ASSET PURCHASE AGREEMENT
Exhibit
10.21
This
Asset Purchase Agreement (this "Agreement")
is
made as of the 2nd day of October, 2006, by and between Answerbag, Inc., a
California corporation ("Seller"),
InfoSearch Media, Inc., a Delaware corporation and the sole shareholder of
Seller ("Parent"),
Demand Answers, Inc., a Delaware corporation ("Buyer"),
and
Demand Media, Inc., a Delaware corporation and the sole stockholder of Buyer
("DMI").
RECITALS
Seller
desires and intends to sell substantially all of its operating assets and other
rights relating to its user-generated question and answer content website and
other business operations, and Buyer desires and intends to purchase the same,
at the price and on the terms and conditions herein set forth.
AGREEMENT
NOW,
THEREFORE, in consideration of the covenants and agreements set forth herein,
the parties hereby agree as follows:
1. Definitions
As
used
in this Agreement, the following capitalized terms shall have the meanings
set
forth below:
"Affiliate"
of any
Person (the "Subject")
means
any other Person which, directly or indirectly, controls or is controlled by
or
is under common control with the Subject and, without limiting the generality
of
the foregoing, includes, in any event, (a) any Person which beneficially
owns or holds 25% or more of any class of voting securities of the Subject
or
25% or more of the legal or beneficial interest in the Subject and (b) any
Person of which the Subject beneficially owns or holds 25% or more of any class
of voting securities or 25% or more of the legal or beneficial interest.
"Control" (including, with correlative meanings, the terms "controlled by"
and
"under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Aggregate
Purchase Price"
has the
meaning assigned in Section 3.1.
"Agreement"
means
this Agreement and all Schedules and Exhibits hereto.
"Assets"
has the
meaning assigned in Section 2.1.
"Assignment
and
Assumption of
Contract Agreement
Rights"
has the
meaning assigned in Section 2.65.
“Assumption
Agreement” has
the
meaning assigned in Section 2.5.
"Xxxx
of Sale"
has the
meaning assigned in Section 2.5.
"Business"
means
the business, operations and activities of Seller relating to the operations
of
Xxxxxxxxx.xxx, the Seller’s user-generated question and answer content website.
Without limiting the foregoing, "Business" shall include the operation of the
Assets.
"Cap"
has the
meaning assigned in Section 13.4.
"Claim"
means
any claim, demand, cause of action, suit, proceeding, arbitration, hearing
or
investigation.
"Closing"
means
the consummation of the purchase and sale of the Assets and other transactions
contemplated under this Agreement and the other Transaction
Documents.
"Closing
Cash Amount"
has the
meaning assigned in Section 3.1.
"Closing
Date"
means
the date upon which the Closing becomes effective.
"Code"
means
the Internal Revenue Code of 1986, as amended, and all regulations promulgated
thereunder, as in effect from time to time.
“Confidential
Information”
shall
mean any and all trade secrets, confidential business or technical information,
and proprietary information and materials, whether or not stored in any medium,
relating to Seller or the Business, including, but not limited to, business
information, technology, technical documentation, product or service
specifications or strategies, marketing plans, research and development,
designs, formulae, computer programs, pricing information, financial
information, information relating to existing, previous and potential suppliers,
customers, contracts and other know-how.
"Contract"
means
any contract, agreement, lease, license, grant of immunity from suit in regard
to intellectual property rights, commitment, arrangement, purchase or sale
order, or undertaking, whether written or oral.
"Disclosure
Memorandum"
means
that certain Disclosure Memorandum dated as of the date hereof and delivered
by
Seller to Buyer on the date hereof in connection with this
Agreement.
"DMI"
has the
meaning assigned in the recitals.
"Employee
Benefit Plans"
means
all employee pension benefit plans, as defined in Section 3(2) of ERISA,
employee welfare benefit plans, as defined in Section (3)(1) of ERISA, and
any deferred compensation, performance, bonus, incentive, vacation pay, holiday
pay, severance, insurance, retirement, excess benefit, fringe benefit or other
plan, trust or arrangement,
whether or not covered by ERISA, whether written or oral, for the benefit of
the
Business employees.
"ERISA"
means
the Employee Retirement Income Security Act of 1974, as amended.
"Encumbrance"
means
any security interest, mortgage, lien, charge, option, easement, license,
adverse claim or restriction of any kind, including, but not limited to, any
restriction on the use, transfer, voting, receipt of income or other exercise
of
any attributes of ownership.
"Entity"
means
any
corporation (including any non-profit corporation), general partnership, limited
partnership, limited liability partnership, joint venture, estate, trust,
company (including any company limited by shares, limited liability company
or
joint stock company), firm, society or other enterprise, association,
organization or entity (including any Governmental Body).
"Escrow,"
"Escrow
Agent,"
"Escrow
Agreement,"
and
"Escrow
Amount"
have
the respective meanings assigned in Section 3.3.
"Excluded
Assets"
has the
meaning assigned in Section 2.2.
"Excluded
Liabilities"
has the
meaning assigned in Section 2.4.
"Financial
Statements"
has the
meaning assigned in Section 5.6.
"GAAP"
means
United States generally accepted accounting principles, as in effect as of
the
relevant date.
"Governmental
Body"
means
any federal, state or other court or governmental body, any subdivision, agency,
commission or authority thereof, or any quasi-governmental or private body
exercising any regulatory or taxing authority thereunder, domestic or
foreign.
"indemnified
party"
and
"indemnifying
party"
have
the respective meanings assigned in Section 13.5.
"Intellectual
Property"
has the
meaning assigned in Section 2.1.2.
"Judgment"
means
any judgment, order, award, writ, injunction or decree of any Governmental
Body
or arbitrator.
"knowledge"
means,
with respect to a specified Person, the actual knowledge of such Person
including such additional knowledge as would be acquired by a Person conducting
a reasonable, diligent inquiry concerning the subject matter at issue; and
as to
each of Seller and Parent shall also include the actual knowledge of Seller's
and Parent's respective executive officers and directors including such
additional knowledge as would be acquired by such a Person conducting a
reasonable, diligent inquiry concerning the subject matter at
issue.
"Loss"
means
any loss, damage, Judgment, debt, liability, obligation, fine, penalty, cost
or
expense (including, but not limited to, any legal and accounting fee or
expense), whether or not
relating to personal injury, property damage, public or worker health, welfare
or safety or the environment and whether or not relating to violations of or
liability under environmental and safety laws.
"material
adverse effect"
with
respect to a party or other Person means an
event,
violation, change, failure, inaccuracy, circumstance or other matter has had,
or
would reasonably be expected to have, a material adverse effect on (a) the
business, operations or financial condition of such Person or (b) in the case
of
a party to this Agreement, the ability of such party to timely consummate the
transactions contemplated by this Agreement or perform any of its obligations
under the Agreement.
"Misrepresentation
Claims"
has the
meaning assigned in Section 13.4.
"Outstanding
Shares"
has the
meaning assigned in Section 5.4(a).
"Owned
Personal Property"
has the
meaning assigned in Section 5.8.
"Parent"
has the
meaning assigned in the recitals.
"Permit"
means
any permit, license, approval, certification, endorsement or qualification
of
any Governmental Body or any other Person (including, but not limited to, any
customer).
"Person"
means
any individual or Entity.
"Relevant
Personnel"
has the
meaning assigned in Section 5.12.
"Tax"
or
"Taxes"
means
all taxes, charges, fees, levies or other assessments, including, without
limitation, income, excise, gross receipts, personal property, real property,
sales, use, ad valorem, transfer, franchise, profits, license, withholding,
payroll, employment, severance, stamp, occupation, windfall profits, social
security and unemployment or other taxes imposed by the United States or any
agency or instrumentality thereof, any state, county, local or foreign
government, or any agency or instrumentality thereof, and any interest or fines,
and any and all penalties or additions relating to such taxes, charges, fees,
levies or other assessments.
"Third-Party
Claim"
has the
meaning assigned in Section 13.5.
"Transaction
Documents"
means
this Agreement, the Warrants as set forth in Section 9.9 and 10.5, Xxxx of
Sale,
Escrow Agreement, Assignment of Contracts, Assignment of Intellectual Property
Rights and Assumption Agreement.
"transfer"
has the
meaning assigned in Section 2.1.
2.
Purchase
and Sale of Assets
2.1 Purchase
and Sale.
Subject
to the terms and conditions of this Agreement, at the Closing, Seller shall
sell, transfer, convey, assign and deliver (collectively, "transfer"),
or
cause to be transferred, to Buyer or one of its designees, free and clear of
all
Encumbrances, and Buyer shall purchase and acquire, all of Seller's right,
title
and interest in and to all of the assets and rights
(collectively, the "Assets")
primarily or exclusively used in the Business, whether tangible or intangible,
real, personal or mixed, wherever located and whether or not reflected on the
books and records of Seller, subject to the more specific descriptions of the
Assets set forth below (and excluding, in each category of this Section 2.1
below, the Excluded Assets):
2.1.1 Equipment.
The five
computer servers and related peripheral equipment owned by Seller and employed
in Seller's operation of the Business as of the close of business on the Closing
Date as described in Schedule
2.1.1
to the
Disclosure Memorandum (the “Sold Equipment”), and all rights to the warranties
received from the manufacturers and distributors of all such equipment and
any
related claims, credits, rights of recovery and setoffs with respect to such
equipment.
2.1.2 Intellectual
Property.
All
information (whether or not protectable by patent, copyright or trade secret
rights) and intellectual property rights possessed or owned by Seller and
employed primarily or exclusively in Seller's operation of the Business as
of
the close of business on the Closing Date, and all right, title and interest
of
Seller in, to and under licenses, sublicenses or like agreements providing
Seller any right or concession to use any information or intellectual property,
and, in each case, employed primarily or exclusively in Seller's operation
of
the Business as of the close of business on the Closing Date, including all
domain names, URLs, trade names, trademarks (including common-law trademarks),
service marks, art work, packaging, plates, emblems, logos, insignia and
copyrights, and their registrations and applications, and all goodwill
associated therewith, all domestic and foreign patents and patent applications,
all technology, know-how, show-how, trade secrets, manufacturing processes,
formulae, drawings, designs, systems, forms, technical manuals, data, computer
programs, product information and development work-in-progress and all
documentary evidence of any of the foregoing, including, without limitation,
the
trademarks, patents, patent applications, other assets and related agreements
described in Schedule 2.1.2
to the
Disclosure Memorandum (collectively, the "Intellectual
Property").
2.1.3 Contract
Rights and Other Intangible Assets.
All of
Seller's right, title and interest in, to and under all contracts and
agreements, purchase orders, sales orders, sale and distribution agreements,
supply and processing agreements and other instruments and agreements relating
exclusively or primarily to Seller's operation of the Business as of the close
of business on the Closing Date, and all goodwill associated with the Business,
including, without limitation, Seller's right, title and interest in, to and
under the contracts, agreements and other intangible assets described in
Schedule 5.10
to the
Disclosure Memorandum.
2.1.4 Books
and Records.
All of
Seller's books and records (including all discs, tapes and other media-storage
data and information) relating primarily or exclusively to Seller's operation
of
the Business as of the close of business on the Closing Date.
2.1.5 Other
Records, Manuals and Documents.
All of
Seller's mailing lists, customer lists, supplier lists, vendor data, marketing
information and procedures, sales and customer files, advertising and
promotional materials, current product material, equipment maintenance records,
warranty information, standard forms of documents, manuals of operations or
business procedures and other similar procedures, and all other information
of
Seller relating primarily
or exclusively to Seller's operation of the Business as of the close of business
on the Closing Date.
2.1.6 Insurance
Proceeds.
All
insurance proceeds paid or payable to Seller in respect of any damage to or
destruction or loss of any assets or rights of Seller reflected on the Schedules
referred to in this Section 2.1.
2.2 Excluded
Assets.
Seller
and Buyer expressly understand and agree that Seller is not transferring to
Buyer pursuant to this Agreement any of the following assets or rights of Seller
(the "Excluded
Assets"),
and
that such Excluded Assets do not constitute Assets under Section 2.1 of
this Agreement:
2.2.1 Excluded
Contracts.
Seller's
Contracts listed on Schedule 2.2.1
to the
Disclosure Memorandum.
2.2.2 Excluded
Equipment. All
machinery, equipment, furniture, computer hardware, fixtures, motor vehicles
and
other tangible person property owned by Seller and employed in Seller’s
operation of the Business as of the close of business on the Closing Date that
is not listed on Schedule 2.1.1.
2.2.3 Other
Excluded Assets.
All
other assets of Seller listed on Schedule 2.2.3
to the
Disclosure Memorandum.
2.3 Assumption
of Liabilities.
Upon the
terms and subject to the conditions of this Agreement, Buyer agrees, effective
at the time of Closing, to assume only the liabilities of Seller set forth
on
Schedule 2.3
(the
"Assumed
Liabilities").
2.4 Excluded
Liabilities.
Buyer
shall not assume any obligations or liabilities other than the Assumed
Liabilities, and all obligations and liabilities other than the Assumed
Liabilities shall remain obligations and liabilities of Seller (all obligations
or liabilities not assumed by Buyer herein are called the "Excluded
Liabilities"),
including but not limited to (a) those liabilities arising primarily or
exclusively out of the conduct of the Business prior to and including the
Closing Date, (b) all accounts payable of Seller incurred in the ordinary
course of the Business, (c) any accrued liabilities of Seller on Seller's
books incurred in the ordinary course of the Business), and (d) all
liabilities related to the Excluded Assets.
2.5 Instruments
of Sale and Transfer.
On or
prior to the Closing Date, Seller shall deliver to Buyer and Buyer shall deliver
to Seller, as the case may be, such instruments of sale and assignment as shall,
in the reasonable judgment of Buyer and Seller, be effective to vest in Buyer
on
the Closing Date all of Seller's right, title and interest in and to the Assets
and to evidence the assumption of the Assumed Liabilities by Buyer, including,
without limitation, a Xxxx of Sale and Assignment substantially in the form
of
Exhibit
2.5(a)
(the
"Xxxx
of Sale"),
an
Assignment of Contract Rights substantially in the form of Exhibit 2.5(b)
(the
"Contract
Assignment Agreement")
and an
Assumption of Certain Liabilities substantially in the form of Exhibit
2.5(c) (the
“Assumption
Agreement”).
3.
Purchase
Price
3.1 Purchase
Price.
The
aggregate purchase price to be paid at Closing for the Assets shall be the
sum
of Three Million Dollars ($3,000,000) (the "Aggregate
Purchase Price")
minus
the Escrow Amount (such amount after such deduction, the "Closing
Cash Amount").
3.2 Allocation
of Purchase Price.
The
parties agree to utilize the fair market values of the Assets as determined
by
Buyer for the purpose of allocating the Purchase Price paid hereunder for the
Assets for federal, state, local and other Tax purposes, which allocation shall
be in accordance with Section 1060 of the Code. Buyer shall pay any sales
and use taxes arising out of the transfer of the Assets. Each party agrees
to
report the federal, state, local and other Tax consequences of the transactions
contemplated by this Agreement and the Transaction Documents in a manner
consistent with such allocation and shall not take any position inconsistent
therewith upon examination of any Tax return, in any refund claim, or in any
litigation, investigation or otherwise. Each party shall cooperate with the
other party in the filing of Form 8594 with the U.S. Internal Revenue
Service.
3.3 Escrow.
The
parties agree that at Closing an aggregate of Three Hundred Thousand Dollars
($300,000) of the Aggregate Purchase Price (the "Escrow
Amount")
shall
be deposited in escrow (the "Escrow")
with
Xxxxx Fargo Bank, National Association (the "Escrow
Agent")
to be
held and administered for a period of 12 months in accordance with the Escrow
Agreement attached hereto as Exhibit 3.3
(the
"Escrow
Agreement").
The
fees of the Escrow Agent in connection with the Escrow Agreement shall be paid
by Buyer.
4.
Closing
4.1 Closing
Date.
Subject
to the terms and conditions of this Agreement, the Closing shall take place
at
the offices of Seller, at 9:00 a.m. on October [__], 2006, or at such other
location or time as the parties may agree and shall be effective as of 11:59
p.m. of the Closing Date.
4.2 Closing
Payments.
At the
Closing, Buyer shall pay (a) to the Escrow Agent an amount equal to the
Escrow Amount by wire transfer of immediately available funds to be held and
administered pursuant to the Escrow Agreement, and (b) to Seller an amount
equal to the Closing Cash Amount by wire transfer of immediately available
funds.
5.
Representations
and Warranties Regarding Seller
To
induce
Buyer and DMI to enter into and perform this Agreement, Seller and Parent
jointly and severally represent and warrant to Buyer (which representations
and
warranties shall survive the Closing as provided in Section 13) all as
follows in this Section 5:
5.1 Organization,
Good Standing,
etc.
Seller
is a corporation duly organized, validly existing and in good standing under
the
laws of the jurisdiction of its incorporation. Seller has all requisite
corporate power and authority to own, operate and lease the Assets and to carry
on the Business's business as now being conducted.
5.2 Corporate
Authority.
Seller
has the requisite corporate power and authority to execute and deliver this
Agreement and the Transaction Documents to which it is a party and perform
its
obligations hereunder and thereunder. The execution and delivery by Seller
of
this Agreement and the Transaction Documents to which it is a party, the
performance by Seller of its obligations hereunder and thereunder and the
consummation by Seller of the transactions contemplated hereby and thereby
have
been duly authorized by all necessary corporate action. This Agreement
constitutes a valid and binding obligation of Seller, enforceable against Seller
in accordance with its terms, and the Transaction Documents to which Seller
is a
party, when executed and delivered by Seller, will constitute valid and binding
obligations of Seller, enforceable against Seller in accordance with their
respective terms.
5.3 No
Conflict.
The
execution, delivery and performance of this Agreement or the Transaction
Documents by Seller and the consummation of the transactions contemplated hereby
or thereby will not (a) violate, conflict with, or result in any breach of,
any provision of Seller's certificate of incorporation or by-laws (or equivalent
documents); or (b) violate, conflict with, result in any breach of, or
constitute a default (or an event that, with notice or lapse of time or both,
would constitute a default) under any Contract or Judgment to which Seller
is a
party or by which it is bound or which relates to the Assets or the Business;
or
(c) result in the creation of any Encumbrance on any of the Assets; or
(d) violate any applicable law, statute, rule, ordinance or regulation of
any Governmental Body; or (e) give any party with rights under any
Contract, Judgment or other restriction to which Seller is a party or by which
it is bound or which relates to the Assets or the Business, the right to
terminate, modify or accelerate any rights, obligations or performance under
such Contract, Judgment or restriction; or (g) violate, conflict with, result
in
any breach of, or constitute a default (or an event that, with notice or lapse
of time or both, would constitute a default) under any Contract of or Judgment
applicable to Seller or Parent containing any noncompetition, nonsolicitation,
no-shop, standstill or similar provisions.
5.4 Capitalization.
Parent
owns all of the outstanding shares of the issued and outstanding capital stock
of Seller ("Outstanding
Shares"),
and
all of such shares are held by Parent. All of the Outstanding Shares have been
duly authorized and validly issued. There is no contract or agreement relating
to the voting of any of the Outstanding Shares.
5.5 Consents
and Approvals.
Except
as set forth in Schedule 5.5
to the
Disclosure Memorandum ("Consents
and Approvals"),
(a) no consent, approval or authorization of, or declaration, filing or
registration with, any Governmental Body is required for the execution, delivery
and performance by Seller of this Agreement and the Transaction Documents to
which it is a party and for the consummation by Seller of the transactions
contemplated hereby and thereby and (b) no consent, approval or
authorization of any third party is required for the execution, delivery and
performance by Seller of this Agreement and the Transaction Documents to which
it is a party and the consummation by Seller of the transactions contemplated
hereby and thereby.
5.6 Financial
Statements.
(a) Seller
has delivered to Buyer the financial statements relating to the Business which
are set forth in Schedule
5.6(a).
The
Financial Statements were derived from the books and records with respect to
the
Business and Seller has used
it
best judgment in setting forth the results of operations of the Business for
the
respective years or periods then ended.
(b) Giving
effect to the transactions contemplated by this Agreement and the other
Transaction Documents shall not cause (1) Seller to be unable to pay its
debts as they become due in the usual course of business, or (2) Seller's
total assets to be less than the sum of Seller's total liabilities.
5.7 Taxes.
Seller
was duly formed effective January 1, 2006. Since January 1, 2006, all
Tax obligations of Seller with respect to its operation of the Business that
are
due have been timely paid and Seller has and will have no liability for any
Tax
obligations with respect to its operation of the Business and no interest or
penalties have accrued or are accruing with respect thereto, whether state,
county, local or otherwise with respect to any periods prior to the Closing
Date
except, in each case, any Tax obligations that, if not timely paid by Seller,
could not result in (a) an Encumbrance on any of the Assets or (b) the
commencement of a Claim against Buyer.
5.8 Property.
(a) Seller
does not own or lease any real property. Seller does not lease or rent any
personal property.
(b) Except
for (1) assessments for Taxes not yet due and payable and
(2) mechanics', materialmen's, carriers' and other similar liens securing
indebtedness that is in the aggregate less than $10,000, is not yet due and
payable, and was incurred in the ordinary course of business, the Sold Equipment
is free and clear of all liens, mortgages, pledges, deeds of trust, security
interest, conditional sales agreements, charges, encumbrances and other adverse
claims or interests of any kind, and Seller has good and marketable title
thereto.
5.10 Contracts.
(a) Schedule
5.10
to the
Disclosure Memorandum contains a complete and accurate list of all Material
Contracts, oral or written, to which Seller is a party and that relate to the
operation of the Business (other than those set forth in Schedule 2.2.1
that constitute Excluded Assets), including the names of the parties thereto,
the date of each such Material Contract and each amendment thereto. Schedule 5.10
also
contains a description of any provision in any Contract listed therein that
restricts or otherwise qualifies Seller's ability to conduct the Business,
including but not limited to noncompetition provisions, guaranteed performance
or payments, geographic restrictions, market segment restrictions, product
or
service volume limitations and similar restrictions. For purposes of this
Agreement, the term "Material
Contract"
means
any of the following:
(1) any
Contract for the purchase, lease, rental or sale of supplies, machinery,
equipment, services or other tangible or intangible property, in each case
involving the payment or receipt by Seller of Ten Thousand Dollars ($10,000)
or
more in the case of any single Contract, or providing for performance,
regardless of dollar amount, over a period of one year or more;
(2) any
Contract to which Seller is a party that is not terminable without penalty
on
notice of 60 days or less;
(3) any
Contract providing for the services of consultants or independent contractors,
including, but not limited to, any Contract relating to research, development,
advertising or promotion in connection with the Business;
(4) any
Contract relating to patents, trade names, trademarks, service marks,
copyrights, or applications for any of the foregoing, or inventions, formulas,
processes, technology, know-how, trade secrets, technical information or other
intellectual property rights in connection with the Business, including, but
not
limited to, the Intellectual Property;
(5) any
Contract relating to real property or any interest therein in connection with
the Business;
(6) any
Contract with Parent or any director or officer of Seller or Parent, or any
Affiliate of such Persons, including any Contract providing for the furnishing
of services by, rental of real or personal property from, or otherwise requiring
payments to any such Person;
(7) any
Contract containing any covenant (A) limiting the right of Seller to engage
in any line of business, make use of any Intellectual Property or compete with
any person in any line of business, (B) granting any exclusive distribution
or supply rights or (C) otherwise having an adverse effect on the right of
Seller to sell, distribute or manufacture any products or services or to
purchase or otherwise obtain any software, components, parts or
subassemblies;
(8) any
Contract between Seller and any current or former employee, consultant or
director of Seller or Parent pursuant to which benefits would vest or amounts
would become payable or the terms of which would otherwise be altered by virtue
of the consummation of the transactions contemplated by this Agreement or any
other Transaction Document to which Seller is a party (whether alone or upon
the
occurrence of any additional or subsequent event or events);
(9) any
Contract that requires a consent to a sale of assets, change of control, merger
or an assignment by operation of law, either before or after the Closing;
and
(10) any
other
Contract, or group of Contracts, the termination or breach of which would have,
or would be reasonably expected to have, a material adverse effect on
Seller.
(b) With
respect to the contracts listed on Schedule
5.10,
all
such Contracts are valid and in full force and effect, Seller has performed
all
material obligations imposed on it thereunder, and there are not, under any
of
such Contracts, any defaults or events of default on the part of Seller or,
to
the knowledge of each of Seller and Parent, any other party thereto, and no
circumstance exists that, with notice, the passage of time, or both, could
constitute a default under any Material Contract by Seller, or to the knowledge
of each of Seller and Parent, any other party thereto.
(c) With
respect to the Contracts listed on Schedule
5.10,
neither
Seller nor Parent has received notice, and neither Xxxxxx Xxxxxxx nor Xxxxx
Kneuttel otherwise has actual knowledge, that any party to any such Contract
intends to modify, cancel, terminate or refuse to renew such Contract or to
exercise or decline to exercise any option or right thereunder.
(d) Except
as
set forth in Schedule 5.5 to
the
Disclosure Memorandum, no consent, approval or authorization of any third party
is required for the assignment to Buyer of any Contract contained in the Assets
and all such Contracts will continue to be binding on the other parties thereto
following the Closing and their assignment to Buyer.
5.11 Claims
and Legal Proceedings.
Except
as specifically set forth in Schedule 5.11
to the
Disclosure Memorandum, there are no Claims pending or, to the knowledge of
each
of Seller and Parent, threatened against Seller or Parent with respect to the
operation of the Business, before or by any court or other Governmental Body
or
nongovernmental department, commission, board, bureau, agency, instrumentality
arbitrator, arbitration panel or any other Person. To the knowledge of each
of
Seller and Parent, there is no valid basis for any Claim, other than as
specifically set forth in Schedule 5.11
to the
Disclosure Memorandum, adverse to the Business by or before any Governmental
Body or nongovernmental department, commission, board, bureau, agency or
instrumentality, or any other Person. There are no outstanding or unsatisfied
judgments, orders, decrees or stipulations to which Seller with respect to
the
operation of the Business is a party, that involve the transactions contemplated
herein or that could reasonably be expected to, alone or in the aggregate,
have
a material adverse effect on Seller.
5.12 Labor
Matters.
There
are no disputes, material employee grievances or material disciplinary actions
pending or, to the knowledge of each of Seller and Parent, threatened between
Seller or Parent and the Relevant Personnel (as defined below). For purposes
herein, “Relevant Personnel” means Xxxx Xxxxx, Xxxxxxxx Xxxxxx, Xxxx Xxxxxxx and
Xxxxx Xxxxx. Each of Seller and Parent, with respect to the respective Relevant
Personnel retained by Seller or Parent, has complied in all material respects
with all applicable provisions of all laws relating to the employment of labor
and has no liability for any arrears of wages or Taxes or penalties for failure
to comply with any such laws. Neither Seller nor Parent has any knowledge of
any
organizational efforts presently being made or threatened by or on behalf of
any
labor union with respect to any Relevant Personnel.
5.13 Patents,
Trademarks and Intellectual Property.
(a) Seller
owns the right, title and interest in and to, and has the sole and exclusive
right to use, free and clear of any payment obligation or other Encumbrance,
or
has obtained all of the necessary rights and licenses to use, all the patents,
trade names, trademarks, service marks, copyrights and applications for any
of
the foregoing, whether registered or not, that are used in the Business,
including but not limited to the use or sale of products or services of Seller
by customers of Seller, or that are owned by Seller and relate to the products
and services of Seller. Notwithstanding the foregoing, such ownership, licenses
and rights are exclusive except with respect to standard, generally commercially
available, “off-the-shelf” third party products that are not part of any
previous, current or proposed product, service or Intellectual Property offering
of
the
Seller. Schedule 2.1.2
to the
Disclosure Memorandum is an accurate and complete list of all such patents,
trade names, trademarks, service marks, copyrights, and applications for any
of
the foregoing, reflecting dates of filing or dates of issuance, if applicable.
No patents, trade names, trademarks, service marks, copyrights or applications
for any of the foregoing, other than those set forth in Schedule 2.1.2 to
the Disclosure Memorandum, are or have been used in or are necessary in
connection with the Business or such manufacture, use, sale or application
of
products or services of the Business, or are owned by Seller and relate to
the
products and services of the Business. All registrations listed in
Schedule 2.1.2 to the Disclosure Memorandum are in good standing, valid,
subsisting and in full force and effect in accordance with their terms. The
technical information and data and other intellectual property rights to be
transferred to Buyer hereunder include all of Seller's technical information
and
data and other intellectual property rights (including, but not limited to,
those of the types referenced in Section 2.1.2) relating to the Business,
the manufacture, use or sale of products or services by or for Seller, the
use
or application of products or services by customers of Seller, or otherwise
relating to the Business.
(b) To
the
knowledge of each of Seller and Parent,
none of
the Intellectual Property or Seller's rights thereto are being infringed or
otherwise violated by any Person.
(c) The
use
of the Intellectual Property by Seller, the manufacture, use and sale by or
for
Seller of the products and services of Seller, and the use or application of
the
products and services of Seller by customers in accordance with promotions
or
recommendations of Seller, do not infringe or otherwise violate any rights
of
any Person, and there is no pending or, to the knowledge of each of Seller
and
Parent, threatened Claim alleging any such infringement or violation. In
addition, there is no pending or, to the knowledge of each of Seller and Parent,
threatened Claim alleging any defect in or invalidity, misuse or
unenforceability of, or challenging the ownership or use of or Seller's rights
with respect to, any of the Intellectual Property, and there is no basis for
any
such Claim. Furthermore, there is no other Claim made by any Person pertaining
to the Intellectual Property. None of the Intellectual Property is subject
to
any Judgment.
(d) The
consummation of the transactions contemplated by this Agreement and the
Transaction Documents will not alter or impair any of the Intellectual Property,
and the Intellectual Property may be transferred to Buyer hereunder without
the
consent or approval of any other party or Governmental Body.
(e) To
the
knowledge of each of Seller and Parent,
the
Business does not involve the employment of any Person in a manner that violates
any noncompetition or nondisclosure agreement that such Person entered into
in
connection with his or her employment or activities at any time prior to
employment by Seller or Parent.
5.14 No
Adverse Events.
Neither
Seller nor Parent has any knowledge of any facts or circumstances that hinder
or
adversely affect, or in the future would reasonably be expected to hinder or
adversely affect, the Assets or the conduct, business, operations, properties,
condition (financial or otherwise) of the Business. Furthermore, since August
31, 2006 there has not been any material adverse change in, or any event,
condition or contingency or any damage, destruction or loss (whether or not
covered by insurance) that would reasonably be expected to result
in
any material adverse change in, the Assets or the conduct, business, operations,
properties, condition (financial or otherwise) of the Business. Neither Seller
nor Parent makes any representation or warranty as to facts and circumstances
as
to economic or industry conditions having general effect.
5.15 Compliance
With Law.
Each of
Seller and Parent is and has been in compliance with all laws, statutes, rules,
ordinances and regulations promulgated by any Governmental Body and all
Judgments applicable to the ownership or operation of the Assets or the conduct
of the Business. Neither Seller nor Parent has received any notice of any
alleged violation (whether past or present and whether remedied or not), nor
is
Seller nor Parent aware of any basis for any claim of any such violation, of
any
such law, statute, rule, ordinance, regulation or Judgment with respect to
the
Business.
5.16 Insurance.
Seller
has, with respect to the Business, maintained insurance protection against
all
liabilities, Claims and risks against which it is customary for corporations
engaged in the same or a similar business similarly situated to
insure.
5.17 Employee
Plans. Seller
maintains for the benefit of current or former employees of the Business only
those Employee Benefit Plans listed on Schedule
5.17
to the
Disclosure Memorandum. Seller is not now a contributing employer to any
"multi-employer plan" as described in Section 4001(a)(3) of ERISA with
respect to any employees of the Business. Seller has not been a contributing
employer to any "multi-employer" plan with respect to employees of the Business
in the past five years. Each and every pension plan (as defined in
Section 3(1) of ERISA) maintained by Seller for the benefit of the
employees of the Business has been issued a favorable determination letter
with
respect to its qualified status under Section 401(a) of the Code by the
U.S. Internal Revenue Service, or an application for such a determination letter
has been filed with the U.S. Internal Revenue Service within the requisite
time
period to allow Seller to make remedial amendments for such qualification
purposes. With respect to employees of the Business, Seller is in compliance
with the healthcare continuation coverage requirements of the Consolidated
Omnibus Budget Reconciliation Act of 1985, Section 4980B of the Code, and
proposed regulations issued by the U.S. Internal Revenue Service.
5.18 Brokerage.
Neither
Seller nor Parent has retained any broker or finder in connection with the
transactions contemplated by this Agreement.
5.19 Customers
and Suppliers.
To the
knowledge of each of Seller and Parent, no customer or supplier of Seller
relating to the Business is involved in, or affected by, any Claim, Judgment
or
circumstances that would reasonably be expected to materially and adversely
affect the Assets or the conduct, business, operations, properties, condition
(financial or otherwise) of the Business.
5.20 Assets
Complete.
The
Assets to be transferred to Buyer pursuant to this Agreement and the Transaction
Documents include, other than the Excluded Assets, all the assets and rights
used by Seller, and are sufficient to permit Buyer to conduct the services
of
the Business, and operate the Assets, in the same manner as heretofore and
currently conducted by Seller. The execution and delivery of the Transaction
Documents by the parties and the payment by Buyer to Seller of the Purchase
Price for the Assets set forth in Section 3.1 will result,
subject to
obtaining the consents and approvals set forth in Schedule
5.5
to the
Disclosure Memorandum, in Buyer's immediate acquisition of good, valid and
marketable title to the Assets, free and clear of any Encumbrance.
5.21 Full
Disclosure.
The
information furnished by Seller or Parent to Buyer in connection with this
Agreement (including, but not limited to the information in the Schedules to
the
Disclosure Memorandum) is not false or misleading in any material respect.
In
connection with such information and with this Agreement and the transactions
contemplated hereby, Seller has not made any untrue statement of a material
fact
or omitted to state a material fact necessary in order to make the statements
made or information delivered, in the light of the circumstances under which
they were made, not misleading.
6. Representations
and Warranties Regarding Parent
To
induce
Buyer and DMI to enter into and perform this Agreement, Parent represents and
warrants to Buyer and DMI (which representations and warranties shall survive
the Closing as provided in Section 13) all as follows in this
Section 6:
6.1 Organization,
Good Standing, Power, etc.
Parent
is a corporation duly organized, validly existing and in good standing under
the
laws of the State of Delaware. Parent has all requisite power and authority
to
own or lease and operate its assets and to carry on its business as it is now
conducted.
6.2 Transaction
Documents.
Parent
has the requisite power and authority to execute and deliver this Agreement
and
the Transaction Documents to which it is a party and perform its obligations
hereunder and thereunder. The execution and delivery by Parent of this Agreement
and the Transaction Documents to which it is a party, the performance by Parent
of its obligations hereunder and thereunder and the consummation by Parent
of
the transactions contemplated hereby and thereby have been duly authorized
by
all necessary action. This Agreement constitutes a valid and binding obligation
of Parent, enforceable against Parent in accordance with its terms, and the
Transaction Documents to which Parent is a party, when executed and delivered
by
Parent, will constitute valid and binding obligations of Parent, enforceable
against Parent in accordance with their terms.
6.3 No
Conflict.
Neither
the execution and delivery by Parent of this Agreement or the Transaction
Documents to which Parent is a party, the performance by Parent of its
obligations hereunder or thereunder, nor the consummation of the transactions
contemplated hereby or thereby will (a) violate, conflict with or result in
any breach of any provision of Parent's charter documents, if applicable; or
(b) violate, conflict with, result in any breach of, or constitute a
default (or an event that, with notice or lapse of time or both, would
constitute a default) under any Contract or Judgment to which Parent is party
or
by which it is bound; or (c) violate any applicable law, statute, rule,
ordinance or regulation of any Governmental Body.
6.4 Claims
and Legal Proceedings.
There
are no Claims pending or, to the knowledge of Parent, threatened against Parent,
before or by any Governmental Body or nongovernmental department, commission,
board, bureau, agency or instrumentality, or any other Person, and there are
no
outstanding or unsatisfied Judgments or stipulations to which Parent
is
a party that involve the transactions contemplated herein or that could alone
or
in the aggregate reasonably be expected to have a material adverse effect on
Parent.
6.5 Brokerage.
Parent
has not retained any broker or finder in connection with the transactions
contemplated by this Agreement.
7. Representations
and Warranties Regarding Buyer
and DMI
To
induce
Seller and Parent to enter into this Agreement, Buyer and DMI jointly and
severally represent and warrant to Seller and Parent (which representations
and
warranties shall survive the Closing as provided in Section 13) all as
follows in this Section 7:
7.1 Organization,
Good Standing, Power,
etc.
Each of
Buyer and DMI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each of Buyer and DMI has
all
requisite power and authority to own or lease and operate its assets and to
carry on its business as it is now conducted.
7.2 Transaction
Documents.
(a) Buyer
has
full corporate power and authority to execute and deliver this Agreement and
the
Transaction Documents to which it is a party and perform its obligations
hereunder and thereunder. The execution and delivery by Buyer of this Agreement
and the Transaction Documents to which it is a party, the performance by Buyer
of its obligations hereunder and thereunder and the consummation by Buyer of
the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action. This Agreement constitutes a valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
and
the Transaction Documents to which Buyer is a party, when executed and delivered
by Buyer, will constitute valid and binding obligations of Buyer, enforceable
against Buyer in accordance with their terms.
(b) DMI
has
full corporate power and authority to execute and deliver this Agreement and
the
Transaction Documents to which it is a party and perform its obligations
hereunder and thereunder. The execution and delivery by DMI of this Agreement
and the Transaction Documents to which it is a party, the performance by DMI
of
its obligations hereunder and thereunder and the consummation by DMI of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action. This Agreement constitutes a valid and binding
obligation of DMI, enforceable against DMI in accordance with its terms, and
the
Transaction Documents to which DMI is a party, when executed and delivered
by
DMI, will constitute valid and binding obligations of DMI, enforceable against
DMI in accordance with their terms.
7.3 No
Conflict.
(a) Neither
the execution and delivery by Buyer of this Agreement or the Transaction
Documents to which Buyer is a party, the performance by Buyer of its obligations
hereunder or thereunder, nor the consummation of the transactions contemplated
hereby or thereby will (a) violate, conflict with or result in any breach
of any provision of Buyer's certificate of incorporation or by-laws; or
(b) violate, conflict with, result in any breach of, or constitute a
default (or an event that, with notice or lapse of time or both, would
constitute a default) under any Contract or Judgment to which Buyer is party
or
by which it is bound; or (c) violate any applicable law, statute, rule,
ordinance or regulation of any Governmental Body.
(b) Neither
the execution and delivery by DMI of this Agreement or the Transaction Documents
to which DMI is a party, the performance by DMI of its obligations hereunder
or
thereunder, nor the consummation of the transactions contemplated hereby or
thereby will (a) violate, conflict with or result in any breach of any
provision of DMI's certificate of incorporation or by-laws; or (b) violate,
conflict with, result in any breach of, or constitute a default (or an event
that, with notice or lapse of time or both, would constitute a default) under
any Contract or Judgment to which DMI is party or by which it is bound; or
(c) violate any applicable law, statute, rule, ordinance or regulation of
any Governmental Body.
7.4 Claims
and Legal Proceedings.
There
are no Claims pending or, to the knowledge of Buyer or DMI, threatened against
Buyer or DMI, before or by any Governmental Body or nongovernmental department,
commission, board, bureau, agency or instrumentality, or any other Person,
and
there are no outstanding or unsatisfied Judgments or stipulations to which
Buyer
or DMI is a party that involve the transactions contemplated herein or that
could alone or in the aggregate reasonably be expected to have a material
adverse effect on the Buyer or DMI.
7.5 Brokerage.
Neither
Buyer nor DMI has retained any broker or finder in connection with the
transactions contemplated by this Agreement.
8.
Certain
Covenants
8.1 Access/Confidentiality.
(a) The
Seller acknowledges that Seller has knowledge of certain Confidential
Information and that such Confidential Information is confidential and
proprietary to the Business and constitutes valuable trade secrets of the
Business, which affect, among other things, the successful conduct, furtherance
and protection of the Business and related goodwill. Seller acknowledges
that the unauthorized use or disclosure of such Confidential Information is
likely to be highly prejudicial to the interests of Buyer and its Affiliates
or
their respective customers, advertisers, clients and patrons, an invasion of
privacy, or an improper disclosure of trade secrets. Seller agrees that a
substantial portion of the Consideration is being paid for such Confidential
Information and that it represents a substantial investment having great
economic and commercial value to Buyer and its Affiliates, and constitutes
a
substantial part of the value to Buyer and its Affiliates of the Business and
the Assets. Seller further acknowledges that Buyer and its Affiliates
would be irreparably damaged if any of the Confidential Information was
disclosed to, or used or exploited on behalf of, any Person other than Buyer
or
any of its Affiliates. Accordingly, except as required by any regulation
or legal process, Seller covenants and agrees that it shall not, directly or
indirectly, and shall use its best efforts to ensure that any agents,
representatives, Affiliates and any other persons acting on Seller’s behalf
(Seller and such agents, representatives, Affiliates and other persons with
respect to Seller being collectively referred to as the “Restricted
Persons”)
do
not, without the prior written consent of Buyer, disclose, use, exploit, furnish
or make accessible to anyone or any other entity, any such Confidential
Information, for a period of
three
years from the date of this Agreement, except that the Seller may use or exploit
a particular item of Confidential Information if and to the extent (but only
if
and to the extent) that such item is:
| i. |
or
becomes generally known on a non-confidential basis to persons in
the
industry, through no wrongful act of any Restricted Person, in which
Seller is engaged and is part of the public domain;
|
| ii. |
or
was within a Restricted Person’s possession prior to its being furnished
to such Restricted Person by or on behalf of Seller or any other
Restricted Person , provided
that the
source of such information was not known by such Restricted Person
to be
bound by a confidentiality agreement with or other contractual, legal
or
fiduciary obligation of confidentiality to Buyer, Seller or any other
Person with respect to such information; or
|
| iii. |
or
becomes available to a Restricted Person on a non-confidential basis
from
a source other than Seller or any other Restricted Person, provided
that the
source of such information was not known by such Restricted Person
to be
bound by a confidentiality agreement with or other contractual, legal
or
fiduciary obligation of confidentiality to Buyer, Seller or any other
Person with respect to such information.
|
(b) Prior
to
the Closing Date, Seller and Parent shall (1) give Buyer and DMI and their
accounting, legal, business, intellectual property and other authorized
representatives and advisors full access, during normal business hours, to
all
employees, directors, offices and other facilities and properties of Seller
and
Parent relating to the Assets and the Business, (2) furnish Buyer and DMI
and their authorized representatives and advisors with all documents and
information relating to the Assets and the Business as may be reasonably
requested by Buyer or DMI and their authorized representatives and advisors,
and
(3) otherwise fully
cooperate with Buyer and DMI and their authorized representatives and advisors
in their investigation and examination of the Assets and the affairs of the
Business. (c) Buyer agrees that unless and until Closing it will not, and will
cause its authorized agents and representatives not to, use any Confidential
Information obtained in connection with the transactions contemplated hereby
for
any purpose unrelated to the consummation of the transactions contemplated
by
this Agreement. Subject to the requirements of law, each party to this Agreement
will keep confidential, and will cause its authorized agents and representatives
to keep confidential, all such Confidential Information except as otherwise
consented to by the other parties in writing; provided, however that Buyer
shall
not be precluded from making any disclosure which it deems required by law
in
connection with its acquisition of the Seller’s Assets and Business. In the
event that Buyer is required to disclose any Confidential Information pursuant
to the immediately preceding sentence, Buyer shall give prior notice (to the
extent practical under the circumstances) of such disclosure to the to the
Seller and Parent. Under any termination of this Agreement, both parties will
collect and deliver to the other party, or destroy and confirm destruction,
all
documents obtained pursuant to or in connection with the diligence of
this transaction
by it or any of its authorized agents or representatives then in their
possession and any copies thereof.
8.2 Assignment
of Contracts.
(a) Subject
to the terms and conditions of this Agreement, as of the Closing Date, Seller
shall assign to Buyer all of the right, title and interest of Seller in and
under all Contracts that constitute any of the Assets, including but not limited
to those listed in Schedule
5.10
to the
Disclosure Memorandum, and Buyer shall assume the liabilities and obligations
of
Seller arising under such Contracts after the Closing Date; provided, however,
that Buyer shall not succeed to or assume, and Seller shall be responsible
for,
any liability or obligation arising out of any or all of the following:
(1) any breach by Seller of any such Contract or any failure by Seller to
discharge or perform any liability or obligation that is required to be
performed or discharged on or prior to the Closing Date under any such Contract;
(2) any Claim based on failure to perform services, defective services,
defective products, breach of product or service warranties or other claims
relating to services provided or products manufactured, shipped or sold by
Seller and arising on or prior to the Closing Date; (3) any Claim resulting
from any act or omission of Seller on or prior to the Closing Date; and
(4) any Claim relating to any Contract that is required under
Section 5.10 to be listed in Schedule 5.10
to the
Disclosure Memorandum but is not so listed; and (5) any of the Excluded
Assets.
(b) If
any
Contract constituting any of the Assets, including but not limited to those
listed in Schedule
5.10
to the
Disclosure Memorandum, is not assignable by Seller to Buyer without the consent
of a third party, or will not continue in effect after the Closing and such
assignment without the consent of a third party, then each of Seller and Parent
shall use commercially reasonable efforts to provide Buyer with such third-party
consent prior to the Closing Date to the satisfaction of Buyer (but if Seller's
assignment or attempted assignment of any such Contract prior to obtaining
the
third-party consent would constitute a breach of such Contract, then such
assignment or attempted assignment shall not be or be deemed effective unless
and until the third-party consent is obtained). Buyer shall render such
cooperation as is reasonably required to assist Seller and Parent in obtaining
such third-party consent.
8.3 Conduct
of Business Prior to Closing.
Except
for actions taken with the prior written consent of Buyer, from the date of
this
Agreement until the Closing Date, Seller shall conduct the Business in the
ordinary course consistent with Seller's past practice, and each of Seller
and
Parent shall use commercially reasonable efforts to (a) maintain the Assets
and the Business intact; (b) to market, promote, sell and distribute the
services and products of the Business consistently with Seller's past practice,
and to preserve the goodwill of the Business and present relationships with
the
customers and suppliers of the Business and others with whom the Business has
business relations; (c) to meet the contractual and other obligations of
the Business including making payments and filings required to continue the
Intellectual Property and continue to prosecute and maintain all pending
applications therefor in all jurisdictions in which such applications are
pending; (d) not take any action, or omit to take any action, that would
result in any of Seller's or Parent's representations and warranties made herein
being inaccurate at the time of such action or omission as if made at and as
of
such time; and (e) not solicit, approach or furnish information to any
prospective buyer, or negotiate with any third party concerning the sale or
transfer of the Assets, the Business or any part thereof, whether any of such
actions are taken directly or indirectly, through a representative or
otherwise.
8.4 Employee
Matters.
Except
as provided below in this Section 8.4, Seller shall terminate the
employment of all the Relevant Personnel effective as of the Closing Date.
Prior
to the Closing, Buyer shall provide to each of the Relevant Personnel an offer
letter in substantially the form set forth in Exhibit 8.4A, 8.4B, 8.4C and
8.4D,
and Seller shall provide a notice to each of the Relevant Personnel as of the
Closing Date, advising such Relevant Personnel of the sale of the business,
their termination as Seller's employees and Buyer's offer of employment.
8.5 Covenants
to Satisfy Conditions.
Each
party shall proceed with all reasonable diligence and use commercially
reasonable efforts to satisfy or cause to be satisfied all of the conditions
precedent to the other party's obligation to purchase or sell the Assets that
are set forth in Section 9 or 10, as the case may be.
9.
Conditions
Precedent to Obligations of Buyer
The
obligation of Buyer to purchase the Assets at the Closing shall be subject
to
the satisfaction at or prior to the Closing of each of the following conditions,
any one or more of which may be waived by Buyer:
9.1 No
Injunction or Litigation.
As of
the Closing Date, there shall not be any Claim or Judgment of any nature or
type
threatened, pending or made by or before any Governmental Body that questions
or
challenges the lawfulness of the transactions contemplated by this Agreement
or
the Transaction Documents under any law or regulation or seeks to delay,
restrain or prevent such transactions.
9.2 Representations,
Warranties and Covenants.
(a) The
representations and warranties of Seller and Parent made in this Agreement,
the
Transaction Documents and any certificate furnished pursuant hereto or thereto
shall be true, complete and correct on and as of the Closing Date with the
same
force and effect as though made on and as of the Closing Date;
(b) Each
of
the Seller and Parent shall have performed and complied with the covenants
and
agreements required by this Agreement to be performed and complied with by
it on
or prior to the Closing Date; and
(c) Seller
shall have delivered to Buyer a certificate dated the Closing Date certifying
that the conditions specified in Sections 9.2(a) and 9.2(b) have been satisfied,
signed by a duly authorized executive officer of Seller.
9.3 No
Material Adverse Effect.
From the
date of this Agreement to the Closing Date, there shall not have been any
material adverse effect with respect to Seller or Parent, and neither Seller
nor
Parent shall have any knowledge of any such effect which is threatened; and
Seller shall have delivered to Buyer a certificate dated the Closing Date to
the
foregoing effects signed by a duly authorized executive officer of
Seller.
9.4 Consents
and Approvals.
All
consents, approvals or authorizations of, or declarations, filings or
registrations with, all Governmental Bodies or other Persons required for the
consummation of the transactions contemplated by this Agreement and the
Transaction Documents shall have been obtained or made on terms satisfactory
to
Buyer, shall have been provided to Buyer and shall be in full force and effect.
Without
limiting the generality of the foregoing, all
consents of any third parties required for the assignment to Buyer of any
Contracts listed in Schedule 5.10
to the
Disclosure Memorandum and the continuation in effect of such Contracts following
the Closing and such assignment shall
be
in full force and effect.
9.5 Taxes.
All
Taxes and other assessments applicable to the Assets that are due and owing
as
of the Closing Date shall have been paid, except for Taxes and assessments
to be
apportioned between the parties as of the Closing pursuant to Section 12.3
or paid pursuant to Section 12.1.
9.6 Delivery
of Documents.
Seller
shall deliver the following documents, agreements and supporting papers to
Buyer
at the Closing, and the delivery of each shall be a condition to Buyer's
performance of its obligations to be performed at the Closing:
(a) an
executed Xxxx of Sale;
(b) a
counterpart of the Contract Assignment executed by Seller; and
(c) executed
counterparts of one or more Assignments of Intellectual Property Rights in
substantially the form of Exhibit
9.6(c)
hereto
covering the Intellectual Property described in Schedule 2.1.2
to the
Disclosure Memorandum, in due form for recordation with the appropriate
Governmental Body.
9.7 Employment
Agreements.
Buyer
shall have delivered an offer letter (set forth in Exhibit 8.4A, 8.4B, 8.4C
and
8.4D) and confidentiality agreement to each of Xxxx Xxxxx, Xxxxxxxx Xxxxxx,
Xxxx
Xxxxxxx on terms satisfactory to Buyer, and Xxxxx Xxxxx shall have accepted
Buyer's offer of employment for a position beginning not later than
October 23, 2006.
9.9 Warrant
for Parent Stock.
Parent
shall have entered into and delivered to Buyer a warrant to purchase up to
5,000,000 shares of Parent's common stock substantially in the form of
Exhibit 9.9
hereto.
9.10 Content
Agreement.
Parent
shall have delivered to Buyer an executed Insertion Order 1A and Insertion
Order
2 , collectively (the “Content Purchase Agreements”) providing for the Buyer's
purchase of $80,000 and $1,800,000, respectively, of content from Parent upon
the terms and conditions specified therein, substantially in the form
of Exhibit 9.10A
and
9.10B,
respectively, hereto.
9.11 Legal
Opinion.
Parent
shall have delivered to Buyer and DMI the opinion of Parent's counsel,
McGuireWoods LLP, dated the Closing Date, substantially in the form
of
Exhibit 9.11
hereto,
including but not limited to compliance with Delaware General Corporation Law
Section 271.
9.12 Diligence.
Buyer
shall have completed its due diligence investigation of Seller, its Affiliates,
the Assets and the Business and shall be satisfied in its sole discretion with
the results thereof.
9.13 Satisfaction
of Conditions.
All
agreements and other documents required to be delivered by Seller and Parent
hereunder on or prior to the Closing Date shall be satisfactory in the
reasonable judgment of DMI, Buyer and its counsel. Each of Buyer and DMI shall
have received such other agreements, documents and information as it may
reasonably request in order to establish satisfaction of the conditions set
forth in this Section 9.
10.
Conditions
Precedent to Obligations of Seller
The
obligation of Seller to sell the Assets to Buyer at the Closing shall be subject
to the satisfaction at or prior to the Closing of each of the following
conditions, any one or more of which may be waived by Seller:
10.1 No
Injunction or Litigation.
As of
the Closing Date, there shall not be any Claim or Judgment of any nature or
type
threatened, pending or made by or before any Governmental Body that questions
or
challenges the lawfulness of the transactions contemplated by this Agreement
or
the Transaction Documents under any law or regulation or seeks to delay,
restrain or prevent such transactions.
10.2 Representations,
Warranties and Covenants.
(a) The
representations and warranties of Buyer and DMI made in this Agreement or in
the
Transaction Documents or any certificate furnished pursuant hereto or thereto
shall be true, complete and correct on and as of the Closing Date with the
same
force and effect as though made on and as of the Closing Date;
(b) Each
of
Buyer and DMI shall have performed and complied with the covenants and
agreements required by this Agreement to be performed and complied with by
it on
or prior to the Closing Date; and
(c) Buyer
shall have delivered to Seller a certificate dated the Closing Date to the
foregoing effect signed by a duly authorized executive officer of
Buyer.
10.3 Transfer
Documents.
Buyer
shall have executed and delivered to Seller the Assumption Agreement relating
to
Contracts, substantially in the form of Exhibit 2.6(c)
hereto.
10.4 Content
Agreements.
Buyer
shall have delivered to Parent an executed Insertion Order 1A and Insertion
Order 2 providing for the Buyer's purchase of $80,000 and $1,800,000,
respectively, of content from Parent upon the terms and conditions specified
therein, substantially in the form of Exhibit 9.10A
and
9.10B,
respectively, hereto.
10.5 Warrant
for DMI Stock.
DMI
shall have entered into and delivered to Parent a warrant to purchase up to
125,000 shares of DMI's Series C Preferred stock substantially in the form
of
Exhibit 10.5
hereto.
10.6 Satisfaction
of Conditions.
All
agreements and other documents required to be delivered by Buyer and DMI
hereunder on or prior to the Closing Date shall be satisfactory in the
reasonable judgment of Parent, Seller and its counsel. Each of Seller and Parent
shall have received such other agreements, documents and information as it
may
reasonably request in order to establish satisfaction of the conditions set
forth in this Section 10.
11. Certain
Post-Closing Covenants
11.1 Further
Assurances.
After
the Closing Date, Seller and Parent shall from time to time at Buyer's or DMI's
request execute and deliver, or cause to be executed and delivered, such further
instruments of conveyance, assignment and transfer or other documents, and
perform such further acts and obtain such further consents, approvals and
authorizations, as Buyer or DMI may reasonably require in order to fully effect
the conveyance and transfer to Buyer of, or perfect Buyer's right, title and
interest in, any of the Assets, to assist Buyer in obtaining possession of
any
of the Assets, or to otherwise comply with the provisions of this Agreement
and
consummate the transactions contemplated by this Agreement and the Transaction
Documents.
11.2 Books
and Records.
On the
Closing Date, Seller shall deliver to Buyer (a) all of the technical
information and data and other intellectual property rights to be transferred
hereunder (including all of the assets referenced in Section 2.1.2) which
have been reduced to writing, (b) all of the original Contracts referenced
in Section 2.1.3, (c) all of the books and records referenced in
Section 2.1.4, and (d) all of Seller's information and materials
referenced in Section 2.1.5.
11.3 Source
Code. On
the
Closing Date, Seller shall deliver to Buyer, in electronic form to a computer(s)
or server(s) designated by Buyer, by remote telecommunication, all Source Code,
object code and executable code for all custom software included in the Assets,
and separately all related documentation, including in each case, all masters
and copies thereof.
11.4 Domain
Names Transfers.
On the
Closing Date, Seller
shall change (i) all WHOIS records for each of the domain names included in
the
Assets and set forth on Schedule
2.1.2
to
reflect the WHOIS information requested by Buyer and (ii) the name servers
of
the Purchased Domain Names to those name servers specified by Buyer.
11.5 Orders.
Seller
and Parent shall promptly forward to Buyer all orders for products and services
related to the Business, and other inquiries from customers or prospective
customers in regard to the supply of products or services, that are received
by
Seller or Parent within two years after the Closing Date.
11.6 Post-Closing
Cooperation.
After
the Closing Date, each party shall provide the other party with such reasonable
assistance (without charge) as may be requested by the other party in connection
with any Claim or audit of any kind or nature whatsoever or the preparation
of
any response, demand, inquiry, filing, disclosure or the like (including, but
not limited to, any tax return or form) relating to the Assets or the Business.
Such assistance shall include, but not be
limited to, permitting the party requesting assistance to have reasonable access
to the employees, books and records of the other party.
11.7 Election
of a Director.
Upon
Closing, Parent will Offer DMI one (1) seat on the Parent’s Board of Directors.
DMI has the right to select a member of its current management team to fill
the
seat.
11.8 Transition
Period.
The
parties contemplate that it may be necessary to implement the relocation of
certain equipment, obtain consents to assignment of contracts from third
parties, deliver documents and various books and records, allow for the Relevant
Personnel and other employees of Seller to complete certain assignments that
are
under their responsibility and otherwise accommodate the transition of the
Assets and Business of Seller to Buyer without disrupting the business of Parent
over a brief but reasonable time after Closing. Each of the parties covenants
and agrees to cooperate with the other parties and use all commercially
reasonable efforts to accommodate a smooth and orderly transition after
Closing.
12.
Taxes
and Costs; Apportionments
12.1 Transfer
Taxes.
Buyer
shall be responsible for the payment of all transfer, sales and use and
documentary taxes, filing and recordation fees and similar charges relating
to
the sale or transfer of the Assets hereunder.
12.2 Transaction
Costs.
Each
party shall be responsible for its own costs and expenses incurred in connection
with the preparation, negotiation and delivery of this Agreement and the
Transaction Documents, including but not limited to attorneys' and accountants'
fees and expenses and brokerage fees.
12.3 Apportionments.
Any and
all real property taxes, personal property taxes, assessments, lease rentals,
fuel, and other charges applicable to the Assets will be pro-rated to the
Closing Date, and such taxes and other charges shall be allocated between the
parties by adjustment at the Closing, or as soon thereafter as the parties
may
agree. All such taxes shall be allocated on the basis of the fiscal year of
the
tax jurisdiction in question.
13.
Survival
and Indemnification
13.1 Survival.
All
representations and warranties of Seller, Parent, Buyer and DMI contained in
this Agreement or in the Transaction Documents or in any certificate delivered
pursuant hereto or thereto shall survive the Closing for a period of 12 months
after the Closing, and shall not be deemed waived or otherwise affected by
any
investigation made or any knowledge acquired with respect thereto; provided,
however, that the representations and warranties in Section 5.7 (Taxes) and
Section 5.17 (Employee Plans) shall survive until the expiration of the
relevant statute of limitations period plus 30 days. The covenants and
agreements of Seller, Parent, Buyer and DMI contained in this Agreement or
in
the Transaction Documents shall survive the Closing and shall continue until
all
obligations with respect thereto shall have been performed or satisfied or
shall
have been terminated in accordance with their terms.
13.2 Indemnification
by Seller
and Parent.
From and
after the Closing Date, Seller and Parent shall on a joint and several basis
indemnify and hold Buyer, DMI and their respective Affiliates harmless from
and
against, and shall reimburse Buyer, DMI and their respective Affiliates for,
any
and all Losses arising out of or in connection with:
(a) any
inaccuracy in any representation or warranty made by Seller or Parent in this
Agreement or in the Transaction Documents or in any certificate delivered
pursuant hereto or thereto;
(b) any
failure by Seller or Parent to perform or comply with any covenant or agreement
in this Agreement or in the Transaction Documents;
(c) any
claim
by any Person for brokerage or finder's fees or commissions; or similar payments
based upon any agreement or understanding alleged to have been made by such
Person directly or indirectly with Seller or Parent or any of their respective
officers, directors or employees in connection with any of the transactions
contemplated by this Agreement or the Transaction Documents;
(d) the
conduct of the Business, the ownership or operation of the Assets or the sale
of
products or services of the Business on or prior to the Closing Date, including,
but not limited to, any Losses arising out of or in connection with any Claims
and Judgments relating to the Business or the Assets which are pending or
entered on or prior to the Closing Date or as to which Seller or Parent has
received notice on or prior to the Closing Date;
(e) any
failure to comply with any applicable bulk sales laws in connection with the
transactions contemplated by this Agreement or the Transaction Documents;
or
(f) any
Claim
made against Buyer to the extent such Claim relates to any business or assets
of
Seller, Parent or their respective Affiliates not acquired by Buyer hereunder,
or any obligations or liabilities of Seller, Parent or their respective
Affiliates not assumed by Buyer hereunder.
13.3 Indemnification
by Buyer
and DMI.
From and
after the Closing Date, Buyer and DMI shall on a joint and several basis
indemnify and hold harmless Seller, Parent and their respective Affiliates
from
and against, and shall reimburse Seller, Parent and their respective Affiliates
for, any and all Losses arising out of or in connection with:
(a) any
inaccuracy in any representation or warranty made by Buyer or DMI in this
Agreement or in the Transaction Documents or in any certificate delivered
pursuant hereto or thereto;
(b) any
failure by Buyer or DMI to perform or comply with any covenant or agreement
in
this Agreement or the Transaction Documents;
(c) any
Claim
by any Person for brokerage or finders' fees or commissions or similar payments
based upon any agreement or understanding alleged to have been made by
such
Person
directly or indirectly with Buyer or DMI or any of their respective officers,
directors or employees in connection with any of the transactions contemplated
by the Agreement or the Transaction Documents; or
(d) the
conduct of the Business, the ownership or operation of the Assets or the sale
of
products or services of the Business after the Closing Date.
13.4 Time
Limitations;
Cap.
(a) With
respect to Claims for indemnification made under Section 13.2(a) or
13.3(a), as the case may be (the "Misrepresentation
Claims"),
no
indemnified party (as defined in Section 13.5 below) shall be entitled to
assert any right of indemnification with respect to any Misrepresentation Claim
that was not the subject of a written indemnification notice to the indemnifying
party (as defined in Section 13.5 below) on or prior to the end of the
applicable survival period set forth in Section 13.1 above; provided,
however, that if the indemnified party or its Affiliate(s) has given written
notice of any Misrepresentation Claim to the indemnifying party on or prior
to
the end of such survival period, then the indemnified party shall continue
to
have the right to be indemnified with respect to such pending Misrepresentation
Claim, notwithstanding the expiration of such survival period. The liability
of
any party to the other party and its Affiliates for indemnification Claims
under
Section 13.2 or 13.3, as the case may be, other than Misrepresentation
Claims, shall not be subject to any timing limitations set forth in this
Section 13.4.
(b) With
respect to Misrepresentation Claims, no indemnifying party shall be obligated
to
indemnify indemnified parties hereunder in an amount exceeding $750,000 in
the
aggregate for all such Claims (the "Cap").
13.5 Procedure.
(a) Any
party
hereto or any of its Affiliates seeking indemnification hereunder (in this
context, the "indemnified
party")
shall
notify the other party (in this context, the "indemnifying
party")
in
writing reasonably promptly after the assertion against the indemnified party
of
any Claim by a third party (a "Third-Party
Claim")
in
respect of which the indemnified party intends to base a Claim for
indemnification hereunder, but the failure or delay so to notify the
indemnifying party shall not relieve it of any obligation or liability that
it
may have to the indemnified party except to the extent that the indemnifying
party demonstrates that its ability to defend or resolve such Third Party Claim
is materially and adversely affected thereby.
(b) (1) Subject
to the provisions of Sections 13.5(d) and 13.5(g) below, the indemnifying
party shall have the right, upon written notice given to the indemnified party
within 30 days after receipt of the notice from the indemnified party of any
Third Party Claim, to assume the defense or handling of such Third Party Claim,
at the indemnifying party's sole expense, in which case the provisions of
Section 13.5(b)(2) below shall govern.
(2) The
indemnifying party shall select counsel reasonably acceptable to the indemnified
party in connection with conducting the defense or handling of such Third Party
Claim, and the indemnifying party shall defend or handle the same in
consultation with the indemnified party, shall keep the indemnified party timely
apprised of the status of such Third Party Claim,
and
shall not, without the prior written consent of the indemnified party, directly
or indirectly assume any position or take any action that would impose any
obligation of any kind on
or
restrict the actions of the indemnified party.
The
indemnifying party shall not, without the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld, agree
to a
settlement of any Third Party Claim that
could directly or indirectly lead to liability or create any financial or other
obligation on the part of the indemnified party for which the indemnified party
is not entitled to indemnification hereunder.
The
indemnified party shall cooperate with the indemnifying party and shall be
entitled to participate in the defense or handling of such Third Party Claim
with its own counsel and at its own expense. Notwithstanding the foregoing,
in
the event the indemnifying party fails to conduct the defense or handling of
any
Third Party Claim in good faith after having assumed such defense or handling,
then the provisions of Section 13(c)(2) below shall govern.
(c) (1) If
the
indemnifying party does not give written notice to the indemnified party, within
30 days after receipt of the notice from the indemnified party of any Third
Party Claim, of the indemnifying party's election to assume the defense or
handling of such Third Party Claim, the provisions of Section 13(c)(2)
below shall govern.
(2) The
indemnified party may, at the indemnifying party's expense, select counsel
in
connection with conducting the defense or handling of such Third Party Claim
and
defend or handle such Third Party Claim in such manner as it may deem
appropriate, provided, however, that the indemnified party shall keep the
indemnifying party timely apprised of the status of such Third Party Claim
and
shall not settle such Third Party Claim without the prior written consent of
the
indemnifying party, which consent shall not be unreasonably withheld. If the
indemnified party defends or handles such Third Party Claim, the indemnifying
party shall cooperate with the indemnified party and shall be entitled to
participate in the defense or handling of such Third Party Claim with its own
counsel and at its own expense.
(d) If
the
indemnified party intends to seek indemnification hereunder, other than for
a
Third Party Claim, then it shall notify the indemnifying party in writing within
the applicable period for survival of such claim as provided in
Section 13.1.
(e) The
indemnification obligations of Seller and Parent under this Section 13
shall be satisfied by payment to Buyer of the indemnification amount from the
Escrow. The aggregate value of the claims paid by means of the payments to
Buyer
pursuant to this Section 13 shall be deemed to reduce the total Aggregate
Purchase Price otherwise payable pursuant to Section 3.1.
13.6 Election
of Remedies.
In the
event that any party or any of its Affiliates alleges that it is entitled to
indemnification hereunder, and that its Claim is covered under more than one
provision of this Section 13, such party or Affiliate shall be entitled to
elect the provision or provisions under which it may bring a claim for
indemnification.
13.7 Specific
Performance.
The
parties to this Agreement acknowledge that it may be impossible to measure
in
money the damages that a party would incur if any covenant or agreement
contained in this Agreement were not performed in accordance with its terms
and
agree that each of the parties hereto shall be entitled to obtain an injunction
to require specific performance of, and prevent any violation of the terms
of,
this Agreement, in addition to any other remedy available hereunder.
13.8 Exclusive
Remedies.
Except
with respect to claims based on fraud, the indemnification and specific
performance remedies set forth under this Section 13 shall constitute the
sole and exclusive remedies of the parties with respect to any matters arising
under or relating to this Agreement.
14. Termination
14.1 Termination.
This
Agreement may be terminated before the Closing:
(a) by
mutual
consent of Seller, Parent, Buyer and DMI;
(b) by
Seller
and Parent, on the one hand, or Buyer and DMI, on the other hand:
(1) in
the
event of a breach by the other party of any representation, warranty, covenant
or other agreement contained in this Agreement or any other Transaction Document
which (A) would give rise to the failure of a condition set forth in
Article 9 or Article 10, as applicable, and (B) cannot be or has
not been cured within 20 days (the "Cure
Period")
following receipt by the breaching party of written notice of such
breach;
(2) if
a
court of competent jurisdiction or other Governmental Body shall have issued
an
order, decree, or ruling or taken any other action (which order, decree or
ruling the parties hereto shall use commercially reasonable efforts to lift),
in
each case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement or any other Transaction Document,
and such order, decree, ruling or other action shall have become final and
non-appealable;
(3) if
the
Closing shall not have occurred by the 30th day following the date of this
Agreement; provided, however, that the right to terminate this Agreement under
this clause (3) shall not be available to any party whose breach of this
Agreement has been the cause of, or resulted in, the failure of the Closing
to
occur on or before such date.
The
right
of any party hereto to terminate this Agreement pursuant to this Article 14
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any party hereto, any Person controlling
any such party or any of their respective officers, directors, employees,
accountants, consultants, legal counsel, agents or other representatives whether
prior to or after the execution of this Agreement. Notwithstanding anything
in
the foregoing to the contrary, no party that is in material breach of this
Agreement shall be entitled to terminate this Agreement except with the written
consent of the other party.
14.2 Effect
of Termination.
In the
event of the termination of this Agreement pursuant to Section 14.1 above,
(a) each party shall return or destroy all documents containing
confidential information of the other party (and, upon request, certify as
to
the destruction thereof), and (b) no party hereto shall have any liability
or further obligation to the other party hereunder, except for liabilities
or obligations relating to any breach by any party of any representation,
warranty, covenant or agreement set forth herein. Notwithstanding the foregoing,
in
the
event of a termination of this Agreement by Seller, for reasons other than
a
breach by Buyer, (x) Seller shall reimburse
Buyer for its out-of-pocket expenses incurred with relating to the transaction,
subject to a cap of $25,000 and (y) Seller shall provide Buyer with up to
$70,000 in Content. For purposes of this Section 14.2, Content means new
articles, created in categories of DMI’s choosing, and subject to conformance
with DMI writers’ guidelines and formats and approval by DMI’s editors pursuant
the procedures set forth in the Insertion Order 2 Writer’s guidelines attached
as Exhibit 10.4B.
Seller
shall be responsible for its own expenses and those of its advisors, and no
party hereto, and any of its Affiliates for any expenses relating to the
transactions contemplated by this Agreement or any other Transaction
Document.
15. Miscellaneous
15.1 Noncompetition
and Nonsolicitation Obligations of Seller and Parent Following the
Closing.
(a)
Seller and Parent each acknowledge
that such Person is familiar with the trade secrets of the Seller and with
other
confidential information concerning the Seller, including all
(1) inventions, technology and research and development of the Seller,
(2) customers and clients and customer and client lists of the Seller,
(3) products (including products under development) and services of the
Seller and related costs and pricing structures and manufacturing and service
delivery techniques, (4) accounting and business methods and practices of
the Seller and (5) similar and related confidential information and trade
secrets of the Seller. Parent further acknowledges that its services have been
of special, unique and extraordinary value to the Seller, that Parent has been
substantially responsible for the growth and development of the Seller and
the
creation and preservation of the Seller's goodwill. Seller and Parent
acknowledge and agree that the Buyer would be irreparably damaged if Seller
or
Parent were to compete with the business of the Buyer, and that such competition
by Seller or Parent would result in a significant loss of goodwill by the Buyer.
Each of Seller and Parent acknowledges and agrees that the covenants and
agreements set forth in this Section 15.1 were a material inducement to the
Buyer to enter into this Agreement and to perform its obligations hereunder,
and
that the Buyer would not obtain the benefit of the bargain set forth in this
Agreement as specifically negotiated by the parties hereto if Seller or Parent
breached the provisions of this Section 15.1. Therefore, in further
consideration for the payment of the Aggregate Purchase Price as set forth
in
Section 3.1 and the other consideration set forth in this Agreement, and in
order to protect the value of the Assets purchased by Buyer (including the
goodwill inherent in the Assets as of the Closing), each of Seller and Parent
agrees that:
(A) During
the Restricted Period (as hereinafter defined), neither of Seller or Parent
nor
any of their respective controlled Affiliates shall have any affiliation (as
defined below) with any corporation, partnership or other business entity,
enterprise or other Person (other than the Buyer and its Subsidiaries) having
any location within the United States of America which engages in the management
and/or operation of any entity that engages in any business which is the same
as
or substantially similar to the business of the Seller as presently conducted;
provided,
however,
that
nothing contained herein shall be construed to prohibit the Seller or Parent
or
such Affiliates from purchasing up to an aggregate of 5% of any class of the
outstanding voting securities of any other Person whose securities are listed
on
a national securities exchange. For purposes of this subsection (A), the term
"affiliation"
shall
mean any direct or indirect ownership interest of 25% or more in such entity,
enterprise or other Person.
(B) During
the Restricted Period, none of the Seller, Parent nor any of their respective
Affiliates shall (i) contact, approach or solicit for the purpose of offering
employment to or hiring (whether as an employee, consultant, agent, independent
contractor or otherwise) or actually hire any person employed by the Buyer
or
DMI or any of their respective Affiliates without the prior written consent
of
the Buyer or DMI; or (ii) induce or attempt to induce any customer, supplier,
licensee or other business relation of the Business or Buyer to cease doing
business with Buyer or in any way interfere with the relationship between any
such customer, supplier, licensee or business relation of the Business or the
Buyer,; provided, however, that the foregoing restrictions shall not prohibit
general employment solicitations to the public not directed at the employees
of
Buyer, DMI or their respective Affiliates by Seller, Parent or their respective
Affiliates or hiring of any employee of Buyer, DMI or their respective
Affiliates who contacts any of Seller, Parent or their respective Affiliates
in
response to such general solicitation; and provided further, that the foregoing
restrictions shall not prohibit Seller, Parent or their respective Affiliates
from calling on, soliciting or servicing their existing or potential customers,
suppliers, licensees or other business relations in connection with their
respective business.
(C) During
the Restricted Period, none of the Buyer, DMI nor any of their respective
Affiliates shall (i) contact, approach or solicit for the purpose of offering
employment to or hiring (whether as an employee, consultant, agent, independent
contractor or otherwise) or actually hire any person employed by the Seller
or
Parent or any of their respective Affiliates without the prior written consent
of the Seller or Parent;; (ii) induce or attempt to induce any customer,
supplier, licensee or other business relation of the Seller, Parent or any
of
their respective Affiliates to cease doing business with any such Person or
in
any way interfere with the relationship between any such customer, supplier,
licensee or business relation of the Seller, Parent or any of their respective
Affiliates; provided, however, that the foregoing restrictions shall not
prohibit general employment solicitations to the public not directed at the
employees of Seller, Parent or their respective Affiliates by Buyer, DMI or
their respective Affiliates or hiring of any employee of Seller, Parent or
their
respective Affiliates who contacts any of Buyer, DMI or their respective
Affiliates in response to such general solicitation; and provided further,
that
the foregoing restrictions shall not prohibit Buyer, DMI or their respective
Affiliates from calling on, soliciting or servicing their existing customers,
suppliers, licensees or other business relations.
(D) Notwithstanding
anything in this Section 15.1 to the contrary, if at any time, in any judicial
or arbitration proceeding, any of the restrictions stated in this
Section 15.1 is found by a final order of a court of competent jurisdiction
or arbitrator(s) to be unreasonable or otherwise unenforceable under
circumstances then existing, the Seller and Parent agree that the period, scope
or geographical area, as the case may be, shall be reduced to the extent
necessary to enable the court and arbitrator(s) to enforce the restrictions
to
the extent such provisions are allowable under Applicable Law, giving
effect
to
the agreement and intent of the parties that the restrictions contained herein
shall be effective to the fullest extent permissible. In the event of an alleged
breach or violation by Seller or Parent of any of the provisions of this Section
15.1, the Restricted Period with respect to such party will be tolled until
such
alleged breach or violation is resolved; provided,
however,
that if
Seller or Parent is found to have not violated the provisions of this Section
15.1, then the Restricted Period will not be deemed to have been tolled. Each
of
Seller and Parent agrees that the restrictions contained in this
Section 15.1 are reasonable in all respects and necessary to protect the
interests of the Buyer and its Affiliates.
(E) As
used
herein, "Restricted Period" means the period ending on the date 3 years
after the date of Closing.
15.2 Confidentiality
Obligations of Seller and Parent Following the Closing.
From and
after the Closing, Seller and Parent shall keep confidential and not use or
disclose to any party any confidential information relating to the assets,
business or affairs of Buyer or the Assets or the Business. The confidentiality
and non-use obligations set forth in this Section 15.2 shall not apply to
any information which is available to the public through no breach of this
Agreement by Seller or Parent, or is disclosed to Seller or Parent by third
parties who are not under any duty of confidentiality with respect thereto,
or
is required to be disclosed by Seller or Parent in connection with pending
litigation or investigation; provided, however, that in the event Seller or
Parent becomes required in connection with pending litigation or investigation
to disclose any of the confidential information relating to the assets, business
or affairs of Buyer or the Assets or the Business, then Seller or Parent shall
provide Buyer with reasonable notice so that Buyer may seek a court order
protecting against or limiting such disclosure or any other appropriate remedy;
and in the event such protective order or other remedy is not sought, or is
sought but not obtained, Seller or Parent shall furnish only that portion of
the
information that is required and shall endeavor, at Buyer's expense, to obtain
a
protective order or other assurance that the portion of the information
furnished by Seller or Parent will be accorded confidential
treatment.
15.3 Public
Announcements.
Each
party agrees not to make any public announcement in regard to the transactions
contemplated by this Agreement and the Transaction Documents without the other
party's prior consent, except as may be required be law, in which case the
parties shall use reasonable efforts to coordinate with each other with respect
to the timing, form and content of such required disclosures.
15.4 Severability.
If any
court determines that any part or provision of this Agreement is invalid or
unenforceable, the remainder of this Agreement shall not be affected thereby
and
shall be given full force and effect and remain binding upon the parties.
Furthermore the court shall have the power to replace the invalid or
unenforceable part or provision with a provision that accomplishes, to the
extent possible, the original business purpose of such part or provision in
a
valid and enforceable manner. Such replacement shall apply only with respect
to
the particular jurisdiction in which the adjudication is made. Without in any
way limiting the generality of the foregoing, it is understood and agreed that
this Section 15.4 shall apply to the provisions of Section 15.1 and
that the provisions of Section 15.1, as they relate to each jurisdiction
within their geographical scope, constitute separate and distinct
covenants.
15.5 Modification
and Waiver.
This
Agreement may not be amended or modified in any manner, except by an instrument
in writing signed by each of the parties hereto. The failure of any party to
enforce at any time any of the provisions of this Agreement shall in no way
be
construed to be a waiver of any such provision, or in any way affect the right
of such party thereafter to enforce each and every such provision. No waiver
of
any breach of this Agreement shall be deemed to be a waiver of any other or
subsequent breach.
15.6 Notices.
All
notices and other communications required or permitted to be given under this
Agreement shall be in writing and shall be sent by facsimile transmission,
or
mailed postage prepaid by first-class certified or registered mail, or mailed
by
a nationally recognized express courier service, or hand-delivered, addressed
as
follows:
|
if
to Buyer:
|
Demand
Answers, Inc.
|
| 0000 Xxxxx Xxxxxx Xxxxxxxxx |
| Xxxxx Xxxxxx, XX 00000 |
| Attention: Xxxxx Xxxx |
|
with
a copy to:
|
Demand
Answers, Inc.
|
| 00000 XX 00xx Xxxxxx |
| Xxxxxxxx, XX 00000 |
| Attention: Xxxxx X. Xxxxxx |
|
if
to Seller :
|
Answerbag,
Inc.
|
| 0000 Xxx Xxx Xxxxxx |
| Xxxxxx Xxx Xxx, XX 00000 |
| Attention: Xxxxxx Xxxxxxx |
|
with
a copy to:
|
Xxxxxx
Xxxxxx Rosenman
|
| 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000 |
| Xxx Xxxxxxx, XX 00000 |
| Attention: Xxxx X. Xxxxxx |
| if to Parent: | InfoSearch Media, Inc. |
|
0000
Xxx Xxx Xxxxxx
|
| Xxx Xxxxxxx, XX 00000 |
|
Attention:
Xxxxxx Xxxxxxx
|
|
|
with
a copy to:
|
Xxxxxx
Xxxxxx Xxxxxxxx
|
| 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000 |
| Xxx Xxxxxxx, XX 00000 |
| Attention: Xxxx X. Xxxxxx |
| if to DMI: |
| Demand Media, Inc. |
| 0000 Xxxxx Xxxxxx Xxxxxxxxx |
| Xxxxx Xxxxxx, XX 00000 |
| Attention: Xxxxx Xxxx |
|
with
a copy to:
|
Xxxxxxx
Coie LLP
|
| 0000 Xxxxx Xxxxxx, Xxxxx 0000 |
| Xxxxxxx, XX 00000 |
| Attention: Xxxxx Xxxx |
Each
of
the above parties may change the persons or addresses to which any notices
or
other communications to it should be addressed by notifying the other party
as
provided above. Any notice or other communication, if addressed and sent, mailed
or delivered as provided above, shall be deemed given or received three days
after the date of mailing as indicated on the certified or registered mail
receipt, or on the next business day if mailed by express courier service,
or on
the date of delivery or transmission if hand-delivered or sent by facsimile
transmission.
15.7 Assignment.
No party
may assign any of its rights or obligations hereunder without the prior written
consent of the other parties hereto. Buyer may, without the consent of the
Seller or Parent assign all or any portion of its rights and obligations
hereunder; provided, that such assignee is an Affiliate of Buyer. This Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns. Notwithstanding the foregoing, Buyer may
assign its rights hereunder to a lender as collateral security.
15.8 Captions.
The
captions and headings used in this Agreement have been inserted for convenience
of reference only and shall not be considered part of this Agreement or be
used
in the interpretation thereof.
15.9 Entire
Agreement.
This
Agreement, together with the exhibits and schedules hereto and the other
Transaction Documents, constitutes the entire agreement and understanding
between the parties with respect to the subject matter hereof and supersedes
all
prior agreements, understandings, negotiations, representations and statements,
whether oral, written, implied or expressed, relating to such subject
matter.
15.10 No
Third-Party Rights.
Nothing
in this Agreement is intended, nor shall be construed, to confer upon any Person
other than Buyer, Seller and Parent (and only to the extent expressly provided
herein, their respective Affiliates) any right or remedy under or by reason
of
this Agreement.
15.11 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original, but all of which shall constitute one
agreement.
15.12 Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of Delaware without regard to principles of conflict of laws to the
contrary.
IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by
their respective representatives hereunto authorized as of the day and year
first above written.
| SELLER: | ||
| ANSWERBAG, INC. | ||
| |
|
|
| By: | ||
| Title | ||
| BUYER: | ||
| DEMAND ANSWERS, INC. | ||
| |
|
|
| By: | ||
| Title | ||
