PURCHASE AGREEMENT
This
Purchase Agreement (the “Agreement”)
is
entered
into as of June 10, 2008 by and among The Registry Management Company, LLC,
a
Florida limited liability company (the “Buyer”),
Tralliance Corporation, a New York corporation (the “Seller”),
and
xxxxxxxx.xxx, Inc., a Delaware corporation (the “Parent”).
The
Buyer, Seller and Parent are sometimes collectively referred to as the
“Parties”
or
individually as a “Party”).
RECITALS
A. The
Seller is in the business of enhancing the identity and presence of the travel
industry on the Internet by delivering products and services in the .travel
top
level domain (TLD); the travel industry global products and services database;
and new value-added products and services designed to support the travel
industry's use of the .travel TLD (collectively, the “Business”).
B. Parent
owns all of the issued and outstanding capital stock of the Seller.
C. Seller
wishes to sell and Buyer wishes to purchase, substantially all of the Assets
of
the Seller, subject to the assumption of certain of the liabilities of the
Seller, upon the terms and subject to the conditions set forth in this
Agreement.
D. Parent
also wishes to issue and sell, and the Buyer wishes to purchase, 229,000,000
shares of Parent’s common stock, $.001 par value per share (the “Shares”),
upon
the terms and conditions set forth in this Agreement.
NOW,
THEREFORE, in consideration of the premises and the mutual agreements and
covenants contained herein and intending to be legally bound, Buyer, Seller
and
Parent hereby agree as follows:
ARTICLE
1
SALE
AND TRANSFER OF ASSETS AND SHARES
1.1 Certain
Terms.
Certain
capitalized terms used in this Agreement are defined in Article 12.
1.2 Basic
Transaction.
On and
subject to the terms and conditions of this Agreement, the Buyer agrees to
purchase from (A) Parent, and Parent agrees to sell to the Buyer, all of the
Shares, and from (B) the Seller, and the Seller agrees to sell to the Buyer,
all
of the Seller’s right, title and interest in and to all of the Seller’s assets
used in the Business (other than the Excluded Assets) (all of such purchased
assets being collectively referred to as “Purchased
Assets”).
Without limiting the generality of the foregoing, the Purchased Assets shall
include all of the following assets of the Seller existing on the Closing
Date:
(i) all
goodwill relating to the Business;
(ii) all
tangible personal property;
(iii) all
Contracts that are set forth on Schedule 1.2(a)(iii) hereof (the “Assumed
Contracts”);
(iv) all
Permits, to the extent transferable;
(v) all
of
the Seller’s books and records relating to the Business (including without
limitation, all products formulations and proprietary methods and know-how),
the
Purchased Assets and the Assumed Liabilities of the Seller other than the
Excluded Assets;
(vi) all
of
the other intangible assets of the Seller, including, without limitation,
Intellectual Property assets, including without limitation all rights of Seller
to use of the name “Tralliance” and “.travel;”
(vii) all
insurance policies (to the extent transferable), claims and benefits, including,
without limitation, rights and proceeds, arising from or relating to the
Purchased Assets and/or the Assumed Liabilities prior to the Closing
Date;
(viii) all
claims of the Seller against third parties relating to the Purchased Assets
and/or the Assumed Liabilities, whether known or unknown, fixed or contingent;
(ix) security
deposits relating to leases and utilities; and
(x) all
other
Assets of every kind, nature and description, tangible or intangible, owned
by
Seller and used or held for use in connection with the Business.
1.3 Excluded
Assets.
The
following assets of the Seller existing on the Closing Date (collectively,
the
“Excluded
Assets”)
are
not part of the sale and purchase contemplated hereunder, are excluded from
the
Purchased Assets and shall remain the property of the Seller after the
Closing:
(i) all
minute books, corporate seals, stock record books and stock transfer records
of
the Seller and tax returns and tax records of the Seller and records pertaining
to the Excluded Assets;
(ii) all
Contracts which are not assumed pursuant to Section 1.4 below;
(iii) all
cash
and bank accounts of Seller; and
(iv) all
Accounts Receivable from customers, including Affiliates of the Seller
(including Parent and any wholly-owned subsidiaries of Parent), taxing
authorities or other third Party due to Seller.
1.4 Assumed
Liabilities.
At the
Closing, Buyer shall assume only those Liabilities arising after the Closing
Date under the Assumed Contracts identified on Schedule 1.2(a)(iii) (the
Liabilities to be assumed being called collectively “Assumed
Liabilities”).
Except as expressly provided in this Agreement and the Assignment and Assumption
Agreement, Buyer shall not assume or be liable, nor be deemed to have assumed
or
be liable for, any Liability of Seller of any nature whatsoever.
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1.5 Payment
of Purchase Price.
(a) The
Purchase Price shall be determined under and payable in the manner provided
in
this Agreement.
(b) Subject
to the terms and conditions of this Agreement, at the Closing, Buyer shall
pay
or deliver, or cause to be paid or delivered, to Parent the following
(collectively, the “Purchase
Price”):
(i) exchange
and surrender to Parent all of their right, title and interest to the
convertible promissory notes described on Schedule 1.5(b)(i) attached hereto
(the “Convertible
Notes”),
together with all accrued and unpaid interest thereon (including on an
additional $400,000 of such Convertible Notes held by Dancing Bear Investments,
Inc. which are anticipated to be converted in the near future) through the
Closing Date, which aggregate $5,398,439 as of May 31, 2008;
(ii)
release
of the Seller and Parent of all of the Buyer’s and its applicable Related
Parties interest in and to outstanding rent and miscellaneous fees due and
unpaid to the Buyer or its Related Parties through the Closing Date, which
aggregate $722,220 as of May 31, 2008, as more particularly described on
Schedule 1.5(b)(ii) attached hereto, and
(iii) pay
an
earn-out to the Parent equal to 10% of the Buyer’s net revenue derived from
“.travel” names registered by the Buyer through May 5, 2015, on the terms and
conditions of and as more particularly described in the Earn-out Agreement
(as
hereinafter defined).
1.6 The
Closing.
The
purchase and sale of the Shares and the Purchased Assets provided for in this
Agreement shall take place at a closing (the “Closing”)
at the
offices of Xxxxxxx Xxxxxx Xxxxxx Weisller Xxxxxxxx & Xxxxxxxxx, P.A. at 000
Xxxx Xxx Xxxx Xxxxxxxxx, Xxxxx 0000, Xx. Xxxxxxxxxx, XX 00000 at 10:00 a.m.
(local time) on the date hereof or at such other time and place as the Parties
may agree (the “Closing
Date”).
1.7 Closing
Deliveries.
(a) At
or
prior to the Closing, the Seller shall deliver, or cause to be delivered, to
Buyer:
(i) the
Purchased Assets;
(ii) a
Xxxx of
Sale in the form of Exhibit “A,” dated the Closing Date, and duly executed by
the Seller in favor of the Buyer;
(iii) an
Assignment and Assumption Agreement in the form of Exhibit “B”, dated the
Closing Date, and duly executed by the Seller;
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(iv) a
copy of
the Seller's Certificate of Incorporation (and all amendments) certified by
the
New York Secretary of State and a copy of the Seller's Bylaws certified by
the
corporate secretary of the Seller;
(v) a
good
standing certificate issued by the State of New York with regard to the Seller;
and
(vi) such
other certificates, documents and other instruments of transfer and conveyance
as may reasonably be requested by Buyer, each in form and substance satisfactory
to Buyer dated the Closing Date and duly executed by the Seller.
(b) At
or
prior to the Closing, Parent shall deliver, or cause to be delivered, to
Buyer:
(i) stock
certificates representing the Shares issued in the name of the Buyer;
(ii) a
good
standing certificate issued by the State of Delaware with regard to Parent;
(iii) the
Earn-out Agreement; and
(iv) such
other certificates, documents and other instruments of transfer and conveyance
as may reasonably be requested by Buyer, each in form and substance satisfactory
to Buyer dated the Closing Date and duly executed by Parent.
(c) At
or
prior to the Closing, Buyer shall deliver to Parent or the Seller, as
applicable:
(i) the
original Convertible Notes;
(ii) the
Assignment and Assumption Agreement in the form of Exhibit “B”, dated the
Closing Date, and duly executed by the Buyer;
(iii) a
copy of
the Buyer’s Certificate of Formation (and all amendments) certified by the
Florida Secretary of State and a copy of the Buyer's Operating Agreement
certified by the corporate secretary of the Buyer;
(iv) a
certificate of “active status” issued by the State of Florida with regard to the
Buyer;
(v) the
Earn-Out Agreement described in Section 1.8 hereof;
(vi) the
Employment Termination Agreements described in Section 8.8 hereof;
and
(vii) such
other certificates, documents and other instruments of transfer and conveyance
as may reasonably be requested by Parent or the Seller, each in form and
substance satisfactory to Parent and Seller dated the Closing Date and duly
executed by the Buyer or its Related Parties, as appropriate.
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1.8 Earn-Out
Agreement.
The
Buyer
shall pay to the Parent an earn-out equal to 10% of certain revenues of the
Buyer derived from “.travel” names registered by the Buyer through May 5, 2015,
as more particularly described in that certain Earn-out Agreement substantially
in the form attached hereto as Exhibit “C” (the “Earn-out
Agreement”).
The
Parties acknowledge that the minimum earn-out shall be no less than the
Cumulative Minimum Payment Amount (as defined in Section 1.2 of the Earn-out
Agreement) and that Buyer shall further guaranty that such payments will be
no
less that $300,000 in the first year following the Closing Date and increasing
by $25,000 in each subsequent year (except that the final partial year will
be
prorated) until the end of the term.
1.9 Assignment
of Contracts.
Anything contained in this Agreement to the contrary notwithstanding, this
Agreement shall not constitute an agreement or an attempted agreement to sell,
transfer, sublease or assign any material Contract (or any claim or right or
any
benefit arising thereunder or resulting therefrom) if the attempted sale,
transfer, sublease or assignment thereof, without the consent of any other
party
thereto, would constitute a breach thereof or materially affect the rights
of
the Buyer thereunder. Seller and Parent shall use their commercially reasonable
efforts to obtain the consent of the other party to any material Contract to
the
sale, transfer, sublease or assignment thereof to the Buyer in all cases in
which such consent is required for the sale, transfer, sublease or assignment
of
any material Contract. If any such consent is not obtained and the Closing
occurs, Seller and Parent shall use their commercially reasonable efforts to
cooperate with the Buyer in reasonable and lawful arrangements designed to
provide for the Buyer the benefits of such Contract, including (a) adherence
to
reasonable procedures established by the Buyer for the immediate transfer to
the
Buyer of any payments or other funds received by Seller or Parent thereunder
and
(b) enforcement for the benefit of the Buyer of any and all rights of Seller
thereunder against the other party or parties thereto arising out of the breach
or cancellation thereof by such other party or parties or otherwise.
ARTICLE
2
CERTAIN
OTHER AGREEMENTS
2.1 Tax
Treatment.
The
Parties agree that the Parent and Seller shall be treated as selling the
Purchased Assets and Shares, respectively, to the Buyer in exchange for the
aggregate of the Purchase Price (including the Earn-Out) and the Assumed
Liabilities in accordance with Section 707(a)(2)(B) of the Code and the Treasury
Regulations promulgated thereunder.
2.2 Purchase
Price Allocation.
Prior
to the Closing the Parties shall agree upon the allocation of the Purchase
Price
(and all other capitalized costs) (i) as between the Shares and the Purchased
Assets as a whole and (ii) among the Purchased Assets in accordance with Code
Section 1060 and the Treasury Regulations thereunder, which allocations shall
be
binding upon the Parties. Buyer, Parent and Seller (and the Shareholders) and
each of their Affiliates shall take all actions and file all Tax Returns
(including, but not limited to IRS Form 8594 “Asset Acquisition Statement”)
consistent with such allocation unless required to do so by law and, in such
event, such Party shall provide advance written notice to the other detailing
(i) the reasons surrounding such inconsistent position and (ii) the position
to
be taken by such Party.
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2.3 Tax
Matters.
Before
and after the Closing, Seller, Parent and Buyer shall reasonably cooperate,
and
shall cause their respective affiliates, officers, employees and agents to
reasonably cooperate, in preparing and filing all Tax Returns, in resolving
any
audits or disputes relating to Taxes and in connection with any other matters
relating to Taxes. All transfer, documentary, sales, use, stamp, registration
and other such Taxes, and all conveyance fees, recording charges and other
fees
and charges incurred in connection with the transactions contemplated by this
Agreement shall be split between the Seller and Buyer.
ARTICLE
3
REPRESENTATIONS
AND WARRANTIES
OF
PARENT AND SELLER
The
Parent and the Seller, jointly and severally, represent and warrant to the
Buyer
as of the date hereof:
3.1 Organization;
Authority.
(a) Parent
is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York. Parent
and Seller are each duly licensed or qualified to do business as a foreign
entity, and are each in good standing in each jurisdiction where the failure
to
have such qualification would result in a Material Adverse Effect. True and
complete copies of the charter and bylaws, including any amendments thereto
through the date hereof (certified as of a recent date hereof by the Secretary
of Parent or Seller, as applicable), of each of Parent and Seller have been
delivered to Buyer.
(b) Parent
and Seller each have all requisite corporate power and authority to (i) execute
and deliver this Agreement, the other Transaction Documents to which each is
a
party (the “Parent
Transaction Documents”)
and
any related agreements to which either of them is a party and to perform the
transactions contemplated hereby and thereby (the “Contemplated
Transaction”),
(ii)
to operate its business and to carry on its business as presently conducted,
and
(iii) to own, lease and otherwise hold its properties and assets.
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3.2 Authority
Relative to the Transaction Documents; Issuance of Shares.
(a) Parent
and Seller have all requisite corporate authority and power to execute and
deliver this Agreement and the other Parent Transaction Documents to which
it is
or will become a party and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the other Parent
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby (including without limitation, the issuance of the Shares)
have been duly and validly authorized by all required corporate and stockholder
action on the part of Parent and by all required corporate and stockholder
action on the part of Seller and no other corporate, shareholder or other
proceedings on the part of Parent or Seller (other than stockholder approval
by
the stockholders of the Parent) are necessary to authorize this Agreement or
the
other Parent Transaction Documents or to consummate the Contemplated
Transactions. The Parent Transaction Documents have been duly and validly
executed and delivered by Parent and Seller as applicable, and, assuming the
Parent Transaction Documents have been duly authorized, executed and delivered
by Buyer, the Parent Transaction Documents constitute the valid and binding
agreement of Parent and Seller enforceable against Parent and Seller in
accordance with their terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in
effect relating to or affecting creditors’ rights generally, including the
effect of statutory and other laws regarding fraudulent conveyances and
preferential transfers and subject to the limitations imposed by general
equitable principles (regardless whether such enforceability is considered
in a
proceeding at law or in equity).
(b) The
Shares are duly authorized and when issued and paid for in accordance with
the
terms hereof, will be validly issued, fully paid and non-assessable, and free
from all taxes, liens, claims and encumbrances (other than those imposed through
acts or omissions of the Buyer thereof), and will not be subject to preemptive
rights or other similar rights of shareholders of the Parent and will not impose
personal liability upon the holder thereof.
3.3 Non-Contravention.
Except
as listed on Schedule 3.3, the execution and delivery by Parent and Seller
of
this Agreement and the Parent Transaction Documents and the consummation by
the
Parent and Seller of the Contemplated Transactions will not (a) violate or
conflict with any provision of their respective charters or bylaws, each as
amended to date; (b) conflict with or result in the breach or termination of
(or
constitute a default for any event which, with notice or lapse of time or both
would constitute a default) under, or give to others any rights of termination
or cancellation of, or accelerate the performance required by, or maturity
of,
or result in the creation of any Encumbrance pursuant to any of the terms,
conditions or provisions of, any Contract which either Parent or Seller is
a
party; (c) constitute a violation of, or be in conflict with, or constitute
or
create a default under, or result in the creation or imposition of any
Encumbrance; or (d) violate any statute, law, ordinance, guideline,
interpretation, judgment, decree, order, regulation or rule of any Governmental
Authority (as defined herein). The execution and delivery of this Agreement
by
Parent and Seller and the performance of this Agreement, the Parent Transaction
Documents and the related or Contemplated Transactions by Parent and Seller
will
not require filing or registration with, or the issuance of any Permit by,
any
Person or Governmental Authority under any applicable Law (other than any
obligations to file an Information Statement and other reports as required
by
the Exchange Act (as defined herein) or any contracts to which Parent and Seller
is a party.
3.4 Compliance
with Law.
Except
as set forth on Schedule 3.4, the Business has been conducted in accordance
with
all applicable Laws (except, in each such case, for any non-compliance that
individually or in the aggregate has not had, and would not reasonably be
expected to have, a Material Adverse Effect). Seller has complied with, and
is
in compliance with (a) all Laws applicable to Seller or any of its properties
and (b) all terms and provisions of all Contracts to which Seller is a party,
or
to which the Purchased Assets or the Business is subject (except, in each such
case, for any non-compliance that individually or in the aggregate has not
had,
and would not reasonably be expected to have, a Material Adverse Effect). Except
as set forth in Schedule 3.4 hereto, neither Parent nor Seller has committed,
been charged with, or been under investigation with respect to, nor does there
exist, any violation of any provision of any Law with respect to the Business
(except, in each such case, for any non-compliance that individually or in
the
aggregate has not had, and would not reasonably be expected to have, a Material
Adverse Effect). Neither the Parent nor Seller is subject to any decree,
injunction, judgment, order, ruling, assessment or writ issued by any
Governmental Authority which could impair its ability to consummate the
transactions contemplated hereby or adversely affect Buyer’s ownership of the
Purchased Assets or conduct of the Business from and after Closing.
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3.5 SEC
Documents; Financial Statements.
(a) Since
January 1, 2006, Parent has filed all reports, schedules, forms, statements
and
other documents required to be filed by it with the Securities and Exchange
Commission (“SEC”)
pursuant to the reporting requirements of the Securities Exchange Act of 1934,
as amended (the “Exchange
Act”)
(all
of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the
“SEC
Documents”).
As of
their respective dates, the SEC Documents complied in all material respects
with
the requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to
be
stated therein or necessary in order to make the statements therein, in light
of
the circumstances under which they were made, not misleading. As of their
respective dates, the financial statements included in the SEC Documents
(“SEC
Financial Statements”)
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto. The SEC Financial Statements have been prepared in accordance with
generally accepted accounting principles in the United States (“GAAP”),
consistently applied during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or (ii) in the
case
of unaudited interim statements, to the extent they may exclude footnotes or
may
be condensed or summary statements) and fairly present in all material respects
the financial position of Parent and Seller (as it relates to Seller and the
Business) as of the dates thereof and the results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). As at the respective dates of the SEC
Financial Statements, there were no material liabilities or obligations of
Parent (whether absolute or contingent) except for those liabilities and
obligations reflected on or adequately reserved for therein. To the knowledge
of
the executive officers of Parent, no information provided by or on behalf of
Parent to Buyer or which is included in the SEC Documents contains any untrue
statement of a material fact or omits to state any material fact necessary
in
order to make the statements therein, in light of the circumstances under which
they are or were made, not misleading.
8
(b) Certain
Financial Information.
Parent
has delivered to Buyer complete and correct copies of (i) unaudited financial
statements for the Seller as of and for the calendar year ended December 31,
2006 and 2007, including balance sheets and related statements of income and
cash flows; and (ii) the unaudited financial statements for Seller as of and
for
the three months ended March 31, 2008 (the “Balance
Sheet Date”),
including balance sheets and related statements of income and cash flows
(collectively, the “Seller
Financial Statements”,
and
together with the SEC Financial Statements, the “Financial
Statements”),
copies of which are attached as Schedule 3.5(b) hereto. The unaudited balance
sheet of the Seller as of the Balance Sheet Date is hereinafter referred to
as
the “Balance
Sheet”.
Each
of the Seller Financial Statements has been prepared in accordance with GAAP,
applied on a consistent basis throughout the relevant periods (except as may
be
otherwise indicated in such Seller Financial Statements or the notes thereto),
and fairly presents in all material respects the assets, liabilities and
financial position of Seller as of such dates and for the periods indicated
subject, in the case of unaudited financial statements, to normal year end
adjustments. Since the Balance Sheet Date, there has been no change in any
of
the significant accounting policy practices or procedures of Parent or
Seller.
3.6 Consents.
Except
as set forth on Schedule 3.6 hereto, no consent, approval or authorization
of,
or registration, qualification or filing with, any Person or Governmental
Authority is required for the execution and delivery by Parent and Seller of
this Agreement and the Parent’s Transaction Documents or for the consummation by
Seller and Parent of the Contemplated Transactions. Except as set forth on
Schedule 3.6, no consent of any third party, the failure of which to obtain
may
have a Material Adverse Effect, is required for the transfer of the Purchased
Assets.
3.7 Litigation.
Except
as set forth on Schedule 3.7 hereto, no claim, action, suit, proceeding or
investigation whether civil or criminal, in law or equity, before any
arbitration or Governmental Authority is pending or threatened in writing:
(i)
against Seller, (ii) relating to or affecting the ability of Parent or Seller
to
execute this Agreement or the Parent’s Transaction Documents or consummate the
transactions contemplated herein or therein, or (iii) which questions the
validity of this Agreement or any of the Parent’s Transaction Documents or
challenges any of the transactions contemplated hereby or thereby, nor to
Parent’s and Seller’s knowledge is there any basis for any such action, suit,
proceeding or investigation. None of the matters set forth in Schedule 3.7
hereof, either individually or in the aggregate, could reasonably be expected
to
have a Material Adverse Effect on the Seller or the Purchased
Assets.
3.8 Intellectual
Property.
Schedule 3.8 hereto sets forth a complete and accurate list of all material
Intellectual Property of the Seller, which is the only intellectual property
or
other proprietary rights of any kind or nature which are material to the
operation of the Business of Seller after the Closing as presently conducted
by
Seller. Schedule 3.8 also includes a complete and accurate list of all United
States and foreign patent, copyright, trademark, service xxxx, trade dress,
domain name and other registrations and applications, if any, used in connection
with the Business, indicating for each: the owner (if other than the Seller),
the applicable jurisdiction, registration number (or application number), and
date issued or filed, and all unregistered Intellectual Property. Except to
the
extent set forth in Schedule 3.8 and for any third-party consents, Seller owns
or has the right to use all of the Intellectual Property used or necessary
for
use in connection with the business of Seller as presently conducted or proposed
to be conducted, and the consummation of the transactions contemplated by the
Transaction Documents will not alter or impair any such right. Except as has
not
or would not reasonably be expected to have a Material Adverse Effect, Seller
has taken all action necessary to maintain and protect each material item of
Intellectual Property. No registered Intellectual Property has been or is now
involved in any cancellation, dispute or litigation, and, to the knowledge
of
Parent and Seller, no such action is threatened.
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3.9 Permits.
The
Permits listed in Schedule 3.9 constitute all of the licenses, permits,
certificates, approvals, exemptions, franchises, registrations, variances,
accreditations or authorizations currently used in or required for the operation
of the Business as operated by Seller prior to the Closing Date, except for
any
Permits the absence of which would not have a Material Adverse Effect. The
Permits are valid and in full force and effect and there are no pending
proceedings which could result in the termination, revocation, limitation or
impairment of any of the Permits. Neither Parent nor Seller has received notice
of any violations in respect of any of the Permits.
3.10 Taxes.
Except
as set forth on Schedule 3.10 hereto:
(a) Neither
Seller nor Parent nor any member of a Relevant Group has failed to file any
Tax
return required to be filed, which failure could result in the imposition of
any
Encumbrance (other than Permitted Encumbrances) on or against the Shares, the
Purchased Assets, or the Business or in any liability to the Buyer, as
transferee or otherwise. All Taxes imposed on the Parent or any member of a
Relevant Group, the non-payment of which could result in an Encumbrance (other
than Permitted Encumbrances) on or against the Shares, the Purchased Assets
or
the Buyer or in any liability to the Buyer, as transferee or otherwise, have
been or will prior to the Closing Date be paid by the Parent or Seller. All
deposits required to be made by the Parent or any member of a Relevant Group
in
respect of any material Tax, including, without limitation, withholding taxes,
have been or will be made in a timely fashion. There are no material Tax
deficiencies or claims asserted against Parent or any member of a Relevant
Group
the non payment of which could result in any Encumbrances (other than a
Permitted Encumbrance) on or against the Shares or the Purchased Assets or
in
any liability to Buyer, as transferee or otherwise, nor is there any basis
for
any such deficiency or claim;
(b) Neither
Seller nor Parent is a party to any Tax allocation or sharing agreement;
and
(c) No
Tax
return of either Seller or Parent is currently under audit by the IRS or by
any
other taxing authority. Neither the IRS nor any other taxing authority is now
asserting or, to the knowledge of Seller, threatening to assert against either
Seller or Parent any deficiency or claim for additional Taxes or interest
thereon or penalties in connection therewith or any adjustment that would have
a
Material Adverse Effect.
3.11 Broker.
Except
as set forth in Schedule 3.11, neither Parent nor Seller has retained, utilized
or been represented by any broker, agent, finder or other intermediary in
connection with the negotiation or consummation of this Agreement or the
Transaction Documents or the transactions contemplated by this
Agreement.
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3.12 Title
to Purchased Assets; Leases.
(a) The
Seller has good and marketable title to all of the Purchased Assets, free and
clear of all Encumbrances, except the Permitted Encumbrances. Seller has the
full right to sell, convey, transfer, assign and deliver the Purchased Assets
without the need to obtain the consent or approval of any third party except
for
the required consents listed on Schedule 3.6 and those consents or approvals,
the failure of which to obtain, would not result in a Material Adverse Effect.
At and as of the Closing, the Buyer will have, good and valid record and
marketable title to all of the Purchased Assets, free and clear of all
Encumbrances except the Permitted Encumbrances, and the lien in favor of the
holders of the Convertible Notes, which lien will be extinguished promptly
following the surrender of the Convertible Notes to the Parent.
(b) The
Seller does not own any real property or any interest (other than a leasehold
interest) in any real property.
(c) Schedule
3.12 sets forth a complete and correct description of all leases of real or
personal property under which the Seller is lessor or lessee. Each such lease
is
valid and subsisting and no event or condition exists that constitutes, or
after
notice or lapse of time or both would constitute, a default thereunder by the
Seller or, to the Seller’s knowledge, the other party thereto. The Seller’s
respective leasehold interests are not subject to any Encumbrances (other than
Permitted Encumbrances and the interest of the lessors thereunder), and the
Seller is in quiet possession and enjoyment of the properties covered by such
leases.
3.13 Material
Contracts.
(a) Except
as
set forth in Schedule 3.13, the Seller is not a party to or otherwise bound
by
any:
(i) agreement,
instrument, or commitment that may adversely affect its ability to consummate
the Contemplated Transactions;
(ii) agreement
for the purchase, sale, lease, or license by or from it of services, products,
or assets, requiring total payments by or to it in excess of $100,000 in any
instance;
(iii) agreement
requiring it to purchase all or substantially all of its requirements for a
particular product or service from a particular supplier or suppliers, or
requiring it to supply all of a particular customer’s or customers’ requirements
for a certain service or product;
(iv) agreement
or other commitment pursuant to which it has agreed to indemnify or hold
harmless any other person;
(v) (x)
employment agreement; (y) consulting agreement; or (z) agreement providing
for
severance payments or other additional rights or benefits (whether or not
optional) in the event of the sale or other change in control of
it;
(vi) agreement
with the Parent or any current or former Affiliate, stockholder, officer,
director, employee, or consultant of the Seller;
(vii) joint
venture or partnership agreement; or
11
(viii) agreement
imposing any non-competition, non-solicitation or exclusive dealing obligations
on Seller or other like restrictive covenants which materially restrict the
Seller’s business activities.
(b) Seller
has delivered to the Buyer true, correct and complete copies (or written
summaries of the material terms of oral agreements or understandings) of each
Contract listed in Schedule 3.13, each as amended to date. Each such Contract
is
a valid, binding and enforceable obligation of the Seller and, to the best
knowledge of the Seller, of the other party or parties thereto, and is in full
force and effect. Neither the Seller, nor to the knowledge of the Seller, any
other party thereto, is, or is considered by any other party thereto to be,
in
breach of or noncompliance with any term of any such Contract (nor, to the
knowledge of the Seller, is there any basis for any of the foregoing), except
for any breaches or noncompliances that singly or in the aggregate would not
have a Material Adverse Effect. No claim, change order, request for equitable
adjustment, or request for contract price or schedule adjustment, between the
Seller and any supplier or customer, relating to any Contract listed in the
Schedule 3.13 is pending or, to the knowledge of the Seller, threatened, nor,
to
the knowledge of the Seller, is there any basis for any of the foregoing. No
Contract listed in Schedule 3.13 includes or incorporates any provision, the
effect of which may be to enlarge or accelerate any of the material obligations
of the Seller or to give additional rights to any other party thereto, or will
terminate, lapse, or in any other way be affected, by reason of the Contemplated
Transaction, except to the extent a necessary consent to assignment is required
and not obtained prior to the Closing.
3.14 Employees.
Schedule 3.14 contains a complete and accurate list of all employees of the
Seller who perform material services for the Seller as of April 30,
2008.
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES OF THE BUYER
The
Buyer
represents and warrants to the Parent and Seller as follows:
4.1 Organization
of the Buyer; Authority.
The
Buyer is limited liability company organized under the laws of the State of
Florida and its status is active. The Buyer has all requisite corporate power
and authority to execute and deliver this Agreement, the other Transaction
Documents to which it is a party (the “Buyer
Transaction Documents”)
and
any related agreements to which it is a party and to perform the Contemplated
Transactions.
4.2 Approval;
Binding Effect.
The
Buyer has obtained all necessary limited liability company action,
authorizations and approvals required for the execution and delivery of the
Buyer Transaction Documents and the consummation of the transactions
contemplated hereby and thereby. This Agreement and each of such Buyer
Transaction Documents have been duly executed and delivered by the Buyer and
constitutes the legal, valid and binding obligation of the Buyer, enforceable
against the Buyer in accordance with its terms except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or
hereafter in effect relating to or affecting creditors’ rights generally,
including the effect of statutory and other laws regarding fraudulent
conveyances and preferential transfers and subject to the limitations imposed
by
general equitable principles (regardless whether such enforceability is
considered in a proceeding at law or in equity).
12
4.3 Non-Contravention.
The
execution and delivery by the Buyer of the Buyer Transaction Documents and
the
consummation by the Buyer of the transactions contemplated hereby and thereby
will not (a) violate or conflict with any provisions of the charter or bylaws
of
the Buyer, each as amended to date; (b) conflict with or result in the breach
or
termination of (or constitute a default for any event which, with notice or
lapse of time or both would constitute a default) under, or accelerate the
performance required by, any contract, lease, agreement, commitment or other
instrument or restriction of any kind to which the Buyer is a party, or result
in a violation of any Law of any Governmental Authority applicable to the Buyer,
or (ii) on the ability of the Buyer to perform its obligations hereunder or
under the Transaction Documents.
4.4 Convertible
Notes.
The
Buyer owns, or will own as of the Closing, the Convertible Notes free and clear
of all Encumbrances.
4.5 Governmental
Consents.
Except
as set forth in Schedule 4.5 hereto, no consent, approval or authorization
of,
or registration, qualification or filing with, any Governmental Authority is
required for the execution and delivery by the Buyer of this Agreement and
the
Buyer Transaction Documents to which it is a party or for the consummation
by
the Buyer of the transactions contemplated hereby or thereby.
4.6 Broker.
Except
as set forth in Schedule 4.6, the Buyer has not retained, utilized or been
represented by any broker, agent, finder or other intermediary in connection
with the negotiation or consummation of this Agreement or of the transactions
contemplated by this Agreement.
4.7 Litigation.
Except
as set forth on Schedule 4.7 hereto, no claim, action, suit, proceeding or
investigation whether civil or criminal, in law or equity, before any
arbitration or Governmental Authority is pending or threatened in writing:
(i)
against Buyer, (ii) relating to or affecting the ability of Buyer to execute
this Agreement or the Buyer’s Transaction Documents or consummate the
transactions contemplated herein or therein, or (iii) which questions the
validity of this Agreement or any of the Buyer’s Transaction Documents or
challenges any of the transactions contemplated hereby or thereby, nor to
Buyer’s knowledge is there any basis for any such action, suit, proceeding or
investigation. None of the matters set forth in Schedule 6.6 hereto, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
4.8 Investment
Matters.
Buyer
(A) understands that the Shares have not been, and will not be, registered
under
the Securities Act, or under any state securities laws, and are being offered
and sold in reliance upon federal and state exemptions for transactions not
involving any public offering, (B) is acquiring the Shares solely for its own
account for investment purposes, and not with a view to the distribution
thereof, (C) is a sophisticated investor with knowledge and experience in
business and financial matters, (D) has received certain information concerning
the Seller and the Parent and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and the risks inherent
in
purchasing the Shares, (E) is able to bear the economic risk and lack of
liquidity inherent in holding the Shares, and (F) is an “Accredited Investor”
within the meaning of Regulation D promulgated under the Securities
Act.
13
4.9 Acknowledgement
by Buyer.
Buyer
acknowledges and agrees that it has conducted its own independent review and
analysis of, and, based thereon, has formed an independent judgment concerning,
the business, assets, condition, operations and prospects of the Parent and
the
Seller. In entering into this Agreement, Buyer has relied solely upon its own
investigation and analysis, and Buyer: (a) acknowledges that, other than as
set
forth in this Agreement, the Schedules hereto and the certificates delivered
pursuant hereto, none of the Seller, the Parent, nor any of their respective
directors, officers, employees, Affiliates, agents or representatives makes
or
has made any representation or warranty, either express or implied, (i) as
to
the accuracy or completeness of any of the information provided or made
available to Buyer or its agents or representatives prior to the execution
of
this Agreement, and (ii) with respect to any projections, forecasts, estimates,
plans or budgets of future revenues, expenses or expenditures, future results
of
operations (or any component thereof), future cash flows (or any component
thereof) or future financial condition (or any component thereof) of the Parent
or Seller; (b) agrees, to the fullest extent permitted by law (except with
respect to claims of fraud), that none of the Seller, the Parent, nor any of
their respective Affiliates, managers, directors, officers, employees,
equityholders, agents or representatives of the Seller, the Parent or their
respective Affiliates shall have any direct personal liability or responsibility
whatsoever to Buyer on any basis (including contract, tort, or otherwise) based
upon any information provided or made available, or statements made, to Buyer
prior to the execution of this Agreement; and (c) acknowledges that it is not
aware of any facts or circumstances concerning the Seller or the Parent which
would result in any representation, warranty or covenant contained herein being
untrue or inaccurate in any respect.
ARTICLE
5
COVENANTS
5.1 Operations
Prior to the Closing Date.
Except
as set forth on Schedule 5.1 and except as otherwise permitted by the prior
written consent of Buyer, during the period from the date of this Agreement
to
the Closing Date: (i) the business of Seller shall be conducted only in the
Ordinary Course; and (ii) Seller and Parent shall use their commercially
reasonable efforts to preserve the business of Seller substantially intact,
to
preserve the value of the assets and properties, wherever located, that are
material to Seller in existence on the date hereof, to comply with all Laws
and
requirements of any Governmental Authority applicable to Seller and to preserve
the present relationships of Seller with customers, suppliers and other persons
with which Seller has business relations.
5.2 Preserve
Accuracy of Representations and Warranties.
Each of
the Parties hereto shall refrain from taking any action which would render
any
representation or warranty contained in Articles 3 or 4 of this Agreement
inaccurate as of the Closing Date. Each Party hereto shall promptly notify
the
other of any proceeding that shall be instituted or threatened against such
party to restrain, prohibit or otherwise challenge the legality of the
Contemplated Transactions. Seller and Parent shall promptly notify the Buyer
of
(a) any proceeding that may be threatened, brought, asserted or commenced
against it which if such proceeding had arisen prior to the date hereof would
have been required to be disclosed to Buyer hereunder; (b) any fact which,
if
known on the date of this Agreement, would have been required to be set forth
or
disclosed pursuant to this Agreement; and (c) any actual, impending or
threatened breach of any of the representations and warranties contained in
this
Agreement and with respect to the latter, shall use their commercially
reasonable best efforts to remedy such actual, impending or threatened
breach.
14
5.3 Access
to Information.
From
and after the date hereof, the Parent and Seller shall give, or cause to be
given, to Buyer and its representatives, employees and financing sources, timely
access to all of its the titles, contracts, books, records, files, documents,
and personnel as the Buyer shall reasonably request relating to the Seller
or
the Business, furnish to the Buyer all such information concerning the Seller
or
the Business as the Buyer reasonably may request and cause its independent
public accountants to permit Buyer and its representatives to examine all
records and working papers relating to Seller in order to permit an independent
accounting firm selected by the Buyer to conduct an audit of the Business’s
financial statements in a diligent manner. Unless and until the Closing shall
occur, the Buyer shall maintain the confidentiality of (and not use except
in
furtherance of the Contemplated Transactions) all Confidential Information
which
it may receive as a result of such access.
5.4 [Intentionally
omitted]
5.5 Best
Efforts.
Each
Party shall use its commercially reasonable best efforts to satisfy timely
each
of the conditions to be satisfied by it as provided in Articles 7 and 8 of
this
Agreement.
5.6 Expenses.
Except
as otherwise set forth herein, Buyer on the one hand, and Seller and Parent
on
the other hand, shall each bear their own respective expenses incurred in
connection with the preparation, execution, delivery and performance of this
Agreement and the Transaction Documents and in connection with all obligations
required to be performed by each of them under this Agreement and the
Transaction Documents, whether or not the transactions contemplated hereby
and
thereby are consummated.
5.7 Public
Announcements.
Seller,
Parent and Buyer shall consult with each other before issuing any press release,
public announcement or other public statement concerning the contemplated
Transactions or any transaction contemplated by this Agreement or any of the
Transaction Documents, and shall not issue any such public announcement, press
release or public statement prior to such consultation, except as may be
required by law. Copies of any such announcement or filings shall be delivered
to the other parties hereto prior to release.
5.8 Information
Statement.
(a) As
promptly as reasonably practicable following the date of this Agreement, Parent
shall (i) seek the written consent of Xxxxxxx X. Xxxx and certain of his
Affiliates or related parties, in their capacity as stockholders of the Parent,
to the approval of this Agreement and the Contemplated Transactions and (ii)
with the assistance of Buyer, prepare and mail an information statement to
be
sent to the stockholders of Parent in connection with obtaining stockholder
approval of the Contemplated Transactions (as amended or supplement, the
“Information
Statement”).
Buyer
and Parent will cooperate with each other in the preparation of the Information
Statement. Without limiting the generality of the foregoing, (i) Parent will
provide Buyer with a reasonable opportunity to review and comment on the
Information Statement and (ii) Buyer will furnish to Parent true and correct
information relating to it and its arrangements with Parent management required
by applicable securities laws to be set forth in the Information
Statement.
15
(b) Parent
agrees that none of the information supplied or to be supplied by Parent for
inclusion or incorporated by reference in the Information statement will, at
the
date it is first mailed to the stockholders of Parent, contain any untrue
statement of a material fact or omit to state any material fact required to
be
stated therein or necessary in order to make the statement therein, in the
light
of the circumstances under which they are made, not misleading.
(c) Parent
shall use its reasonable best efforts, after consultation with Buyer, to resolve
all SEC comments with respect to the Information Statement as promptly as
practicable after receipt thereof. Each of Buyer and Parent agree to correct
any
information provided by it for use in the Information Statement which shall
have
become false or misleading. Parent shall as soon as reasonably practicable
notify Buyer of the receipt of any comments from or other correspondence with
the SEC staff with respect to the Information Statement and any request by
the
SEC for any amendment to the Information Statement or for additional information
(and promptly deliver a copy of such comments, correspondence or request to
Buyer). Parent shall use its reasonable best efforts to cause the Information
Statement to be mailed to Parent’s stockholders as promptly as practicable after
the Information Statement is cleared by the SEC.
ARTICLE
6
POST-CLOSING
COVENANTS
6.1 Transferred
Employees.
(a) Offer
of Employment.
Subject
to and in accordance with the provisions of this Section 6.1, Buyer shall,
effective upon the Closing, offer full-time employment to each of the Seller’s
employees employed by Seller as of the Closing Date, as listed on Schedule
6.1
hereof (the “Seller
Employees”),
that
Buyer, in its sole discretion, elects to offer employment, on terms and
conditions substantially equivalent to the terms and conditions of employment
and benefits as previously provided to such Seller Employees. Buyer shall hire
all of the Seller Employees who accept such offer. Buyer will deliver to Parent
a list of all of the Seller Employees who have accepted an offer of employment
from Buyer promptly after the Closing. Each of the Seller Employees who actually
becomes a full-time employee of Buyer upon the Closing is hereinafter referred
to as a “Transferred
Employee.”
(b) Transition.
The
employment of each Transferred Employee by Seller shall end effective as of
the
close of business on the day before the Closing Date and the employment of
the
Transferred Employees by Buyer shall commence at or after 12:01 a.m. on the
Closing Date.
16
(c) Retention
of Employees Prior to Closing.
Seller
shall expend its reasonable efforts to assist Buyer in securing the employment
on the Closing Date of the Seller Employees; provided, however, that Seller
shall not be required to incur any financial obligation beyond continuing to
pay
for current employee compensation and benefits prior to the Closing in
connection with the foregoing unless otherwise required by this
Agreement.
(d) Employees
Other than Transferred Employees.
Seller
shall retain responsibility for Seller Employees that are neither offered nor
accepted employment with Buyer. All liabilities or obligations to any Seller
Employee resulting from Buyer’s failure to offer employment to any Seller
Employee shall be and remain the sole responsibility and liability of the
Seller.
6.2 Covenant
Not to Compete.
(a) Parent
and Seller acknowledge and recognize the highly competitive nature of the
industry in which Seller and the Business operate. Accordingly, in consideration
of the premises contained herein and the consideration to be received hereunder,
neither Seller nor Parent shall, during the Non-Competition Period (as defined
below), anywhere in the World: (i)
directly
or indirectly engage, whether or not such engagement shall be as a member,
partner, stockholder, affiliate or other participant, in any Competitive
Business (as defined herein), or represent in any way any Competitive Business,
whether or not such engagement or representation shall be for profit;
(ii)
knowingly or intentionally interfere with, disrupt or attempt to disrupt the
relationship, contractual or otherwise, between Buyer and any other person
or
entity, including, without limitation, any customer, supplier, employee or
consultant of Buyer with respect to the Business; (iii)
induce
any employee of Buyer to terminate his or her employment with Buyer or to engage
in any Competitive Business in any manner described in the foregoing clause
(i);
or (iv)
affirmatively assist or induce any other person or entity to engage in any
Competitive Business in any manner described in the foregoing clause (i).
Anything contained in this Section 6.3 to the contrary notwithstanding, an
investment by Seller or Parent in any publicly traded company in which either
Seller or Parent and their affiliates exercise no operational or strategic
control and which, collectively, constitutes less than 5% of the capital of
such
entity shall not constitute a breach of this Section 6.3.
(b) As
used
herein, “Non
Competition Period”
shall
mean the period commencing on the Closing Date hereof and terminating five
(5)
years from the Closing Date.
(c) “Competitive
Business”
shall
mean any business engaged in the development, sales and support of domain name
registrations for the travel related industry or that is substantially similar
to the services and products offered by the Seller as of the date hereof.
(d) Seller,
Parent and Buyer recognize and acknowledge that the restrictions set forth
herein are reasonable as to form and scope. Notwithstanding the foregoing,
it is
the desire and intent of the parties that the provisions of this Section 6.2
shall be enforced to the fullest extent permissible under the laws and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular provision of this Section 6.2 shall be
adjudicated to be invalid or unenforceable, such provision shall be deemed
amended to (i) delete therefrom the portion thus adjudicated to be invalid
or
unenforceable, such deletion to apply only with respect to the operation of
such
provision in the particular jurisdiction in which such adjudication is made
or
(ii) otherwise to render it enforceable in such jurisdiction.
17
(e) Each
of
Buyer, Seller and Parent acknowledges and understands that the provisions of
this Section 6.2 are of a special and unique nature, the loss of which cannot
be
adequately compensated for in damages by an action at law, and that the breach
or threatened breach of the provisions of this Section 6.2 would cause the
Buyer
irreparable harm. In the event of a breach or threatened breach by Seller or
Parent of the provisions of this Agreement, the Buyer shall be entitled to
an
injunction restraining Seller and Parent from such breach without requirement
to
post bond or otherwise prove damage. Nothing contained in this Section 6.2
shall
be construed as prohibiting the Buyer from or limiting the Buyer in pursuing
any
other remedies available for any breach or threatened breach of this
Agreement.
6.3 Further
Assurances.
At any
time and from time to time after the Closing Date, each Party shall, without
further consideration, execute and deliver to the other such other instruments
of transfer and assumption and shall take such other action as the other may
reasonably request to carry out the transactions contemplated by this Agreement.
Seller and Parent agree to perform all acts that are reasonably within their
purview, authority and/or ability and deliver all documents reasonably requested
by Buyer to perfect and confirm Buyer’s rights to the Shares and the Purchased
Assets.
6.4 Registration
Rights.
The
Shares shall have the registration rights set forth on Schedule 6.4 attached
hereto and made a part hereof.
ARTICLE
7
CONDITIONS
PRECEDENT TO BUYER’S OBLIGATIONS
The
obligation of the Buyer to consummate the Closing and to make all payments
of
the Purchase Price shall be subject to the satisfaction at or prior to the
Closing of each of the following conditions (to the extent noncompliance is
not
waived in writing by the Buyer):
7.1 Representations
and Warranties True at Closing; Compliance with Covenants; Corporate
Approvals.
(a) The
representations and warranties made by Seller and Parent in or pursuant to
this
Agreement shall be true and correct in all material respects as of the date
hereof and as of the Closing Date with the same effect as though such
representations and warranties had been made or given at and as of the Closing
Date (except for representations and warranties that speak as of a specific
date, which shall be true and correct as of such specific date);
(b) Seller
and Parent shall each have performed and complied in all material respects
with
all of their covenants, obligations and conditions under this Agreement to
be
performed or complied with by each of them on or prior to the
Closing;
18
(c) All
corporate approvals necessary to authorize the Contemplated Transactions shall
have been obtained by Seller and Parent.
(d) Seller
and Parent shall have delivered to Buyer (i) a certificate of good standing
of
Seller and Parent, as of the most recent practicable date, from the Secretary
of
State of the states of incorporation of each of Seller and Parent; and (ii)
certificates from the Secretary of State of the appropriate official in each
state in which such Seller and Parent is qualified to do business to the effect
that Seller and Parent are in good standing in such state; in each case, dated
as of a date not more than 5 Business Days prior to the Closing
Date.
7.2 Consents.
Seller,
Parent and Buyer shall have obtained all necessary material consents of third
parties to the Contemplated Transactions, including, without limitation, any
consents required by the Contracts and any required consents of any creditors,
lessors, suppliers and Governmental Authorities, including without limitation,
those set forth in Schedules 3.3 and 3.6.
7.3 No
Litigation.
No
restraining order or injunction shall prevent the transactions contemplated
by
this Agreement and no action, suit or proceeding shall be pending or threatened
before any court or administrative body: (a) in which it will be or is sought
to
restrain or prohibit or obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby or (b)
in
connection with any claim for damages in excess of $100,000 against the Parent
or Seller.
7.4 Governmental
Permits and Approvals.
The
Parties shall have received all necessary Permits and approvals from any
Governmental Authority.
7.5 No
Material Adverse Change.
There
shall not have occurred a Material Adverse Effect with respect to the Parent
or
the Seller since the Balance Sheet Date.
7.6 Parent
Transaction Documents.
Buyer
shall have received all Parent Transaction Documents duly executed by Seller
and
the Parent, as applicable.
7.7 Proceedings
and Documents Satisfactory.
All
proceedings in connection with the transactions contemplated by this Agreement
and all certificates and documents delivered to the Buyer in connection with
the
transactions contemplated by this Agreement shall be satisfactory in all
reasonable respects to the Buyer and its counsel and the Buyer shall have
received the originals or certified or other copies of all such records and
documents as the Buyer may reasonably request.
7.8 Fairness
Opinion.
Parent
and Seller shall have received a favorable fairness opinion from Xxxxxxx Xxxxxxx
Valuations, Inc.
19
ARTICLE
8
CONDITIONS
PRECEDENT TO OBLIGATIONS
OF
SELLER AND PARENT
The
obligation of Seller and Parent to consummate the Closing shall be subject
to
the satisfaction, at or prior to the Closing, of each of the following
conditions (to the extent noncompliance is not waived in writing by Seller
and
Parent):
8.1 Representations
and Warranties True at Closing; Compliance with Covenants; Corporate
Approvals.
(a) The
representations and warranties made by Buyer in this Agreement shall be true
and
correct in all material respects as of the date hereof and as of the Closing
Date with the same effect as though such representations and warranties had
been
made or given at and as of the Closing Date (except for representations and
warranties that speak as of a specific date, which shall be true and correct
as
of such specific date);
(b) Buyer
shall have performed and complied in all material respects with all of its
covenants, obligations and conditions under this Agreement that are to be
performed or complied with by it at or prior to the Closing;
(c) All
shareholder approvals necessary to authorize the Contemplated Transactions
shall
have been obtained by Parent and (i) at least twenty (20) calendar days shall
have elapsed from the date of mailing of the Information Statement to the
stockholders of the Parent or (ii) if elected by Parent, at least forty (40)
calendar days shall have elapsed from the date of mailing of notice to its
stockholders of the “Internet Availability” of the Information Statement
pursuant to Rule 14a-16 of the Exchange Act; and
(d) Buyer
shall have delivered a certificate of good standing of Buyer, as of the most
recent practicable date, from the Secretary of State of the state of
organization of Buyer.
8.2 Consents.
Seller,
Parent and Buyer shall have obtained any necessary material consents of third
parties to the Contemplated Transactions including, without limitation, any
consents required by the Contracts and any required consents of any creditors,
suppliers and Governmental Authorities, including, without limitation, those
set
forth in Schedules 3.3 and 3.6.
8.3 No
Litigation.
No
restraining order or injunction shall prevent the transactions contemplated
by
this Agreement and no action, suit or proceeding shall be pending or threatened
before any court or administrative body in which it will be or is sought to
restrain or prohibit or obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated
hereby.
8.4 Governmental
Permits and Approvals.
The
parties shall have received all necessary approvals from any Governmental
Authority.
8.5 Purchase
Price.
Buyer
shall have delivered to the Seller and Parent the Purchase Price.
8.6 Buyer
Transaction Documents.
Seller
and Parent shall have received all Buyer Transaction Documents duly executed
by
Buyer.
20
8.7 Proceedings
and Documents Satisfactory.
All
proceedings in connection with the transactions contemplated by this Agreement
and all certificates and documents delivered to Seller or Parent in connection
with the transactions contemplated by this Agreement (including expiration
of
the applicable waiting period after distribution of the Information Statement
to
Parent’s stockholders) shall be satisfactory in all reasonable respects to
Seller, Parent and their counsel, and Seller and Parent shall have received
the
originals or certified or other copies of all such records and documents as
the
Seller or Parent may reasonably request.
8.8 Employment
Termination Agreements.
Parent
and Seller shall have received Agreements in form and substance satisfactory
to
it, agreeing to the mutual termination of the Parent’s employment agreements
with each of Xxxxxxx Xxxx, Xxxxxx Xxxxxxxx and Xxxxx Xxxxxx
Xxxxxxxx.
8.9 Fairness
Opinion.
Parent
and Seller shall have received a favorable fairness opinion from Xxxxxxx Xxxxxxx
Valuations, Inc.
ARTICLE
9
9.1 Survival
of Representations and Warranties.
The
representations and warranties of the Parties hereto contained in this
Agreement, the Transaction Documents or otherwise made in writing in connection
with the Contemplated Transactions (in each case except as affected by the
transactions contemplated by this Agreement) shall be deemed material and,
notwithstanding any pre-Closing investigations, examinations, or prior knowledge
of Buyer or any due diligence conducted by Buyer, shall be deemed to have been
relied on by the Buyer and shall survive the consummation of the transactions
contemplated hereby and the payment of the Purchase Price until 5:00 p.m. EST
on
the date that is one (1) year following the Closing Date (such period, the
“Indemnification
Period”),
and
thereafter until resolved if a claim in respect thereof has been made prior
to
such date); provided that the representations and warranties set forth in
Sections 3.10 shall survive the Closing Date until the expiration of the statute
of limitations applicable to the matters set forth therein and the
representations and warranties set forth in Section 3.2(b) and Section 3.12(a)
shall survive indefinitely. Covenants and agreements made by the Seller and
Buyer herein shall survive indefinitely unless otherwise provided herein or
therein.
9.2 Indemnity
by Seller.
Parent
and Seller jointly and severally agree to indemnify and hold Buyer and its
Affiliates and their respective officers, directors, stockholder, employees
and
agents (collectively, the “Buyer
Indemnified Group”)
harmless from and with respect to any and all losses, assessments, liabilities,
claims, damages, deficiencies, costs and expenses, including, without
limitation, reasonable attorneys’ and accountants’ fees and disbursements
(“Losses”)
related to, or arising directly or indirectly out of any failure to perform
or
breach by either Seller or Parent of any representation or warranty, covenant,
obligation or undertaking made by either Seller or Parent in any Transaction
Document (including the Schedules and Exhibits hereto or thereto), or in any
other statement, certificate or other instrument delivered pursuant hereto
or
thereto, or any misrepresentation contained therein.
21
9.3 Indemnity
by the Buyer.
The
Buyer agrees to indemnify and hold the Parent and the Seller and their
respective officers, directors, stockholder, employees and agents (collectively,
the “Seller
Indemnified Group”)
harmless from and with respect to any and all Losses related to, or arising
directly or indirectly out of, any failure to perform or breach by the Buyer
of
any representation or warranty, covenant, obligation (including as to the
Assumed Liabilities) or undertaking made by the Buyer in any Transaction
Document (including the Schedules and Exhibits hereto and thereto), or in any
other statement, certificate or other instrument delivered pursuant hereto
hereto or thereto, or any misrepresentation contained therein.
9.4 Claims.
(a) Notice.
Any
Party seeking indemnification hereunder (the “Indemnified
Party”)
shall
promptly notify the other Party hereto (the “Indemnifying
Party”)
of any
action, suit, proceeding, claim, demand, assessment, judgment, cost, expense
or
breach (a “Claim”)
with
respect to which the Indemnified Party claims indemnification hereunder, by
delivering a written notice thereof together with a statement setting forth
such
information with respect to such Claim as the Indemnified Party shall then
have
(an “Indemnification
Notice”)
provided that failure of the Indemnified Party to give an Indemnification Notice
shall not relieve the Indemnifying Party of its obligations under this Section
9.4 except to the extent, if at all, that such Indemnifying Party shall have
been prejudiced thereby in its ability to defend the suit, action, claim,
proceeding or investigation for which such indemnification is sought by reason
of such failure.
(b) Third-Party
Claims.
If such
Claim relates to any action, suit, proceeding or demand instituted against
the
Indemnified Party by a third party (a “Third-Party
Claim”),
the
Indemnifying Party shall be entitled to participate in the defense of such
Third-Party Claim after receipt of the Indemnification Notice from the
Indemnified Party, as follows. Within 30 days after receipt of the
Indemnification Notice of a particular matter from the Indemnified Party, the
Indemnifying Party may assume the defense of such Third-Party Claim, in which
case the Indemnifying Party shall have the authority to negotiate, compromise
and settle such Third-Party Claim, if and only if the following conditions
are
satisfied:
(i) the
Indemnifying Party shall have confirmed in writing that it is obligated
hereunder to indemnify the Indemnified Party with respect to such Third-Party
Claim;
(ii) the
Indemnifying Party retains counsel that is acceptable to the Indemnified Party,
which acceptance shall not be unreasonably withheld or delayed; and
(iii) the
Indemnified Party is kept reasonably informed of such action, suit or proceeding
at all stages thereof whether or not it is represented by separate
counsel.
However,
notwithstanding the preceding sentence, if (a) the Indemnifying Party fails
or
refuses to defend the Claim then Indemnified Party may defend and/or settle
such
Claim, after giving notice of proposed settlement to the Indemnifying Party,
on
such terms as the Indemnified Party may reasonably deem appropriate and no
such
action taken by the Indemnified Party in defending or settling such Claim will
release the Indemnifying Party of any obligation hereunder. Except under the
circumstances described in the preceding sentence, the Indemnified Party will
not enter into any settlement agreement without the consent of the Indemnifying
Party which consent shall not be unreasonably withheld or delayed. The
Indemnifying Party will not, without the prior written consent of the
Indemnified Party (which will not be unreasonably withheld), enter into any
settlement of a Claim, if pursuant to or as a result of such settlement,
injunctive or other equitable relief will be imposed against the Indemnified
Party or if such settlement does not expressly unconditionally release the
Indemnified Party from all liabilities or obligations with respect to such
Claim, with prejudice. The Indemnified Party and the Indemnifying Party will
cooperate with the each other in the defense, compromise or settlement of any
Claim for which indemnification is sought.
22
9.5 Cooperation.
If
requested by the Indemnifying Party, the Indemnified Party shall cooperate
to
the extend reasonably requested in the defense or prosecution of any suit,
action, demand, assessment, judgment, claim, proceeding or investigation for
which such Indemnifying Party is being called upon to indemnify the Indemnified
Party pursuant to this Article 9, and the Indemnified Party shall furnish such
records, information and testimony and attend all such conferences, discovery
proceedings, hearing, trials and appeals as may be reasonably requested in
connection therewith and, if appropriate, the Indemnified Party shall make
any
counterclaim against the party asserting such suit, action, demand, assessment,
judgment, claim, proceeding or investigation or any cross-complaint against
any
person in connection therewith and the Indemnified Party further agrees to
take
such other actions as reasonably may be requested by an Indemnifying Party
to
reduce or eliminate any Loss for which the Indemnifying Party would have
responsibility, but the Indemnifying Party will reimburse the Indemnified Party
for any fees or expenses incurred by it in so cooperating or acting at the
request of the Indemnifying Party.
9.6 Limitations
on Indemnification.
(a) Subject
to Section 9.6(c) below, Parent and Seller’s maximum aggregate combined
liability to the Buyer Indemnified Group for indemnification (including costs
incurred in the defense of such claim) under Section 9.2 shall not exceed
$2,000,000.
(b) No
member
of the Buyer Indemnified Group shall be entitled to indemnification pursuant
to
Section 9.2 unless and until the aggregate Losses incurred by all members of
the
Buyer Indemnified Group in respect of all claims under Section 9.2 collectively
exceeds $100,000 whereupon the Buyer Indemnified Group shall only be entitled
to
indemnification hereunder (subject to the other provisions of this Article
IX)
from the Seller for all such Losses incurred by the Buyer Indemnified Group
in
excess of such $100,000 threshold.
(c) The
amount of any Losses for which indemnification is provided for under this
Agreement shall be reduced by (i) any amounts realizable by the Indemnified
Person as a result of any indemnification, contribution or other payment by
any
third party, (ii) any insurance proceeds or other amounts realizable by the
Indemnified Person from third parties with respect to such Losses, and (iii)
any
Tax benefit realizable to the Indemnified Person from the incurrence or payment
of any such Losses. In computing the amount of any such Tax benefit, the
Indemnified Party shall be deemed to fully utilize, at the highest marginal
Tax
rate then in effect, all Tax items arising from the incurrence or payment of
any
indemnified Losses.
23
(d) The
Indemnified Person agrees to take commercially reasonable actions to mitigate
all Losses and to timely make and diligently pursue any claims for insurance,
Tax benefits and/or other payments available from third parties with respect
to
Losses for which it will seek indemnification hereunder. The Indemnifying Person
shall be subrogated to the Indemnified Person’s rights of recovery to the extent
of any Losses satisfied by the Indemnifying Person. The Indemnified Person
shall
execute and deliver such instruments and papers as are necessary to assign
such
rights and assist in the exercise thereof, including access to the books and
records of the Parent and Seller.
(e) The
limitations set forth in Sections 9.6(a) and (b) shall not apply to any Losses
arising from actual fraud on the part of the Indemnifying Party.
9.7 Sole
Remedy.
After
the Closing, the indemnification provided in this Article 9 (including all
limitations contained herein) shall be the sole and exclusive remedy for all
matters relating to this Agreement, the transactions contemplated hereby, the
ownership of the Shares of the Parent by Seller and for the breach of any
representation, warranty, covenant or agreement contained herein.
9.8 Adjustment.
Any
payment of indemnification amount under this Article 9 shall be accounted for
as
an adjustment to the Purchase Price.
ARTICLE
10
TERMINATION
10.1 Termination.
(a) Anything
contained in the Transaction Documents to the contrary notwithstanding, this
Agreement may be terminated at any time prior to the Closing Date:
(i) by
the
mutual consent of Buyer and Parent; or
(ii) by
Buyer
or Parent (the “Terminating
Party”)
if the
Closing shall not have occurred on or before 11:59 p.m. on September 15, 2008
(or such later date as may be mutually agreed to by Buyer and the Parent);
provided that if the Closing shall not have occurred as a result of the willful
act or omission of one of the Parties, then such Terminating Party may not
terminate this Agreement pursuant to this Section 10.1(a).
(b) Seller
and Parent may, on or prior to the Closing Date, terminate this Agreement
without liability if:
(i) there
shall have been a material breach of any representations or warranties set
forth
in this Agreement on the part of Buyer or if any representations or warranties
of Buyer shall have become untrue, provided that neither Seller nor Parent
have
materially breached any of their obligations hereunder;
(ii) there
shall have been a material breach by Buyer of any of its covenants of agreements
hereunder and such breach would materially and adversely affect the ability
Buyer, Parent or Seller to consummate the transactions contemplated by this
Agreement, and Buyer has not cured such breach within ten (10) Business Days
after notice by Parent thereof setting forth in reasonable detail the nature
of
such breach; provided that neither Seller nor Parent has materially breached
any
of their obligations hereunder; or
24
(iii) any
condition to Closing set forth in Article 8 shall not have been fulfilled by
Buyer or waived by Parent by the Closing Date.
(c) Buyer
may, on or prior to the Closing Date, terminate this Agreement without liability
if:
(i) there
shall have been a material breach of any representations or warranties set
forth
in this Agreement on the part of either Seller or Parent or if any
representations or warranties of either Seller or Parent shall have become
untrue to the extent it would have a Material Adverse Effect provided that
Buyer
has not materially breached any of its obligations hereunder;
(ii) there
shall have been a material breach by Parent or Seller of one or more of their
respective covenants or agreements hereunder having a Material Adverse Effect
on
Parent or the Business or materially adversely affecting (or materially
delaying) the ability of Parent and Buyer to consummate transactions
contemplated by this Agreement, and neither Seller nor Parent has cured such
breach within 10 Business Days after notice by Buyer thereof setting forth
in
reasonable detail the nature of such breach, provided that Buyer has not
materially breached any of its obligations hereunder;
(iii) any
condition to Closing set forth in Article 7 shall not have been fulfilled or
waived by Buyer by the Closing Date.
10.2 Notice
of Termination.
Any
Party desiring to terminate this Agreement pursuant to Section 10.1(a)(ii),
10.1(b) or 10.2 shall give written notice of such termination to the other
Party
to this Agreement specifying the reason for such termination.
10.3 Effect
of Termination.
In the
event that this Agreement shall be terminated pursuant to Section 10.1, each
Party shall pay all expenses incurred by it in connection with this Agreement,
and no Party shall have any further obligations or liability for any damages
or
expenses under this Agreement. In the event of any termination, all further
obligations of the parties under this Agreement (other than those provisions
which by their terms are intended to survive termination, including, without
limitation, this Article 10) shall be terminated without further liability
of
any Party to the other; provided, however, that nothing contained herein shall
be construed to prevent any Parties hereto from pursuing any remedy available
at
law or in equity for any breach, violation, default or other failure of
performance of any other Party hereto prior to Closing.
ARTICLE
11
GENERAL
11.1 Notices.
All
notices, demands and other communications hereunder shall be in writing or
by
written telecommunication, and shall be deemed to have been duly given if
delivered personally or if mailed by certified mail, return receipt requested,
postage prepaid, or if sent by overnight courier, or sent by written
telecommunication, as follows:
25
If
to the
Parent or Seller:
xxxxxxxx.xxx,
Inc.
000
Xxxx
Xxxxxxx Xxxxxxxxx
Xxxxx
0000
Xx.
Xxxxxxxxxx, XX 00000
Attention:
Xxxxx Xxxxxx Xxxxxxxx
Fax:
with
copies to:
Attn:
Xxxxxx X. “Rocky” Xxxxxxxx II
Xxxxxxx
Xxxxxx Xxxxxx Xxxxxxxx Xxxxxxxx &Sitterson, P.A.
000
Xxxx
Xxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xx.
Xxxxxxxxxx, XX 00000
Telephone:
(000) 000-0000
Fax:
(000) 000-0000
xxxxxxxxx@xxxxxx.xxx
If
to the
Buyer, to:
The
Registry Management Company, LLC
000
Xxxx
Xxxxxxx Xxxxxxxxx
Xxxxx
0000
Xx.
Xxxxxxxxxx, XX 00000
Attention:
Xxxxxx X. Xxxxxxxx
Fax:
with
copies to:
Xxxxxxx
X. Xxxxx, Esq.
Xxxxx
Xxxxx, P.A.
000
X.X.
0xx Xxxxxx
00xx
Xxxxx
Xxxx
Xxxxxxxxxx, XX 00000
Fax:
000-000-0000
xxx@xxxxxxxxxx.xxx
Any
such
notice shall be effective (a) if delivered personally, when received, (b) if
sent by overnight courier, when receipted for, (c) if mailed, five (5) days
after being mailed as described above, and (d) if sent by written
telecommunication, when dispatched; provided that notice is sent simultaneously
via another permitted method.
26
11.2 Entire
Agreement.
This
Agreement, together with the other Transaction Documents, contain the entire
understanding of the parties, supersedes all prior agreements and understandings
relating to the subject matter hereof.
11.3 Partial
Invalidity.
If any
term or provision of this Agreement or the application hereof to any person,
property or circumstance shall, to any extent, be invalid or unenforceable,
the
remainder of this Agreement or the application of such term or provision to
persons, property or circumstances other than those as to which it is invalid
or
unenforceable shall not be affected thereby, and each term and provision of
this
Agreement shall be valid and enforced to the fullest extent permitted by
law.
11.4 Amendment,
Modification and Waiver.
This
Agreement shall not be altered or otherwise amended except pursuant to an
instrument in writing signed by each of the Parties hereto. The waiver by one
Party of the performance of any covenant, condition or promise shall not
invalidate this Agreement, nor shall it be considered a waiver by such Party
of
any other covenant, condition or promise. The delay in pursuing any remedy
or in
insisting upon full performance for any breach or failure of any covenant,
condition or promise shall not prevent a Party from later pursuing any remedies
or insisting upon full performance for the same or any similar breach or
failure.
11.5 Construction.
This
Agreement shall be construed according to its fair meaning and neither for
nor
against any party hereto irrespective of which party caused the same to be
drafted. Each of the parties acknowledges that it has been represented by an
attorney in connection with the preparation and execution of this
Agreement.
11.6 Governing
Law.
The
validity and construction of this Agreement shall be governed by the internal
laws of the State of Florida, without giving effect to the principles of
conflicts of laws thereof.
11.7 Arbitration
of Disputes.
(a) Any
controversy or claim arising out of, relating to, or in connection with, this
Agreement or the Transaction Documents, or the breach, termination or validity
thereof, shall be settled by arbitration in accordance with the Center for
Public Resources for Non-Administered Arbitration by a sole arbitrator. The
Parties expressly waive any right to punitive, exemplary or similar damages
and
the arbitrator is expressly prohibited from awarding any such damages. Judgment
upon the award rendered by the Arbitrator shall be entered by an court having
jurisdiction thereof. The seat of the arbitration shall be Broward County,
Florida.
(b) In
order
to facilitate the comprehensive resolution of related disputes, and upon request
of any Party to the arbitration proceeding, the arbitrator may, within 90 days
of his or her appointment, consolidate the arbitration proceeding involving
any
of the Parties relating to this Agreement or any Transaction Documents. The
arbitration shall not consolidate such arbitrations unless he or she determines
that (i) there are issues of fact or law common to the two proceedings so that
a
consolidated proceeding would be more efficient than separate proceedings,
and
(ii) one Party would be prejudiced as a result of such consolidation through
undue delay or otherwise. In the case of a consolidated proceeding, the
arbitration shall be conducted in the manner provided in subparagraph (a) of
this paragraph.
27
11.8 Assigns.
This
Agreement shall be binding upon and inure to the benefit of the Parties hereto
and their respective heirs, successors and permitted assigns. This Agreement
shall be fully assignable by Buyer to any majority-owned subsidiary of Buyer
formed for the purpose of acquiring the Purchased Assets from Seller. Except
as
provided herein, neither this Agreement nor the obligations of any Party
hereunder shall be assignable or transferable by such Party without the prior
written consent of the other Party hereto.
11.9 Counterparts.
This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the
same
instrument.
ARTICLE
12
CERTAIN
DEFINITIONS
As
used
herein the following terms not otherwise defined have the following respective
meanings:
“Accounts
Receivable”
means
(a) all trade accounts receivable and other rights to payment from customers
of
the Seller and the full benefit of all security for such accounts or rights
to
payment, including all trade accounts receivable representing amounts receivable
in respect of goods or products sold or services rendered to customers of the
Seller, (b) all other accounts or notes receivable of the Seller and the full
benefit of all security for such accounts or notes and (c) any claim, remedy
or
other right related to any of the foregoing.
“Accredited
Investor”
shall
have the meaning set forth in Section 4.8.
“Affiliate”
shall
mean any Person directly or indirectly controlling, controlled by or under
direct or indirect common control with the specified Person and shall include
(a) any Person who is a director or beneficial holder of at least 10% of any
class of the then-outstanding capital stock (or other shares of beneficial
interest) of such Person and family members of any such Person, (b) any Person
of which such Person or an Affiliate of such Person under clause (a) hereof
shall, directly or indirectly, either beneficially own at least 10% of any
class
of the then outstanding capital stock (or other shares of beneficial interest)
or constitute at least a 10% equity participant, and (c) in the case of a
specified Person who is an individual, family members of such Person.
Notwithstanding the foregoing, for purposes of this Agreement, neither Buyer
nor
its equity owners, shall be considered an “Affiliate” of Seller or Parent, and
neither Seller, Parent nor its equity owners, shall be considered an “Affiliate”
of the Buyer.
“Balance
Sheet”
shall
have the meaning set forth in Section 3.5(b).
“Balance
Sheet Data”
shall
have the meaning set forth in Section 3.5(b).
“Business”
shall
have the meaning set for in the Recitals.
28
“Business
Day”
shall
mean any day excluding Saturday, Sunday and any day on which banks in New York
City are authorized by law or other governmental action to close.
“Buyer
Indemnified Group”
shall
have the meaning set forth in Section 9.2.
“Buyer
Transaction Documents”
shall
have the meaning set forth in Section 4.1.
“Claim”
shall
have the meaning set forth in Section 9.4(a).
“Closing”
shall
have the meaning set forth in Section 1.6.
“Closing
Date”
shall
have the meaning set forth in Section 1.6.
“Confidential
Information”
means
all information of a propriety or confidential nature provided by one Party
to
another, but shall not include any information that the receiving Party can
demonstrate: (i) was independently developed by or for the receiving party
without reference to the Confidential Information, or was received without
restrictions; (ii) has become generally available to the public without breach
of confidentiality obligations of the receiving Party; (iii) was in the
receiving Party's possession without restriction or was known by the receiving
Party without restriction at the time of disclosure; or (iv) is the subject
of a
subpoena or other legal or administrative demand for disclosure; provided,
however, that the receiving Party has given the disclosing party prompt notice
of such demand for disclosure and the receiving Party reasonably cooperates
with
the disclosing party's efforts to secure an appropriate protective order of
such
information.
“Competitive
Business”
shall
have the meaning set forth in Section 6.2(c).
“Contract”
shall
mean any agreement, contract, obligation, promise, or undertaking (whether
written or oral and whether express or implied) that is legally
binding.
“Contemplated
Transaction”
shall
have the meaning set forth in Section 3.1(b).
“Convertible
Notes”
shall
have the meaning set forth in Section 1.5(b)(i).
“Earn-out
Agreement”
shall
have the meaning set forth in Section 1.8.
“Encumbrance”
shall
mean any charge, claim, condition, equitable interest, lien, option, pledge,
security interest, right of first refusal, or restriction of any kind, including
any restriction on use, voting, transfer, receipt of income, or exercise of
any
other attribute of ownership.
“Exchange
Act”
shall
have the meaning set forth in Section 3.5(a).
“Financial
Statements”
shall
have the meaning set forth in Section 3.5(b).
“GAAP”
shall
have the meaning set forth in Section 3.5(a)
29
“Governmental
Authority”
shall
mean any domestic or foreign federal, state or local agency, authority, board,
bureau, court, instrumentality or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers, in each
case, to the extent having jurisdiction over the applicable Party.
“Indemnification
Period”
shall
have the meaning set forth in Section 9.1.
“Indemnification
Notice”
shall
have the meaning set forth in Section 9.4(a).
“Indemnified
Party”
shall
have the meaning set forth in Section 9.4(a).
“Indemnifying
Party”
shall
have the meaning set forth in Section 9.4(a).
“Information
Statement”
shall
have the meaning set forth in Section 5.8.
“Intellectual
Property”
shall
mean all intangible assets used in or necessary to the conduct of the business
of Seller, including, without limitation: the name “Tralliance” and all
derivations thereof, all trade names, domain names, websites, service marks
names, trade dress, logos, trade secrets, copyrights and registrations and
applications therefore, designs, technical information, know-how, processes
and
techniques, research and development information, and supplies, plans,
proposals, technical data, computer software, financial, marketing and business
data, pricing and cost information, and business and marketing plans, formulas,
devices, software or compilations of information; patents, license rights and
sublicense rights to all patents and trademarks, and other intangible assets
registered in the name of Seller and currently used by Seller in connection
with, or necessary for the Business of Seller, all applications therefore and
all licenses (as licensee or licensor) and other agreements related thereto
as
described on Schedule 3.8 hereto, and all of Seller’s rights to use or allow
others to use such names, all registrations and applications for registration
and all claims for infringement of any intellectual property and intangible
rights relating thereto.
“IRS”
shall
man the United States Internal Revenue Service.
“Laws”
shall
mean any federal, state, local, municipal, foreign, international, multinational
or other administrative order, constitution, law, ordinance, principle of common
law, rule, regulation, statute or treaty or any order of any Governmental
Authority, or any license, franchise, consent, approval, permit or similar
right
granted under any of the foregoing including, without limitation, all federal,
state and local privacy laws, rules and regulations, and all other applicable
laws of similar tenor and effect, all laws relating to occupational health
and
safety, equal employment opportunities, fair employment practices and
discrimination, privacy, security and exchange of information, the Sarbanes
Oxley Act of 2002, the Digital Millennium Copyright Act, the CAN-SPAM Act of
2003, the Children’s Online Protection Act, the Children’s Online Privacy
Protection Act, the Protection of Children from Sexual Predators Act, rules
and
regulations promulgated by the Federal Trade Commission and the Federal
Communications Commission, and other laws, rules, and regulations, applicable
to
the Business or the Purchased Assets.
30
“Losses”
shall
have the meaning set forth in Section 9.2.
“Material
Adverse Effect”
shall
mean circumstance, change in, or effect on the Business, or the Parent that,
individually or in the aggregate is, or would reasonably be expected to be,
materially adverse to the business, operations, assets or liabilities, results
of operations or the financial condition of the Parent.
“Non-Competition
Period”
shall
have the meaning set forth in Section 6.2(b).
“Ordinary
Course”
shall
mean the normal day to day operations of the Seller consistent with past
practices.
“Parent
Financial Statements”
shall
have the meaning set forth in Section 3.5(b).
“Parent
Transaction Documents”
shall
have the meaning set forth in Section 3.1(b).
“Permits”
shall
mean all franchises, licenses, permits, consents, authorizations, approvals
and
certificates, or any waiver of the foregoing, required by any person or
organization including any Governmental Authority (as defined herein), and
held,
used or otherwise possessed by Seller in connection with and/or necessary to
the
operation of the business of Seller, to the extent transferable to Buyer under
applicable Laws as listed on Schedule 3.9.
“Permitted
Encumbrances”
means
(i) liens for Taxes not yet due and payable or being contested in good faith
by
appropriate proceedings and with respect to which adequate reserves have been
established; (ii) rights reserved to any Governmental Authority to regulate
the
affected property; (iii) statutory liens of banks and rights of set-off; (iv)
as
to leased assets, interests of the lessors and sublessors thereof and liens
affecting the interests of the lessors and sublessors thereof; (v) inchoate
materialmen’s, mechanics’, workmen’s, repairmen’s or other like liens arising in
the Ordinary Course; (vi) liens incurred or deposits made in the Ordinary Course
in connection with workers’ compensation and other types of social security;
(vii) licenses of trademarks or other intellectual property rights granted
by
the Seller in the Ordinary Course and not interfering in any material respect
with the Ordinary Course of the Business of Seller; and (viii) as to real
property, any encumbrance, adverse interest, constructive or other trust, claim,
attachment, exception to or defect in title or other ownership interest
(including, but not limited to, reservations, rights of entry, rights of first
refusal, possibilities of reverter, encroachments, easement, rights of way,
restrictive covenants, leases, and licenses) of any kind, which otherwise
constitutes an interest in or claim against property, whether arising pursuant
to any Laws, under any contract or otherwise, that do not, individually or
in
the aggregate, have a Material Adverse Effect on Seller’s use thereof as
currently used in the Ordinary Course.
“Person”
shall
mean a corporation, an association, a partnership, an organization, a business,
an individual, a limited liability company, a government or political
subdivision thereof or a governmental agency (including without limitation,
any
federal, state, local or municipal regulatory or administrative
body).
“Purchase
Price”
shall
have the meaning set forth in Section 1.5(b).
31
“Related
Party”
shall
mean, with respect to the Buyer, any of the holders of the Convertible Notes,
Certified Vacations Group, Inc., Labigroup Holdings, LLC and their respective
subsidiaries, if any. Notwithstanding anything to the contrary, neither the
Seller, the Parent nor any of its subsidiaries shall be considered Related
Parties of the Buyer hereunder.
“Relevant
Group”
shall
mean any combined, consolidated, affiliated, unitary or similar group of which
either Parent or Seller is or was a member.
“SEC”
shall
have the meaning set forth in Section 3.5(a).
“SEC
Documents”
shall
have the meaning set forth in Section 3.5(a).
“SEC
Financial Statements”
shall
have the meaning set forth in Section 3.5(a).
“Seller
Indemnified Group”
shall
have the meaning set forth in Section 9.3.
“Shares”
shall
have the meaning set forth in the Recitals.
“Tax”
shall
mean any federal, state, local, foreign and other income, profits, franchise,
capital, withholding, unemployment insurance, social security, occupational,
production, severance, gross receipts, value added, sales, use, excise, real
and
personal property, ad valorem, occupancy, transfer, employment, disability,
workers’ compensation or other similar tax, duty or other governmental charge
(including all interest and penalties thereon and additions
thereto).
“Tax
Return”
shall
mean any return (including any information return), report, statement, schedule,
notice, form, declaration, claim for refund or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Authority in connection with the determination, assessment,
collection or payment of any Tax or in connection with the administration,
implementation or enforcement of or compliance with any Laws relating to any
Tax.
“Terminating
Party”
shall
have the meaning set forth in Section 10.1(a)(ii).
“Third-Party
Claim”
shall
have the meaning set forth in Section 9.4(b).
“Transaction
Documents”
shall
mean this Agreement and such other documents and agreements of even date
herewith or delivered at Closing.
“Transferred
Employee”
shall
have the meaning set forth in Section 6.1(a).
32
IN
WITNESS WHEREOF, and intending to be legally bound hereby, the Parties hereto
have caused this Agreement to be duly executed and delivered as the date first
provided above.
|
PARENT:
xxxxxxxx.xxx,
inc.
|
|
|
By:
|
/s/
Xxxxxx X. Xxxxxxxx
|
|
Title:
President
|
|
|
SELLER:
TRALLIANCE
CORPORATION
|
|
|
By:
|
/s/
Xxxxxx X. Xxxxxxxx
|
|
Title:
President
|
|
|
BUYER:
THE
REGISTRY MANAGEMENT COMPANY, LLC.
|
|
|
By:
|
/s/
Xxxxxxx X. Xxxx
|
|
Title:
Manager
|
|
33
Schedule
6.4
Registration
Rights
1.1 Demand
Registration; Limitation.
At any
time after the first anniversary of the date hereof, the holders (the
“Holders”)
of a
majority of the shares of Common Stock shall be entitled to deliver written
notice to the Parent demanding the registration of all Registrable Securities
(as hereinafter defined) or such lesser number as the Holders may elect. Upon
the written request of such Holders, the Parent shall use its commercial
reasonable best efforts to cause to be registered under the 1933 Act all of
such
Registrable Shares. The Holders whom elect to participate in the registration
(or a registration pursuant to Section 1.2 below) are called “Participating
Holders.”
The
term “Registrable
Securities”
shall
mean shares of the Common Stock issued pursuant to this Agreement, together
with
any shares of Common Stock issued or issuable by way of a stock dividend or
stock split or in connection with any recapitalization, merger, consolidation
or
other reorganization; provided that the term “Registrable Securities” shall not
include shares of Common Stock which have been either: (i) publicly resold
pursuant to Rule 144 promulgated under the 1933 Act or (ii) are eligible for
sale under Rule 144(k) of the 1933 Act. The Holders of the Registrable
Securities may exercise the rights described in this Section 1.1 a total of
one
time only. Notwithstanding any demand by the Holders hereunder, the Parent
shall
not be required to effect any such registration, and may delay any such
registration, at anytime during which: (i) the Parent has pending, or reasonably
anticipates filing within forty five (45) days of receipt of a demand for
registration hereunder, its own registration statement for the public offering
of shares of Common Stock by the Parent; (ii) has pending, or has received
a
notice of demand registration relating to, a registration statement for the
offer and sale of Common Stock by selling shareholders pursuant to registration
rights outstanding (or hereinafter granted) in favor of other security holders;
or (iii) the Parent’s Board of Directors determines, in its good faith
discretion, that such registration may have a material adverse effect on the
Parent or its plans or prospects; provided that, in any of such events, the
Holders shall continue to have a demand right and the Parent shall promptly
notify the Holders of the foregoing and provide the Holders with an estimate
of
when they may exercise such demand registration again; and provided further
that
solely in the event of clause (iii) above, (x) the Parent’s ability to delay
such registration shall be limited to durations of not longer than ninety (90)
days and (y) the Parent shall not delay more than once during any twelve month
period.
34
1.2 Piggy-Back
Registration Rights.
If at
any time hereafter, the Parent shall prepare and file one or more registration
statements under the 1933 Act, with respect to a public offering of equity
or
debt securities of the Parent, or of any such securities of the Parent held
by
its security holders, other than registration statements on forms S-4 or S-8
(or
their successor forms), the Parent will include in any such registration
statement such information as is required, and such number of Registrable
Securities held by the Participating Holders thereof as may be requested by
them, to permit a public offering of the Registrable Securities so requested;
provided, however, that in the case of an underwritten offering, if, in the
written opinion of the Parent's or, if pursuant to a demand registration by
selling security holders, such selling holder’s, managing underwriter for such
offering, the inclusion of the Registrable Securities requested to be
registered, when added to the securities being registered by the Parent or
any
other selling security holder(s), would exceed the maximum amount of the
Parent's securities that can be marketed without otherwise materially and
adversely affecting the entire offering, then such managing underwriter may
exclude from such offering that portion of the Registrable Securities requested
to be so registered, so that the total number of securities to be registered
is
within the maximum number of shares that, in the opinion of the managing
underwriter, may be marketed without otherwise materially and adversely affect
the entire offering, provided that at least a pro rata amount of the securities
that otherwise were proposed to be registered for other stockholders (but not
the Parent and other than with respect to securities registered pursuant to
demand registration rights if such securities are otherwise included in the
underwriting) is also excluded. In the event of such a proposed registration,
the Parent shall furnish the then registered holders of Registrable Securities
with not less than twenty (20) days' written notice prior to the proposed date
of filing of such registration statement. Such notice shall continue to be
given
by the Parent to registered holders of Registrable Securities, with respect
to
subsequent registration statements filed by the Purchaser, until such time
as
all of the Registrable Securities have been registered or may be sold without
registration under the Act or applicable state securities laws and regulations,
and without limitation as to volume pursuant to Rule 144 of the 1933 Act. The
holders of Registrable Securities shall exercise the rights provided for herein
by giving written notice to the Parent, within fifteen (15) days of receipt
of
the Parent's notice of its intention to file a registration statement. In the
event the offering involves an underwritten offering, the Participating Holders
shall also execute, and be a party to, the underwriting agreement of the Parent
or other selling security holders.
1.3 Furnish
Information.
It
shall be a condition precedent to the obligations of the Parent to take any
action pursuant to this Agreement with respect to the Registrable Securities
that each of the Participating Holders furnish to the Parent such information
regarding itself, the Registrable Securities held by it, and the intended method
of disposition of such securities as shall be required to effect the
registration of the Registrable Securities.
1.4 Expenses
of Registration.
The
Parent shall bear and pay all expenses incurred in connection with any
registration, filing or qualification of Registrable Securities with respect
to
the registrations pursuant to Section 1.1 and 1.2 for the Investor, including
without limitation all registration, filing and qualification fees, printers’
and accounting fees relating or apportionable thereto, and, if connection with
a
demand registration pursuant to Section 6.1 hereof, the fees and disbursements
of one counsel appointed by the Participating Holders. The Participating Holders
shall be responsible for payment of any underwriter’s or broker’s fee or
commission with respect to the sale of their Registrable
Securities.
1.5 Registration
Procedures.
Whenever the Holders of Registrable Securities have requested that any
Registrable Securities be registered pursuant to this Agreement, the Parent
shall use its best efforts in good faith to effect the registration and the
sale
of such Registrable Securities in accordance with the intended method of
disposition thereof, and in furtherance hereof, the Parent shall as
expeditiously as possible:
(a) prepare
and file with the Securities and Exchange Commission a registration statement
with respect to such Registrable Securities and use its best efforts in good
faith to cause such registration statement to become and remain effective;
provided, that before filing a registration statement or prospectus or any
amendments or supplements thereto, the Parent shall furnish to the counsel
selected by the Participating Holders of a majority of the Registrable
Securities covered by such registration statement copies of all such documents
proposed to be filed, which documents shall be subject to the review and comment
of such counsel;
35
(b) notify
each Participating Holder of the effectiveness of each registration statement
filed hereunder and prepare and file with the Securities and Exchange Commission
such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than 180 days and
comply with the provisions of the 1933 Act with respect to the disposition
of
all securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof
set
forth in such registration statement;
(c) furnish
to each Participating Holder such number of copies of such registration
statement, each amendment and supplement thereto (in each case including all
exhibits thereto), the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as such seller
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Holder;
(d) use
its
best efforts in good faith to register or qualify such Registrable Securities
under such other securities or blue sky laws of such jurisdictions as any
Participating Holder reasonably requests and do any and all other acts and
things which may be reasonably necessary or advisable to enable such seller
to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by such Holder (provided that the Parent shall not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subsection, (ii) subject itself
to
taxation in any such jurisdiction or (iii) consent to general service of process
in any such jurisdiction);
(e) notify
each Participating Holder, at any time when a prospectus relating thereto is
required to be delivered under the 1933 Act, of the happening of any event
as a
result of which the prospectus included in such registration statement contains
an untrue statement of a material fact or omits any fact necessary to make
the
statements therein not misleading, and, at the request of any such seller or
by
its own initiative, the Parent shall prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not contain an untrue statement
of
a material fact or omit to state any fact necessary to make the statements
therein not misleading;
36
(f) cause
all
such Registrable Securities to be listed or admitted to trading on each
securities exchange on which securities issued by the Parent are then listed
or
admitted for trading or, if not so listed or admitted for trading, then on
at
least one securities exchange or quotation system on which securities of
companies similar to the Parent are then listed or admitted for trading, and,
if
admitted for trading on the Over the Counter Bulletin Board, use its best
efforts in good faith (i) to either (x) secure designation of all such
Registrable Securities covered by such registration statement, if and to the
extent eligible for such designation, as a NASDAQ “national market system
security” within the meaning of Rule 11Aa2 1 of the Securities and Exchange
Commission or (y) secure trading on the NASDAQ “SmallCap” market and, without
limiting the generality of the foregoing, and (ii) to arrange for at least
two
market makers to register as such with respect to such Registrable Securities
with the NASD;
(g) furnish
to each Participating Holder a signed counterpart, addressed to such
Participating Holder, of (i) an opinion of counsel for the Parent, dated the
effective date of the registration statement, and (ii) a “comfort” letter signed
by the independent public accountants who have certified the Parent’s financial
statements included in the registration statement, covering substantially the
same matters with respect to the registration statement (and the prospectus
included therein) and (in the case of the comfort letter, with respect to events
subsequent to the date of the financial statements), as are customarily covered
(at the time of such registration) in opinions of issuer’s counsel and in
comfort letters delivered to the underwriters in underwritten public offerings
of securities. If and to the extent that any registration relates to an
underwritten public offering, such opinion and comfort letter shall be
sufficient if it is in the form acceptable to the managing underwriter
thereof.
(h) provide
a
transfer agent and registrar for all such Registrable Securities not later
than
the effective date of such registration statement;
(i) enter
into such customary agreements (including underwriting agreements in customary
form) and take all such other actions as the Participating Holders of a majority
of the Registrable Securities being sold or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities;
(j) in
the
event of the issuance of any stop order suspending the effectiveness of a
registration statement, or of any order suspending or preventing the use of
any
related prospectus or suspending the qualification of any Common Stock included
in such registration statement for sale in any jurisdiction, the Parent shall
use its best efforts in good faith promptly to obtain the withdrawal of such
order.
1.6 Selection
of Underwriter.
In the
event of a demand registration pursuant to Section 6.1 hereof, the holders
of a
majority of the Registrable Securities initially requesting registration
hereunder shall have the right to select the investment banker(s) and manager(s)
to administer the offering, subject to the Parent's approval which shall not
be
unreasonably withheld or delayed.
1.7 Indemnification.
In the
event any Registrable Securities are included in a registration statement under
this Section 1:
37
(a) The
Parent will indemnify and hold harmless the Participating Holders, the partners
or officers, directors and shareholders of the Participating Holders, legal
counsel and accountants for the Participating Holders, against any losses,
claims, damages or liabilities (joint or several) to which they may become
subject under the 1933 Act, the 1934 Act or any state securities laws, insofar
as such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a “Violation”):
(i)
any untrue statement or alleged untrue statement of a material fact contained
in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii)
the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading,
or
(iii) any violation or alleged violation by the Parent of the 1933 Act, the
1934
Act, any state securities laws or any rule or regulation promulgated under
the
1933 Act, the 1934 Act or any state securities laws. The Parent will reimburse
each Participating Holder for any legal or other expenses reasonably incurred
by
it in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this subsection 1.7 (a) shall not apply to amounts paid in settlement of
any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Parent (which consent shall not be unreasonably
withheld), nor shall the Parent be liable for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
Violation that occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration
by
such Participating Holder; provided further, however, that the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit a Participating Holder, from whom the person asserting any such
losses, claims, damages or liabilities purchased shares in the offering, if
a
copy of the prospectus (as then amended or supplemented if the Parent shall
have
furnished any amendments or supplements thereto) was not sent or given by or
on
behalf of such Participating Holder to such person, if required by law so to
have been delivered, at or prior to the written confirmation of the sale of
the
shares to such person, and if the prospectus (as so amended or supplemented)
would have cured the defect giving rise to such loss, claim, damage or
liability.
(b) Each
Participating Holder will indemnify and hold harmless the Parent, each of its
directors, each of its officers who has signed the registration statement,
each
person, if any, who controls the Parent within the meaning of the 1933 Act,
legal counsel and accountants for the Parent and any underwriter, against any
losses, claims, damages or liabilities (joint or several) to which any of the
foregoing persons may become subject under the 1933 Act, the 1934 Act or any
state securities laws, insofar as such losses, claims, damages or liabilities
(or actions in respect thereto) arise out of or are based upon any Violation,
in
each case to the extent (and only to the extent) that such Violation occurs
in
reliance upon and in conformity with written information furnished by such
Participating Holder expressly for use in connection with such registration;
and
such Participating Holder will reimburse any person intended to be indemnified
pursuant to this subsection, for any legal or other expenses reasonably incurred
by such person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this subsection 1.7(b) shall not apply to amounts paid
in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of such Participating Holder (which
consent shall not be unreasonably withheld).
38
(c) Promptly
after receipt by an indemnified party under this Section 1.7 of notice of the
commencement of any action (including any action by a governmental authority),
such indemnified party (the “Indemnified
Party”)
will,
if a claim in respect thereof is to be made against any indemnifying party
(the
“Indemnifying
Party”)
under
this Section 1.7, deliver to the Indemnifying Party a written notice of the
commencement thereof and the Indemnifying Party shall have the right to
participate in, and, to the extent the Indemnifying Party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an Indemnified Party (together with all other indemnified parties that
may
be represented without conflict by one counsel) shall have the right to retain
one separate counsel, with the fees and expenses to be paid by the Indemnifying
Party, if representation of such Indemnified Party by the counsel retained
by
the Indemnifying Party would be inappropriate due to actual or potential
differing interests between such Indemnified Party and any other party
represented by such counsel in such proceeding. No Indemnifying Party shall,
without the consent of the Indemnified Party, consent to entry of any judgment
or enter into any settlement of any such action which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a complete and full release from all liability in respect
of such claim or litigation. No Indemnified Party shall consent to entry of
any
judgment or enter into any settlement of any such action the defense of which
has been assumed by an Indemnifying Party without the consent of such
Indemnifying Party.
(d) If
the
indemnification provided for in this Section 1.7 is held by a court of competent
jurisdiction to be unavailable to an Indemnified Party with respect to any
loss,
liability, claim, damage or expense referred to herein, then the Indemnifying
Party, in lieu of indemnifying such Indemnified Party hereunder, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such loss, liability, claim, damage or expense in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the
one
hand and of the indemnified party on the other in connection with the statements
or omissions that resulted in such loss, liability, claim, damage or expense,
as
well as any other relevant equitable considerations. The relative fault of
the
Indemnifying Party and of the Indemnified Party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party and the parties’
relative intent, knowledge, access to information, and opportunity to correct
or
prevent such statement or omission.
(e) No
Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of
the 0000 Xxx) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Notwithstanding anything to the
contrary in this Section 1.7, no indemnified party shall be required, pursuant
to this Section 1.7, to contribute any amount in excess of the net proceeds
received by such indemnifying party from the sale of securities in the offering
to which the losses, claims, damages, liabilities or expenses of the indemnified
party relate.
39
1.8 Successors
and Assigns.
The
covenants and agreements in this Section 1 by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not. In addition, whether
or not any express assignment has been made, the provisions of this Agreement
which are for the benefit of purchasers or holders of Registrable Securities
are
also for the benefit of, and enforceable by, any subsequent holder of at least
one million (1,000,000) shares of the Registrable Securities.
40
Exhibit
A
Xxxx
of
Sale
41
Exhibit
B
Assignment
and Assumption Agreement
42
Exhibit
C
Earn-out
Agreement
43
