
action as Purchaser may reasonably require to more effectively transfer and
assign to, and vest in, Purchaser the Assets free and clear of all Liens (as
hereinafter defined).
1.8. Sales
and Transfer Taxes.
All
sales, transfer, use, recordation, documentary, stamp, excise taxes, personal
property taxes, fees and duties (including any real estate transfer taxes)
under
applicable law incurred in connection with this Agreement or the transactions
contemplated hereby will be borne and paid by Purchaser.
1.9. Transfer
of Subject Assets.
At the
Closing, Seller shall deliver or cause to be delivered to Purchaser good and
sufficient instruments of transfer transferring to Purchaser title to all of
the
Assets, together with all required consents. Such instruments of transfer (a)
shall contain appropriate warranties and covenants which are usual and customary
for transferring the type of property involved under the laws of the
jurisdictions applicable to such transfers, (b) shall be in form and substance
reasonably satisfactory to Purchaser and its counsel, (c) shall effectively
vest
in Purchaser good and marketable title to all of the Assets free and clear
of
all Liens, and (d) where applicable, shall be accompanied by evidence of the
discharge of all Liens against the Assets.
ARTICLE
II.
CLOSING
AND TERMINATION
2.1. Closing
Date.
Subject
to the satisfaction of the conditions set forth in Sections 6.1 and 6.2 hereof
(or the waiver thereof by the party entitled to waive that condition), the
closing of the sale and purchase of the Assets provided for in Section 1.1
hereof (the “Closing”) shall take place at the offices of Sichenzia Xxxx
Xxxxxxxx Xxxxxxx LLP located at 00 Xxxxxxxx, 00xx
Xxxxx,
Xxx Xxxx, XX 00000 (or at such other place as the parties may mutually agree
upon) on July 13, 2007. The date on which the Closing shall be held is referred
to in this Agreement as the “Closing Date”
-5-
2.2. Termination
of Agreement. This
Agreement may be terminated prior to the Closing as follows:
(a) at
the
election of the Seller or the Purchaser on or after July 16, 2007, if the
Closing shall not have occurred by the close of business on such date, provided
that the terminating party is not in default of any of its obligations
hereunder;
(b) by
mutual
written consent of the Seller and the Purchaser;
(c) by
the
Seller or the Purchaser if there shall be in effect a final nonappealable order
of a court, government or governmental agency or body of competent jurisdiction
(“Governmental Body”) of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated hereby;
it being agreed that the parties hereto shall promptly appeal any adverse
determination which is not nonappealable (and pursue such appeal with reasonable
diligence);
(d) by
the
Purchaser, if it shall fail to enter into arrangements with at least eighty
(80%) percent of those current or former employees of Seller as set forth on
Schedule 2.2 (d) (the “Employees”), which have not been subsequently revoked by
such Employees, with terms and conditions satisfactory to it, as determined
by
it in its sole discretion; and
(e) by
the
Purchaser, pursuant to Paragraph 1.3(a).
2.3. Procedure
Upon Termination.
In the
event of termination and abandonment by the Purchaser or the Seller, or both,
pursuant to Section 2.2 hereof, written notice thereof shall forthwith be given
to the other party or parties, and this Agreement shall terminate, and the
purchase of the Assets hereunder shall be abandoned, without further action
by
the Purchaser or the Seller. If this Agreement is terminated as provided herein
each party shall redeliver all documents, work papers and other material of
any
other party relating to the transactions contemplated hereby, whether so
obtained before or after the execution hereof, to the party furnishing the
same.
2.4. Effect
of Termination.
In the
event that this Agreement is validly terminated as provided herein, then each
of
the parties shall be relieved of their duties and obligations arising under
this
Agreement after the date of such termination and such termination shall be
without liability to the Purchaser or the Seller; provided, however, that
nothing in this Section 2.4 shall relieve the Purchaser or the Seller of any
liability for a breach of this Agreement.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES OF THE SELLER AND THE OWNERS
The
Seller and the Owners, jointly and severally hereby represent and warrant to
the
Purchaser that:
3.1. Organization
and Good Standing.
The
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the state of Delaware and has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now conducted. The Seller is duly qualified or authorized to do business
as a
foreign corporation and is in good standing under the laws of each jurisdiction
in which it owns or leases real property and each other jurisdiction in which
the conduct of its business or the ownership of its properties requires such
qualification or authorization, except where failure to be so qualified would
not have a material adverse effect on the business, assets or financial
condition of the Seller taken as a whole (“Material Adverse
Effect”).
[may
need to included a qualifier as Wurld may need to complete an additional filing
in DE]
-6-
3.2. Authorization
of Agreement.
The
Seller and the Owners have all requisite corporate or personal, as the case
may
be, power, authority and legal capacity to execute and deliver this Agreement,
and each other agreement, document, or instrument or certificate contemplated
by
this Agreement or to be executed by the Seller or the Owners in connection
with
the consummation of the transactions contemplated by this Agreement (together
with this Agreement, the “Seller Documents”), and to consummate the transactions
contemplated hereby and thereby. This Agreement has been, and each of the Seller
Documents will be at or prior to the Closing, duly and validly executed and
delivered by the Seller or the Owners and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto) this Agreement
constitutes, and each of the Seller Documents when so executed and delivered
will constitute, legal, valid and binding obligations of the Seller, enforceable
against the Seller or the Owners, as applicable, in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in
equity).
3.3. Ownership
of Seller.
The
Owners collectively own 39.2% of the issued and outstanding shares of common
stock of the Seller, free and clear of any and all liens, charges or
encumbrances or any kind or nature.
3.4. No
Subsidiaries.
The
Seller has no subsidiaries.
3.5. Conflicts;
Consents of Third Parties.
(a) Except
as
set forth in Schedule 3.5(a), none of the execution and delivery by the Seller
or Owners of this Agreement and the Seller Documents, the consummation of the
transactions contemplated hereby or thereby, or compliance by the Seller with
any of the provisions hereof or thereof will (i) conflict with, or result in
the
breach of, any provision of the Articles of Incorporation or By-laws of the
Seller; (ii) conflict with, violate, result in the breach or termination of,
or
constitute a default under any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which the Seller or any Owner
is
a party or by which any of them or any of their respective properties or assets
is bound; (iii) violate any statute, rule, regulation, order or decree of any
governmental body or authority by which the Seller is bound; or (iv) result
in
the creation of any Lien upon the properties or assets of the Seller except,
in
case of clauses (ii), (iii) and (iv), for such violations, breaches or defaults
as would not, individually or in the aggregate, have a Material Adverse
Effect.
(b) No
consent, waiver, approval, order, permit or authorization of, or declaration
or
filing with, or notification to, any person or Governmental Body is required
on
the part of the Seller, the Seller in connection with the execution and delivery
of this Agreement or the Seller Documents, or the compliance by the Seller
as
the case may be, with any of the provisions hereof or thereof.
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3.6. Ownership
and Transfer of Assets.
Except
as set forth on Schedule 3.6, Seller has good and marketable title to all of
the
Assets free and clear of all mortgages, pledges, security interests, charges,
liens, restrictions and encumbrances of any kind (collectively, “Liens”)
whatsoever. Upon the sale, assignment, transfer and delivery of the Assets
to
the Purchaser hereunder and under the Seller Documents, there will be vested
in
the Purchaser good, marketable and indefeasible title to the Assets, free and
clear of all Liens. Except as specifically set forth on Schedule 1.2(a), the
Assets include all of the assets and properties (i) held for use by Seller
to
conduct the Business as presently conducted and (ii) necessary for Purchaser
to
operate the Business in the same manner as such business is currently operated
by Seller. All of the tangible Assets are in good repair, have been well
maintained and are in good operating condition, do not require any material
modifications or repairs, and comply in all material respects with applicable
laws, ordinances and regulations, ordinary wear and tear excepted.
3.7. Financial
Statements.
The
Seller has delivered or caused to be delivered to the Purchaser copies of (i)
the consolidated balance sheets of the Seller as at December 31, 2006 and 2005
and the related audited consolidated statements of income and of cash flows
of
the Seller for the years then ended and (ii) the unaudited but reviewed
consolidated balance sheet of the Seller as at March 31, 2007 and the related
consolidated statements of income and cash flows of the Seller for the
three-month period then ended (such audited and unaudited statements, including
the related notes and schedules thereto, are referred to herein as the “Seller
Financial Statements”). Each of the Seller Financial Statements is complete and
correct in all material respects, will be prepared in accordance with GAAP
(subject to normal year-end adjustments in the case of the unaudited statements)
and in conformity with the practices consistently applied by the Seller without
modification of the accounting principles used in the preparation thereof and
will present fairly the financial position, results of operations and cash
flows
of the Seller as at the dates and for the periods indicated. For the purposes
hereof, the unaudited but reviewed consolidated balance sheet of the Seller
as
at March 31, 2007 is referred to as the “Seller Balance Sheet” and March 31,
2007 is referred to as the “Seller Balance Sheet Date”.
3.8. No
Undisclosed Liabilities.
To the
best of the Seller’s and Owners’ knowledge, the Seller has no indebtedness,
obligations or liabilities of any kind (whether accrued, absolute, contingent
or
otherwise, and whether due or to become due) that would have been required
to be
reflected in, reserved against or otherwise described on the Seller Balance
Sheet or in the notes thereto in accordance with GAAP which was not fully
reflected in, reserved against or otherwise described in the Seller Balance
Sheet or the notes thereto or was not incurred in the ordinary course of
business consistent with past practice since the Seller Balance Sheet
Date.
3.9. Absence
of Certain Developments.
Except
as expressly contemplated by this Agreement or as set forth on Schedule 3.9,
since the Seller Balance Sheet Date:
(i) there
has
not been an event which had a Material Adverse Effect nor has there occurred
any
event which is reasonably likely to result in a Material Adverse
Effect;
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(ii) there
has
not been any damage, destruction or loss, whether or not covered by insurance,
with respect to the property and assets of the Seller having a replacement
cost
of more than $10,000 for any single loss or $20,000 for all such
losses;
(iii) there
has
not been any declaration, setting aside or payment of any distribution in
respect of any ownership interest of the Seller or any repurchase, redemption
or
other acquisition by the Seller of any outstanding ownership interest in, the
Seller;
(iv) the
Seller has not awarded or paid any bonuses to employees of the Seller with
respect to the fiscal year ended 2006, except to the extent accrued on the
Seller Balance Sheet or entered into any employment, deferred compensation,
severance or similar agreement (nor amended any such agreement) or agreed to
increase the compensation payable or to become payable by it to any of the
Seller’s directors, officers, employees, agents or representatives or agreed to
increase the coverage or benefits available under any severance pay, termination
pay, vacation pay, company awards, salary continuation for disability, sick
leave, deferred compensation, bonus or other incentive compensation, insurance,
pension or other employee benefit plan, payment or arrangement made to, for
or
with such directors, officers, employees, agents or representatives (other
than
normal increases in the ordinary course of business consistent with past
practice and that in the aggregate have not resulted in a material increase
in
the benefits or compensation expense of the Seller);
(v) there
has
not been any change by the Seller in accounting or Tax reporting principles,
methods or policies;
(vi) the
Seller has not entered into any transaction or contract or conducted its
business other than in the ordinary course consistent with past
practice;
(vii) the
Seller has not failed to promptly pay and discharge current liabilities except
where disputed in good faith by appropriate proceedings;
(viii) the
Seller has not made any loans, advances or capital contributions to, or
investments in, any Person or paid any fees or expenses to the Seller or any
Affiliate of the Seller;
(ix) except
as
disclosed herein, the Seller has not mortgaged, pledged or subjected to any
Lien
any of its assets, or acquired any assets or sold, assigned, transferred,
conveyed, leased or otherwise disposed of any assets of the Seller, except
for
assets acquired or sold, assigned, transferred, conveyed, leased or otherwise
disposed of in the ordinary course of business consistent with past
practice;
(x) the
Seller has not discharged or satisfied any Lien, or paid any obligation or
liability (fixed or contingent), except in the ordinary course of business
consistent with past practice and which, in the aggregate, would not be material
to the Seller;
(xi) the
Seller has not canceled or compromised any debt or claim or amended, canceled,
terminated, relinquished, waived or released any Contract or right except in
the
ordinary course of business consistent with past practice and which, in the
aggregate, would not be material to the Seller;
-9-
(xii) the
Seller has not made or committed to make any capital expenditures or capital
additions or betterments in excess of $10,000 individually or $20,000 in the
aggregate;
(xiii) the
Seller has not instituted or settled any material legal proceeding;
and
(xiv) the
Seller has not agreed to do anything set forth in this Section 3.9.
3.10. Taxes.
(a) Except
as
set forth on Schedule 3.10(a), to the best of the Seller’s knowledge, (A) all
Tax returns required to be filed by or on behalf of the Seller have been
properly prepared and duly and timely filed with the appropriate taxing
authorities in all jurisdictions in which such Tax returns are required to
be
filed (after giving effect to any valid extensions of time in which to make
such
filings), and all such Tax returns were true, complete and correct in all
material respects; (B) all Taxes payable by or on behalf of the Seller or in
respect of its income, assets or operations have been fully and timely paid,
and
adequate reserves or accruals for Taxes have been provided in the Seller Balance
Sheet with respect to any period for which Tax Returns have not yet been filed
or for which Taxes are not yet due and owing; and (C) the Seller has not
executed or filed with the Internal Revenue Service (the “IRS”) or any other
taxing authority any agreement, waiver or other document or arrangement
extending or having the effect of extending the period for assessment or
collection of Taxes (including, but not limited to, any applicable statute
of
limitation), and no power of attorney with respect to any Tax matter is
currently in force. “Tax or Taxes” means all federal, state, local or other
taxes or similar governmental charges, fees, levies or assessments.
(b) Except
as
set forth on Schedule 3.10(b), the Seller has complied in all material respects
with all applicable laws (as defined in Section 3.18), rules and regulations
relating to the payment and withholding of Taxes and has duly and timely
withheld from employee salaries, wages and other compensation and has paid
over
to the appropriate taxing authorities all amounts required to be so withheld
and
paid over for all periods under all Laws.
(c) Purchaser
has received complete copies of (A) all federal, state, local and foreign income
or franchise Tax Returns of the Seller relating to the taxable periods since
2003 and (B) any audit report issued within the last three years relating to
any
material Taxes due from or with respect to the its income, assets or operations.
All income and franchise Tax returns filed by or on behalf of the Seller for
the
taxable years ended on the respective dates set forth on Schedule 3.10 have
been
examined by the relevant taxing authority or the statute of limitations with
respect to such Tax Returns has expired.
(d) Schedule
3.10 lists all material types of Taxes paid and material types of Tax returns
filed by or on behalf of the Seller. Except as set forth on Schedule 3.10,
no
claim has been made by a taxing authority in a jurisdiction where the Seller
does not file Tax Returns such that it is or may be subject to taxation by
that
jurisdiction.
(e) Except
as
set forth on Schedule 3.10, all deficiencies asserted or assessments made as
a
result of any examinations by the IRS or any other taxing authority of the
Tax
Returns of or covering or including the Seller that are owed by the Seller
have
been fully paid, and there are no other audits or investigations by any taxing
authority in progress, nor has the Seller received any written notice from
any
taxing authority that it intends to conduct such an audit or investigation.
No
issue has been raised in writing by a federal, state, local or foreign taxing
authority in any current or prior examination which, by application of the
same
or similar principles, could reasonably be expected to result in a proposed
deficiency for any subsequent taxable period.
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(f) Except
as
set forth on Schedule 3.10, the Seller has not (A) agreed to or is not required
to make any adjustments pursuant to Section 481(a) of the Code or any similar
provision of state, local or foreign law by reason of a change in accounting
method initiated by the Seller or has any knowledge that the IRS has proposed
any such adjustment or change in accounting method, or has any application
pending with any taxing authority requesting permission for any changes in
accounting methods that relate to the business or operations of the Seller,
(B)
executed or entered into a closing agreement pursuant to Section 7121 of the
Code or any predecessor provision thereof or any similar provision of state,
local or foreign law with respect to the Seller, or (C) requested any extension
of time within which to file any Tax Return, which Tax Return has since not
been
filed within the period of limitations.
(g) No
property owned by the Seller is (i) property required to be treated as being
owned by another Person pursuant to the provisions of Section 168(f)(8) of
the
Internal Revenue Code of 1954, as amended and in effect immediately prior to
the
enactment of the Tax Reform Act of 1986, (ii) constitutes “tax-exempt use
property” within the meaning of Section 168(h)(1) of the Code or (iii) is
“tax-exempt bond financed property” within the meaning of Section 168(g) of the
Code.
(h) The
Seller is not a foreign person within the meaning of Section 1445 of the
Code.
(i) The
Seller is not a party to any tax sharing or similar agreement or arrangement
(whether or not written) pursuant to which it will have any obligation to make
any payments after the Closing.
(j) There
is
no contract, agreement, plan or arrangement covering any person that,
individually or collectively, could give rise to the payment of any amount
that
would not be deductible by the Purchaser, the Affiliates or their respective
affiliates by reason of Section 280G of the Code, or would constitute
compensation in excess of the limitation set forth in Section 162(m) of the
Code.
(k) The
Seller is not subject to any private letter ruling of the IRS or comparable
rulings of other taxing authorities.
(l) There
are
no liens as a result of any unpaid Taxes upon any of the assets of the
Seller.
(m) Except
as
set forth on Schedule 3.10, the Seller has no elections in effect for federal
income tax purposes under Sections 108, 168, 441, 463, 472, 1017, 1033 or 4977
of the Code.
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(n) The
Seller has never owned any Subsidiaries and has never been a member of any
consolidated, combined or affiliated group of corporations for any Tax
purposes.
3.11. Real
Property.
(a) Seller
does not own any interest in any real property. Schedule 3.11(a) sets forth
a
complete list of all real property and interests in real property leased by
the
Seller (individually, a “Real Property Lease” and the real properties specified
in such leases being referred to herein individually as a “Seller Property” and
collectively as the “Seller Properties”) as lessee or lessor. The Seller
Property constitutes all interests in real property currently used or currently
held for use in connection with the Business of the Seller and which are
necessary for the continued operation of the Business of the Seller as the
Business is currently conducted. The Seller has a valid and enforceable
leasehold interest under each of the Real Property Leases, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in
a
proceeding at law or in equity), and Seller has not received any written notice
of any default or event that with notice or lapse of time, or both, would
constitute a default by the Seller under any of the Real Property Leases. All
of
the Seller Property, buildings, fixtures and improvements thereon owned or
leased by the Seller are in good operating condition and repair (subject to
normal wear and tear). The Seller has delivered or otherwise made available
to
the Purchaser true, correct and complete copies of the Real Property Leases,
together with all amendments, modifications or supplements, if any,
thereto.
(b) To
the
best knowledge of the Seller, the Seller’s landlord has all material
certificates of occupancy and Permits of any Governmental Body necessary or
useful for the current use and operation of each Seller Property, and the Seller
has fully complied with all material conditions of the Permits applicable to
it.
No default or violation, or event that with the lapse of time or giving of
notice or both would become a default or violation, has occurred in the due
observance of any Permit.
(c) To
the
best knowledge of the Seller, there does not exist any actual or threatened
or
contemplated condemnation or eminent domain proceedings that affect any Seller
Property or any part thereof, and the Seller has not received any notice, oral
or written, of the intention of any Governmental Body or other Person to take
or
use all or any part thereof.
(d) The
Seller has not received any written notice from any insurance company that
has
issued a policy with respect to any Seller Property requiring performance of
any
structural or other repairs or alterations to such Seller Property.
(e) The
Seller does not own or hold, and is not obligated under or a party to, any
option, right of first refusal or other contractual right to purchase, acquire,
sell, assign or dispose of any real estate or any portion thereof or interest
therein.
(i)
(f) Except
as
specifically set forth in this Agreement to the contrary, Purchaser assumes
no
liability with respect to any Real Property Lease or Seller
Property.
-12-
3.12. Tangible
Personal Property.
(a) Schedule
3.12(a) sets forth all leases of personal property (“Personal Property Leases”)
involving annual payments in excess of $10,000 relating to personal property
used in the business of the Seller or to which the Seller is a party or by
which
the properties or assets of the Seller is bound. The Seller has delivered or
otherwise made available to the Purchaser true, correct and complete copies
of
the Personal Property Leases, together with all amendments, modifications or
supplements thereto.
(b) The
Seller has a valid leasehold interest under each of the Personal Property Leases
under which it is a lessee, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally and subject, as to enforceability, to general principles
of
equity (regardless of whether enforcement is sought in a proceeding at law
or in
equity), and there is no default under any Personal Property Lease by the
Seller, or, to the best knowledge of the Seller, by any other party thereto,
and
no event has occurred that with the lapse of time or the giving of notice or
both would constitute a default thereunder.
(c) The
Seller has good and marketable title to all of the items of tangible personal
property reflected in the Seller Balance Sheet (except as sold or disposed
of
subsequent to the date thereof in the ordinary course of business consistent
with past practice), free and clear of any and all liens other than as set
forth
on Schedule 3.12. All such items of tangible personal property which,
individually or in the aggregate, are material to the operation of the business
of the Seller are in good condition and in a state of good maintenance and
repair (ordinary wear and tear excepted) and are suitable for the purposes
used.
(d) All
of
the items of tangible personal property used by the Seller under the Personal
Property Leases are in good condition and repair (ordinary wear and tear
excepted) and are suitable for the purposes used.
3.13. Intangible
Property.
Schedule
3.13 contains a complete and correct list of each patent, trademark, trade
name,
service xxxx and copyright owned or used by the Seller as well as all
registrations thereof and pending applications therefor, and each license or
other agreement relating thereto. Except as set forth on Schedule 3.13, each
of
the foregoing is owned by the party shown on such Schedule as owning the same,
free and clear of all mortgages, claims, liens, security interests, charges
and
encumbrances and is in good standing and not the subject of any challenge.
There
have been no claims made and the Seller has not received any notice or otherwise
knows or has reason to believe that any of the foregoing is invalid or conflicts
with the asserted rights of others. The Seller possesses, owns or licenses
all
patents, patent licenses, trade names, trademarks, service marks, brand marks,
brand names, copyrights, know-how, formulae and other proprietary and trade
rights necessary for the conduct of its business as now conducted, not subject
to any restrictions and without any known conflict with the rights of others
and
has not forfeited or otherwise relinquished any such patent, patent license,
trade name, trademark, service xxxx, brand xxxx, brand name, copyright,
know-how, formulate or other proprietary right necessary for the conduct of
its
business as conducted on the date hereof. The Seller is not under any obligation
to pay any royalties or similar payments in connection with any license to
any
Affiliate thereof. As used in this Agreement, “Affiliate” means, with respect to
any person, any other person directly or indirectly controlling, controlled
by
or under common control with such person and for purposes of individuals,
Affiliates would include an individual’s spouse and minor children.
-13-
3.14. Material
Contracts.
Schedule
3.14 sets forth all of the following Contracts to which the Seller is a party
or
by which it is bound (collectively, the “Material Contracts”): (i) Contracts
with any current officer or director of the Seller; (ii) Contracts with any
labor union or association representing any employee of the Seller; (iii)
Contracts pursuant to which any party is required to purchase or sell a stated
portion of its requirements or output from or to another party; (iv) Contracts
for the sale of any of the assets of the Seller other than in the ordinary
course of business or for the grant to any person of any preferential rights
to
purchase any of its assets; (v) joint venture agreements; (vi) material
Contracts containing covenants of the Seller not to compete in any line of
business or with any person in any geographical area or covenants of any other
person not to compete with the Seller in any line of business or in any
geographical area; (vii) Contracts relating to the acquisition by the Seller
of
any operating business or the capital stock of any other person; (viii)
Contracts relating to the borrowing of money; or (ix) any other Contracts,
other
than Real Property Leases, which involve the expenditure of more than $20,000
in
the aggregate or $10,000 annually or require performance by any party more
than
one year from the date hereof. There have been made available to the Purchaser,
its affiliates and their representatives true and complete copies of all of
the
Material Contracts. Except as set forth on Schedule 3.14, all of the Material
Contracts and other agreements are in full force and effect and are the legal,
valid and binding obligation of the Seller, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity). Except
as
set forth on Schedule 3.14, the Seller is not in default in any material respect
under any Material Contracts, nor, to the knowledge of the Seller, is any other
party to any Material Contract in default thereunder in any material
respect.
3.15. Employee
Benefits.
(a) Schedule
3.15(a) sets forth a complete and correct list of (i) all “employee benefit
plans”, as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”), and any other pension plans or employee
benefit arrangements, programs or payroll practices (including, without
limitation, severance pay, vacation pay, company awards, salary continuation
for
disability, sick leave, retirement, deferred compensation, bonus or other
incentive compensation, stock purchase arrangements or policies,
hospitalization, medical insurance, life insurance and scholarship programs)
maintained by the Seller or to which the Seller contributes or is obligated
to
contribute thereunder with respect to employees of the Seller (“Employee Benefit
Plans”) and (ii) all “employee pension plans”, as defined in Section 3(2) of
ERISA, maintained by the Seller or any trade or business (whether or not
incorporated) which are under control, or which are treated as a single
employer, with Seller under Section 414(b), (c), (m) or (o) of the Code (“ERISA
Affiliate”) or to which the Seller or any ERISA Affiliate contributed or is
obligated to contribute thereunder (“Pension Plans”). Schedule 3.15(a)
identifies, in separate categories, Employee Benefit Plans or Pension Plans
that
are (i) subject to Section 4063 and 4064 of ERISA (“Multiple Employer Plans”),
(ii) multiemployer plans (as defined in Section 4001(a)(3) of ERISA)
(“Multiemployer Plans”) or (iii) “benefit plans”, within the meaning of Section
5000(b)(1) of the Code providing continuing benefits after the termination
of
employment (other than as required by Section 4980B of the Code or Part 6 of
Title I of ERISA and at the former employee’s or his beneficiary’s sole
expense).
-14-
(b) Each
of
the Employee Benefit Plans and Pension Plans intended to qualify under Section
401 of the Code (“Qualified Plans”) so qualifies and the trusts maintained
thereto are exempt from federal income taxation under Section 501 of the Code,
and, except as disclosed on Schedule 3.15(b), nothing has occurred with respect
to the operation of any such plan which could cause the loss of such
qualification or exemption or the imposition of any liability, penalty or tax
under ERISA or the Code.
(c) All
contributions and premiums required by Law or by the terms of any Employee
Benefit Plan or Pension Plan which are money purchase plans or any agreement
relating thereto have been timely made (without regard to any waivers granted
with respect thereto) to any funds or trusts established thereunder or in
connection therewith, and no accumulated funding deficiencies exist in any
of
such plans subject to Section 412 of the Code.
(d) No
Employee Benefit Plans and Pension Plans are subject to Title IV of
ERISA.
(e) Each
of
the Employee Benefit Plans and Pension Plans has been maintained, in all
material respects, in accordance with its terms and all provisions of applicable
Law.
3.16.
Labor.
(a) Except
as
set forth on Schedule 3.16(a), the Seller is not party to any labor or
collective bargaining agreement and there are no labor or collective bargaining
agreements which pertain to employees of the Seller. The Seller has delivered
or
otherwise made available to the Purchaser true, correct and complete copies
of
the labor or collective bargaining agreements listed on Schedule 3.16(a),
together with all amendments, modifications or supplements thereto.
(b) Except
as
set forth on Schedule 3.16(b), no employees of the Seller are represented by
any
labor organization. No labor organization or group of employees of the Seller
has made a pending demand for recognition, and there are no representation
proceedings or petitions seeking a representation proceeding presently pending
or, to the best knowledge of the Seller, threatened to be brought or filed,
with
the National Labor Relations Board or other labor relations tribunal. There
is
no organizing activity involving the Seller pending or, to the best knowledge
of
the Seller, threatened by any labor organization or group of employees of the
Seller.
(c) There
are
no (i) strikes, work stoppages, slowdowns, lockouts or arbitrations or (ii)
material grievances or other labor disputes pending or, to the best knowledge
of
the Seller, threatened against or involving the Seller. There are no unfair
labor practice charges, grievances or complaints pending or, to the best
knowledge of the Seller, threatened by or on behalf of any employee or group
of
employees of the Seller.
-15-
3.17. Litigation.
Except
as set forth in Schedule 3.17, there is no suit, action, proceeding,
investigation, claim or order pending or, to the knowledge of the Seller,
overtly threatened against the Seller (or to the knowledge of the Seller,
pending or threatened, against any of the officers, directors or key employees
of the Seller with respect to its business activities on behalf of the Seller,
or to which the Seller is otherwise a party, which, if adversely determined,
would have a Material Adverse Effect, before any court, or before any
governmental department, commission, board, agency, or instrumentality; nor
to
the knowledge of the Seller is there any reasonable basis for any such action,
proceeding, or investigation. Except as set forth in Schedule 3.17, the Seller
is not subject to any judgment, order or decree of any court or governmental
agency except to the extent the same are not reasonably likely to have a
Material Adverse Effect and is not engaged in any legal action to recover monies
due it or for damages sustained by it.
3.18. Compliance
with Laws; Permits.
(a) Subject
to Section 3.10, the Seller is in compliance with all federal, state and local
statutes, laws, rules, regulations, orders and ordinances (“Laws”) applicable to
it or to the conduct of its business or operations or the use of its properties
(including any leased properties) and assets, except for such non-compliances
as
would not, individually or in the aggregate, have a Material Adverse Effect.
The
Seller has all governmental permits and approvals from state, federal or local
authorities which are required for it to operate its business, except for those
the absence of which would not, individually or in the aggregate, have a
Material Adverse Effect.
3.19. Environmental
Matters.
Except
as set forth on Schedule 3.19 hereto:
(a) the
operations of the Seller are in compliance with all applicable laws promulgated
by any governmental entity which prohibit, regulate or control any hazardous
material or hazardous material activity (“Environmental Laws”) and all permits
issued pursuant to Environmental Laws or otherwise;
(b) the
Seller has obtained all permits required under all applicable Environmental
Laws
necessary to operate its business;
(c) the
Seller is not the subject of any outstanding written order or contract with
any
governmental authority or person respecting (i) Environmental Laws, (ii)
Remedial Action or (iii) any release or threatened release of a Hazardous
Material (“Release”);
(d) the
Seller has not received any written communication alleging either or both that
it may be in violation of any Environmental Law, or any permit issued pursuant
to Environmental Law, or may have any liability under any Environmental
Law;
(e) the
Seller does not have any current contingent liability in connection with any
Release into the indoor or outdoor environment (whether on-site or
off-site);
(f) there
are
no investigations of the business, operations, or currently or previously owned,
operated or leased property of the Seller pending or, to the Seller’s knowledge,
threatened which could lead to the imposition of any liability pursuant to
Environmental Law;
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(g) to
the
Seller’s knowledge, there is not located at any of the properties of the Seller
any (i) underground storage tanks, (ii) asbestos-containing material or (iii)
equipment containing polychlorinated biphenyls; and,
(h) the
Seller has provided to the Purchaser all environmentally related audits,
studies, reports, analyses, and results of investigations that have been
performed with respect to the currently or previously owned, leased or operated
properties of the Seller.
3.20. Insurance.
Schedule
3.20 sets forth a complete and accurate list of all policies of insurance of
any
kind or nature covering the Seller or any of its employees, properties or
assets, including, without limitation, policies of life, disability, fire,
theft, workers compensation, employee fidelity and other casualty and liability
insurance. All such policies are in full force and effect, and, to the Seller’s
knowledge, it is not in default of any provision thereof, except for such
defaults as would not, individually or in the aggregate, have a Material Adverse
Effect.
3.21. Inventories;
Receivables; Payables.
(a) The
inventories of the Seller are in good and marketable condition, and are saleable
in the ordinary course of business.
(b)
All
accounts receivable of the Seller has arisen from bona fide transactions in
the
ordinary course of business consistent with past practice. All accounts
receivable of the Seller reflected on the Seller Balance Sheet are good and
collectible at the aggregate recorded amounts thereof, net of any applicable
reserve for returns or doubtful accounts reflected thereon, which reserves
are
adequate and were calculated in a manner consistent with past practice and
in
accordance with GAAP consistently applied. All accounts receivable arising
after
the Seller Balance Sheet Date are good and collectible at the aggregate recorded
amounts thereof, net of any applicable reserve for returns or doubtful accounts,
which reserves are adequate and were calculated in a manner consistent with
past
practice and in accordance with GAAP consistently applied. The parties agree
and
acknowledge that Purchaser’s sole remedy for a breach of this representation and
warranty shall be to require Seller to repurchase uncollected accounts
receivable as per Section 1.4(b)(ii) hereof.
(c) All
accounts payable of the Seller reflected in the Seller Balance Sheet or arising
after the date thereof are the result of bona fide transactions in the ordinary
course of business and have been paid or are not yet due and
payable.
3.22. [INTENTIONALLY
LEFT BLANK]
3.23. Banks.
Schedule
3.23 contains a complete and correct list of the names and locations of all
banks in which the Seller has accounts or safe deposit boxes and the names
of
all persons authorized to draw thereon or to have access thereto. Except as
set
forth on Schedule 3.23, no person holds a power of attorney to act on behalf
of
the Seller.
3.24. No
Misrepresentations.
No
representation or warranty of the Seller contained in this Agreement or in
any
schedule hereto or in any certificate or other instrument furnished by the
Seller to the Purchaser pursuant to the terms hereof, taken as a whole, contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained herein or therein not
misleading.
Without
in any way limiting the foregoing, (i) Seller acknowledges that it prepared
all
schedules (with the exception of Schedules1.4(f), 2.2(d), and 4.3) attached
hereto and represents that such schedules are true and accurate; and (ii) with
regard to Schedule 1.1(c), Seller agrees that if any Intellectual Property
is
not included on such schedule, it is nonetheless intended to be, and is hereby,
transferred to Purchaser, and Seller will take any and all actions as reasonably
requested by Purchaser to perfect and/or memorialize Purchaser’s interest in
such Intellectual Property (in accordance with the provisions of Section 1.7
hereunder).
-17-
3.25. Financial
Advisors.
No
Person has acted, directly or indirectly, as a broker, finder or financial
advisor for the Seller in connection with the transactions contemplated by
this
Agreement and no Person is entitled to any fee or commission or like payment
in
respect thereof.
3.26. Investment
Intention.
The
Seller is acquiring the Securities for its own account, for investment purposes
only and not with a view to the distribution (as such term is used in Section
2(11) of the Securities Act of 1933. The Seller understands that the Securities
have not been registered under the Securities Act and cannot be sold unless
subsequently registered under the Securities Act or an exemption from such
registration is available.
3.27. Investment
Experience.
The
Seller acknowledges that it can bear the economic risk and complete loss of
its
investment in the Securities and has such knowledge and experience in financial
or business matters that it is capable of evaluating the merits and risks of
the
investment contemplated hereby.
3.28. Disclosure
of Information.
The
Seller has had an opportunity to receive all additional information related
to
the Company requested by it and to ask questions of and receive answers from
the
Company regarding the Company, its business and the terms and conditions of
the
Securities. The Seller acknowledges receipt of copies of the SEC Filings.
Neither such inquiries nor any other due diligence investigation conducted
by
the Seller shall modify, amend or affect the Seller’s right to rely on the
Company’s representations and warranties contained in this Agreement.
3.29. Legends.
It is
understood that, except as provided below, certificates evidencing the
Securities may bear the following or any similar legend:
“The securities represented hereby may not be transferred unless (i) such
securities have been registered for sale pursuant to the Securities Act of
1933,
as amended, (ii) such securities may be sold pursuant to Rule 144, or (iii)
the
Company has received an opinion of counsel reasonably satisfactory to it that
such transfer may lawfully be made without registration under the Securities
Act
of 1933 or qualification under applicable state securities laws”.
3.30. Patriot
Act.
The
Seller certifies that, to the best of the Seller’s knowledge, the Seller has not
been designated, and is not owned or controlled, by a “suspected terrorist” as
defined in Executive Order 13224. The Seller hereby acknowledges that the
Purchaser seeks to comply with all applicable Laws concerning money laundering
and related activities. In furtherance of those efforts, the Seller hereby
represents, warrants and agrees that: (i) none of the cash or property owned
by
the Seller has been or shall be derived from, or related to, any activity that
is deemed criminal under United States law; and (ii) no contribution or payment
by the Seller has, and this Agreement will not, cause the Seller to be in
violation of the United States Bank Secrecy Act, the United States International
Money Laundering Control Act of 1986 or the United States International Money
Laundering Abatement and Anti-Terrorist Financing Act of 2001.
-18-
ARTICLE
IV.
REPRESENTATIONS
AND WARRANTIES OF PURCHASER
The
Purchaser represents and warrants that:
4.1. Organization
and Good Standing. Purchaser
is a corporation duly incorporated and validly existing and in good standing
under the laws of the State of Delaware.
4.2. Authorization
of Agreement.
(a) The
Purchaser has full corporate power and authority to execute and deliver this
Agreement and each other agreement, document, instrument or certificate
contemplated by this Agreement or to be executed by the Purchaser in connection
with the consummation of the transactions contemplated hereby and thereby
(together with the Employment Agreement, the “Purchaser Documents”), and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by the Purchaser of this Agreement and each Purchaser
Document have been duly authorized by all necessary corporate action on behalf
of the Purchaser. This Agreement has been, and each Purchaser Document will
be
at or prior to the Closing, duly executed and delivered by the Purchaser and
(assuming the due authorization, execution and delivery by the other parties
hereto and thereto) this Agreement constitutes, and each Purchaser Document
when
so executed and delivered will constitute, legal, valid and binding obligations
of the Purchaser, enforceable against the Purchaser in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in
equity).
(b) Purchaser
has the corporate power, capacity and authority to enter into and complete
this
Agreement;
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4.3. Conflicts;
Consents of Third Parties.
(a) Except
as
set forth on Schedule 4.3 hereto, neither of the execution and delivery by
the
Purchaser of the Purchaser Documents, nor the compliance by the Purchaser with
any of the provisions hereof or thereof will (i) conflict with, or result in
the
breach of, any provision of the certificate of incorporation, or certificate
of
formation, or by-laws, or limited liability company agreement of the Purchaser,
respectively, (ii) conflict with, violate, result in the breach of, or
constitute a default under any note, bond, mortgage, indenture, license,
agreement or other obligation to which the Purchaser is a party or by which
the
Purchaser or its properties or assets are bound or (iii) violate any statute,
rule, regulation, order or decree of any governmental body or authority by
which
the Purchaser is bound, except, in the case of clauses (ii) and (iii), for
such
violations, breaches or defaults as would not, individually or in the aggregate,
have a material adverse effect on the business, properties, results of
operations, prospects, conditions (financial or otherwise) of the Purchaser,
taken as a whole.
(b) No
consent, waiver, approval, order, permit or authorization of, or declaration
or
filing with, or notification to, any Person or Governmental Body is required
on
the part of the Purchaser in connection with the execution and delivery of
this
Agreement or the Purchaser Documents or the compliance by Purchaser with any
of
the provisions hereof or thereof.
4.4. Litigation.
There
are no Legal Proceedings pending or, to the best knowledge of the Purchaser,
threatened that are reasonably likely to prohibit or restrain the ability of
the
Purchaser to enter into this Agreement or consummate the transactions
contemplated hereby.
4.5. Financial
Advisors.
No
person has acted, directly or indirectly, as a broker, finder or financial
advisor for the Purchaser in connection with the transactions contemplated
by
this Agreement and no person is entitled to any fee or commission or like
payment in respect thereof.
4.6. Patriot
Act.
The
Purchaser certifies that, to the best of the Purchaser’s knowledge, the
Purchaser has not been designated, and is not owned or controlled, by a
“suspected terrorist” as defined in Executive Order 13224. The Purchaser hereby
acknowledges that the Seller seeks to comply with all applicable Laws concerning
money laundering and related activities. In furtherance of those efforts, the
Purchaser hereby represents, warrants and agrees that: (i) none of the cash
or
property owned by the Seller has been or shall be derived from, or related
to,
any activity that is deemed criminal under United States law; and (ii) no
contribution or payment by the Purchaser has, and this Agreement will not,
cause
the Purchaser to be in violation of the United States Bank Secrecy Act, the
United States International Money Laundering Control Act of 1986 or the United
States International Money Laundering Abatement and Anti-Terrorist Financing
Act
of 2001.
4.7. No
Knowledge of Breaches.
Purchaser does not have actual knowledge of any breach of any representation
and
warranty made by Seller and the Owners hereunder.
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ARTICLE
V.
COVENANTS
5.1. Access
to Information.
The
Seller and Owners agree that, prior to the Closing Date, the Purchaser shall
be
entitled, through its officers, employees and representatives (including,
without limitation, its legal advisors and accountants), to make such
investigation of the properties, businesses and operations of the Seller and
such examination of the books, records and financial condition of the Seller
as
it reasonably requests and to make extracts and copies of such books and
records. Any such investigation and examination shall be conducted during
regular business hours and under reasonable circumstances, and the Seller shall
cooperate fully therein. No investigation by the Purchaser prior to or after
the
date of this Agreement shall diminish or obviate any of the representations,
warranties, covenants or agreements of the Seller contained in the Seller
Documents. In
order
that the Purchaser may have full opportunity to make such physical, business,
accounting and legal review, examination or investigation as it may reasonably
request of the affairs of the Seller, Seller shall cause its officers,
employees, consultants, agents, accountants, attorneys and other representatives
to cooperate fully with such representatives in connection with such review
and
examination.
5.2. Conduct
of the Business Pending the Closing.
(a) Except
as
otherwise expressly contemplated by this Agreement or with the prior written
consent of the Purchaser, the Seller shall:
(i) conduct
its business only in the ordinary course consistent with past
practice;
(ii) use
its
best efforts to (A) preserve its present business operations, organization
(including, without limitation, management and the sales force) and goodwill
and
(B) preserve its present relationship with Persons having business dealings
with
it;
(iii) maintain
(A) all of its assets and properties in their current condition, ordinary wear
and tear excepted and (B) insurance upon all of its properties and assets in
such amounts and of such kinds comparable to that in effect on the date of
this
Agreement;
(iv) (A)
maintain its books, accounts and records in the ordinary course of business
consistent with past practices, (B) continue to collect accounts receivable
and
pay accounts payable utilizing normal procedures and without discounting or
accelerating payment of such accounts, and (C) comply with all contractual
and
other obligations applicable to its operation; and
(v) comply
in
all material respects with applicable Laws.
(b) Except
as
otherwise expressly contemplated by this Agreement or with the prior written
consent of the Purchaser, the Seller shall not:
(i) except
for trade payables and for indebtedness for borrowed money incurred in the
ordinary course of business and consistent with past practice, borrow monies
for
any reason or draw down on any line of credit or debt obligation, or become
the
guarantor, surety, endorser or otherwise liable for any debt, obligation or
liability (contingent or otherwise) of any other Person;
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(ii) subject
to any Lien (except for liens that do not materially impair the use of the
property subject thereto in their respective businesses as presently conducted),
any of its properties or assets (whether tangible or intangible);
(iii) acquire
any material properties or assets or sell, assign, transfer, convey, lease
or
otherwise dispose of any of its material properties or assets (except for fair
consideration in the ordinary course of business consistent with past
practice);
(iv) cancel
or
compromise any debt or claim or waive or release any material right except
in
the ordinary course of business consistent with past practice;
(v) enter
into any commitment for capital expenditures in excess of $5,000 for any
individual commitment and $10,000 for all commitments in the
aggregate;
(vi) introduce
any material change with respect to its operation, including any material change
in the types, nature, composition or quality of its products or services,
experience any material change in any contribution of its product lines to
its
revenues or net income, or, other than in the ordinary course of business,
make
any change in product specifications or prices or terms of distributions of
such
products;
(vii) enter
into any transaction or make or enter into any contract which by reason of
its
size or otherwise is not in the ordinary course of business consistent with
past
practice;
(viii) enter
into or agree to enter into any merger or consolidation with, any corporation
or
other entity, and not engage in any new business or invest in, make a loan,
advance or capital contribution to, or otherwise acquire the securities of
any
other Person;
(ix) except
for transfers of cash pursuant to normal cash management practices, make any
investments in or loans to, or pay any fees or expenses to, or enter into or
modify any contract with any Affiliate; or
(x) agree
to
do anything prohibited by this Section 5.2 or anything which would make any
of
the representations and warranties of the Seller in this Agreement or the Seller
Documents untrue or incorrect in any material respect as of any time through
and
including the Effective Time.
5.3. Consents.
The
Seller shall use its best efforts, and the Purchaser shall cooperate with the
Seller, to obtain at the earliest practicable date all consents and approvals
required to consummate the transactions contemplated by this Agreement,
including, without limitation, the consents and approvals referred to in Section
3.5(b) hereof; provided, however, that neither the Seller nor the Purchaser
shall be obligated to pay any consideration therefor to any third party from
whom consent or approval is requested.
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5.4. Other
Actions.
Each of
the Seller, Owners, and Purchaser shall use its best efforts to (i) take all
actions necessary or appropriate to consummate the transactions contemplated
by
this Agreement and (ii) cause the fulfillment at the earliest practicable date
of all of the conditions to their respective obligations to consummate the
transactions contemplated by this Agreement.
5.5. No
Solicitation.
The
Seller will not, and will not cause or permit any of its partners, officers,
employees, representatives or agents (collectively, the “Representatives”) to,
directly or indirectly, (i) discuss, negotiate, undertake, authorize, recommend,
propose or enter into, either as the proposed surviving, merged, acquiring
or
acquired corporation, any transaction involving a merger, consolidation,
business combination, purchase or disposition of any amount of the assets or
capital stock or other equity interest in it other than the transactions
contemplated by this Agreement (an “Acquisition Transaction”), (ii) facilitate,
encourage, solicit or initiate discussions, negotiations or submissions of
proposals or offers in respect of an Acquisition Transaction, (iii) furnish
or
cause to be furnished, to any Person, any information concerning its business,
operations, properties or assets in connection with an Acquisition Transaction,
or (iv) otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other Person to do or
seek
any of the foregoing. The Seller will inform the Purchaser in writing
immediately following the receipt by the Seller or any Representative of any
proposal or inquiry in respect of any Acquisition Transaction.
5.6. Provisions
for Liabilities Not Assumed. Prior
to
any final winding up or dissolution, the Seller will pay or adequately provide
for all of its known or reasonably anticipated claims, liabilities and
obligations that are not expressly assumed by the Purchaser pursuant to
Article 2. The Seller will make no distribution to its shareholders of the
proceeds of the transactions contemplated by this Agreement until all of its
creditors are paid and for a minimum of one (1) year following the
Closing.
5.7. Preservation
of Records.
The
Seller, Owners, and Purchaser agree that each of them shall preserve and keep
the records held by it relating to the business of the Seller for a period
of
three years from the Closing Date (six years with respect to tax related
records) and shall make such records and personnel available to the other as
may
be reasonably required by such party in connection with, among other things,
preparation of financial statements, disclosure of information to the Securities
and Exchange Commission, stock exchange or similar entity, any insurance claims
by, legal proceedings against or governmental investigations of the Seller,
the
Purchaser or any of their Affiliates or in order to enable the Seller or
Purchaser to comply with their respective obligations under this Agreement,
the
Employment Agreements and each other agreement, document or instrument
contemplated hereby or thereby. In the event the Seller or Purchaser wishes
to
destroy such records after that time, such party shall first give ninety (90)
days prior written notice to the other and such other party shall have the
right
at its option and expense, upon prior written notice given to such party within
that ninety (90) day period, to take possession of the records within one
hundred and eighty (180) days after the date of such notice.
5.8. Continued
Cooperation.
From the
date of Closing through June 30, 2008, Xxxxxx shall make himself available
to
the Purchaser to provide such consulting services as may be requested by the
Purchaser to ensure the orderly functioning of the Business and incorporation
of
the assets into Purchaser’s business.
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5.9. Release
of Personal Guarantees.
Purchaser agrees to use its best efforts to secure the release of any personal
guarantees given by the Owners in connection with the Leased Assets which
Purchaser shall acquire pursuant to this Agreement. A true and accurate schedule
setting forth all such personal guarantees is attached hereto as Schedule 5.9.
However, each of the Owners agrees to be jointly and severally liable to
Purchaser to the extent that Purchaser expends more than 105% of the total
dollar amount set forth in Schedule 1.3(a)(i) to discharge all of the
liabilities set forth on Schedule 1.3(a) (i). Similarly, if Purchaser only
settles a portion of the liabilities set forth on Schedule 1.3(a)(i), each
of
the Owners agrees to be jointly and severally liable to Purchaser to the extent
that Purchaser expends more than 105% of the total dollar amount allocated
to
those liabilities settled by Purchaser.
5.10. Publicity.
Neither
the Seller nor the Purchaser shall issue any press release or public
announcement concerning this Agreement or the transactions contemplated hereby
without obtaining the prior written approval of the other party hereto, which
approval will not be unreasonably withheld or delayed, unless, in the sole
judgment of the Purchaser or the Seller, disclosure is otherwise required by
applicable Law or by the applicable rules of any stock exchange on which the
Purchaser lists securities, provided that, to the extent required by applicable
Law, the party intending to make such release shall use its best efforts
consistent with such applicable Law to consult with the other party with respect
to the text thereof.
5.11. Use
of Name.
The
Seller hereby agrees that upon the consummation of the transactions contemplated
hereby, the Purchaser shall have the sole right to the use of the name “Peer
Impact” and variations thereof and the Seller shall not, and shall not cause or
permit any Affiliate to use such name or any variation or simulation
thereof.
ARTICLE
VI.
CONDITIONS
TO CLOSING
6.1. Conditions
Precedent to Obligations of Purchaser.
The
obligation of the Purchaser to consummate the transactions contemplated by
this
Agreement is subject to the approval of its Board of Directors, which may be
withheld in the Board’s sole discretion, and to the fulfillment, on or prior to
the Closing Date, of each of the following conditions (any or all of which
may
be waived by the Purchaser in whole or in part to the extent permitted by
applicable Law):
(a) all
representations and warranties of the Seller and Owners contained herein shall
be true and correct as of the date hereof;
(b) all
representations and warranties of the Seller contained herein qualified as
to
materiality shall be true and correct, and the representations and warranties
of
the Seller contained herein not qualified as to materiality shall be true and
correct in all material respects, at and as of the Closing Date with the same
effect as though those representations and warranties had been made again at
and
as of that time;
(c) the
Seller 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 it on or prior to the Closing Date;
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(d) the
Purchaser shall have been furnished with certificates (dated the Closing date
and in form and substance reasonably satisfactory to the Purchaser) executed
by
the Seller certifying as to the fulfillment of the conditions specified in
Sections 6.1(a), 6.1(b) and 6.1(c) hereof;
(e) the
Purchaser shall have obtained all consents and waivers referred to in Section
4.3 hereof with respect to the transactions contemplated by this Agreement
and
the Purchaser Documents;
(f) the
Purchaser shall have been furnished with certificates (dated the Closing date
and in form and substance reasonably satisfactory to the Purchaser) executed
by
the Seller certifying as to the fulfillment of the conditions specified in
Sections 6.1(a), 6.1(b) and 6.1(c) hereof, and resolution(s) of the Board of
Directors of the Seller authorizing the sale of the Assets as set forth in
this
Agreement;
(g) there
shall not have been or occurred any event which will have a Material Adverse
Effect;
(h) the
Seller shall have obtained all consents and waivers referred to in Section
3.5
hereof, in a form reasonably satisfactory to the Purchaser, with respect to
the
transactions contemplated by this Agreement and the Seller
Documents;
(i) no
Legal
Proceedings shall have been instituted or threatened or claim or demand made
against the Seller or the Purchaser seeking to restrain or prohibit or to obtain
substantial damages with respect to the consummation of the transactions
contemplated hereby, and there shall not be in effect any order by a
Governmental Body of competent jurisdiction restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated
hereby;
(j) all
agreements and consents to the assignment of the Selected Contracts (except
to
the extent Purchaser has notified Seller that Purchaser will obtain or has
obtained such consent(s)), all estoppel certificates, recognition agreements,
nondisturbance agreements and all waivers of termination, cancellation and
other
rights, deemed by Purchaser to be necessary or advisable shall have been
obtained by the Seller and delivered to the Purchaser, and none of such
agreements, consents or waivers shall be conditioned upon the giving of any
consideration by the Purchaser or any change in the terms of such
contracts.
(k)
the
Seller shall have delivered a Subordination Agreement, in the form attached
hereto as Exhibit C pursuant to which Xxxxxxx Xxxxxx, Xxxx Xxxxxxxx and Xxxxxxx
Xxxxxx shall agree to subordinate all claims which they may have against the
Seller or its assets, existing now or later, to all other claims of the
Company’s creditors.
(l) the
Purchaser shall have received disclosure schedules required pursuant to Article
3 hereof, which shall be reasonably satisfactory to the Purchaser.
6.2. Conditions
Precedent to Obligations of the Seller and Owners.
The
obligations of the Seller and Owners to consummate the transactions contemplated
by this Agreement are subject to the fulfillment, prior to or on the Closing
Date, of each of the following conditions (any or all of which may be waived
by
the Seller in whole or in part to the extent permitted by applicable
law):
-25-
(a) all
representations and warranties of the Purchaser contained herein shall be true
and correct as of the date hereof;
(b) all
representations and warranties of the Purchaser contained herein qualified
as to
materiality shall be true and correct, and all representations and warranties
of
Purchaser contained herein not qualified as to materiality shall be true and
correct in all material respects, at and as of the Closing Date with the same
effect as though those representations and warranties had been made again at
and
as of that date;
(c) 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 on or prior to the Closing Date;
(d) the
Seller shall have been furnished with certificates (dated the Closing Date
and
in form and substance reasonably satisfactory to the Seller) executed by the
Chief Executive Officer and Chief Financial Officer of the Purchaser certifying
as to the fulfillment of the conditions specified in Sections 6.2(a), 6.2(b)
and
6.2(c), and with resolution(s) of the Board of Directors of the Purchaser
authorizing the purchase of the Assets as set forth in this
Agreement;;
(e) there
shall not be in effect any order by a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation
of
the transactions contemplated hereby.
ARTICLE
VII.
DOCUMENTS
TO BE DELIVERED
7.1.
Documents
to be Delivered by the Seller.
At the
Closing, the Seller shall deliver, or cause to be delivered, to the Purchaser
the following:
(a) the
opinion of Xxxxxxxx and Xxxxxxxx, counsel to the Seller, in a mutually
acceptable form;
(b) copies
of
all consents and waivers referred to in Section 6.1(h) hereof;
(c) the
Compensation Escrow Agreement and the Escrow Agreement, substantially in the
form of Exhibits
A and B
hereto,
duly executed;
(d) the
Subordination Agreements, in the form of Exhibit
C hereto,
duly executed;
(e) the
certificates and resolutions referred to in Section 6.1(f) hereof;
and
(f) such
other documents as the Purchaser shall reasonably request.
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7.2. Documents
to be Delivered by the Purchaser.
At the
Closing, the Purchaser shall deliver to the following:
(a) the
Securities;
(b) the
Compensation Escrow Agreement and the Escrow Agreement, substantially in the
form of Exhibit
A and B
hereto,
duly executed;
(c) the
certificates referred to in Section 6.2(d) hereof; and
(d) such
other documents as the Seller shall reasonably request.
ARTICLE
VIII.
INDEMNIFICATION
8.1. Indemnification.
(a) Subject
to Section 8.2 hereof, the Seller and the Owners hereby agree to indemnify
and
hold the Purchaser and its respective directors, officers, employees,
Affiliates, agents, successors and assigns (collectively, the “Purchaser
Indemnified Parties”) harmless from and against:
(i) any
and
all liabilities of the Seller of every kind, nature and description, absolute
or
contingent, existing as against the Seller prior to and including the Closing
Date or thereafter coming into being or arising by reason of any state of facts
existing, or any transaction entered into, on or prior to the Closing Date,
except to the extent that the same have been fully provided for (and accrued
and
applied as a liability) in the Purchaser Balance Sheet or were incurred in
the
ordinary course of business between the Seller Balance Sheet Date and the
Closing Date;
(ii) subject
to Section 9.3, any and all losses, liabilities, obligations, damages, costs
and
expenses based upon, attributable to or resulting from the failure of any
representation or warranty of the Seller set forth in Section 3 hereof, or
any
representation or warranty contained in any certificate delivered by or on
behalf of the Seller pursuant to this Agreement, to be true and correct in
all
respects as of the date made;
(iii) any
and
all losses, liabilities, obligations, damages, costs and expenses based upon,
attributable to or resulting from any Excluded Liabilities;
(iv) any
claim
by, or liability or obligation to any employee of the Seller in connection
with
his or her employment or termination of employment on or prior to the Closing
Date by the Seller;
(v) any
and
all losses, liabilities, obligations, damages, costs and expenses based upon,
attributable to or resulting from the breach of any covenant or other agreement
on the part of the Seller under this Agreement;
-27-
(vi) any
and
all notices, actions, suits, proceedings, claims, demands, assessments,
judgments, costs, penalties and expenses, including attorneys’ and other
professionals’ fees and disbursements (collectively, “Expenses”) incident to any
and all losses, liabilities, obligations, damages, costs and expenses with
respect to which indemnification is provided hereunder (collectively,
“Losses”).
(b) Subject
to Section 8.2, Purchaser hereby agree to indemnify and hold the Seller, the
Owners and their Affiliates, agents, successors and assigns (collectively,
the
“Seller Indemnified Parties”) harmless from and against:
(i) subject
to Section 9.3, any and all Losses based upon, attributable to or resulting
from
the failure of any representation or warranty of the Purchaser set forth in
Section 4 hereof, or any representation or warranty contained in any certificate
delivered by or on behalf of the Purchaser pursuant to this Agreement, to be
true and correct as of the date made;
(ii) any
and
all Losses based upon, attributable to or resulting from the breach of any
covenant or other agreement on the part of the Purchaser under this Agreement;
(iii) any
and
all Losses of the Purchaser of every kind, nature and description, absolute
or
contingent, existing as against the Purchaser after the Closing Date coming
into
being or arising by reason of any state of facts existing, or any transaction
entered into, after the Closing Date, except for (A) such Losses for which
Seller and the Owners have an obligation to indemnify the Purchaser Indemnified
Parties pursuant to Section 8.1 and (B) such Losses that affect all shareholders
of Purchaser by virtue of their status as shareholders; and
(iv) any
and
all Expenses incident to the foregoing.
8.2. Indemnification
Procedures.
(a) In
the
event that any Legal Proceedings shall be instituted or that any claim or demand
(“Claim”) shall be asserted by any Person in respect of which payment may be
sought under Section 8.1 hereof, the indemnified party shall reasonably and
promptly cause written notice of the assertion of any Claim of which it has
knowledge which is covered by this indemnity to be forwarded to the indemnifying
party. The indemnifying party shall have the right, at its sole option and
expense, to be represented by counsel of its choice, which must be reasonably
satisfactory to the indemnified party, and to defend against, negotiate, settle
or otherwise deal with any Claim which relates to any Losses indemnified against
hereunder. If the indemnifying party elects to defend against, negotiate, settle
or otherwise deal with any Claim which relates to any Losses indemnified against
hereunder, it shall within five (5) days (or sooner, if the nature of the Claim
so requires) notify the indemnified party of its intent to do so. If the
indemnifying party elects not to defend against, negotiate, settle or otherwise
deal with any Claim which relates to any Losses indemnified against hereunder,
fails to notify the indemnified party of its election as herein provided or
contests its obligation to indemnify the indemnified party for such Losses
under
this Agreement, the indemnified party may defend against, negotiate, settle
or
otherwise deal with such Claim. If the indemnified party defends any Claim,
then
the indemnifying party shall reimburse the indemnified party for the Expenses
of
defending such Claim upon submission of periodic bills. If the indemnifying
party shall assume the defense of any Claim, the indemnified party may
participate, at his or its own expense, in the defense of such Claim; provided,
however, that such indemnified party shall be entitled to participate in any
such defense with separate counsel at the expense of the indemnifying party
if,
(i) so requested by the indemnifying party to participate or (ii) in the
reasonable opinion of counsel to the indemnified party, a conflict or potential
conflict exists between the indemnified party and the indemnifying party that
would make such separate representation advisable; and provided, further, that
the indemnifying party shall not be required to pay for more than one such
counsel for all indemnified parties in connection with any Claim. The parties
hereto agree to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such Claim.
-28-
(b) After
any
final judgment or award shall have been rendered by a court, arbitration board
or administrative agency of competent jurisdiction and the expiration of the
time in which to appeal therefrom, or a settlement shall have been consummated,
or the indemnified party and the indemnifying party shall have arrived at a
mutually binding agreement with respect to a Claim hereunder, the indemnified
party shall forward to the indemnifying party notice of any sums due and owing
by the indemnifying party pursuant to this Agreement with respect to such matter
and the indemnifying party shall be required to pay all of the sums so due
and
owing to the indemnified party by wire transfer of immediately available funds
within 10 business days after the date of such notice.
(c) The
failure of the indemnified party to give reasonably prompt notice of any Claim
shall not release, waive or otherwise affect the indemnifying party’s
obligations with respect thereto except to the extent that the indemnifying
party can demonstrate actual loss and prejudice as a result of such
failure.
(d) The
failure of the indemnified party to give reasonably prompt notice of any Claim
shall not release, waive or otherwise affect the indemnifying party’s
obligations with respect thereto except to the extent that the indemnifying
party can demonstrate actual loss and prejudice as a result of such
failure.
(e) At
its
sole discretion and without limiting any other rights of the Purchaser under
this Agreement or at law or equity, the Purchaser may satisfy any Losses for
which it is to be indemnified by the Seller in this Agreement in whole or in
part by offset against any funds, securities, or other property payable by
the
Purchaser to the Seller and neither the exercise of nor the failure to exercise
such right of set-off will constitute an election of remedies or limit the
Purchaser in any manner in the enforcement of any other remedies that may be
available to them.
ARTICLE
IX.
MISCELLANEOUS
9.1. Payment
of Sales, Use or Similar Taxes.
All
sales, use, transfer, intangible, recordation, documentary stamp or similar
Taxes or charges, of any nature whatsoever, applicable to, or resulting from,
the transactions contemplated by this Agreement shall be borne by the
Purchaser.
-29-
9.2. Survival
of Representations and Warranties.
The
parties hereto hereby agree that the representations and warranties contained
in
this Agreement or in any certificate, document or instrument delivered in
connection herewith, shall survive the execution and delivery of this Agreement,
and the Closing hereunder, regardless of any investigation made by the parties
hereto; provided, however, that any claims or actions with respect thereto
(other than claims for indemnifications with respect to the representation
and
warranties contained in Sections 3.7, 3.10, 3.17, 3.19, 4.4 and 4.5 which shall
survive for periods coterminous with any applicable statutes of limitation)
shall terminate unless within twelve (12) months after the Closing Date written
notice of such claims is given to the Seller or such actions are
commenced.
9.3. Expenses.
Except
as otherwise provided in this Agreement, the Seller, the Purchaser shall each
bear its own expenses incurred in connection with the negotiation and execution
of this Agreement and each other agreement, document and instrument contemplated
by this Agreement and the consummation of the transactions contemplated hereby
and thereby.
9.4. Specific
Performance.
The
Seller and Owners acknowledge and agree that the breach of this Agreement would
cause irreparable damage to the Purchaser and that the Purchaser will not have
an adequate remedy at law. Therefore, unless validly terminated pursuant to
Section 2.2 above, the obligations of the Seller under this Agreement,
including, without limitation, the Seller’s obligation to sell the Assets to the
Purchaser, shall be enforceable by a decree of specific performance issued
by
any court of competent jurisdiction, and appropriate injunctive relief may
be
applied for and granted in connection therewith. Such remedies shall, however,
be cumulative and not exclusive and shall be in addition to any other remedies
which any party may have under this Agreement or otherwise.
9.5. Further
Assurances.
The
Seller and Purchaser each agree to execute and deliver such other documents
or
agreements and to take such other action as may be reasonably necessary or
desirable for the implementation of this Agreement and the consummation of
the
transactions contemplated hereby including but not limited to, a xxxx of
sale.
9.6. Submission
to Jurisdiction; Consent to Service of Process
(a) The
parties hereto hereby irrevocably submit to the non-exclusive jurisdiction
of
any federal or state court located within the State of New York over any dispute
arising out of or relating to this Agreement or any of the transactions
contemplated hereby and each party hereby irrevocably agrees that all claims
in
respect of such dispute or any suit, action proceeding related thereto may
be
heard and determined in such courts. The parties hereby irrevocably waive,
to
the fullest extent permitted by applicable Law, any objection which they may
now
or hereafter have to the laying of venue of any such dispute brought in such
court or any defense of inconvenient forum for the maintenance of such dispute.
Each of the parties hereto agrees that a judgment in any such dispute may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
(b) Each
of
the parties hereto hereby consents to process being served by any party to
this
Agreement in any suit, action or proceeding by the mailing of a copy thereof
in
accordance with the provisions of Section 9.9.
-30-
9.7. Entire
Agreement; Amendments and Waivers.
This
Agreement (including the schedules and exhibits hereto) represents the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and can be amended, supplemented or changed, and any
provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the party against whom enforcement of
any
such amendment, supplement, modification or waiver is sought. No action taken
pursuant to this Agreement, including without limitation, any investigation
by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representation, warranty, covenant
or
agreement contained herein. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a further
or
continuing waiver of such breach or as a waiver of any other or subsequent
breach. No failure on the part of any party to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise
of
any other right, power or remedy. All remedies hereunder are cumulative and
are
not exclusive of any other remedies provided by law.
(a) Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York.
9.8. Table
of Contents and Headings.
The
table of contents and section headings of this Agreement are for reference
purposes only and are to be given no effect in the construction or
interpretation of this Agreement.
9.9. Notices.
All
notices and other communications under this Agreement shall be in writing and
shall be deemed given when delivered personally or mailed by certified mail,
return receipt requested, to the parties (and shall also be transmitted by
facsimile to the Persons receiving copies thereof) at the following addresses
(or to such other address as a party may have specified by notice given to
the
other party pursuant to this provision):
If
to
Purchaser:
ROO
HD,
Inc.
000
Xxxx
00xx
Xxxxxx,
0xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxx Xxxxx
Phone:
(000) 000-0000
Fax: (000)
000-0000
With
copies to:
ROO
HD,
Inc.
000
Xxxx
00xx
Xxxxxx,
0xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxxx Xxxxxxx
Phone:
(000) 000-0000
Fax: (000)
000-0000
-31-
Xxxxxxx
X. Xxxxxxxx, Esq.
Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
00
Xxxxxxxx, 00xx
Xxx
Xxx
Xxxx,
Xxx Xxxx 00000
Phone:
000-000-0000
Fax:
000-000-0000
If
to
Seller or Owners:
Wurld
Media, Inc.
00
Xxxxxx
Xxxxxx, Xxxxx#000
Xxxxxxxx
Xxxxxxx, XX 00000
Attn:
Xxxxxxx X. Xxxxxx
Phone:
(000) 000-0000
Fax:
(000) 000-0000
With
a
copy to:
Xxxxxxxx
& Xxxxxxxx
000
Xxxxxxxx
Xxxxxxxx
Xxxxxxx, XX 00000
Attn:
Xxxx X. Xxxxxxxx, Xx.
Phone:
(000) 000-0000
Fax:
(000) 000-0000
9.10. Severability.
If any
provision of this Agreement is invalid or unenforceable, the balance of this
Agreement shall remain in effect.
9.11. Binding
Effect; Assignment.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. Nothing in this Agreement
shall create or be deemed to create any third party beneficiary rights in any
person or entity not a party to this Agreement except as provided below. No
assignment of this Agreement or of any rights or obligations hereunder may
be
made by either the Seller or the Purchaser (by operation of law or otherwise)
without the prior written consent of the other parties hereto and any attempted
assignment without the required consents shall be void.
[SIGNATURE
PAGE FOLLOWS]
-32-
IN
WITNESS WHEREOF, and intending to be bound, the parties have affixed their
signatures this 12th
day of
July, 2007
|
ROO
HD, Inc.
By: _/s/
Xxxxx Xxxxx
Name:
Xxxxx Xxxxx
Title:
Executive Director
Wurld
Media, Inc.
By: _/s/
Xxxxxxx Xxxxxx
Name:
Xxxxxxx Xxxxxx
Title:
CEO & Chairman
/s/
Xxxxxxx Xxxxxx
Xxxxxxx
Xxxxxx
/s/
Xxxx Xxxxxxxx
Xxxx
Xxxxxxxx
|
-33-
SCHEDULE
1.1(a)
EQUIPMENT
(LOCATED AT XXXXXX STREET)
Monitors
|
Type
|
Quantity
|
|
NEC
LCD 1700V
|
3
|
|
IBM
9495 AG1
|
2
|
|
NEC
LCD 1860 NX
|
24
|
|
NEC
LCD 92V
|
26
|
|
Sony
MFM-HT95
|
1
|
|
Envision
EN 9110
|
12
|
|
NEC
Accusync LCD 92V
|
6
|
|
NEC
LCD 1830
|
10
|
|
NEC
1850E
|
7
|
|
NEC
LCD 1770 NX
|
3
|
|
IBM
G96
|
8
|
|
NEC
ASLCD 92V
|
1
|
|
NEC
LCD 1855NX
|
2
|
|
Gateway
VX 1110
|
1
|
|
Gateway
FPD 1830
|
1
|
Desktops
|
Type
|
Quantity
|
|
Gateway
E-6100
|
22
|
|
Gateway
E-4000
|
0
|
|
Xxxxxxx
X-0000
|
0
|
|
Xxxxxxx
X-0000
|
6
|
|
Gateway
E-6500
|
0
|
|
Xxxxxxx
X-0000
|
0
|
|
Xxxxxxx
X-0000
|
5
|
|
IBM
8310-36U
|
4
|
|
Gateway
E-3600
|
1
|
|
Gateway
700L
|
3
|
|
HP
DX5150 MT
|
1
|
|
IBM
831561U
|
1
|
Laptop
|
Type
|
Quantity
|
|
Gateway
450X
|
0
|
|
Xxxxxxx
X000
|
0
|
|
Xxxxxxx
200X
|
1
|
|
Gateway
M460
|
15
|
|
Sony
VAIO TX 651
|
1
|
|
Sony
pcg-Z1wamp1
|
1
|
|
Sony
VGNTX 651 P/B
|
2
|
|
Alienware
Area 51M 5500
|
1
|
|
Fujitsu
St 4110
|
1
|
|
OQO
01
|
0
|
|
Xxxxxxx
X000
|
0
|
|
Xxxx
Xxxxxxxx 0000
|
1
|
|
HP
NC 8000 P735
|
1
|
|
IBM
2897-GAU
|
2
|
|
Gateway
450E
|
4
|
|
HP
NX 9030
|
1
|
|
HP
NC 8230
|
1
|
|
Gateway
M350
|
2
|
|
HP
NC 6000
|
2
|
|
Gateway
450 ROG
|
2
|
|
IBM
X00 0000-x0x
|
3
|
|
Gateway
200e
|
1
|
|
NEC
Accusync LCD 92V
|
0
|
|
Xxxxxxx
X000
|
0
|
|
XXX
X00 0000-XXX
|
3
|
|
Gateway
8006527
|
1
|
|
Gateway
450 SX
|
1
|
Printers
|
Type
|
Quantity
|
|
HP
OfficeJet 5110
|
1
|
|
HP
C4661A
|
1
|
|
Xxxxxx
S9000
|
2
|
|
Xxxxxx
IR 3220
|
1
|
|
HP
K80xi
|
1
|
|
HP
OfficeJet 6210
|
1
|
|
HP
Fax 1240
|
1
|
|
HP
LaserJet 2300L
|
0
|
|
Xxxxxx
X0000
|
0
|
|
Xxxxxx
x0000
|
1
|
|
Primera
Bravo ii
|
2
|
|
Oki
7330n
|
1
|
|
Xxxxxx
i9900
|
1
|
Blackberry
|
Type
|
Quantity
|
|
Verizon
7750
|
24
|
|
Verizon
7250
|
7
|
|
Verizon
7130e
|
1
|
Servers
|
Type
|
Quantity
|
|
IBM
|
23
|
|
HP
|
8
|
|
Gateway
|
1
|
Switch
|
Type
|
Quantity
|
|
Netgear
|
2
|
|
Belkin
|
2
|
|
Spirent
|
1
|
|
Cisco
|
20
|
|
F5
|
2
|
|
Raritan
|
1
|
|
ShoreTel
|
4
|
|
Avocent
|
3
|
|
3
Com
|
7
|
Furniture
|
Type
|
Quantity
|
|
Desks
|
18
|
|
Workstations
|
40
|
SCHEDULE
1.3(a)(iii)
|
TOTAL
|
Patent
|
||||||||
|
Computer
Patent Annuities Ltd
|
2,309.94
|
2,309.94
|
International
patent
|
||||||
|
Xxxx
Xxxxxxx
|
220,000.00
|
220,000.00
|
Patent
attorney. Rob worked a deal with him.
|
||||||
|
Xxxxxxxxx
Xxxxxxx
|
3,398.25
|
3,398.25
|
Legal
work in intl patents. Still working.
|
||||||
|
TOTAL
|
225,708.19
|
225,708.19
|
225,708.19
|
SCHEDULE
3.5(a)
CONFLICTS,
VIOLATIONS, ETC.
NONE
SCHEDULE
3.6
ENCUMBRANCES
ON ASSETS
The
leased equipment set forth in Schedule 1.3(a)(i) is encumbered.
The
Adirondack Trust Company (see Schedule 1.3(a)(ii)) has filed
a UCC covering all
of the furniture, furnishings, fixture and equipment of Wurld.
The
creditors who have judgments against Wurld have a lien on all
of its assets.
(See Schedule 3.17)
At
or
following the closing ROO will pay or will make provision for
payment to the
lienholders such that the assets will be unencumbered.
SCHEDULE
3.9
MATERIAL
ADVERSE MATTERS, ETC. SINCE
SELLER
BALANCE SHEET DATE
NONE
SCHEDULE
3.10(a)
TAX
MATTERS
The
2006
corporate and state income tax returns have not been
filed and are on extension
until September 15, 2007.
The
second quarter 2007 withholding tax returns have not
been filed and the third
quarter will be due on or before October 31, 2007.
Loans
or
advances made to employees will be “grossed up” and the withholding taxes, both
employers and employees portions, will be paid pursuant
to the
Agreement.
SCHEDULE
3.10(b)
COMPLIANCE
WITH TAX LAW
The
Seller will “gross up” the advances previously made to employees and when
the
necessary funds are released to the Seller by the
Purchaser, the Seller will
file the appropriate returns and pay over the withholding
tax, both the
employers and employees portion.
SCHEDULE
3.11
REAL
PROPERTY LEASE
Seller
is
the Lessor of premises known as 00 Xxxxxx Xxxxxx,
Xxxxx #000, Xxxxxxxx Xxxxxxx,
Xxx Xxxx.
SCHEDULE
3.12
LEASES
ON
PERSONAL PROPERTY
The
personal property set forth in the Seller’s balance sheet is encumbered as
follows:
1.
The
equipment set forth on Schedule 1.3(a)(i)
is encumbered by leases.
2.
The
Adirondack Trust Company has a blanket
lien on all of the assets of the
Seller.
3.
The
judgment creditors set forth in Schedule
3.17 have a lien on all of the assets
of the Seller.
SCHEDULE
3.14
MATERIAL
CONTRACTS
None,
other than as set forth in other schedules.
SCHEDULE
3.15(b)
NON-EXEMPT
BENEFIT PLANS
NONE
SCHEDULE
3.16(a)
COLLECTIVE
BARGAINING AGREEMENTS
NONE
SCHEDULE
3.16(b)
LABOR
ORGANIZATIONS
NONE
SCHEDULE
3.19
ADVERSE
ENVIRONMENTAL MATTERS
NONE
SCHEDULE
3.23
NAMES
& LOCATIONS OF SELLER’S BANKS
| · |
Citizen
Bank
|
00
Xxxxxxxx Xxxxxx
Xxxxxxxx
Xxxxxxx, XX 00000
POWERS
OF ATTORNEY
| · |
None
|
EXHIBIT
A
COMPENSATION
ESCROW AGREEMENT
THIS
COMPENSATION ESCROW AGREEMENT (this “Agreement”)
is
made as of July 12, 2007, by and among ROO HD, Inc., a
corporation organized and existing under the laws of the State
of
New York (the "Company");
Wurld
Media, Inc., a corporation organized and existing under the laws of Delaware
("Wurld
Media.");
and
Xxxxxxxx & Xxxxxxxx, a sole proprietorship (the "Escrow
Agent");
WITNESSETH
THAT:
WHEREAS,
the Company and Wurld Media have entered into an agreement (the "Purchase Agreement”);
and
WHEREAS,
the parties have agreed to escrow the sum of Four Hundred Fifty Six Thousand
Eighty Seven ($456,087) (the “Escrow Funds”) to be paid by the Company to Wurld
Media pursuant to the terms of the Purchase Agreement;
NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements herein contained, and in consideration of the parties thereto
entering into the Asset Purchase Agreement, the parties hereto covenant
and
agree as follows:
| I. |
A.
Deposit
of Funds
|
Concurrently
with the execution and delivery of this Escrow Agreement, the Company shall
deliver the Escrow Funds to the Escrow Agent. In addition, Wurld Media
hereby
agrees to execute such documents as the Escrow Agent may request to transfer
the
Escrowed Funds as may required pursuant to the terms of this Escrow Agreement.
| II. |
Release
of Escrowed Funds
|
A. Conditions
specified in Purchase Agreement.
The
Purchase Agreement provides the Escrowed Funds are to be used by Wurld
Media to
settle outstanding amounts of up to forty (40%) percent of the gross wages
plus
such amount which shall constitute employer’s contribution (less statutory
payroll deductions, less advances previously made to the employees) owed
to the
employees identified on Schedule 1.4(f) of the Purchase Agreement. The
Escrow
Funds are to be utilized solely for the purpose set forth in Section 1.4(f)
of
the Purchase Agreement and may not be released to Wurld Media until all
claims
by the employees listed on Schedule 1.4(f) have been fully settled and
compromised and the employees have executed and delivered to the Seller,
a
release (the “Release”) in the form set forth on Exhibit
A-1
to this
Escrow Agreement. A copy of said release shall be furnished to the Company
simultaneously with the Seller’s receipt from each employee.
B. Release
upon the Notice of Settlement.
Upon
receipt by the Escrow Agent of a Release and a Notice of Settlement in
the form
of which is attached hereto as Exhibit
A-2
(the
“Notice of Settlement”) signed by Wurld Media, the Escrow Agent shall, after
waiting a period of seven full days, release funds to the employee with
whom
Wurld Media settled its compensation issues, provided that such amount
does not
exceed the maximum amount set forth for such employee in Schedule 1.4(f)
of the
Purchase Agreement less statutory payroll deductions, less advances previously
made to the employee. At the same time the Escrow Agent will remit to GTM
Tech
Valley Payroll, 0 Xxxxxxxx Xxxxx, Xxxxxxx Xxxx, XX 00000, the
employer’s contribution plus statutory payroll deductions to be paid to
applicable governmental authorities. Payment to the employee shall be made
within five (5) days of the receipt of the Notice of Settlement. In the
event
that the amount of funds specified in the Notice of Settlement (plus the
employer’s contribution) shall constitute all of the Escrowed Funds upon release
of the specified amount of funds this Agreement shall be deemed terminated
and
this Escrow Agreement shall be released and discharged from all further
obligations hereunder. Wurld Media agrees to continue to retain GTM Tech
Valley
Payroll perform the services contemplated hereunder until this Escrow Agreement
is terminated.
1
| III. |
Termination
by the Parties
|
If
at any
time the Escrow Agent shall receive a notice signed by or on behalf of
the
Company and Wurld Media. that this Agreement has been terminated and instructing
the Escrow Agent with respect to the disposition of the Escrowed Funds,
the
Escrow Agent shall release the Escrowed Funds in accordance with the
instructions contained in such notice, and upon such release this Escrow
Agreement shall be deemed terminated, and the Escrow Agent shall be released
and
discharged from all further obligations hereunder.
| IV. |
Nature
of Duties; No Conflict;
Liability
|
It
is
understood and agreed that the duties of the Escrow Agent hereunder are
purely
ministerial in nature and do
not
represent a conflict of interest for the Escrow Agent to act, or continue
to
act, as counsel for any party to this Escrow Agreement with respect to
any
litigation or other matters arising out of this Escrow Agreement or otherwise.
The
Escrow Agent shall not be liable for any error of judgment, fact, or law,
or any
act done or omitted to be done, except for its own willful misconduct or
gross
negligence or that of its partners, employees, and agents. The Escrow Agent's
determination as to whether an event or condition has occurred, or been
met or
satisfied, or as to whether a provision of this Escrow Agreement has been
complied with, or as to whether sufficient evidence of the event or condition
or
compliance with the provision has been furnished to it, shall not subject
the
Escrow Agent to any claim, liability, or obligation whatsoever, even if
it shall
be found that such determination was improper and incorrect; provided that
the
Escrow Agent and its partners, employees, and agents shall not have been
guilty
of willful misconduct or gross negligence in making such determination.
| V. |
Indemnification
|
The
Company and Wurld Media. jointly and severally agree to indemnify the Escrow
Agent for, and to hold it harmless against, any loss, liability, or expense
("Cost")
incurred without gross negligence or willful misconduct on the part of
the
Escrow Agent, arising out of or in connection with its entering into this
Escrow
Agreement and carrying out its duties hereunder, including costs and expenses
of
defending itself against any claim of liability in connection herewith
or
therewith. The right to indemnification set forth in the preceding sentence
shall include the right to be paid by the Company and Wurld Media. in respect
of
Costs as they are incurred (including Costs incurred in connection with
defending itself against any claim of liability in connection herewith).
The
Escrow Agent shall repay any amounts so paid if it shall ultimately be
determined by a final order of a court of competent jurisdiction from which
no
appeal is or can be taken that the Escrow Agent is not entitled to such
indemnification.
2
| VI. |
Documents
and Instructions
|
The
Escrow Agent may act in reliance upon any notice, instruction, certificate,
statement, request, consent, confirmation, agreement or other instrument
which
it believes to be genuine and to have been signed by a proper person or
persons,
and may assume that any of the officers of the Company purporting to act
on
behalf of the Company in giving any such notice or other instrument in
connection with the provisions hereof has been duly authorized to do so.
The
Escrow Agent acts hereunder as a depository only and shall not be responsible
or
liable in any manner whatsoever for the genuineness, sufficiency, correctness,
or validity of any agreement, document, certificate, instrument, or item
deposited with it or any notice, consent, approval, direction, or instruction
given to it, and the Escrow Agent shall be fully protected, under Sections
IV
and V above, for all acts taken in accordance with any written instruction
or
instrument given to it hereunder, and reasonably believed by the Escrow
Agent to
be genuine and what it purports to be.
| VII. |
Conflicting
Notices, Claims, Demands, or
Instructions
|
If
at any
time the Escrow Agent shall receive conflicting notices, claims, demands,
or
instructions with respect to the Escrowed Funds, or if for any other reason
it
shall in good faith be unable to determine the party or parties entitled
to
receive the Escrowed Funds, or any part thereof, the Escrow Agent may refuse
to
make any distribution and may retain the Escrowed Funds in its possession
until
it shall have received instructions in writing concurred in by all parties
in
interest, or until directed by a final order or judgment of a court of
competent
jurisdiction from which no appeal is or can be taken, whereupon the Escrow
Agent
shall make such disposition in accordance with such instructions or such
order.
The Escrow Agent shall also be entitled to
commence
as interpleader action in any court of competent jurisdiction to seek an
adjudication of the rights of the Company and Wurld Media.
| VIII. |
Advice
of Counsel
|
The
Escrow Agent may consult with, and obtain advice from, legal counsel in
the
event of any dispute or question as to the construction of any of the provisions
hereof or its duties hereunder, and it shall incur no liability and shall
be
fully protected and indemnified under Section V above for all acts taken,
in the
absence of gross negligence or willful misconduct, in accordance with the
advice
and instructions of such counsel. In
the
event that the Escrow Agent retains counsel or otherwise incurs any legal
fees
by virtue of any provision of this Escrow Agreement, the reasonable fees
and
disbursements of such counsel and any other liability, loss or expense
which the
Escrow Agent may thereafter suffer or incur in connection with this Escrow
Agreement or the performance or attempted performance in good faith of
its
duties hereunder shall be paid (or reimbursed to it) by the Company and
Wurld
Media. jointly and severally. In the event that the Escrow Agent shall
become a
party to any litigation in connection with its functions as Escrow Agent
pursuant to this Escrow Agreement, whether such litigation shall be brought
by
or against it, the reasonable fees and disbursements of counsel to the
Escrow
Agent including the amounts attributable to services rendered by partners
or
associates of Escrow Agent at the then prevailing hourly rate charged by
them
and disbursements incurred by them, together with any other liability,
loss or
expense which it may suffer or incur in connection therewith, shall be
paid (or
reimbursed to it) by the Company and Wurld Media., jointly and severally,
unless
such loss, liability or expense is due to the willful breach by the Escrow
Agent
of its duties hereunder.
3
| IX. |
Compensation
and Expenses
|
The
Escrow Agent agrees to serve without compensation for its services. All
expenses
of the Escrow Agent incurred in the performance of its duties hereunder
shall be
paid by the Company.
| X. |
Resignation
of Escrow Agent
|
The
Escrow Agent may resign at any time upon giving the other parties hereto
thirty
(30) days' notice to that effect. In that event the successor Escrow Agent
shall
be such person, firm, or corporation as the Company and Wurld Media. shall
mutually select. It is understood and agreed that the Escrow Agent's resignation
shall not be effective until a successor Escrow Agent agrees to act hereunder;
provided,
however,
that in
the event no successor Escrow Agent is appointed and acting hereunder within
thirty (30) days of such notice, the Escrow Agent may deliver the Escrowed
Funds
to a court of competent jurisdiction; and provided,
further,
that the
Escrow Agent may appoint a successor escrow agent hereunder at any time
so long
as such successor shall accept and agree to be bound by the terms of this
Escrow
Agreement (except that any such successor escrow agent shall be entitled
to
customary fees which shall be payable by the Company) and shall be a bank
or
trust company insured by the Federal Deposit Insurance Corporation.
| XI. |
Escrow
Agent as Counsel to the Company
|
Wurld
Media. hereby acknowledges that the Escrow Agent is counsel to the Company
and
agrees that it will not seek to disqualify the Escrow Agent from acting
and
continuing to act as counsel to the Company in the event of a dispute hereunder
or in the course of the defense or prosecution of any claim relating to
the
transactions contemplated hereby or by the Purchase Agreement.
| XII. |
Notices
|
All
notices, consents, approvals, directions, and instructions required or
permitted
under this Escrow Agreement shall be effective when received and shall
be given
in writing and delivered either by hand or by registered or certified mail,
postage prepaid, or by telecopier, and addressed as follows:
4
If
to the
Company
ROO
HD,
Inc.
000
Xxxx
00xx
Xxxxxx,
0xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxx Xxxxx, CEO
Phone:
(000) 000-0000
Fax:
(000) 000-0000
With
copies to:
ROO
HD,
Inc.
000
Xxxx
00xx
Xxxxxx,
0xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxxx Xxxxxxx, General Counsel
Phone:
(000) 000-0000
Fax:
(000) 000-0000
And
Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxx X. Xxxxxxxx, Esq.
Phone:
000-000-0000
Fax:
000-000-0000
If
to
Wurld Media:
Wurld
Media Inc.
00
Xxxxxx
Xxxxxx, Xxxxx#000
Xxxxxxxx
Xxxxxxx, XX 00000
Attn:
Xxxxxxx X. Xxxxxx
Phone:
(000) 000-0000
Fax:
(000) 000-0000
With
a
copy to:
Xxxxxxxx
& Xxxxxxxx
000
Xxxxxxxx
Xxxxxxxx
Xxxxxxx, XX 00000
Attn:
Xxxx X. Xxxxxxxx, Xx.
Phone:
(000) 000-0000
Fax:
(000) 000-0000
5
or
to
such other persons or addresses as any party may have furnished in writing
to
the other parties. Copies of all communications hereunder shall be sent
to the
Escrow Agent.
| XIII. |
Entire
Agreement, Etc.
|
This
Escrow Agreement contains the entire agreement among the parties with respect
to
the subject matter hereof. This Escrow Agreement may not be amended,
supplemented, or discharged, and no provision hereof may be modified or
waived,
except by an instrument in writing signed by all of the parties hereto.
No
waiver of any provision hereof by any party shall be deemed a continuing
waiver
of any matter by such party. If a conflict between the terms and provisions
hereof and of the Purchase Agreement occurs, the terms and provisions hereof
shall govern the rights, obligations, and liabilities of the Escrow
Agent.
| XIV. |
Successors
and Assigns
|
This
Escrow Agreement shall be binding upon and shall inure to the benefit of
each of
the parties hereto, and their respective heirs, successors, assigns,
distributees, and legal representatives.
| XV. |
Counterparts
|
This
Escrow Agreement may be executed in several counterparts, each of which
shall be
deemed original, but such counterparts together shall constitute one and
the
same instrument.
| XVI. |
Governing
Law
|
This
Escrow Agreement shall be governed by and construed and enforced in accordance
with the law (other than the law governing conflict of law questions) of
the
State of New York. Any action to enforce, arising out of, or relating in
any way
to any of the provisions of this Escrow Agreement may be brought and prosecuted
in such court or courts located within New York County, New York as is
provided
by law; and the parties hereto consent to the jurisdiction of the court
or
courts located within New York, New York and to service of process by registered
or certified mail, return receipt requested, or by any other manner provided
by
law.
| XVII. |
Additional
Documents and Act
|
The
Company
and Wurld Media. shall, from time to time, execute such documents and perform
such acts as Escrow Agent may reasonably request and as may be necessary
to
enable Escrow Agent to perform its duties hereunder or effectuate the
transactions contemplated by this Escrow Agreement.
[Signature
page follows.]
6
IN
WITNESS WHEREOF, the parties hereto have executed or caused this Agreement
to be
duly executed as a sealed instrument as of the day and year first above
written.
|
ROO,
HD, Inc.
By:
/s/
Xxxxx Xxxxx
Name:
Xxxxx Xxxxx
Title:
Executive Director
Wurld
Media, Inc.
By:
/s/
Xxxxxxx Xxxxxx
Name:
Xxxxxxx Xxxxxx
Title:
CEO & Chairman
Xxxxxxxx
and Xxxxxxxx
/s/
Xxxx Xxxxxxxx
Xxxx
X. Xxxxxxxx, Xx.
|
7
EXHIBIT
A-1
Form
of General Release
GENERAL
RELEASE
EMPLOYEE,
his/her
heirs,
executors, administrators, successors, and assigns (collectively referred
to
throughout this Release as "Employee"), agree that:
Dispute.
A
dispute has arisen between the Wurld Media, Inc. (the “Company”) and the
Employee concerning the payment of past wages owed to the Employee and
the
parties hereto wish to resolve this dispute.
Consideration.
In consideration for Employee’s signing this General Release (“Release”) and
complying with the promises made by Employee herein, Employee will be paid,
seven (7) days after Employee delivers a fully-executed original of this
Release
to the Escrow Agent, the total consideration sum of $______________
less
lawful withholdings and deductions.
General
Release of Claims.
Employee knowingly and voluntarily releases and forever discharges WURLD
MEDIA,
INC., its affiliates, parent companies, subsidiaries, divisions, successors
and
assigns, and their current and former employees, attorneys, officers, directors,
insurers, plan fiduciaries and agents (collectively referred to throughout
this
Release as "Employer"), of and from any and all claims, known and unknown,
asserted or unasserted, which Employee has or may have against Employer
as of
the date of the complete execution of this Release for unpaid wages or
otherwise, including, but not limited to, any alleged violation of:
|
·
|
Title
VII of the Civil Rights Act of 1964, as
amended;
|
|
·
|
The
Civil Rights Act of 1991;
|
|
·
|
Sections
1981 through 1988 of Title 42 of the United States Code, as
amended;
|
|
·
|
The
Employee Retirement Income Security Act of 1974, as
amended;
|
|
·
|
The
Immigration Reform and Control Act, as
amended;
|
|
·
|
The
Americans with Disabilities Act of 1990, as
amended;
|
|
·
|
The
Age Discrimination in Employment Act of 1967, as
amended;
|
|
·
|
The
Worker Adjustment and Retraining Notification Act, as
amended;
|
|
·
|
The
New York Human Rights Law, as
amended;
|
1
|
·
|
Any
other federal, state, local or other civil or human rights law,
or any
other local, state, federal or other law, regulation or ordinance;
|
|
·
|
Any
public policy, contract, tort, or common law;
or
|
|
·
|
Any
statutory, common law or other basis for recovering all costs,
fees or
other expenses, including but not limited to attorneys' fees
and
costs.
|
Affirmations.
Employee affirms that he or she has not filed, caused to be filed, or presently
is a party to any claim, complaint, or action against Employer in any forum
or
form (or, if he/she has filed an Action, he/she has withdrawn or will withdraw
from such Action). Employee further affirms, upon receipt of the payments
hereunder, that he or she has been paid and/or has received all compensation,
wages, bonuses, commissions and/or benefits to which he or she may be entitled
and that no other compensation, wages, bonuses, commissions and/or benefits
are
due to him or her, except as provided in this Release. Employee
furthermore affirms that he or she has no known workplace injuries or
occupational diseases, and that he or she has been provided and/or has
not been
denied any leave under any federal, state or local family/medical or disability
leave law.
Confidentiality.
Employee agrees not to disclose any allegations of wrongdoing against Employer
or any information regarding the existence or substance of this Release,
except
to his or her immediate family, tax advisor, and an attorney with whom
Employee
chooses to consult regarding his or her consideration of this Release.
Nothing herein is intended to or shall preclude Employee from communicating
with
any federal, state, or local government agency.
Governing
Law and Interpretation.
This Release shall be governed and conformed in accordance with the laws
of the
State of New York without regard to the State’s conflict of laws
provisions. If Employee breaches any provision of this Release, Employee
affirms that either Employer or Employee may institute an action to specifically
enforce any term or terms of this Release. However, Employee consents that
any action relating to her employment with the Company or this Release
will only
be brought in a court located in the County of New York and that any such
action
will be heard without a jury, including but not limited to an advisory
jury. Employee expressly waives the right to bring any such action in any
other jurisdiction, or to have any such action heard before a jury or advisory
jury.
Severability.
Should
any provision of this Release be declared illegal or unenforceable by any
court
of competent jurisdiction and cannot be modified to be enforceable, such
provision shall immediately become null and void, leaving the remainder
of this
Release in full force and effect.
Nonadmission
of Wrongdoing.
Employee acknowledges that the furnishing of the consideration for this
Release
shall not be deemed or construed at any time for any purpose as an admission
by
Employer of any liability or unlawful conduct of any kind.
2
Amendment.
This Release may not be modified, altered or changed except upon express
written
consent of Employer and Employee wherein specific reference is made to
this
Release.
Entire
Release.
This Release sets forth the entire understanding of Employee and fully
supersedes any prior agreements or understandings between Employer and
Employee,
except for any restrictive covenant, confidentiality and/or arbitration
agreements that Employee previously entered into with Employer, which shall
remain in full force and effect. Employee acknowledges that he or she has
not relied on any representations, promises, or agreements of any kind
made to
him or her in connection with his or her decision to sign this Release,
except
for those set forth in this Release.
EMPLOYEE
HAS BEEN ADVISED THAT EMPLOYEE HAS AT LEAST TWENTY-ONE (21) CALENDAR DAYS
TO
CONSIDER THIS RELEASE AND HAS BEEN ADVISED IN WRITING TO CONSULT WITH AN
ATTORNEY OF HIS OR HER CHOOSING PRIOR TO EXECUTING THIS RELEASE. EMPLOYEE
AGREES
THAT ANY MODIFICATIONS, MATERIAL OR OTHERWISE, MADE TO THIS RELEASE, DO
NOT
RESTART OR AFFECT IN ANY MANNER THE ORIGINAL TWENTY-ONE (21) CALENDAR DAY
CONSIDERATION PERIOD.
HAVING
ELECTED TO EXECUTE THIS RELEASE, TO FULFILL THE PROMISES SET FORTH HEREIN
THAT
PERTAIN TO EMPLOYEE, AND TO RECEIVE THEREBY THE CONSIDERATION SET FORTH
IN
PARAGRAPH "2" ABOVE, EMPLOYEE FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION,
ENTERS INTO THIS RELEASE INTENDING TO WAIVE, SETTLE AND RELEASE ALL CLAIMS
HE OR
SHE HAS OR MIGHT HAVE AGAINST EMPLOYER.
IN
WITNESS WHEREOF, Employee knowingly and voluntarily executed this Release
as of
the date set forth below:
Date:
Employee
3
EXHIBIT
A-2
Notice
of Settlement
[Company’s
Letterhead]
__________________________
__________________________
__________________________
Gentlemen:
You
are
hereby instructed to release from escrow the amount of _________________________
Dollars ($______________________) (the “Funds”). The recipient, who is an
employee/former employee of Wurld Media is entitled to receive the funds
in
connection with his/her full and final settlement of all claims relating
to
accrued and/or unpaid compensation from Wurld Media and has executed a
delivered
a Release, a copy of which is provided herewith.:
Name
of
Recipient of Funds:
Amount
of
Funds to be Paid:
Dated:
|
Name
of Company
By:
_______________________
Name:
_____________________
Title:
______________________
|
1
EXHIBIT
B
ESCROW
AGREEMENT
THIS
ESCROW AGREEMENT (this “Agreement”)
is
made as of July 17, 2007, by and among ROO HD, Inc., a corporation organized
and
existing under the laws of the State of New York (the "Company");
Wurld
Media, Inc., a corporation organized and existing under the laws of Delaware
("Wurld
Media.");
and
Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP, a limited liability partnership organized
and existing under the laws of the State of New York (the "Escrow
Agent");
WITNESSETH
THAT:
WHEREAS,
the Company and Wurld Media have entered into an agreement (the "Purchase Agreement"),
which, among other matters, provides for the issuance of 600,000 shares
of
common stock of ROO Group, Inc. (“ROO Group”) to Wurld Media; and
WHEREAS,
the parties have agreed to escrow the 600,000 shares of the common stock
of ROO
Group to be issued to Wurld Media pursuant to the terms of the Purchase
Agreement (the “Common
Stock”);
NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements herein contained, and in consideration of the parties thereto
entering into the Asset Purchase Agreement, the parties hereto covenant
and
agree as follows:
| I. |
A.
Deposit
of Stock
|
Concurrently
with the execution and delivery of this Escrow Agreement, the Company shall
deliver the Common Stock to the Escrow Agent (“Escrowed
Stock”),
together with (i) stock power separate from the certificate (“Stock Power”) in a
form attached hereto, as Exhibit A, executed in blank and medallion guaranteed;
and (ii) such corporate resolution authorizing an officer of Wurld Media
to take
such actions as may be necessary to transfer the Escrowed Stock. In addition,
Wurld Media hereby agrees to execute such documents as the Escrow Agent
may
request to transfer the Escrowed Stock as may be required pursuant to the
terms
of this Escrow Agreement.
B. Valuation
of Stock
The
parties hereto agree that the value to be ascribed to each share of the
Escrowed
Stock shall be $1.69
which is
the closing price of the common stock of ROO Group as quoted on the OTCBB
on the
Closing Date.
| II. |
Release
of Escrowed Stock
|
A. Conditions
specified in Purchase Agreement.
The
Purchase Agreement provides the Company shall have the right to set-off
against
the Escrowed Stock: (A) such amounts incurred by the Company, including,
but not
limited to, legal fees and any other costs to satisfy and/or defend any
and all
claims that may arise in connection with the Assets acquired by the Company
under the Purchase Agreement or otherwise in connection with the Purchase
Agreement; and (B) any amounts in excess of 105% of the dollar amount listed
on
Schedule 1.3(a)(i) attached to the Purchase Agreement for any individual
Assumed
Liability, as defined in the Purchase Agreement, that the Company may be
required to pay to discharge any one or more of the Assumed Liabilities.
1
A. Release
upon the Notice of Claim.
Upon
receipt by the Escrow Agent of a Notice of Claim in the form of which is
attached hereto as Exhibit A (the “Notice of Claim”) signed by the Purchaser,
the Escrow Agent shall return to the Purchaser the specified number of
shares of
the Escrowed Stock specified in the Notice of Claim within five (5) days
of the
receipt of the Notice of Claim. In the event that the number of shares
specified
in the Notice of Claim shall constitute all of the Escrowed Stock upon
release
of the specified number of shares this Agreement shall be deemed terminated
and
this Escrow Agreement shall be released and discharged from all further
obligations hereunder.
C. Release
upon Expiration of Term.
Upon
expiration of a period of one (1) year from the date hereof, the Escrow
Agent
shall release to Wurld Media such number of shares of the Escrowed Stock
which
it is holding pursuant to this Agreement and this Escrow Agreement shall
be
deemed terminated and this Escrow Agreement shall be released and discharged
from all further obligations hereunder.
| III. |
Termination
by the Parties
|
If
at any
time the Escrow Agent shall receive a notice signed by or on behalf of
the
Company and Wurld Media. that this Agreement has been terminated and instructing
the Escrow Agent with respect to the disposition of the Escrowed Stock,
the
Escrow Agent shall release the Escrowed Stock in accordance with the
instructions contained in such notice, and upon such release this Escrow
Agreement shall be deemed terminated, and the Escrow Agent shall be released
and
discharged from all further obligations hereunder.
| IV. |
Nature
of Duties; No Conflict;
Liability
|
It
is
understood and agreed that the duties of the Escrow Agent hereunder are
purely
ministerial in nature and do
not
represent a conflict of interest for the Escrow Agent to act, or continue
to
act, as counsel for any party to this Escrow Agreement with respect to
any
litigation or other matters arising out of this Escrow Agreement or otherwise.
The
Escrow Agent shall not be liable for any error of judgment, fact, or law,
or any
act done or omitted to be done, except for its own willful misconduct or
gross
negligence or that of its partners, employees, and agents. The Escrow Agent's
determination as to whether an event or condition has occurred, or been
met or
satisfied, or as to whether a provision of this Escrow Agreement has been
complied with, or as to whether sufficient evidence of the event or condition
or
compliance with the provision has been furnished to it, shall not subject
the
Escrow Agent to any claim, liability, or obligation whatsoever, even if
it shall
be found that such determination was improper and incorrect; provided that
the
Escrow Agent and its partners, employees, and agents shall not have been
guilty
of willful misconduct or gross negligence in making such determination.
2
| V. |
Indemnification
|
The
Company and Wurld Media. jointly and severally agree to indemnify the Escrow
Agent for, and to hold it harmless against, any loss, liability, or expense
("Cost")
incurred without gross negligence or willful misconduct on the part of
the
Escrow Agent, arising out of or in connection with its entering into this
Escrow
Agreement and carrying out its duties hereunder, including costs and expenses
of
defending itself against any claim of liability in connection herewith
or
therewith. The right to indemnification set forth in the preceding sentence
shall include the right to be paid by the Company and Wurld Media. in respect
of
Costs as they are incurred (including Costs incurred in connection with
defending itself against any claim of liability in connection herewith).
The
Escrow Agent shall repay any amounts so paid if it shall ultimately be
determined by a final order of a court of competent jurisdiction from which
no
appeal is or can be taken that the Escrow Agent is not entitled to such
indemnification.
| VI. |
Documents
and Instructions
|
The
Escrow Agent may act in reliance upon any notice, instruction, certificate,
statement, request, consent, confirmation, agreement or other instrument
which
it believes to be genuine and to have been signed by a proper person or
persons,
and may assume that any of the officers of the Company purporting to act
on
behalf of the Company in giving any such notice or other instrument in
connection with the provisions hereof has been duly authorized to do so.
The
Escrow Agent acts hereunder as a depository only and shall not be responsible
or
liable in any manner whatsoever for the genuineness, sufficiency, correctness,
or validity of any agreement, document, certificate, instrument, or item
deposited with it or any notice, consent, approval, direction, or instruction
given to it, and the Escrow Agent shall be fully protected, under Sections
IV
and V above, for all acts taken in accordance with any written instruction
or
instrument given to it hereunder, and reasonably believed by the Escrow
Agent to
be genuine and what it purports to be.
| VII. |
Conflicting
Notices, Claims, Demands, or
Instructions
|
If
at any
time the Escrow Agent shall receive conflicting notices, claims, demands,
or
instructions with respect to the Escrowed Stock, or if for any other reason
it
shall in good faith be unable to determine the party or parties entitled
to
receive the Escrowed Stock, or any part thereof, the Escrow Agent may refuse
to
make any distribution and may retain the Escrowed Stock in its possession
until
it shall have received instructions in writing concurred in by all parties
in
interest, or until directed by a final order or judgment of a court of
competent
jurisdiction from which no appeal is or can be taken, whereupon the Escrow
Agent
shall make such disposition in accordance with such instructions or such
order.
The Escrow Agent shall also be entitled to
commence
as interpleader action in any court of competent jurisdiction to seek an
adjudication of the rights of the Company and Wurld Media.
3
| VIII. |
Advice
of Counsel
|
The
Escrow Agent may consult with, and obtain advice from, legal counsel in
the
event of any dispute or question as to the construction of any of the provisions
hereof or its duties hereunder, and it shall incur no liability and shall
be
fully protected and indemnified under Section V above for all acts taken,
in the
absence of gross negligence or willful misconduct, in accordance with the
advice
and instructions of such counsel. In
the
event that the Escrow Agent retains counsel or otherwise incurs any legal
fees
by virtue of any provision of this Escrow Agreement, the reasonable fees
and
disbursements of such counsel and any other liability, loss or expense
which the
Escrow Agent may thereafter suffer or incur in connection with this Escrow
Agreement or the performance or attempted performance in good faith of
its
duties hereunder shall be paid (or reimbursed to it) by the Company and
Wurld
Media. jointly and severally. In the event that the Escrow Agent shall
become a
party to any litigation in connection with its functions as Escrow Agent
pursuant to this Escrow Agreement, whether such litigation shall be brought
by
or against it, the reasonable fees and disbursements of counsel to the
Escrow
Agent including the amounts attributable to services rendered by partners
or
associates of Escrow Agent at the then prevailing hourly rate charged by
them
and disbursements incurred by them, together with any other liability,
loss or
expense which it may suffer or incur in connection therewith, shall be
paid (or
reimbursed to it) by the Company and Wurld Media., jointly and severally,
unless
such loss, liability or expense is due to the willful breach by the Escrow
Agent
of its duties hereunder.
| IX. |
Compensation
and Expenses
|
The
Escrow Agent agrees to serve without compensation for its services. All
expenses
of the Escrow Agent incurred in the performance of its duties hereunder
shall be
paid by the Company.
| X. |
Resignation
of Escrow Agent
|
The
Escrow Agent may resign at any time upon giving the other parties hereto
thirty
(30) days' notice to that effect. In that event the successor Escrow Agent
shall
be such person, firm, or corporation as the Company and Wurld Media. shall
mutually select. It is understood and agreed that the Escrow Agent's resignation
shall not be effective until a successor Escrow Agent agrees to act hereunder;
provided,
however,
that in
the event no successor Escrow Agent is appointed and acting hereunder within
thirty (30) days of such notice, the Escrow Agent may deliver the Escrowed
Stock
to a court of competent jurisdiction; and provided,
further,
that the
Escrow Agent may appoint a successor escrow agent hereunder at any time
so long
as such successor shall accept and agree to be bound by the terms of this
Escrow
Agreement (except that any such successor escrow agent shall be entitled
to
customary fees which shall be payable by the Company) and shall be a bank
or
trust company insured by the Federal Deposit Insurance Corporation.
| XI. |
Escrow
Agent as Counsel to the Company
|
Wurld
Media. hereby acknowledges that the Escrow Agent is counsel to the Company
and
agrees that it will not seek to disqualify the Escrow Agent from acting
and
continuing to act as counsel to the Company in the event of a dispute hereunder
or in the course of the defense or prosecution of any claim relating to
the
transactions contemplated hereby or by the Purchase Agreement.
4
| XII. |
Notices
|
All
notices, consents, approvals, directions, and instructions required or
permitted
under this Escrow Agreement shall be effective when received and shall
be given
in writing and delivered either by hand or by registered or certified mail,
postage prepaid, or by telecopier, and addressed as follows:
If
to the
Company:
ROO
HD,
Inc.
000
Xxxx
00xx
Xxxxxx,
0xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxx Xxxxx, CEO
Phone:
(000) 000-0000
Fax:
(000) 000-0000
With
copies to:
ROO
HD,
Inc.
000
Xxxx
00xx
Xxxxxx,
0xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxxx Xxxxxxx, General Counsel
Phone:
(000) 000-0000
Fax:
(000) 000-0000
and
Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxx X. Xxxxxxxx, Esq.
Phone:
000-000-0000
Fax:
000-000-0000
If
to
Wurld Media:
Wurld
Media, Inc.
00
Xxxxxx
Xxxxxx, Xxxxx#000
Xxxxxxxx
Xxxxxxx, XX 00000
Attn:
Xxxxxxx X. Xxxxxx
Phone:
(000) 000-0000
Fax:
(000) 000-0000
5
With
a
copy to:
Xxxxxxxx
& Xxxxxxxx
000
Xxxxxxxx
Xxxxxxxx
Xxxxxxx, XX 00000
Attn:
Xxxx X. Xxxxxxxx, Xx.
Phone:
(000) 000-0000
Fax:
(000) 000-0000
or
to
such other persons or addresses as any party may have furnished in writing
to
the other parties. Copies of all communications hereunder shall be sent
to the
Escrow Agent.
| XIII. |
Entire
Agreement, Etc.
|
This
Escrow Agreement contains the entire agreement among the parties with respect
to
the subject matter hereof. This Escrow Agreement may not be amended,
supplemented, or discharged, and no provision hereof may be modified or
waived,
except by an instrument in writing signed by all of the parties hereto.
No
waiver of any provision hereof by any party shall be deemed a continuing
waiver
of any matter by such party. If a conflict between the terms and provisions
hereof and of the Purchase Agreement occurs, the terms and provisions hereof
shall govern the rights, obligations, and liabilities of the Escrow
Agent.
| XIV. |
Successors
and Assigns
|
This
Escrow Agreement shall be binding upon and shall inure to the benefit of
each of
the parties hereto, and their respective heirs, successors, assigns,
distributees, and legal representatives.
| XV. |
Counterparts
|
This
Escrow Agreement may be executed in several counterparts, each of which
shall be
deemed original, but such counterparts together shall constitute one and
the
same instrument.
| XVI. |
Governing
Law
|
This
Escrow Agreement shall be governed by and construed and enforced in accordance
with the law (other than the law governing conflict of law questions) of
the
State of New York. Any action to enforce, arising out of, or relating in
any way
to any of the provisions of this Escrow Agreement may be brought and prosecuted
in such court or courts located within New York County, New York as is
provided
by law; and the parties hereto consent to the jurisdiction of the court
or
courts located within New York, New York and to service of process by registered
or certified mail, return receipt requested, or by any other manner provided
by
law.
| XVII. |
Additional
Documents and Act
|
The
Company
and Wurld Media. shall, from time to time, execute such documents and perform
such acts as Escrow Agent may reasonably request and as may be necessary
to
enable Escrow Agent to perform its duties hereunder or effectuate the
transactions contemplated by this Escrow Agreement.
[Signature
page follows.]
6
IN
WITNESS WHEREOF, the parties hereto have executed or caused this Agreement
to be
duly executed as a sealed instrument as of the day and year first above
written.
|
ROO,
HD, Inc.
By:
/s/
Xxxxx Xxxxx
Name:
Xxxxx Xxxxx
Title:
Executive Director
Wurld
Media, Inc.
By:
/s/
Xxxxxxx Xxxxxx
Name:
Xxxxxxx Xxxxxx
Title:
CEO & Chairman
Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
By:
/s/
Xxxxxxx Xxxxxxxxx
Name:
Xxxxxxx Xxxxxxxxx, Esq.
Title:
Partner
|
7
EXHIBIT
B
SUBORDINATION
AGREEMENT
1. For
good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned (“Creditor”) hereby agrees to subordinate any
claims, security interest or lien (the “Subordinated Debt”) that it has in or
against any property of Wurld Media, Inc. (“Wurld Media”) to the claims of all
other creditors (the “Wurld Creditor(s)”) of Wurld Media (the “Senior
Debt”).
2. Creditor
agrees that all Subordinated Debt payments are subordinated to all obligations
of Wurld Media to the Wurld Creditors existing now or later, together with
collection costs thereof (including attorneys’ fees), including, interest
accruing after any bankruptcy, reorganization or similar proceeding.
3. Until
each Wurld Creditor is indefeasibly paid, the undersigned will not:
|
(a)
|
demand
or receive from Wurld Media (and Wurld Media will not pay) any
part of the
Subordinated Debt, by payment, prepayment, or otherwise.
|
|
(b)
|
exercise
any remedy against any collateral of Wurld Media,
or
|
|
(c)
|
accelerate
any Subordinated Debt, or begin to or participate in any action
against
Wurld Media, until all debts to the Wurld Creditors have been
indefeasibly
paid.
|
4. These
provisions remain in full force and effect, despite Wurld Media’s insolvency,
reorganization or any case or proceeding under any bankruptcy or insolvency
law,
and each Wurld Creditor will be fully paid before any payment is made to
Creditor.
5. Until
the
Senior Debt is indefeasibly paid, Creditor will immediately put a legend
on any
Subordinated Debt instruments that the instruments are subject to this
Agreement. Until the Senior Debt is indefeasibly paid, no amendment of
the
Subordinated Debt documents will modify this Agreement in any way that
terminates or impairs the subordination of the Subordinated Debt. For example,
instruments may not be amended to: (i) increase the interest rate of the
Subordinated Debt, or (ii) accelerate payment of principal or interest
or any
other portion of the Subordinated Debt.
6. This
Agreement binds Creditor and his successors and assigns and benefits Wurld
Creditors and their successors and assigns.
7. This
Agreement shall be governed by New York law without giving effect to conflicts
of laws principles. Creditor submits to the exclusive jurisdiction of the
County, City and State of New York. CREDITOR WAIVES ITS RIGHT TO A JURY
TRIAL OF
ANY CLAIM OR CAUSE OF ACTION FROM THIS AGREEMENT.
8. Creditor
acknowledges and agrees that the breach of this Agreement would cause
irreparable damage to the Wurld Creditors and the Wurld Creditors will
not have
an adequate remedy at law. Therefore, the obligations of Creditor under
this
Agreement shall be enforceable by a decree of specific performance issued
by any
court of competent jurisdiction, and appropriate injunctive relief may
be
applied for and granted in connection therewith. Such remedies shall, however,
be cumulative and not exclusive and shall be in addition to any other remedies
which any party may have under this Agreement or otherwise.
9. Creditor
shall, from time to time after the date hereof, and without further
consideration, execute and deliver any such additional documents and take
such
other action as may be reasonably required to effect the intent and purpose
of
this Agreement.
10. If
there
is an action to enforce the rights of a party under this Agreement, the
party
prevailing will be entitled, in addition to other relief, all reasonable
costs
and expenses, including reasonable attorneys’ fees, incurred in the
action.
IN
WITNESS WHEREOF, the undersigned has executed this Agreement as of the
12th
day of
June 2007.
|
__________________________
Address:
_____________________
_____________________
_____________________
|
