EXHIBIT 2.1
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ASSET PURCHASE AGREEMENT
By and Among
WEATHERLABS, INC., as Seller,
WL ACQUISITION CORP., as Buyer,
and
DIGITAL COURIER TECHNOLOGIES, INC.
October 31, 1999
TABLE OF CONTENTS
ARTICLE 1DEFINITIONS
1.1 Certain Defined Terms.................................................1
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1.2 Accounting Terms......................................................6
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1.3 Other Definition Provisions...........................................6
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ARTICLE 2PURCHASE AND SALE OF ASSETS
2.1 Assets to be Sold to Buyer............................................7
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(a) Accounts Receivable..........................................7
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(b) Furniture, Fixtures and Equipment, Etc.......................7
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(c) Intellectual Property........................................7
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(d) Domain Names.................................................7
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(e) Personal Property Leases.....................................8
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(f) Contracts....................................................8
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(g) Prepaid Expenses.............................................8
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(h) Books and Records, etc.......................................8
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(i) Software.....................................................8
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(j) Stock Exchange Agreement.....................................8
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(k) Claims and Rights............................................9
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(l) Goodwill.....................................................9
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(m) Miscellaneous................................................9
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2.2 Excluded Assets.......................................................9
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2.3 Assignment of Contracts and Rights...................................10
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ARTICLE 3 ASSUMPTION OF LIABILITIES
3.1 Assumed Liabilities..................................................10
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(a) Contractual Obligations.....................................11
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(b) [Intentionally omitted].....................................11
3.2 Excluded Liabilities.................................................11
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(a) Accrued Payroll Liabilities.................................11
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(b) Accounts and Notes Payable..................................11
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(c) Claims......................................................11
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(d) Employee Benefit Plans......................................11
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(e) Taxes.......................................................11
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(f) Excluded Assets.............................................11
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(g) Prior Transactions..........................................12
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(h) Breaches....................................................12
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(i) Indemnity Items.............................................12
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(j) Real Property Leases........................................12
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(k) Other Liabilities...........................................12
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ARTICLE 4 PURCHASE PRICE AND CLOSING
4.1 Purchase Price.......................................................12
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4.2 Manner of Payment....................................................12
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4.3 Allocation of Purchase Price.........................................12
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4.4 Closing..............................................................13
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4.5 Collection of Receivables............................................13
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4.6 Prorations...........................................................13
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ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLING PARTIES
5.1 Organization, Power and Authority....................................13
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5.2 Authorization, etc...................................................14
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5.3 Governmental Authorization...........................................14
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5.4 No Legal Bar.........................................................14
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5.5 No Defaults..........................................................15
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5.6 Financial Statements.................................................15
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5.7 Absence of Undisclosed Liabilities...................................15
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5.8 Absence of Certain Changes or Events.................................16
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5.9 Title Conveyed; Condition and Sufficiency of Assets..................17
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5.10 Software.............................................................18
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5.11 Intellectual Property................................................18
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5.12 Year 2000 Compliance.................................................19
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5.13 Accounts Receivable and Accounts and Notes Payable...................19
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5.14 Tax Matters..........................................................20
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5.15 No Litigation........................................................20
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5.16 Compliance with Laws.................................................21
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5.17 Business Contracts...................................................21
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5.18 Personal Property Leases.............................................22
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5.19 ERISA................................................................22
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5.20 Employees and Independent Contractors................................23
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5.21 No Guaranties........................................................23
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5.22 No Bankruptcy........................................................23
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5.23 Misstatements and Omissions..........................................23
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ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER
6.1 Organization, Power and Authority....................................24
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6.2 Authorization, etc...................................................24
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6.3 No Legal Bar.........................................................24
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ARTICLE 7 CLOSING CONDITIONS
7.1 Conditions to Closing of Buyer.......................................25
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(a) Representations and Warranties True and Correct.............25
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(b) Performance of Conditions Precedent.........................25
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(c) Opinion of Counsel to Selling Parties.......................25
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(d) Good Standing Certificates..................................25
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(e) Secretary's Certificates....................................25
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(f) Incumbency Certificate......................................25
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(g) Certificates of Selling Parties.............................25
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(h) Agreement and Instruments of Transfer.......................26
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(i) Third Party and Governmental Approvals and Consents.........26
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(j) Settlement of Claims........................................26
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(l) No Objecting Litigation.....................................26
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(m) Transition Services Agreement...............................26
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(n) Noncompetition Agreement....................................27
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(o) Release of Liens............................................27
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7.2 Conditions to Closing of the Selling Parties.........................27
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(a) Representations and Warranties True and Correct.............27
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(b) Performance of Conditions Precedent.........................27
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(c) Opinion of Counsel to Buyer.................................27
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(d) Secretary's Certificate.....................................27
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(e) Incumbency Certificate......................................27
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(f) Buyer's Certificate.........................................27
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(g) Instruments of Assumption...................................28
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(h) No Objecting Litigation.....................................28
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(i) Noncompetition Agreement....................................28
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7.3 Waiver of Conditions.................................................28
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ARTICLE 8COVENANTS
8.1 Joint Covenants......................................................28
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(a) Regulatory and Other Approvals and Consents; Cooperation....28
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(b) Public Announcements........................................29
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(c) Confidentiality.............................................29
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(d) Best Efforts................................................29
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(e) Further Assurances..........................................29
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(f) Payment and Expenses of Other Parties.......................30
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(g) Ancillary Agreements........................................30
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8.2 Additional Covenants of the Selling Parties..........................30
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(a) Governmental Authorizations.................................30
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(b) Additional Financial Information............................30
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(c) Post-Closing Tax Matters....................................30
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(d) Rehired Employees...........................................31
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(e) Stock Exchange Agreement....................................31
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(f) Change of Name; Covenant Not To Use Name....................31
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(h) Payment of Excluded Liabilities.............................32
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ARTICLE 9 EXPENSES, INDEMNITY AND SET OFF
9.1 Expenses.............................................................32
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9.2 Indemnification by Selling Parties...................................32
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9.3 Indemnification by Buyer.............................................33
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9.4 Definition of "Event of Loss"; Tax Benefits..........................33
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9.5 Indemnification Procedure............................................34
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9.6 Buyer's Right of Setoff..............................................35
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9.7 Brokers and Finders..................................................35
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ARTICLE 10GENERAL PROVISIONS
10.1 Amendments and Waivers; Construction.................................35
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10.2 Enforcement..........................................................35
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10.3 Successors and Assigns...............................................36
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10.4 Counterparts.........................................................36
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10.5 No Waivers by Implication............................................36
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10.6 Notices..............................................................36
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10.7 Reproductions........................................................37
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10.8 Entire Agreement.....................................................37
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10.9 Exhibits, Schedules and Attachments..................................37
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10.10 Rights Cumulative....................................................38
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10.11 Governing Law........................................................38
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10.12 Severability.........................................................38
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10.13 Captions.............................................................38
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10.14 Third Party Rights...................................................38
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10.15 Survival.............................................................38
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10.16 Written Agreement Required/No Oral Modification......................38
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EXHIBITS AND SCHEDULES
Exhibit A Form of Escrow Agreement
Exhibit B Form of Opinion of Counsel to Selling Parties
Exhibit C Form of Transition Services Agreement
Exhibit D Form of Noncompetition Agreement
Exhibit E Form of Opinion of Counsel to Buyer
Schedule 1.1(a) Excluded Employees
Schedule 1.1(b) Excluded Intellectual Property
Schedule 2.1(b) List of Excluded Furniture, Fixtures and
Equipment, Etc.
Schedule 2.2(e) List of Excluded Contracts, Excluded Personal
Property Leases and Excluded Real Property Leases
Schedule 3.1(a) List of Acquired Contracts
Schedule 3.1(b) List of Assumed Payroll Liabilities
Schedule 4.3 Purchase Price Allocation
Schedule 5.3 Governmental Authorizations
Schedule 5.6 Seller's Financial Statements
Schedule 5.7 Seller's Disclosures
Schedule 5.8 Changes or Events
Schedule 5.9 Permitted Liens
Schedule 5.10 Software
Schedule 5.11 List of Intellectual Property
Schedule 5.14 Federal, State, Local and Foreign Tax Returns of
Sellers
Schedule 5.15 Litigation
Schedule 5.17 List of WeatherLabs Contracts
Schedule 5.18 List of the Personal Property Leases
Schedule 5.19 List of Seller's Benefit Plans
Schedule 5.20 List of Seller's Employment and Independent
Contractor Contracts
Schedule 7.1(k) List of Key Personnel
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into as of the 31st day of
October, 1999, by and among WEATHERLABS, INC., an Illinois corporation
("Seller"), WL ACQUISITION CORP., a California corporation ("Buyer"), and
DIGITAL COURIER TECHNOLOGIES, INC., a Delaware corporation ("DCTI"). (DCTI and
Seller are sometimes referred to collectively as the "Selling Parties" and
individually as a "Selling Party", and the Selling Parties and Buyer are
sometimes referred to collectively as the "Parties" and individually as a
"Party.")
RECITALS
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A. Seller operates a business that provides weather-related information
and services to and through the Internet and other media and communication
channels (the "Business").
B. The Selling Parties desire to sell to Buyer and Buyer desires to
purchase from the Selling Parties substantially all of the assets used or held
for use in the Business, and in connection therewith Buyer is willing to assume
certain specified liabilities of the Selling Parties relating to the Business,
all on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, agreements, representations and warranties herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
AGREEMENT
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ARTICLE 1
DEFINITIONS
1.1 Certain Defined Terms. Unless the context otherwise specifies
or requires, the following terms have the meanings specified below:
"Accounts Receivable" shall have the meaning given in
subsection 2.1(a).
"Accrued Payroll Liabilities" means all obligations of the
Selling Parties with respect to accrued payroll liabilities relating to any
Business Employee, including all accrued payroll charges for time worked through
the Closing Date, all accrued bonuses and commissions, accrued payroll taxes and
insurance, and accrued vacation, paid holiday, sick leave and related payroll
expenses and taxes.
"Acquired Assets" shall have the meaning given in Section 2.1.
"Acquired Contracts" shall have the meaning given in
subsection 2.1(f).
"Affiliate" means (i) any Person directly or indirectly
controlling, controlled by or under common control with another Person; (ii) any
Person owning or controlling ten percent (10%) or more of the outstanding voting
securities of such other Person; (iii) any officer, director or partner of such
Person; and (iv) if such Person is an officer, director or partner, any such
company for which such Person acts in such capacity.
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"Agreement" means this Asset Purchase Agreement, as originally
executed, as amended, supplemented or otherwise modified from time to time.
"Ancillary Agreements" means the Escrow Agreement, the
Transition Services Agreement, the Noncompetition Agreement and the instruments
of transfer referred to in Section 7.1(h).
"Assets" means all assets of the Business, including Acquired
Assets and Excluded Assets.
"Assumed Liabilities" shall have the meaning given in Section
3.1.
"At Home Payment" means that certain payment in the amount of
$267,000 due to At Home Corporation as of --------------- July 10, 1999.
"Bankruptcy" means with respect to a Selling Party: (i) the
filing of an application by a Selling Party for, or its consent to, the
appointment of a trustee, receiver or custodian of its assets; (ii) the entry of
an order for relief with respect to a Selling Party in proceedings under the
United States Bankruptcy Code, as amended or superseded from time to time; (iii)
the making by a Selling Party of a general assignment for the benefit of
creditors; (iv) the entry of an order, judgment or decree by any court of
competent jurisdiction appointing a trustee, receiver or custodian of the assets
of a Selling Party; (v) the failure by a Selling Party generally to pay its
debts as the debts become due within the meaning of Section 303(h)(1) of the
United States Bankruptcy Code or the admission in writing of its inability to
pay its debts as they become due.
"Benefit Plans" shall have the meaning given in Section 5.19.
"Books and Records" shall have the meaning given in subsection
2.1(h).
"Business" shall have the meaning given in the Recitals.
"Business Contracts" shall have the meaning given in Section
5.5.
"Business Day" means a day on which commercial banking
institutions in Norfolk, Virginia are open for the transaction of substantially
all of their banking business.
"Business Employee" means any employee of Seller and/or DCTI
utilized in the operation of the Business as of Closing, other than those
employees who provide primarily legal, accounting, receptionist and/or human
resource services and those employees listed on Schedule 1.1(a), which sets
forth the job title and a brief description of the duties of each such employee.
"Cash" shall have the meaning given in subsection 2.2(a).
"Closing" means the closing of the purchase and sale of the
Acquired Assets occurring on the Closing ------- Date.
"Closing Date" means the date of Closing, as determined
pursuant to Section 4.4.
"Closing Period Financials" shall have the meaning given in
Section 8.2(b).
"Code" means the Internal Revenue Code of 1986, as amended,
and the regulations thereunder, or any subsequent legislative enactment thereof,
as in effect from time to time.
"Default" means the breach of any term or provision hereof,
whether or not any requirement for notice or lapse of time or other condition
precedent has been satisfied.
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"ERISA" means the Employee Retirement Income Security Act of
1974, and the regulations thereunder, as in effect from time to time.
"Escrow Agreement" shall have the meaning given in subsection
4.2(b).
"Escrow Amount" shall have the meaning given in subsection
4.2(a).
"Event of Loss" shall have the meaning given in Section 9.4.
"Excluded Assets" shall have the meaning given in Section 2.2.
"Excluded Contracts" shall have the meaning given in
subsection 2.2(e).
"Excluded Liabilities" shall have the meaning given in Section
3.2.
"Excluded Personal Property Leases" shall have the meaning
given in Section 2.2(e).
"Excluded Real Property Leases" shall have the meaning given
in Section 2.2(e).
"Financial Statements" shall have the meaning given in Section
5.6.
"Generally accepted accounting principles" or "GAAP" means
principles that are consistent with the principles promulgated or adopted by the
Financial Accounting Standards Board and its predecessors.
"Governmental Authorizations" shall have the meaning given in
subsection 2.1(m).
"Indebtedness" means all (i) obligations for borrowed money or
for the deferred purchase price of property or services; (ii) obligations
secured by any Lien on or with respect to any assets or properties owned by a
Person or acquired by a Person subject thereto, whether or not the obligation
secured thereby shall have been assumed; (iii) obligations under direct or
indirect guarantees, and other obligations (contingent or otherwise) to
purchase, to provide funds for payment or otherwise acquire property or to
assure a creditor against loss; and (iv) obligations to reimburse the issuer
with respect to letters of credit, whether direct or indirect.
"Indemnitee" shall have the meaning given in Section 9.4.
"Indemnitor" shall have the meaning given in Section 9.4.
"Independent Contractor" means any contractor, consultant,
service provider or other personnel engaged or retained by Seller and/or DCTI
prior to the Closing Date to provide services to and/or for the Business.
"Independent Contractor Agreements" shall have the meaning
given in subsection 2.1(f).
"Intellectual Property" means, except as set forth on Schedule
1.1(b), (a) all inventions (whether patentable or unpatentable and whether or
not reduced to practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all reissuance,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, trade names and
corporate names, domain names and URLs, together with all translations,
adaptations, derivation, and combinations thereof and including all goodwill
associated therewith, and all applications, registrations, and renewals in
connection therewith, (c) all copyrightable works, all copyrights, and all
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applicants, registrations, and renewals in connection therewith, (d) all trade
secrets and confidential business information (including prospect lists, ideas,
research and development, know-how, formulas, compositions, manufacturing and
production processes and techniques (and documentation thereof), technical data,
designs, drawings, specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals), (e) all Software,
(f) all other proprietary rights, and (g) all copies and tangible embodiments
thereof (in whatever form or medium), owned, used, or held for use by a Selling
Party in connection with the operation of the Business.
"Knowledge" means, as to either or both of the Selling
Parties, the knowledge of any of X.X. Xxxxxxx, Xxxx Xxxxxxx, Xxxx Xxxx, Xxxxxxxx
Xxxxxxx, Xxx Xxxxxx and/or Xxxxxx Xxxxxx after due inquiry.
"Lien" means any interest in property securing an obligation
owed to, or a claim by, a person other than the owner of the property, whether
such interest is based on the common law, statute or contract, and including but
not limited to a lien or security interest arising from a mortgage, charge,
pledge, assignment, hypothecation, security agreement, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes, or other
encumbrance of any nature whatsoever on or with respect to any cash, property,
right to receive income or other assets of any nature whatsoever.
"Loss" or "Losses" shall have the meaning given in Section 9.2
"Material Adverse Effect" means any material and adverse
effect on (i) the assets, liabilities, financial condition, revenues, operating
income, business, operations, affairs, prospects or circumstances of a Selling
Party, the Acquired Assets or the Business or the facts represented or warranted
in this Agreement relating to a Selling Party, the Acquired Assets or the
Business, (ii) the ability of the Business to be carried out as conducted or as
proposed to be conducted, (iii) the ability of Seller to meet its obligations
generally (including, without limitation, its obligations under this Agreement),
on a timely basis, or (iv) the ability of DCTI to meet its obligations under
this Agreement on a timely basis.
"Multiemployer Plan" shall have the meaning specified in
Section 3(37) of ERISA.
"New Release" shall have the meaning given in subsection
2.1(i).
"Noncompetition Agreement" shall have the meaning given in
subsection 7.1(n).
"Notes Payable" shall have the meaning give in subsection
3.2(b).
"Notice of Claim" shall have the meaning given in subsection
9.5(a).
"Old Release" shall have the meaning given in subsection
2.1(i).
"Pension Plan" means an employee pension benefit plan as
defined in Section 3(2) of ERISA.
"Permitted Liens" shall have the meaning given in subsection
5.9.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, trust, unincorporated organization,
association, or other entity or a government or any agency, authority or
political subdivision thereof.
"Personal Property Lease" or "Personal Property Leases" shall
have the meaning given in subsection 2.1(e).
"Prepaid Expenses" shall have the meaning given in subsection
2.1(g).
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"Purchase Price" shall have the meaning given in Section 4.1.
"Rehired Employees" shall mean all Business Employees
immediately prior to Closing who are employed by Buyer immediately after the
Closing.
"Software" shall have the meaning given in subsection 2.1(i).
"Stock Exchange Agreement" shall have the meaning given in
subsection 2.1(j).
"Szilage Payment" means that certain payment (including any
accrued but unpaid interest) due to Xxxxx Xxxxxxx in respect of that certain
note payable as reflected on the Financial Statements.
"Taxes" means all federal, state, local and foreign income,
employment, franchise, capital stock, excise, gross receipts, sales, use,
property, real estate and stamp taxes, payments in lieu of taxes, levies,
duties, assessments and fees of any nature, together with all related penalties,
fines or additions to tax or interest thereon.
"Uninsured Cost" shall mean costs with respect to which
insurance proceeds are not collected or are not capable of being collected in
spite of reasonable efforts by Seller.
1.2 Accounting Terms. All terms of an accounting nature not
specifically defined herein shall have the respective meanings given to them
under GAAP.
1.3 Other Definition Provisions. The masculine form of words
includes the feminine and the neuter and vice versa, and, unless the context
otherwise requires, the singular form of words includes the plural and vice
versa and "or" is used in the sense of "and/or." The words "herein," "hereof,"
"hereunder" and other words of similar import when used in this Agreement refer
to this Agreement as a whole, and not to any particular section or subsection.
ARTICLE 2
PURCHASE AND SALE OF ASSETS
2.1 Assets to be Sold to Buyer. On the terms and subject to the
conditions of this Agreement, and on the basis of the representations and
warranties herein contained, the Selling Parties shall sell, assign, transfer,
convey and deliver (or cause to be assigned, transferred, conveyed and
delivered) to Buyer, on the Closing Date, all of the assets (tangible and
intangible), properties and other rights owned, used or held for use by either
or both of the Selling Parties (or any of their subsidiaries) in connection with
the operation of the Business (except for the Excluded Assets) including without
limitation (x) all assets and properties of the Business shown on the Financial
Statements that have not been consumed or otherwise disposed of in the ordinary
course of business as of the Closing Date, and (y) all assets and properties of
the Business acquired subsequent to the date of the Financial Statements that
have not been consumed or otherwise disposed of in the ordinary course of
business as of the Closing Date (collectively, the "Acquired Assets"). The
Acquired Assets shall include, without limitation, all right, title and interest
of Seller and/or DCTI, as applicable, in, to and under the following:
(a)......Accounts Receivable. Any and all accounts receivable
of, or notes receivable of, and other amounts due to, Seller and/or, to the
extent accrued in connection with the operation of the Business, DCTI,
including, without limitation, amounts due to a Selling Party from any Business
Employee, shareholder or Affiliate (collectively, the "Accounts Receivable");
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(b) Furniture, Fixtures and Equipment, Etc. All
furniture, trade fixtures, equipment, computers and other hardware, inventories
of parts, machinery and other tangible personal property used or held for use in
connection with the operation of the Business, excluding the items listed on
Schedule 2.1(b).
(c) Intellectual Property. All Intellectual Property
(including, without limitation, trademarks, copyrights and confidential
information), goodwill associated therewith, licenses and sublicenses granted
and obtained with respect thereto, and rights thereunder, remedies against
infringements thereof, and rights to protection of interests therein under the
laws of all jurisdictions, including, without limitation, all rights to the
names WeatherLabs and Weather Ad Network.
(d) Domain Names. All Internet domain names and URLs,
goodwill associated therewith, licenses and sublicenses granted and obtained
with respect thereto, and rights thereunder, remedies against infringements
thereof, and rights to protection of interests therein under the laws of all
jurisdictions, including, without limitation, all rights to the domain names
"xxxxxxxxxxx.xxx", "xxxxxxxxxx.xxx", "xxxxxxxxxxxxx.xxx", "xxxxxxxxxxxx.xxx" and
"xxxxxxxxxxxxx.xxx".
(e) Personal Property Leases. All leases, subleases and
licenses of personal property used in connection with the operation of the
Business to which a Selling Party is a party (as either lessee or lessor), which
leases, subleases and licenses have been listed on Schedule 5.18 (excluding the
Excluded Personal Property Leases), together with any options to purchase the
underlying property and any rights to security deposits with respect thereto
(individually a "Personal Property Lease," and collectively, the "Personal
Property Leases");
(f) Contracts. All contracts, licenses, obligations,
agreements, plans, arrangements, commitments or the like (written or oral) of
the Business arising in the ordinary course of business and to which a Selling
Party is a party (excluding the Excluded Contracts), including, without
limitation, all distribution contracts, all license agreements, all contracts
with providers of services to a Selling Party (including, without limitation,
all contracts with Independent Contractors (the "Independent Contractor
Agreements")) and all contracts for the provision of services by a Selling
Party, and all agreements containing covenants not to compete, solicit, or
disclose in favor of Seller or with respect to the Business (collectively, the
"Acquired Contracts");
(g) Prepaid Expenses. All prepaid expenses of Seller,
including, without limitation, any prepaid advertising of Seller, incurred
pursuant to any of the Business Contracts (the "Prepaid Expenses");
(h) Books and Records, etc. All operating data and
business records, including, without limitation, all books, records, data bases,
correspondence, accounts, prospects lists, advertiser lists, archives, files,
papers, employment records of Rehired Employees, records related to Independent
Contractors, sales and advertising materials and related materials used or held
for use in the Business or relating to the Acquired Assets or the Assumed
Liabilities or other matters contemplated by this Agreement, other than (i) the
minute books, stock transfer books and seals of Seller, and (ii) any books,
records or other materials relating exclusively to (A) the Excluded Liabilities
or (B) the Excluded Assets;
(i) Software. All software and all versions thereof
(including, without limitation, all software used by the Selling Parties in
connection with the generation of weather forecasts produced by Seller in the
Business, including the proprietary software used by the Selling Parties and
described as being written in "Objective-C" code (the "Old Release") and the
proprietary software used by the Selling Parties the major components of which
are the WLINow, WLINowX, WLIForecast and WLIKit applications, forecast engines
and collection of other software objects and components integrated therein (the
"New Release")), for any and all computers, devices and equipment owned,
licensed or leased by a Selling Party or used or held for use in the Business,
including all passwords, source code, data and related documentation (the
"Software");
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(j) Stock Exchange Agreement. All of the Selling Parties'
rights under the Stock Exchange Agreement dated as of March 17, 1998, by and
among Seller, Seller's former shareholders and DCTI (formerly DataMark Holdings,
Inc.) (the "Stock Exchange Agreement"), including, without limitation, all
obligations of the Significant Sellers (as defined in the Stock Exchange
Agreement) under Section 9 of the Stock Exchange Agreement;
(k) Claims and Rights. All claims and rights of every
kind relating to the Acquired Assets or the Business, including without
limitation, all deposits, prepayments, refunds, causes of action, choses in
action, rights of recovery, rights of set-off, and rights of recoupment
(including any such item relating to the payment of Taxes in respect of periods
following Closing);
(l) Goodwill. All goodwill related to the Business; and
(m) Miscellaneous. Except as otherwise expressly provided
in this Agreement, all other items of tangible property (including all
inventories and supplies), whether real, personal or mixed, owned or held by
Seller and/or, to the extent owned or held solely in connection with the
operation of the Business, DCTI, and any replacements or additions thereto, and
all other assets, properties and other rights (including all intangible assets)
of Seller and/or, to the extent owned or held solely in connection with the
operation of the Business, DCTI of every kind and nature, including all
trademarks, copyrights, contract rights, licenses, franchise rights, privileges,
graphics used to promote or identify the Business, warranties, guaranties, and
to the extent the same are assignable, business licenses, franchises, approvals,
orders, registrations, certificates of occupancy and all other governmental and
regulatory licenses and permits (the "Governmental Authorizations"), and
telephone, telex, telecopy and telecommunication numbers.
2.2 Excluded Assets. Anything in Section 2.1 to the contrary
notwithstanding, all of the right, title and interest of either of the Selling
Parties in, to and under the following assets, properties and other rights
(collectively, the "Excluded Assets") shall be excluded from the Acquired
Assets:
(a) All of Seller's cash on hand or on deposit,
marketable securities, and other cash equivalents with respect to the Business
but excluding the Security Deposits ("Cash");
(b) Any Tax refund claim of Seller of any type or
description for matters arising prior to the Closing Date;
(c) All Benefit Plans, and any employment agreements
with any Business Employee;
(d) All of the Selling Parties' insurance policies and
rights thereunder, other than claims in respect of the Acquired Assets;
(e) All rights of the Selling Parties under the contracts
(the "Excluded Contracts"), the personal property leases (the "Excluded Personal
Property Leases") and real property leases (the "Excluded Real Property Leases")
listed on Schedule 2.2(e) and any other contract not listed on Schedule 3.1(a)
that Buyer, in its sole discretion, elects to exclude upon the disclosure to or
identification by Buyer of the contract;
(f) All furniture, fixtures and equipment, etc. listed
on Schedule 2.1(b); and
(g)......DCTI's stock in Seller and Seller's corporate books
and records, including the corporate charter and bylaws, corporate seals, minute
books, stock transfer books, and other documents relating to the organization,
maintenance and existence of Seller as a corporation.
7
2.3 Assignment of Contracts and Rights. Anything in this Agreement to
the contrary notwithstanding, this Agreement shall not constitute an agreement
to assign any Acquired Assets or any claim or right or any benefit arising
thereunder or resulting therefrom if an assignment thereof, without consent of a
third party thereto, would constitute a breach or other contravention thereof,
or in any way adversely affect the rights of Buyer thereunder. Each Selling
Party shall use its best efforts to obtain the consent of any third parties to
any such Acquired Assets or claim or right or any benefit arising thereunder for
the assignment thereof to Buyer as Buyer may request. If such consent is not
obtained, or if an assignment thereof would be ineffective as to Buyer, the
Selling Parties and Buyer will enter into a mutually agreeable arrangement under
which Buyer will obtain the benefits and assume the obligations thereunder in
accordance with this Agreement, including subcontracting, sub-licensing, or
subleasing to Buyer, or under which the Selling Parties would enforce such
arrangements for the benefit of Buyer. The Selling Parties shall promptly pay to
Buyer all monies received by the Selling Parties under any Acquired Assets or
any claim or right or any benefit arising thereunder, except to the extent the
same represents an Excluded Asset. In such event, the Selling Parties and Buyer
shall, to the extent the benefits therefrom and obligations thereunder have not
been provided by alternate arrangements satisfactory to Buyer, negotiate in good
faith an adjustment in the consideration paid by Buyer for the Acquired Assets.
The foregoing notwithstanding, the rights and remedies under this Section 2.3
shall be in addition to, and not in place of, any other such rights or remedies
provided for under this Agreement (including, without limitation, Buyer's rights
with respect to failure of the condition set forth in subsection 7.1(i)) or by
operation of law.
ARTICLE 3
ASSUMPTION OF LIABILITIES
3.1 Assumed Liabilities. Buyer agrees that at Closing it will assume,
and agree to pay, perform and discharge when due, only the following obligations
of Seller and/or DCTI, as applicable, as such obligations relate to the
Business, but only to the extent existing on the Closing Date (the "Assumed
Liabilities"):
(a) Contractual Obligations. The obligations and
liabilities of Seller and/or DCTI, as applicable, to the extent performance is
due after the Closing Date, under the Acquired Contracts listed on Schedule
3.1(a) and the Personal Property Leases (excluding the Excluded Personal
Property Leases); and
(b) [Intentionally omitted]
3.2 Excluded Liabilities. Notwithstanding any provision of Section 3.1
of this Agreement or any other document or instrument to the contrary, Buyer
shall have the obligation to assume only the Assumed Liabilities, and shall have
no obligation with respect to any other obligation of the Selling Parties (the
"Excluded Liabilities"). The Excluded Liabilities shall remain the sole
obligation of Seller and/or DCTI, as applicable, and shall include, without
limitation, any and all obligations of Seller and/or DCTI, as applicable, with
respect to:
(a) Accrued Payroll Liabilities. All Accrued Payroll
Liabilities of the Selling Parties; ---------------------------
(b) Accounts and Notes Payable. All accounts payable and
notes payable, including, without limitation, such payables in respect of the At
Home Payment and the Szilage Payment, both current and long-term, by either
Selling Party (collectively, the "Accounts and Notes Payable");
(c) Claims. Any and all obligations or liabilities with
respect to any claims (known or unknown, contingent or otherwise, whether
arising in contract, contribution, indemnity, tort or otherwise), litigation,
court, arbitration or proceedings against either Selling Party (i) existing on
the Closing Date or (ii) arising after the Closing Date from events or
circumstances occurring, or representations, warranties or guaranties made, or
alleged to have been made by either Selling Party, prior to the Closing Date,
relating to Seller and/or DCTI, the Business, or the Acquired Assets, their
directors, officers, employees or agents;
8
(d) Employee Benefit Plans. The Benefit Plans (including
all obligations pursuant to the continuation coverage rules of ERISA Sections
601-608 and Code Section 4980B) and the obligations of the Selling Parties to
any of their employees pursuant to any employment agreements or any incentive
compensation or stock appreciation rights plan;
(e) Taxes. Any and all Taxes arising from or related to
ownership or sale of the Acquired Assets or the conduct of the Business prior to
the Closing Date, including any personal property and sales taxes relating to
the periods prior to the Closing Date;
(f) Excluded Assets. The Excluded Assets and any
liabilities associated therewith;
(g) Prior Transactions. Any and all amounts due (whether
contingent or otherwise) from Seller to any Person involved in a prior sale or
purchase of the stock, assets or business of Seller;
(h Breaches. Any and all debts, liabilities and
obligations of Seller and/or DCTI arising out of the breach of any of the
Personal Property Leases or Acquired Contracts (to the extent such breach
relates to events or circumstances occurring prior to the Closing Date);
(i) Indemnity Items. Any and all debts, liabilities,
obligations and claims against which any of the Selling Parties have agreed to
indemnify Buyer pursuant to Section 9.2; and
(j) Real Property Leases. Any and all obligations or
liabilities arising under any lease of real property to which any of the Selling
Parties is a party.
(k) Other Liabilities. Any obligations or liabilities
not expressly included as Assumed Liabilities in Section 3.1 above.
ARTICLE 4
PURCHASE PRICE AND CLOSING
4.1 Purchase Price. In consideration for the sale, assignment,
transfer, conveyance and delivery of the Acquired Assets to Buyer at Closing,
and in consideration for the covenants and agreements of the Selling Parties
herein contained and contained in the Noncompetition Agreement, Buyer shall pay
to Seller in the manner set forth below the sum of Four Million Five Hundred
Thousand Dollars ($4,500,000) (the "Purchase Price").
4.2 Manner of Payment. Buyer shall pay the Purchase Price at Closing as
follows:
(a) A cash amount (by wire transfer or other immediately
available funds) equal to Three Million Seven Hundred Fifty Thousand Dollars
($3,750,000) shall be delivered to Seller. Such amount shall be adjusted for the
amount of any prorations pursuant to Section 4.6, and reduced by the amount of
each of the At Home Payment and the Szilage Payment pursuant to Section 8.2(h);
and
(b Seven Hundred Fifty Thousand Dollars ($750,000) (such
amount constituting the "Escrow Amount") shall be delivered to Crestar Bank or
its successor (Richmond, Virginia) to hold in escrow pursuant to the terms of an
escrow agreement in substantially the form attached hereto as Exhibit A (the
"Escrow Agreement").
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4.3 Allocation of Purchase Price. The Purchase Price shall be allocated
in accordance with Schedule 4.3 to be attached hereto by Buyer prior to Closing.
The allocation of consideration described on Schedule 4.3 has been the subject
of extensive negotiations and is a material inducement to each Party to enter
into this Agreement. Each of the Parties shall file their respective income tax
returns on the basis of the allocations reflected on Schedule 4.3, and no Party
shall thereafter take a return position inconsistent with such allocation. Each
Party shall fully comply with the reporting requirements of Section 1060 of the
Code relating to allocation rules for certain asset acquisitions, and will use
Schedule 4.3 as the basis for completing IRS Form 8594, which Buyer and Seller
shall each file with the IRS on a timely basis.
4.4 Closing. The Closing for the sale by the Selling Parties to Buyer
of the Acquired Assets and the assumption by Buyer of the Assumed Liabilities
shall take place at the offices of Xxxxxxx & Xxxxxx, P.C., 0000 Xxxx xx Xxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx, at 11:59 p.m. on (i) October 31, 1999, or if later,
(ii) the second Business Day following the satisfaction or waiver of all
conditions set forth in Sections 7.1 and 7.2 (other than conditions with respect
to actions that the respective Parties will take at Closing itself) or such
other date as the Selling Parties and Buyer may mutually determine (the "Closing
Date").
4.5 Collection of Receivables. Buyer shall have the right and authority
to collect for Buyer's own account all Accounts Receivable and other items
included among the Acquired Assets and to endorse with the name of the
applicable Selling Party any checks received on account of any such receivables
or other items. The Selling Parties shall provide any and all notices and file
any documents with any banks as Buyer and its counsel reasonably requests to
facilitate the collection of such items.
4.6 Prorations. Real estate, personal property, payroll and other
taxes, utilities, insurance, rents, charges, license charges, prepaid expenses,
installments due on any Personal Property Lease or license related to any
Intellectual Property and other assessments, if any, shall be prorated at the
Closing between the Selling Parties and Buyer based on the actual number of days
applicable to pre-Closing and post-Closing use.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLING PARTIES
In order to induce Buyer to enter into this Agreement, the Selling
Parties hereby jointly and severally represent and warrant to Buyer that the
statements contained in this Article 5 are correct and complete as of the date
of this Agreement.
5.1 Organization, Power and Authority. Each Selling Party is a
corporation, duly organized, validly existing and in good standing under the
laws of its state of incorporation. Seller is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the properties owned
or used by it, or the nature of the activities conducted by it, requires such
qualification. Each Selling Party has full corporate power and authority to
conduct its business and to own its property, as now conducted and owned. Each
Selling Party has full corporate power and authority and each Selling Party and
its shareholders have taken all required corporate and other action necessary to
permit such Selling Party to execute and deliver this Agreement and all other
documents or instruments required to be executed and delivered by it under this
Agreement, and to carry out the terms of this Agreement and of all such other
documents or instruments. Each Selling Party has delivered to Buyer true and
complete copies of its Articles of Incorporation and all amendments thereto,
certified by the Illinois Secretary of State or the Delaware Secretary of State,
as applicable, and its Bylaws as presently in effect, certified as true and
correct by its secretary. Seller has no subsidiaries.
5.2 Authorization, etc. The execution and delivery of this Agreement by
each of the Selling Parties has been, and the execution and delivery of the
Ancillary Agreements required to be executed by them hereunder, will be, duly
10
and validly authorized by all necessary action in respect thereof on the part of
the Selling Parties, each of which has the legal capacity to execute and perform
this Agreement and the Ancillary Agreements. This Agreement represents, and when
executed and delivered at Closing the Ancillary Agreements will each represent,
the legal, valid and binding obligation of each of the Selling Parties,
enforceable against each of them in accordance with their respective terms,
subject to the effect of bankruptcy, insolvency, reorganization, arrangements,
moratorium, and other similar laws now or hereafter in effect, as well as
limitations imposed by general principles of equity upon the specific
enforceability of any of the remedies, covenants, or other provisions, and the
availability of injunctive relief or other equitable remedies.
5.3 Governmental Authorization. All Governmental Authorizations
necessary to permit the Selling Parties to own (whether jointly or individually)
the Acquired Assets and operate the Business as it is now being operated, the
absence of which would have a Material Adverse Effect, are in full force and
effect, and such Governmental Authorizations are listed on Schedule 5.3 hereto.
5.4 No Legal Bar. The execution and delivery by the Selling Parties of
this Agreement does not, and the consummation of the transactions contemplated
hereby will not, violate, conflict with, result in a breach of, result in or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the cancellation or unilateral
modification or amendment of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any Lien upon any of the Acquired Assets under any of the terms,
conditions or provisions of (i) the respective Articles of Incorporation or
Bylaws of the Selling Parties, (ii) any contract, except for such defaults (or
rights of termination, cancellation or acceleration) as to which requisite
waivers or consents have been or will be obtained by the applicable Selling
Party, prior to the Closing or the obtaining of which has been waived by Buyer
in writing, or (iii) any order, writ, judgment, injunction, decree, award,
ruling, statute, rule or regulation applicable to either Selling Party or any of
the Acquired Assets or the Business. Neither Selling Party has contracted, nor
will either Selling Party contract to sell, transfer, pledge or mortgage to any
third party, all or any part of the Acquired Assets or the capital stock of
Seller. There is no requirement applicable to either Selling Party to make any
filing with, or to obtain any permit, authorization, consent, waiver or approval
of any governmental authority or any third party as a condition to the lawful
consummation of the transactions contemplated by this Agreement or the transfer
to Buyer of ownership of the Acquired Assets.
5.5 No Defaults. Neither Selling Party is in violation of, or in
default under, (a) any provision of its Articles of Incorporation or Bylaws, as
amended to the Closing Date, (b) any Governmental Authorization, (c) any law,
rule or regulation, (d) any order, judgment, writ, injunction, award, decree,
determination, license or permit by which such Selling Party or its assets or
properties is or may be bound, or (e) any contract relating to the operation of
the Business to which such Selling Party is a party (collectively, the "Business
Contracts"). No event or circumstance has occurred and is continuing which with
the giving of notice or the passage of time or both would constitute a Default,
or would cause any of the representations and warranties contained in (a), (b),
(c), (d) or (e) above not to be true and correct. There are no renegotiations
of, or attempts to renegotiate, or outstanding rights to renegotiate any
Business Contract.
5.6 Financial Statements. Attached hereto as Schedule 5.6 are copies of
financial statements of Seller, consisting of Seller's unaudited balance sheet
as of June 30, 1999 and the related statements of income and retained earnings
for the twelve (12) month period then ended, together with the Closing Period
Financials (collectively, the "Financial Statements"). The Financial Statements
are complete and correct in all material respects, are in accordance with the
books and records of Seller (which books and records are complete and correct in
all material respects), and fairly present the financial condition of Seller and
the results of its operations and changes in financial position (or cash flow,
as the case may be) as of the date or for the periods indicated. The Financial
Statements adequately disclose all assets and liabilities and all information
and adjustments, which consist of only normal recurring accruals, necessary to
properly reflect the financial condition of Seller as of the date thereof.
11
5.7 Absence of Undisclosed Liabilities. Except as set forth on Schedule
5.7, to the knowledge of the Selling Parties, Seller has no material obligations
or liabilities (whether absolute, accrued, contingent, or otherwise and
including, without limitation, deferred Tax liabilities, vacation time or pay,
severance pay, or any other liabilities relating to or arising out of any act,
omission, transaction, circumstance, sale of services, or other condition which
occurred or existed on or before the Closing Date); nor does DCTI have any such
obligations or liabilities relating to the Business; nor does there exist a set
of circumstances resulting from transactions effected or events occurring on or
prior to the Closing Date or from any action omitted to be taken during such
period that could reasonably be expected to result in any such obligation or
liability other than operational obligations and liabilities arising in the
ordinary course of business.
5.8 Absence of Certain Changes or Events. Except as set forth on
Schedule 5.8, since June 30, 1999, neither Seller nor DCTI (but in the case of
DCTI, only to the extent any of the following are related to the Acquired Assets
owned, used or held by DCTI or DCTI's involvement in the operation of the
Business) has:
(a) incurred or paid any indebtedness, obligation, lease,
construction or purchase commitment, or other liability (contingent or
otherwise), except for indebtedness, obligations and liabilities incurred or
paid solely for the benefit of the Business in the ordinary course of business,
and there does not exist a set of circumstances that could reasonably be
expected to result in any such indebtedness, obligation or liability;
(b) suffered any adverse changes in condition (financial
or otherwise), results of operations, earnings, properties, business, or
prospects (including, without limitation, any change in its revenues, costs, or
relations with its employees, agents, customers, underwriters, lenders, or
others) which individually or in the aggregate have been materially adverse to
the business, prospects, earnings, operations, properties, or condition
(financial or otherwise) of the Business;
(c) failed to pay any account payable or indebtedness
when due;
(d incurred any indebtedness for borrowed money or
guaranteed any liabilities or obligations of any other person;
(e) created, permitted or allowed any mortgage, pledge,
lien, security interest, encumbrance, restriction or charge of any kind with
respect to any of its properties, businesses or assets;
(f) except for normal merit and cost of living increases
in the ordinary course of business, made or granted any increase in the
compensation payable or to become payable by either Selling Party (or for which
such Selling Party may have any liability) to any Rehired Employee (including
any such increase pursuant to any bonus, pension, profit-sharing or other plan
or commitment);
(g) made any significant change in the amounts payable or
to become payable by either Selling Party (or for which such Selling Party may
have any liability) to any Independent Contractor;
(h) made any capital expenditure or commitments for any
addition to property, plant or equipment, or entered into any advertising
agreement, capital or operating lease, or any other agreement related to the
operation of the Business, which exceeds $25,000 in the aggregate;
(i) suffered or received notice of any damage,
destruction or loss in excess of $25,000 (whether or not covered by insurance)
to any assets or properties;
(j) suffered any strike, dispute, grievance, controversy
or other similar labor trouble;
12
(k) except in the ordinary course of business, sold,
transferred, leased or removed from its premises any of its tangible assets or
sold, assigned, transferred or granted any rights under or with respect to any
of the Intellectual Property;
(l) executed, amended, or terminated any material
agreement to which it is or was a party or by which its property or assets are
or were bound or affected; amended, terminated or waived any of its rights
thereunder; or received notice of termination, amendment, or waiver of any
agreement or any material rights thereunder;
(m) instituted, settled, or agreed to settle, any
litigation, action, or proceeding before any court or governmental body relating
to the Business or its property;
(n) entered into any transaction, contract, or commitment
other than for the benefit of the Business in the ordinary course of business or
paid or agreed to pay any legal, accounting, brokerage, finder's fee, Taxes, or
other expenses, including any severance pay obligations to a Rehired Employee,
in connection with or by reason of this Agreement or the transaction
contemplated hereby; or
(o) entered into any agreement or made any commitment to
take any of the types of action described in subsections 5.8(a) through 5.8(n)
above.
5.9 Title Conveyed; Condition and Sufficiency of Assets. The Selling
Parties are the sole and exclusive owners (whether jointly or individually) of
all right, title and interest in and to the Acquired Assets and have good, valid
and marketable title to the Acquired Assets, free and clear of Liens except for
such Liens as are set forth on Schedule 5.9 (the "Permitted Liens"). The Selling
Parties have complete and unrestricted power and the unqualified right to sell,
assign, transfer and deliver to Buyer, and upon consummation of the transactions
contemplated by this Agreement, Buyer will acquire good, valid and marketable
title to such Acquired Assets, free and clear of all Liens other than Permitted
Liens. Except for the Excluded Assets, there are no assets or properties used or
held for use in the operation of the Business and owned by any person other than
a Selling Party that will not be leased or licensed to Buyer under the valid,
current leases or license arrangements listed on Schedule 5.18 The Acquired
Assets, except for such assets or properties as have been consumed or otherwise
disposed of in the ordinary course of business, constitute all of the assets and
properties used by the Selling Parties to carry on the Business as presently
conducted and include all tangible and intangible assets and goodwill relating
to the Business. None of the Excluded Assets are essential for the operation of
the Business in the manner in which it is currently operated. The Acquired
Assets (including, without limitation, computers) used by the Selling Parties in
connection with the operation of the Business are structurally sound, are in
good operating condition and repair, are free from material latent defects, and
are adequate for the uses to which they are being put, and none of the Acquired
Assets is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that are not material in nature or cost.
5.10 Software. All Software is listed on Schedule 5.10, which sets
forth the source of each Selling Party's entitlement to use the Software, a
description of the Software and its function with respect to the Business, and
identifies any licenses and contracts for the development and/or conveyance of
any rights with respect to the Software, including any sublicenses granted by
either Selling Party. There are no restrictions applicable to either Selling
Party which would limit, preclude or result in a charge for Buyer's continued
use of the Software. The New Release has been fully implemented by the Selling
Parties, has functionality equal to or greater than that of the Old Release,
including the functionality described on Schedule 5.10, is, together with the
other Software, (and the processes utilized in connection therewith are)
sufficient for the operation of the Business as presently conducted and can
support and produce weather forecasts for not fewer than 5,000 locations within
the United States and not fewer than 11,000 foreign locations.
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5.11 Intellectual Property. Neither Selling Party owns or uses any
Intellectual Property in connection with the conduct of the Business other than
that listed on Schedule 5.11. Except as described on Schedule 5.11, each Selling
Party owns all rights in and to its Intellectual Property free and clear of any
adverse claims, liens and interest, or has the valid right to use all
Intellectual Property used by it. Neither Selling Party has, other than in the
ordinary course of business, licensed or authorized any other person or entity
to use the Intellectual Property. Each Selling Party is authorized to transfer
exclusive ownership of its Intellectual Property to Buyer hereunder free and
clear of any adverse claims, liens and interest so that it may be used by Buyer
and its successors and assigns for perpetuity without charge. Neither Selling
Party is required to pay any license fee, royalty or any other payment to use
the Intellectual Property in the Business, nor will any fee or payment be
required of Buyer after or in connection with the transfer of the Intellectual
Property at Closing. Upon transfer of the Intellectual Property to Buyer, Buyer
will have the right to transfer or assign the Intellectual Property to any
subsequent third party free and clear of any adverse claims, liens and interest,
other than any which Buyer after the date of Closing suffers, permits or incurs
with respect thereto. Schedule 5.11 lists (i) the owner or user of the
Intellectual Property, (ii) any assignments thereof and any agreements relating
to the use or sharing of the rights thereunder, and (iii) any statutorily
required filings made by either Selling Party to permit it to make use of the
Intellectual Property. Neither Selling Party will enter into any amendment or
modification of, terminate or consent to the termination of, or sell, assign,
pledge or otherwise dispose of any part of its interest in any Intellectual
Property without the prior written consent of Buyer. Except as set forth on
Schedule 5.11, there are no claims pending or threatened against either Selling
Party with respect to the validity, enforceability, use or ownership of any
Intellectual Property or any infringement or misappropriation by, or conflict
with, any third party with respect to such Intellectual Property, nor has either
Selling Party received any claims of infringement or misappropriation of or
other conflict with any intellectual property of any third party that relate to
the Business; neither Selling Party has, in connection with the conduct of the
Business, infringed, misappropriated or otherwise violated any intellectual
property of any third parties, and neither Selling Party has knowledge of any
infringement, misappropriation or conflict which will occur as a result of the
continued operation of the Business by Buyer after Closing; neither Selling
Party knows of any basis for any such claim; and no such claim has ever been
made to or against either Selling Party in the past. Buyer's interest in and
ability to use after the Closing the Intellectual Property shall not be
adversely affected solely because of the consummation of the transaction
contemplated by this Agreement. All of the Selling Parties' owned Intellectual
Property has been created by employees of the applicable Selling Party within
the scope of and during their employment by such Selling Party or by independent
contractors of such Selling Party who have expressly entered into agreements
assigning all right, title and interest in such Intellectual Property to such
Selling Party. No third party owns any interest in or has any right in, to or
under any portion of the Selling Parties' owned Intellectual Property which was
jointly developed with any third party.
5.12 Year 2000 Compliance. Each item of software and hardware and all
programming (including, without limitation, any interfaces) created by or at the
direction of Seller and/or DCTI and conveyed under this Agreement will (i)
function simultaneously with respect to dates of January 1, 2000 and beyond in
the same manner as with dates prior to January 1, 2000; (ii) be able to
recognize and accurately process (including input, storage, calculation,
transmission, display, retrieval, comparison, sequencing and printing) 4-digit
year dates, including the correct recognition and processing of February 29
during leap years; and (iii) continue to function properly, as set forth in (i)
and (ii), with respect to all such dates before, during and after January 1,
2000.
5.13 Accounts Receivable and Accounts and Notes Payable.
(a) The Accounts Receivable are reflected properly on the
Selling Parties' books and records, and are valid receivables subject to no
setoffs or counterclaims. Neither Selling Party has knowledge of any
vendor/payor relationship where the vendor/payor has given notice of any
inability or refusal to pay Accounts Receivable according to the terms thereof.
14
(b) All Accounts and Notes Payable of the Selling Parties
related to the Business are, other than such payables in respect of the At Home
Payment and the Szilage Payment, current and will be paid in full within five
(5) days of the Closing Date or, in the case of Accounts and Notes Payable for
which an invoice has not been received by a Selling Party, when due (provided,
however, Buyer shall have the right to offset against the Escrow Amount, in
accordance with the terms of the Escrow Agreement, the amount of any Accounts
and Notes Payable not paid by the Selling Parties within ten (10) days of the
date such Accounts and Notes Payable are due). No dispute or claim by a Selling
Party with regard to the Accounts and Notes Payable exists at, or will be
asserted by either Selling Party subsequent to, the Closing.
5.14 Tax Matters.
(a) All federal, state, local and foreign Tax returns
(including, without limitation, consolidated, combined or unitary income Tax
returns) required to be filed by or on behalf of Seller or with respect to Taxes
for which Buyer may have any transferee liability have been accurately and
correctly prepared and duly and timely filed. All Taxes due and payable by
Seller on or before Closing have been paid. No Tax return relating to Seller is
on extension, and there is no audit examination, deficiency or refund litigation
or matter in controversy with respect to any Taxes that might result in a
determination materially adverse to Seller except as adequately reserved against
in the Financial Statements.
(b) The applicable Selling Party has withheld and paid
all Taxes required to have been withheld and paid in connection with amounts
paid or owing to any Business Employee, Independent Contractor, or creditor,
stockholder of or other third party related to the Business.
(c) There is no dispute, claim or outstanding assessment
concerning any Tax liability of or with respect to Seller either (i) claimed or
raised by any taxing authority in writing; or (ii) as to which any Selling Party
or any employee responsible for Tax matters of Seller has knowledge. Schedule
5.14 lists all federal, state, local and foreign Tax returns filed with respect
to Seller for taxable periods ended on or after December 31, 1994, indicates
those Tax returns that have been audited, and indicates those Tax returns that
currently are subject to audit.
5.15 No Litigation. Except as set forth on Schedule 5.15, there are
no actions, suits, claims, investigations or proceedings pending or threatened
in any court or by or before any governmental agency to which Seller and/or, to
the extent related to the Business, DCTI is a party or otherwise affecting the
Acquired Assets or the Business as now or heretofore conducted by the Selling
Parties. The foregoing notwithstanding, there is no action, suit, claim,
investigation or proceeding which is pending or threatened which questions the
validity or propriety of this Agreement or any action taken or to be taken by
any Selling Party in connection with this Agreement. No Selling Party is subject
to any judicial injunction or mandate or any quasi-judicial order or
quasi-judicial restriction directed to or against it as a result of its
ownership of the Acquired Assets or its conduct of the Business as now or
heretofore conducted by it, and no governmental agency has at any time
challenged or questioned in writing, or commenced or given notice of intention
to commence any investigation relating to, the legal right of either Selling
Party to conduct the Business or any part thereof as now or heretofore conducted
by it.
5.16 Compliance with Laws.
(a) Each Selling Party is in compliance with all laws,
rules, regulations, ordinances, reporting and licensing requirements and orders
(including without limitation, all equal opportunity, safety, environmental and
zoning laws, rules and regulations) applicable to the Business or any Business
Employees (because of such employees' activities on behalf of it) (except for
possible violations which might result in a financial liability to such Selling
Party not exceeding $25,000 in the aggregate and not adversely affecting the
ongoing operation of the Business), and no condition exists which with or
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without notice or passage of time or both shall cause such Selling Party not to
remain in such compliance.
(b) There is not currently and in the past there has not
been since the date of occupation by a Selling Party, (i) any use, treatment,
storage or disposal of any hazardous substance or material (as defined in 42
U.S.C. ss. 9601(14) (1982) and 40 C.F.R. ss. 302.4 (1986)) or pollutant
(including, without limitation, any admixture or solution thereof, petroleum and
derivatives or synthetic substitutes thereof, and asbestos or
asbestos-containing materials) on any real property occupied by the Business,
whether leased or owned; (ii) any spill, leakage, discharge or release of any
hazardous substance or material or pollutant thereon or therefrom; (iii) any
off-site disposal by either Selling Party of any hazardous substance or material
or pollutant in any location; or (iv) any hazardous condition in existence on
any real property occupied by the Business, whether leased or owned. Neither
Selling Party has purchased or sold any other hazardous substance or material,
as defined in the preceding sentence. Neither Seller nor, to the extent related
to the Business, DCTI is subject, nor will it be subject, to any liability or
claim in connection with any environmental law or other use, treatment, storage
or disposal of any hazardous substance or pollutant, or any spill, leakage,
discharge or release of any hazardous substance or pollutant as a result of
having owned or operated any business on or prior to the Closing Date.
5.17 Business Contracts. Schedule 5.17 sets forth a complete and
correct list of all Business Contracts, including, without limitation, the
following:
(a) All employment agreements, Independent Contractor
Agreements, all bonus, commission or consulting agreements, and all stock option
agreements and stock acquisition agreements;
(b) All agreements for the purchase of materials,
supplies, services, equipment or any capital item or items involving a
consideration of more than $5,000 per contract or series of related contracts
continuing over a period of more than three (3) months after the Closing Date;
(c) All joint venture contracts or arrangements or other
agreements involving a sharing of profits or expenses;
(d) All noncompetition and other agreements which impose
restrictions upon the conduct of the Business by either Selling Party or by
third parties with respect to the Business or grant exclusive rights or rights
of first refusal to or in any portion thereof to any third party;
(e) Any material agreement related to hyperlinks,
co-branded sites, affiliations, barters, revenue sharing, advertising sales, the
obtaining or provision of weather or weather-related data, technology and/or
infrastructure, data distribution or data acquisition and content; and
(f) All agreements related to the acquisition, transfer,
distribution, use, development, sharing or license of any technology or
Intellectual Property.
True copies of all of the Business Contracts, together with
all amendments thereto, have been made available to Buyer. Except as set forth
on Schedule 5.17, no event or circumstance has occurred and is continuing which
would constitute a default under any of the Business Contracts by any party
other than a Selling Party. The execution, delivery and performance by the
Selling Parties of this Agreement and the transactions contemplated hereby will
not give any party to any of the Business Contracts any right to terminate such
Business Contract or any right to receive additional payments or benefits
thereunder.
5.18 Personal Property Leases. Schedule 5.18 contains a complete
and correct list of all Personal Property Leases, including, without limitation,
all personal property capital and operating leases. Upon assignment to and
assumption by Buyer pursuant to this Agreement, the Personal Property Leases
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will be valid, binding and in full force and effect. True copies of all of the
Personal Property Leases, together with all amendments thereto, have been made
available to Buyer. No event or circumstance has occurred and is continuing
which would constitute a default under any of the Personal Property Leases by
any party other than a Selling Party. The execution, delivery and performance by
the Selling Parties of this Agreement and the transactions contemplated hereby
will not give any party to any of the Personal Property Leases any right to
terminate such Personal Property Lease or any right to receive additional
payments or benefits thereunder.
5.19 ERISA. Schedule 5.19 lists each compensation, employment or
collective bargaining agreement, and each stock option, stock purchase, life,
health, accident or other insurance, bonus, deferred or incentive compensation,
severance or separation, pension, profit sharing, stock bonus, retirement, or
other employee benefit plan, practice, policy or arrangement, covering Business
Employees or former employees of the Business, including but not limited to any
employee benefit plans within the meaning of Section 3(3) of ERISA, which each
Selling Party maintains, to which such Selling Party contributes, or under which
any Business Employees or former employees of the Business are or were covered
(collectively, the "Benefit Plans"). The term "Benefit Plans" as used herein
refers to all plans included in Schedule 5.19, and for purposes of subsections
5.20(b), 5.20(c) and 5.20(d), all similar plans that may have been terminated
previously, and for purposes of the representation below as to a Multiemployer
Plan and subsections 5.20(b), 5.20(c) and 5.20(d), all similar plans that are
Pension Plans which would be Benefit Plans if the term "Selling Party" included
all persons with whom the Selling Parties would be aggregated by the application
of Section 4001(b) of ERISA; however, the term "plan" or "plans" is used in this
Agreement for convenience only and does not constitute an acknowledgment that a
particular arrangement is an employee benefit plan within the meaning of Section
3(3) of ERISA. Seller is not nor has ever been a party to a Multiemployer Plan,
and does not provide continuing health or life insurance coverage to former
employees of Seller following their termination or retirement, except as may be
required under the continuation coverage rules of ERISA Sections 601-608 and
Code Section 4980B (COBRA) or any analogous state-mandated health care plan
continuation rules. Seller and/or DCTI shall remain responsible for taking and
shall take all actions necessary to satisfy COBRA and any analogous
state-mandated health care plan continuation rules with respect to its employees
and former employees, including continuation of its health plan for those
persons electing continuation coverage.
5.20 Employees and Independent Contractors. All Rehired Employees
and Independent Contractors, together with their respective job descriptions and
compensation, are listed on Schedule 5.20. Except as set forth on Schedule 5.20,
neither Selling Party is a party to any written or oral employment contract or
agreement with any of the Rehired Employees which precludes termination at will
of any such employee. Except as set forth on Schedule 5.20, no Rehired Employee
is now, or will by the passage of time hereafter become, entitled to receive any
vacation time, vacation pay or severance pay attributable to services rendered
prior to the Closing Date. There is no union contract or other collective
bargaining agreement in existence affecting the Business or the use or operation
thereof, and neither Selling Party has received notice from the National Labor
Relations Board that a petition for recognition for a collective bargaining unit
has been filed by or on behalf of the employees of the Business, nor does either
Selling Party have knowledge of any attempts by any union to obtain recognition
as a bargaining agent in respect thereof.
5.21 No Guaranties. None of the obligations or liabilities of
Seller is guaranteed by any person, firm or corporation other than DCTI, nor has
Seller guaranteed the obligations or liabilities of any other person, firm or
corporation.
5.22 No Bankruptcy. None of the Selling Parties are insolvent or
the subject of Bankruptcy or any similar proceeding.
5.23 Misstatements and Omissions. No representation or warranty made by
the Selling Parties in this Agreement, or in any statement, certificate,
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exhibit, schedule, or other instrument furnished to Buyer in writing pursuant
hereto, or in connection with the transactions contemplated by this Agreement
contains any untrue statement of material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading and
there is no fact or condition which has not been disclosed in writing to Buyer
that adversely affects Seller or the Business or the ability of any of the
Selling Parties to perform their obligations under this Agreement. However, to
the extent that any information furnished to Buyer constitutes forward-looking
statements regarding the future performance of the Business, such information
shall be deemed made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, and shall constitute a representation
as to the Selling Parties' good faith belief in the reasonableness of the
assumptions underlying such information, but shall not constitute a
representation and warranty as to the ultimate outcome after the Closing of the
matters contained in such forward-looking statements.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
In order to induce the Selling Parties to enter into this Agreement,
Buyer hereby represents and warrants to the Selling Parties that the statements
contained in this Article 6 are correct and complete as of the date of this
Agreement.
6.1 Organization, Power and Authority. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
California. Buyer has full corporate power and authority and Buyer and its
shareholders have taken all required action necessary to permit Buyer to execute
and deliver this Agreement and all other documents or instruments required to be
executed and delivered by it by this Agreement, and to carry out the terms of
this Agreement and of all such other documents or instruments.
6.2 Authorization, etc. This Agreement has been duly authorized,
executed and delivered on behalf of Buyer, and, assuming the due authorization,
execution and delivery hereof by the other parties hereto, this Agreement
constitutes legal, valid, binding and enforceable obligations of Buyer, subject
to the effect of bankruptcy, insolvency, reorganization, arrangements,
moratorium, and other similar laws now or hereafter in effect, as well as
limitations imposed by general principles of equity upon the specific
enforceability of any of the remedies, covenants or other provisions, and the
availability of injunctive relief or other equitable remedies.
6.3 No Legal Bar. Subject to the satisfaction of the conditions
set forth in Section 7.1 of this Agreement, the execution, delivery and
performance by the Buyer of this Agreement and the transactions contemplated
hereby do not and will not (a) conflict with or violate (i) any provision of
Buyer's Articles of Incorporation or Bylaws or (ii) any contract, obligation,
agreement, plan, arrangement, commitment or the like to which Buyer is a party
or by which Buyer or its assets or properties may be bound or affected; (b) to
Buyer's actual knowledge, breach or contravene any law, rule, or regulation; (c)
violate any order, judgment, writ, injunction, award, decree, determination,
license or permit by which Buyer or its assets or properties may be bound or
affected; or (d) result in or require the creation or the imposition of any Lien
on any assets or properties of Buyer, except as contemplated hereby.
ARTICLE 7
CLOSING CONDITIONS
7.1 Conditions to Closing of Buyer. The obligation of Buyer to
purchase the Acquired Assets and to assume the Assumed Liabilities at Closing is
subject to the following conditions precedent:
(a) Representations and Warranties True and Correct. The
representations and warranties made by the Selling Parties in Article 5 hereof
shall be true and correct in all material respects;
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(b) Performance of Conditions Precedent. All covenants,
agreements and conditions contained in this Agreement to be performed or
complied with by the Selling Parties on or prior to the Closing Date shall have
been performed or complied with in all material respects;
(c) Opinion of Counsel to Selling Parties. Delivery to
Buyer at the Closing of the opinion of general counsel to DCTI and Seller,
addressed to Buyer and substantially to the effect set forth in Exhibit B
hereto, with such changes and modifications as are reasonably acceptable to
Buyer and its counsel;
(d) Good Standing Certificates. Each Selling Party shall
have delivered to Buyer certificates, executed by the proper official of each
jurisdiction, as to the good standing and qualification to do business of such
Selling Party in all jurisdictions pursuant to Section 5.1, together with
evidence dated no more than five (5) business days prior to Closing confirming
and updating such information;
(e) Secretary's Certificates. Each Selling Party shall
have delivered to Buyer a certificate from the secretary or assistant secretary
of such Selling Party confirming the existence, incorporation and good standing
of such Selling Party on the Closing Date, and attaching copies of its
Certificate of Incorporation and Bylaws, and shareholder and board of director
resolutions authorizing the execution, delivery and performance of this
Agreement and the Ancillary Agreements and the taking of all action required
thereunder or in connection therewith on behalf of such Selling Party;
(f) Incumbency Certificate. Each Selling Party shall have
delivered to Buyer a certificate of the secretary or assistant secretary of each
of such Selling Party certifying the incumbency of officers of such Selling
Party and their genuine signatures, with a cross certification of such
secretary's or assistant secretary's incumbency and genuine signature;
(g) Certificates of Selling Parties. Each Selling Party
shall have delivered to Buyer a certificate or certificates from the President
or Chief Executive Officer of each Selling Party confirming that the
representations, warranties and covenants set forth in Article 5 hereof are true
and correct in all material respects as of the Closing Date.
(h) Agreement and Instruments of Transfer. Each Selling
Party shall have executed and delivered to Buyer on the Closing Date this
Agreement and such bills of sale, endorsements, assignments, deeds and other
good and sufficient instruments of conveyance and transfer as are provided for
herein, and any other instruments in form and substance reasonably satisfactory
to Buyer and its counsel as shall be effective to vest in Buyer all of the
right, title and interest of such Selling Party in, to and under the Acquired
Assets, free and clear of all Liens other than Permitted Liens;
(i) Third Party and Governmental Approvals and Consents.
Each Selling Party shall have delivered to Buyer by the Closing Date all such
written approvals, consents and waivers of third parties and governmental
authorities which are required to be obtained in connection with the
transactions contemplated by this Agreement and which are necessary for, and the
absence of which would have a material adverse effect on, the ownership by Buyer
of any of the Acquired Assets or the operation by Buyer following the Closing
Date of any of the Business, including the rights and obligations of each
Selling Party under the Personal Property Leases, the Acquired Contracts and the
Assumed Liabilities by Buyer (such consents and waivers not to require any
change in the terms and conditions of the Personal Property Leases, the Acquired
Contracts or any of the Assumed Liabilities, unless consented to by Buyer in its
sole and absolute discretion);
(j) Settlement of Claims. Each Selling Party shall have
settled or otherwise provided for the resolution upon terms acceptable to Buyer
of the matters set forth on Schedule 5.15 and any and all actions, suits,
claims, investigations and proceedings against such Selling Party which could
affect the Acquired Assets or the Business;
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(k) Employment of Key Personnel. Buyer shall have
obtained agreements from the directors, employees, and other persons deemed by
Buyer to be key personnel of Seller and/or DCTI set forth on Schedule 7.1(k), on
terms and conditions mutually satisfactory to Buyer and such directors,
employees, and persons, with respect to their continued employment with Buyer
after Closing;
(l) No Objecting Litigation. There shall not have been
instituted and be pending or threatened any action or proceeding before any
court, governmental agency or other regulatory or administrative agency or
commission, challenging the purchase and sale of the Acquired Assets or the
transactions related thereto, which seeks to restrain, prevent or change the
transactions contemplated by this Agreement or questions the validity of such
transaction;
(m) Transition Services Agreement. DCTI shall have
entered into a Transition Services Agreement with Buyer in the form attached
hereto as Exhibit C (the "Transition Services Agreement");
(n) Noncompetition Agreement. Each of the Selling Parties
shall have entered into a Noncompetition Agreement with Buyer in the form
attached hereto as Exhibit D (the "Noncompetition Agreement"); and
(o) Release of Liens. Seller shall have obtained not
later than contemporaneously with Closing (using, at Seller's election, a
portion of the Purchase Price for the purpose thereof), a release of all Liens
(other than Permitted Liens) and shall have provided Buyer with evidence
thereof, including the requisite UCC termination statements.
7.2 Conditions to Closing of the Selling Parties. The obligation of the
Selling Parties to sell the Acquired Assets at Closing is subject to the
following conditions precedent:
(a) Representations and Warranties True and Correct. The
representations and warranties made by Buyer in Article 6 hereof shall be true
and correct in all material respects;
(b) Performance of Conditions Precedent. All covenants,
agreements and conditions contained in this Agreement to be performed or
complied with by Buyer on or prior to the Closing Date shall have been performed
or complied with in all material respects;
(c) Opinion of Counsel to Buyer. Delivery to the Selling
Parties at the Closing of the opinion of Xxxxxxx & Xxxxxx, P.C., counsel to the
Buyer, addressed to the Selling Parties and substantially to the effect set
forth in Exhibit E hereto, with such changes and modifications as are reasonably
acceptable to each Selling Party and its counsel;
(d) Secretary's Certificate. Buyer shall have delivered
to the Selling Parties a certificate from the secretary or assistant secretary
of Buyer confirming the existence, incorporation and good standing of Buyer on
the Closing Date, and attaching copies of its Articles of Incorporation and
Bylaws, and board of director resolutions authorizing the execution, delivery
and performance of this Agreement and the Ancillary Agreements and the taking of
all action required thereunder or in connection therewith on behalf of Buyer;
(e) Incumbency Certificate. Buyer shall have delivered to
the Selling Parties a certificate of the secretary or assistant secretary of
Buyer certifying the incumbency of officers of the Buyer and their genuine
signatures, with a cross certification of such secretary's or assistant
secretary's incumbency and genuine signature;
(f) Buyer's Certificate. Buyer shall have delivered to
the Selling Parties a certificate of its President or Chief Executive Officer
confirming that the representations and warranties set forth in Article 6 hereof
are true and correct in all material respects as of the Closing Date;
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(g) Instruments of Assumption. Buyer shall have delivered
to the Selling Parties on the Closing Date such instruments of assumption, in
form and substance reasonably satisfactory to Seller and its counsel, as shall
be effective to evidence the assumption by Buyer of the Assumed Liabilities;
(h) No Objecting Litigation. There shall not have been
instituted and be pending any action or proceeding before any court,
governmental agency or other regulatory or administrative agency or commission,
challenging the purchase and sale of the Acquired Assets or the transactions
related thereto, which seeks to restrain, prevent or change the transactions
contemplated hereby or questions the validity of such transaction; and
(i) Noncompetition Agreement. Buyer shall have entered
into the Noncompetition Agreement with each of the Selling Parties.
7.3 Waiver of Conditions. At the Closing, either Party may waive,
in writing, fulfillment of any of the conditions precedent set forth in this
Article 7 to such Party's obligations hereunder, but the waiver of any such
condition and the completion of the Closing shall not, unless it expressly so
provides, constitute a waiver of any other rights or remedies that such Party
may have hereunder, including, without limitation, those provided under Article
9 hereof.
ARTICLE 8
COVENANTS
8.1 Joint Covenants. Each of the Selling Parties, on the one hand,
and Buyer, on the other hand, covenants and agrees with the other as follows:
(a) Regulatory and Other Approvals and Consents;
Cooperation. Each Party shall use its best efforts to file or submit, and
diligently prosecute, any and all applications to or notices with public
authorities, federal, state or local, and requests for approvals, consents or
waivers of private persons, the filing or granting of which is necessary or
appropriate or is reasonably deemed necessary or appropriate by its counsel for
the consummation of the transaction contemplated hereby, and to keep the other
Parties current and fully informed of the status of such applications, and in
good faith to take all reasonable steps that are within its power to cause to be
satisfied the conditions precedent to its obligations or the other Parties'
obligations to close that are dependent upon its actions. Each Party shall
cooperate fully with the other Parties to provide such support, assistance and
information to the other Parties as may be reasonably requested by them in
connection with its applications for all necessary approvals by governmental
authorities and by private parties in connection with the transaction
contemplated hereby and to consult regularly with the other Parties in the
preparation of any such applications or requests for consent.
(b) Public Announcements. No Party shall make or cause to
be made any public announcement, statement or release to the press, or written
statement to a competitor, customer or other third party (except to its
consultants or to the governmental authorities in connection with applications
for governmental approvals or filings or private parties where consent is
requested) with respect to this Agreement or the transaction contemplated hereby
or the terms hereof except as may be necessary, in the opinion of counsel, to
comply with any law, including, without limitation, any such disclosure by DCTI
as is required under applicable securities laws and regulations, provided,
however, that Buyer shall have the right to participate in the preparation of
any such disclosure by any Selling Party.
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(c) Confidentiality. The Selling Parties and, to the
extent related to non-public information with respect to DCTI, Buyer shall,
except as otherwise required in the performance of their respective obligations
hereunder and otherwise required by law, keep as confidential the transactions
contemplated hereby and any non-public information received from the other
Parties during the course of the investigation contemplated pursuant hereto and
all copies thereof will be returned promptly at the request of the Party
furnishing such information in the event of the termination of this Agreement.
Each of the Parties may disclose such information to their respective
affiliates, counsel, accountants, representatives, professional advisors and
consultants as each Party deems necessary to perform its obligations hereunder.
Without limiting the foregoing, to the extent any Selling Party is the
beneficiary of any non-disclosure, confidentiality or other similar agreement or
covenant related to the Acquired Assets or the Business, such Selling Party
shall, at the request of Buyer, enforce subsequent to Closing the terms of such
agreement or covenant and/or shall permit Buyer to maintain an action to enforce
such agreement or covenant in the Selling Party's name; provided that Buyer
shall be responsible for all expenses incurred by it, including, without
limitation, attorneys' fees, in connection with the maintenance of any such
action; and, provided further, that, to the extent any Selling Party is
otherwise bound by or obligated under any nondisclosure, confidentiality or
other similar agreement related to the Acquired Assets or the Business, Buyer
shall, subsequent to Closing, comply with the terms of such agreement.
(d) Best Efforts. Subject to the terms and conditions
herein provided and consistent with the respective obligations of each Party,
each Party shall use its best efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, and each Selling Party shall use its best
efforts to obtain the consent of any third parties to the assignment to Buyer of
any Acquired Assets or claim of rights or any benefit thereunder as Buyer may
request.
(e) Further Assurances. Each Party shall, at any time and
from time to time after the Closing Date, upon request of any other party, do,
execute, acknowledge and deliver, or cause to be done, executed, acknowledged
and delivered, all such further acts, instruments, assignments, transfers,
powers of attorney and assurances as may be reasonably required in order to
carry out the intent of this Agreement, including, without limitation, (i) with
respect to the Selling Parties, furnishing to Buyer within twenty (20) days of
the Closing Date (x) all third party approvals, consents and/or waivers
necessary for the ownership by Buyer of the Acquired Assets (including without
limitation, the Acquired Contracts) which were not provided at or prior to
Closing and (y) unaudited income statement, balance sheet and related unaudited
statement of operations for Seller for the period ended on October 31, 1999,
(ii) with respect to Buyer, furnishing to the Selling Parties within twenty (20)
days of the Closing Date the allocation of the Purchase Price to be attached as
Schedule 4.3 hereto, and (iii) with respect to both Parties, the determination,
within thirty (30) days of the Closing Date of any adjustments to the Purchase
Price as may be necessary pursuant to Section 4.6 above (and the making of any
payment to Buyer or the Selling Parties that may be required in connection
thereto).
(f) Payment and Expenses of Other Parties. The Selling
Parties, on the one hand, and Buyer, on the other hand, agree that if subsequent
to the Closing Date either of them shall receive any payment due to the other
Party each shall promptly remit the same to the other.
(g) Ancillary Agreements. At Closing, each Selling Party
and Buyer shall execute and deliver all Ancillary Agreements to which they are a
party.
8.2 Additional Covenants of the Selling Parties. Each of the
Selling Parties further covenants and agrees with Buyer as follows:
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(a) Governmental Authorizations. Each Selling Party shall
use its best efforts to cause the Governmental Authorizations to continue in
effect, where appropriate, subsequent to, the Closing Date.
(b) Additional Financial Information. Seller shall
promptly furnish to Buyer unaudited monthly income statements, balance sheets,
and related unaudited statements of operations for the periods ended on the date
of such balance sheets, for each calendar month subsequent to June 30, 1999, and
ending more than ten (10) days prior to the Closing Date (collectively, the
"Closing Period Financials").
(c) Post-Closing Tax Matters. Following the Closing, each
of the Selling Parties shall pay over to the taxing authorities of each
jurisdiction to which it is subject all Taxes not paid prior to Closing for
which Buyer could have transferee liability or in respect of which any of the
Acquired Assets could be subjected to a Lien therefor, including sales taxes.
With respect to sales taxes, each of the Selling Parties shall file final sales
tax returns as soon as practicable after the Closing Date with the jurisdictions
in which such Selling Party has heretofore filed such returns and shall deliver
to Buyer as soon as practicable thereafter a receipt from the tax commissioner
of each such jurisdiction showing that any sales taxes due and payable, along
with interest and penalties, have been paid, or a certificate of such tax
commissioner indicating that no taxes are due. Notwithstanding the foregoing,
each Selling Party may contest in good faith, at such Selling Party's expense,
the validity or application, in whole or in part, of any Taxes that it is
obligated by this subsection 8.2(c) to pay.
(d) Rehired Employees. On and as of the Closing Date,
Buyer shall offer employment to the Rehired Employees, which have been
determined by Buyer in its sole and absolute discretion. The applicable Selling
Party shall pay any severance obligations to any of its Business Employees in
connection with any termination or deemed termination of such employees on or
after the Closing Date. Nothing herein shall be deemed either to affect or to
limit in any way the management prerogatives of the Buyer with respect to the
Rehired Employees, or to create or to grant to the Rehired Employees any third
party beneficiary rights or claims or causes of action of any kind or nature.
The Rehired Employees shall be deemed "new hires, at will" of Buyer.
(e) Stock Exchange Agreement. The Selling Parties shall,
at the request of and at the expense of Buyer, enforce subsequent to Closing all
of the Selling Parties' rights under the Stock Exchange Agreement, including,
without limitation, all noncompetition obligations of the significant Sellers
(as defined in the Stock Exchange Agreement), and/or shall permit Buyer to
maintain an action to enforce such rights in the name of the Selling Parties.
(f) Change of Name; Covenant Not To Use Name.
(i) At Closing, Seller shall deliver to Buyer a duly
executed and acknowledged certificate of amendment to Seller's Articles of
Incorporation or other appropriate document which is required to change Seller's
corporate name to WLX Corporation so as to make Seller's present name available
to Buyer. Buyer is hereby authorized to file such certificate or other document
in order to effectuate such change of name at or after the Closing as Buyer
shall elect.
(ii) In order that Buyer may have and enjoy the full
benefit of the Acquired Assets and the Business, each Selling Party agrees that
it will not use or permit any person or entity under its joint or individual
control to use the name "WeatherLabs" or "Weather Ad Network" or any logo
associated therewith, or any confusingly similar copyright, trademark, trade
name, service xxxx, service name, slogan or assumed name or logo in any manner
whatsoever in connection with any business which could be considered in direct
or indirect competition with the Business, including, without limitation, the
use of such copyright, trademark, trade name, service xxxx, service name, slogan
or assumed name in promotional materials. Effective upon the Closing, the
Selling Parties grant to Buyer all rights as each Selling Party has in and to
the names "WeatherLabs" and "Weather Ad Network." This provision shall not be
deemed to be in limitation or derogation of the full and complete transfer of
the Intellectual Property to be made to Buyer at Closing as provided herein.
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(g) DCT Agreements. Termination of the Rehired Employees
by the Selling Parties at Closing shall not (so long as such Rehired Employees
are employed by Buyer) limit, restrict or otherwise effect the rights of any
Rehired Employee with respect to their Purchase Options pursuant to their
Employee Restricted Stock Acquisition Agreements and their Options pursuant to
their Stock Option Contracts, as applicable, with DCTI (collectively, the "DCT
Agreements"). Without limiting the foregoing, each Selling Party acknowledges
and agrees that (i) through November 5, 2000, the term of employment as a
Rehired Employee by Buyer of any Business Employee shall constitute employment
with DCTI for the purposes of determining such Rehired Employees' rights under
the DCT Agreements to which they are party and (ii) the date of termination of
each Rehired Employee's employment by the Selling Parties shall be deemed to be
the earlier of the date of termination of the Rehired Employee's employment by
Buyer and November 5, 2000.
(h) Payment of Excluded Liabilities. Seller and/or DCTI,
as applicable, shall pay or cause to be paid, perform and discharge (i) within
five (5) days of the Closing Date, all Accrued Payroll Liabilities, (ii) within
five (5) days of the Closing Date or, in the case of Accounts and Notes Payable
for which an invoice has not been received, when due, all Accounts and Notes
Payable (other than the payables in respect of the At Home Payment and the
Szilage Payment), (iii) at Closing, the At Home Payment and the Szilage Payment,
and (iv) when due, all other Excluded Liabilities related to the operation of
the Business, including, without limitation, all liabilities under the excluded
Benefit Plans.
ARTICLE 9
EXPENSES, INDEMNITY AND SET OFF
9.1 Expenses. Except as expressly set forth to the contrary
herein, Buyer and the Selling Parties shall be responsible for their own costs
and expenses incurred in connection with the transactions contemplated hereby,
including the fees and expenses of counsel, accountants and consultants. All
applicable state sales taxes, transfer taxes, and real estate transfer taxes, if
any, in respect of the transactions contemplated hereby and all fees or charges
payable with respect to the sale, assignment or transfer to Buyer of any of the
Acquired Assets shall be borne by the Selling Parties.
9.2 Indemnification by Selling Parties. The Selling Parties shall
jointly and severally indemnify and hold harmless Buyer from and against any
damage, liability or loss (including reasonable attorneys fees and other
reasonable costs and expenses incident to, and amounts paid or required to be
paid in settlement of, any claim, suit, action or proceeding) (a "Loss")
sustained, incurred, paid or required to be paid by Buyer which arises out of,
results from or is related to:
(a) the breach by a Selling Party of any representation,
warranty, covenant or agreement contained in this Agreement;
(b) any failure by Seller to comply with Article 6 of the
Uniform Commercial Code of California or any other applicable jurisdiction;
(c) any of the Excluded Assets or the Excluded
Liabilities or the Excluded Contracts, including, without limitation (A) all
Taxes imposed on the Business or the Acquired Assets, the Assumed Liabilities or
Buyer or any Affiliate thereof as a result of operations relating to the
Business conducted prior to the Closing Date, and (B) any obligations to the
Business Employees (including obligations and liabilities to Rehired Employees)
for periods prior to Closing;
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(d) any amount by which the unearned revenue of the
Selling Parties as of the Closing Date for which Buyer assumed the related
obligations as Assumed Liabilities exceeds the Accounts Receivable actually
collected by Buyer within ninety (90) days of the Closing Date;
(e) any failure by a Selling Party to comply with the
continuation health care requirements of the Code and ERISA with respect to the
Business Employees; or
(f) any claim, suit, action or proceeding set forth in
Schedule 5.15, and any claim (known or unknown, contingent or otherwise, whether
arising in contract, contribution, indemnity, tort or otherwise), suit, action
or proceeding (i) against Seller and/or, to the extent related to the operation
of the Business, DCTI existing on the Closing Date, or (ii) arising after the
Closing Date from events or circumstances occurring, or representations,
warranties or guaranties made, or alleged to have been made by either Selling
Party, its directors, officers, employees or agents, prior to the Closing Date,
relating to Seller and/or DCTI, the Business or the Acquired Assets, including,
without limitation, any such claim, suit, action or proceeding by Xxxxxxx Xxxxxx
or, with respect to the use of LZW Technology, Xxxxxx Xxxxxxxxxxx.
9.3 Indemnification by Buyer. After the Closing Date, Buyer shall
indemnify and hold harmless the Selling Parties from and against any Loss
sustained, incurred, paid or required to be paid by a Selling Party which arises
out of, results from or is related to:
(a) the breach by Buyer of any representation, warranty,
covenant or agreement contained in this Agreement;
(b) any of the Assumed Liabilities; or
(c) the ownership of the Acquired Assets and/or operation
of the Business by Buyer subsequent to Closing, unless such Loss arises out of,
results from or relates to a matter as to which Buyer is entitled to indemnity
pursuant to Section 9.2.
9.4 Definition of "Event of Loss"; Tax Benefits. The occurrence of
an event that may result in a Loss to a party entitled to indemnity hereunder
(the "Indemnitee"), as to which the party obligated to provide indemnity (the
"Indemnitor") shall have received notice from the Indemnitee, shall be herein
called an "Event of Loss." Any net tax benefits accruing to an Indemnitee from
any Loss shall not constitute an offset against any Loss covered by this
indemnity.
9.5 Indemnification Procedure.
(a) If at any time an Indemnitee shall receive notice of
any state of facts that may result in a Loss, the Indemnitee shall promptly give
written notice (a "Notice of Claim") to the Indemnitor of the discovery of such
potential or actual Loss. A Notice of Claim shall set forth (i) a brief
description of the nature of the potential or actual Loss, and (ii) the total
amount of Loss anticipated (including any costs or expenses which have been or
may be reasonably incurred in connection therewith). Upon receipt of a Notice of
Claim, Indemnitor may elect to cure the Event of Loss within twenty (20) days
after the date of receipt of the Notice of Claim, or if such cure cannot be
effected within such twenty (20) day period, diligently proceed to effect such
cure. If such cure cannot be effected, payment of the amount of Loss due the
Indemnitee as set forth in a Notice of Claim shall be made by Indemnitor no
later than the twentieth (20th) day after the date of the Notice of Claim (or
such later date as the Indemnitor receives written notice that an actual Loss
has occurred). Except as provided in Sections 9.2 and 9.3, the Indemnitee's
failure to give prompt notice or to provide copies of documents or to furnish
relevant data shall not constitute a defense (in whole or in part) to any claim
by the Indemnitee against the Indemnitor for indemnification, except and only to
the extent that such failure shall have caused or increased such liability or
adversely affected the ability of the Indemnitor to defend against or reduce its
liability.
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(b) If any Notice of Claim relates to any claim made
against an Indemnitee or by any third person, the Notice of Claim shall state
the nature, basis and amount of such claim. Unless the claim involves Taxes, the
Indemnitor shall be entitled to participate in the defense of such claim and, to
the extent that it wishes (unless (i) the Indemnitor is also a party to such
claim and the Indemnitee determines in good faith that joint representation
would be inappropriate, or (ii) the Indemnitor fails to provide reasonable
assurance to the Indemnitee of its financial capacity to defend such claim and
provide indemnification with respect to such claim), to assume the defense of
such claim with counsel satisfactory to the Indemnitee and, after notice from
the Indemnitor to the Indemnitee of its election to assume the defense of such
claim, the Indemnitor will not, as long as it diligently conducts such defense,
be liable to the Indemnitee under such Section for any fees of other counsel or
any other expenses with respect to the defense of such claim in each case
subsequently incurred by the Indemnitee in connection with the defense of such
claim, other than reasonable costs of investigation. If the Indemnitor assumes
the defense of a claim, (a) it will be conclusively established for purposes of
this Agreement that the claims made in the Notice of Claim are within the scope
of and subject to indemnification; (b) no compromise or settlement of such
claims may be effected by the Indemnitor without the Indemnitee's consent unless
(i) there is no finding or admission of any violation of any law or any
violation of the rights of any Person and no effect on any other claims that may
be made against the Indemnitee, and (ii) the sole relief provided is monetary
damages that are paid in full by the Indemnitor; and (c) the Indemnitor will
have no liability with respect to any compromise or settlement of such claims
effected by Indemnitee without its consent. If notice is given to an Indemnitor
of a claim and the Indemnitor does not, within ten (10) days after the
Indemnitee's notice is given, give notice to the Indemnitee of its election to
assume the defense of such claim, the Indemnitor will be bound by any
determination with respect to said claim or any compromise or settlement
effected by the Indemnitee, provided that the Indemnitee shall not settle any
such claim without the prior consent of the Indemnitor (which consent may not be
unreasonably withheld or delayed).
9.6 Buyer's Right of Setoff. Buyer, in its sole and absolute
discretion, may offset against payment of the Escrow Amount or any other amount
due from Buyer to the Selling Parties hereunder (i) the amount of any Loss set
forth in a Notice of Claim, and (ii) any amount due to Buyer from a Selling
Party as damages for the breach of any of the provisions of the Noncompetition
Agreement, the Transition Services Agreement and/or any other agreement to which
Buyer and any of the Selling Parties are parties. The foregoing notwithstanding,
Buyer's right of setoff as provided for in this Section 9.6 shall be in addition
to, and not in lieu of, all other rights and remedies provided for in this
Agreement and under all statutes or rules of law, and Buyer's exercise of its
right of setoff on one occasion shall not be deemed or construed to waive or
otherwise limit its right of indemnification or other rights and remedies
provided for herein or by the statutes or rules of law on any other occasions.
In order to exercise such right of setoff against the Escrow Amount, Buyer must
assert its claim in accordance with the procedures set forth in the Escrow
Agreement.
9.7 Brokers and Finders. Buyer, on the one hand, and the Selling
Parties, on the other hand, each represent and warrant to the other that they
have not engaged any broker, finder, financial advisor or other person who would
be entitled to a brokerage or other fee or commission with respect to the
execution of this Agreement and/or the consummation of the transactions
contemplated hereby.
ARTICLE 10
GENERAL PROVISIONS
The following shall be applicable throughout the term of this
Agreement:
10.1 Amendments and Waivers; Construction. No amendment,
modification, termination or waiver of any provision of this Agreement shall be
effective unless the same shall be set forth in a writing signed by the Selling
Parties and Buyer, and then only to the extent specifically set forth therein.
This Agreement shall not be construed more strictly against one Party than the
other by virtue of the fact that it may have been prepared by counsel for one of
the Parties, it being recognized that Buyer and the Selling Parties have
contributed substantially and materially to the preparation of this Agreement.
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10.2 Enforcement. The Selling Parties agree that damages alone will
be an insufficient remedy for a breach or violation of the provisions of this
Agreement and that each Party shall be entitled as a matter of right, without
limitation of any other remedy available to it for a breach or violation of the
provisions of this Agreement, to equitable relief (including specific
performance of this Agreement) in any court of competent jurisdiction (without
the showing or irreparable, special or imminent damages or the obligation to
provide surety or post any supersedeas bond), it being intended that all rights
and remedies of the Parties under this Agreement are cumulative and
non-exclusive of any such other right or remedy.
10.3 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Selling Parties and Buyer and their respective
successors and assigns. However, except for an assignment of this Agreement by
Buyer to a direct or indirect majority-owned subsidiary of Landmark
Communications, Inc., a Virginia corporation, which shall be permitted without
the prior written consent of the Selling Parties, no Party may assign or
transfer any of its rights under this Agreement or any interest herein without
the prior written consent of the other Party.
10.4 Counterparts. This Agreement and any amendment hereof may be
executed in any number of counterparts and by each Party on a separate
counterpart, each of which, when so executed and delivered, shall be deemed to
be an original and all of which taken together shall constitute one and the same
instrument. In producing this Agreement, it shall not be necessary to produce or
account for more than one such counterpart signed by the Party against whom
enforcement is sought.
10.5 No Waivers by Implication. No waiver by any Party of any
condition or the breach of any term, covenant, representation or warranty
contained in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed a further or continuing waiver of any condition or
covenant, representation or warranty of this Agreement.
10.6 Notices. Unless otherwise specified herein, all notices,
requests and other communications to any Party hereunder shall be in writing
(including telexes, telecopies, facsimile transmissions, and similar writings)
and shall be given to such Party at its address or telecopier number set forth
below or such other address or telecopier number as such Party may hereafter
specify for that purpose by notice to the other Party.
If to the Selling Parties:
Digital Courier Technologies, Inc.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxx Xxx 0000
Xxxx Xxxx, Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxxx Xxxxxxx
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If to Buyer:
WL Acquisition Corp.
c/o The Weather Channel Enterprises, Inc.
000 Xxxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx Xxxxxx
With a Copy to:
Xxxxx X. Powhatan, Esquire
The Weather Channel Enterprises, Inc.
000 Xxxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000
Telecopier: (000) 000-0000
Each such notice, request or other communication shall be
effective (a) if given by telecopier, when such telecommunication is transmitted
and confirmation of receipt obtained, (b) if given by mail, upon receipt, or (c)
if given by any other means, when delivered at the address specified in this
Section.
10.7 Reproductions. This Agreement and all other documents,
instruments and agreements in the possession of Buyer or either Selling Party
which relate hereto or thereto may be reproduced by Buyer or such Selling Party,
and any such reproduction shall be admissible in evidence, with the same effect
as the original itself, in any judicial or other administrative proceeding,
whether the original is in existence or not. No Party will object to the
admission in evidence of any such reproduction, unless the objecting Party
reasonably believes that the reproduction does not accurately reflect the
contents of the original and objects on that basis.
10.8 Entire Agreement. This Agreement, together with the exhibits
and schedules to this Agreement, embodies the entire agreement and understanding
between Buyer and the Selling Parties with respect to the subject matter hereof,
and supersedes all prior agreements and understandings between such parties
relating to the subject matter hereof and thereof, including, without
limitation, that certain Term Sheet executed in July 1999 by and among the
Parties and the Nondisclosure Agreement among the Parties dated July 6, 1999. If
there is a conflict between the terms, conditions, representations, warranties
and covenants contained in this Agreement and any other document, then the
provisions in this Agreement shall control.
10.9 Exhibits, Schedules and Attachments. The exhibits, schedules
and attachments attached to this Agreement are incorporated herein and shall be
considered a part of this Agreement for the purposes stated herein, except that
in the event of any conflict between any of the provisions of such exhibits and
the provisions of this Agreement, the provisions in this Agreement shall
control. Each Party is responsible for the accuracy of its respective schedules
regardless of any assistance provided by any other Party in connection with the
preparation of the schedules.
10.10 Rights Cumulative. Except as set forth herein, all rights,
powers and remedies herein given to the Parties are cumulative and not
alternative, and are in addition to all statutes or rules of law; any
forbearance or delay by Buyer or the Selling Parties in exercising the same
shall not be deemed to be a waiver thereof; no course of dealing on the part of
any Party (or their respective officers, directors, employees, consultants and
agents) nor any failure or delay by any Party with respect to exercising the
same shall operate as a waiver thereof; and the exercise of any right or partial
exercise thereof shall not preclude the further exercise thereof, and the same
shall continue in full force and effect until specifically waived by an
instrument in writing executed by Buyer or the Selling Parties, as the case may
be.
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10.11 Governing Law. This Agreement, and the rights and obligations
of Buyer and the Selling Parties hereunder, shall be governed by and construed
in accordance with the laws of the State of California applicable to contracts
made and to be performed therein.
10.12 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid, such
invalidity shall not affect any other provision which can be given effect
without the invalid provision or application, and to this end the provisions
hereof shall be severable.
10.13 Captions. The captions of and sections in this Agreement are
for convenience of reference only, shall not define or limit the provisions
hereof and shall not have any legal or other significance whatsoever.
10.14 Third Party Rights. It is the intention of the Parties that
nothing in this Agreement shall be deemed to create any right with respect to
any person or entity not a party to this Agreement or the successor or assign
thereof.
10.15 Survival. All representations, warranties, covenants and
agreements made in this Agreement shall survive the Closing.
10.16 Written Agreement Required/No Oral Modification.
Notwithstanding any negotiations or discussions between the Selling Parties
and/or Buyer, or any statements made in connection therewith, there shall be no
legally binding agreement with regard to the transactions contemplated by and
the subject matter of this Agreement, unless and until the Selling Parties and
Buyer have duly executed and delivered to each other a final agreement among
them.
[Remainder of page intentionally left blank -- signature page(s) follow]
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year first above written.
SELLER:
WEATHERLABS, INC.,
an Illinois corporation
By:_______________________________
Name:__________________________
Title:_________________________
DCTI:
DIGITAL COURIER TECHNOLOGIES,INC.,
a Delaware corporation
By:_______________________________
Name:__________________________
Title:_________________________
BUYER:
WL ACQUISITION CORP.,
a California corporation
By:_______________________________
Name:__________________________
Title:_________________________
