EXHIBIT 2
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "AGREEMENT") is entered into this
6th day of September, 2001, by and between SNAP2 Corporation, a Nevada
corporation with its principal place of business at 00000 Xxxxxx Xxxxx,
Xxxxxxxxx Xxxx, ("XXXX0"), ISES Canada Incorporated, a Canadian corporation
organized under the laws of the Province of Ontario and a wholly-owned
subsidiary of SNAP2 ("ISES"), (SNAP2 and ISES being referred to herein
collectively as "SELLER"), and Inflight Digital Limited, a company incorporated
under the laws of England and Wales with its principal office located at 00
Xxxxx Xxxxxx, Xxxxxxxxxx Xxxx Xxxxxx, X.X. ("BUYER").
RECITALS:
A. WHEREAS, Seller is a software product developer and service provider
for embedded systems, including but not limited to in-flight entertainment
systems for passenger aircraft ("IFE") and Seller owns, leases or is a licensee
for the tangible and intangible property used in connection with its IFE
business.
B. WHEREAS, Seller desires to sell to Buyer, and Buyer desires to buy
from Seller, all of the IFE Assets (as hereinafter defined) comprising Seller's
IFE business, all subject to the terms and conditions set forth herein.
In consideration of the foregoing and of the mutual representations,
warranties, covenants, and agreements and upon the terms and subject to the
conditions hereinafter set forth, the parties agree as follows:
ARTICLE I
TERMS OF PURCHASE AND SALE
1.1 PURCHASE AND SALE OF IFE ASSETS.
Subject to the terms and conditions hereof and in reliance upon the
representations, warranties and agreements contained herein, Seller will sell to
Buyer, and Buyer will purchase from Seller, at the Closing (as defined in
SECTION 8.1), all personal assets, rights, benefits and privileges, both
tangible and intangible, wherever located, owned, leased, licensed, used or held
for use by Seller in connection with Seller's IFE business and operations,
except as otherwise specifically provided herein (collectively, the "IFE
ASSETS"), free and clear of any and all options, pledges, mortgages, security
interests, liens, charges, burdens and other encumbrances or adverse claims
whatsoever ("ENCUMBRANCES").
The IFE Assets shall include, without limitation, all of Seller's
right, title and interest in, to and under the following:
(a) All of Seller's rights and obligations under contracts with
airline operators for the provision of IFE products and
services existing as of the Closing Date, (the "IFE
Contracts"), as the same are exhaustively included in the
following contracts as at the date of this Agreement or as
shall be added by notice in writing by Seller to Buyer and
accepted by Buyer as at the Closing Date:
Rockwell/Air France
AOM
BA
Delta Air Lines
Lan Chile
Qantas
Aer Lingus
TAM Linhas Aereas S.A.
(b) All of Seller's rights and obligations under license and
distribution agreements relating to its IFE business existing
as of the Closing Date (the "License and Distribution
Agreements"), as the same are exhaustively included in the
following contracts: (i) the Tetris Company, L.L.C.; and (ii)
Lonely Planet Publications;
(c) A perpetual, royalty-free, exclusive world-wide license to use
for IFE business subsequent to the Closing Date, Seller's
intangible properties and rights relating to Seller's IFE
business, wherever located and whether or not described or
referred to herein, including without limitation all of the
service marks, copyrights, franchise, software, licenses,
trademarks, trade names, patents, jingles, slogans, logos,
publishing rights and other similar intangible assets
(including disclosure of know-how) maintained, owned, used,
held for use or otherwise held by Seller in connection with
its IFE business (including any and all applications,
registrations, extensions, renewals and rights to xxx for past
infringements relating thereto) and all of the rights,
benefits and privileges associated therewith (the
"Intellectual Property") including, but not limited to, the
assets listed in Schedule 3.7, (with the exception of all
software files relating to the game known as "Mr. Sneaky"
("Mr. Sneaky") which are provided for the limited purpose of
permitting Buyer to support those IFE customers, if any,
utilizing such game until expiration of the current agreement
with respect thereto) all related source code and
documentation, constituting the IFE Business trademarked as
the "Airsoft Travel Kit" (a/k/a "SNAP2 Travel Kit") with the
right to develop, modify and adapt the same for use in the IFE
Business (and Buyer shall own absolutely all the rights
arising out of such development, modification or adaptation),
and further with the right to test, sell or otherwise
distribute IFE products incorporating or created using any of
the Intellectual Property and to integrate such products into
other IFE products;
(d) Originals or, if originals are unavailable, copies of Seller's
files, books, and records relating to the IFE Assets,
including without limitation, tapes, computer disks and
electronic data processing software used or usable in the
operation of the IFE business (including all software
necessary to enable Buyer to comply with its obligations under
the IFE Contracts and/or the Licensing and Distribution
Agreements), operating manuals, user guides, accounting
journals, customer lists,
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marketing plans, leads and information relating to targeted
customers, IFE strategy and IFE market analysis (the "IFE
Documentation");
(e) All other tangible personal property and physical assets
utilized by Seller solely in connection with the operation of
its IFE business (the "IFE Tangible Property") including but
not limited to:1 PCU hand controller; 1 AVU seat-back
computer; 2 RGB seat-back displays; 2 sets of cables; and
(f) All goodwill relating to the IFE business.
1.2 EXCLUDED ASSETS.
Notwithstanding anything to the contrary in this Agreement, Seller will
not sell or deliver to Buyer, and Buyer will not acquire from Seller, any assets
of Seller not used in connection with Seller's IFE business including but not
limited to all contracts of employment with the Seller's employees, all of which
shall not be included in the term "IFE Assets."
1.3 ASSUMPTION OF CERTAIN OBLIGATIONS.
At the Closing, and subject to the limitation set forth at Section
1.3(z) below, Buyer will assume and will be liable for Seller's obligations to
render performance under the IFE Contracts and the License and Distribution
Agreements insofar as the same have been disclosed to the Buyer prior to the
date of this Agreement. Buyer will not assume and will not be liable for any
other obligations of Seller; provided, however, that Buyer, in its sole
discretion and without otherwise incurring any liability for other obligations
of Seller not assumed by it, may perform on behalf of Seller certain of Seller's
obligations not otherwise assumed hereunder and, in any such event shall be
entitled to reduce the Purchase Price (as defined in Section 2.1(a) below) by an
amount equal to the cost to Buyer to perform such obligation. Such reduction of
the Purchase Price shall be accomplished by making a claim against and reducing
the Post Closing Escrow Deposit for as long as the Post Closing Escrow Deposit
remains deposited with the Escrow Agent (and is not exhausted). Without limiting
the generality of the immediately preceding sentence, Seller will retain and be
solely responsible for (w) any claims, causes of action or pending or threatened
litigation or proceedings (including without limitation any environmental or
tort liabilities) relating to or arising out of any acts, facts, circumstances,
events or conditions occurring or existing prior to the Closing Date (as defined
in Section 8.1), regardless of when such claims or causes of action are asserted
or such litigation or proceedings are commenced, (x) any liabilities, the
existence or amount of which constitute a breach of a representation, warranty
or covenant of Seller contained in this Agreement or any document executed and
delivered by Seller to Buyer pursuant to this Agreement, (y) any liability,
costs or claims of any nature by or in respect of any of the employees,
officers, agents or contractors of Seller whether or not engaged in the IFE
Business, none of which are assumed by Buyer hereunder, and (z) any claims,
causes of action or any pending or threatened litigation or proceedings and any
liability thereby arising in respect of Mr. Sneaky, other than any liability
assumed by Buyer to support those IFE customers, if any, utilizing such game
until the expiration of the current IFE Contract with respect thereto provided
that the Seller shall not be under any such liability in respect of Mr. Sneaky
where such liability arises as a result of the Buyer's misuse of the rights
licensed to it in connection
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with Mr. Sneaky (that is, any use of Mr. Sneaky software files other than for
the limited purpose described in Section 1.1(c) above).
1.4 TRANSFER, CONVEYANCE AND ASSUMPTION.
Seller shall execute and deliver to Buyer at the Closing a Xxxx of Sale
and Assignment in substantially the form attached hereto as EXHIBIT A (the "XXXX
OF SALE") and all such other assignments, endorsements and instruments of
transfer necessary or appropriate to carry out the intent of this Agreement and
to vest in Buyer title to all of the Assets and all rights, title and interest
of Seller thereto. All of the IFE Assets will be sold (or licensed) free and
clear of all liens, pledges, encumbrances and claims of third parties. Buyer
shall execute and deliver to Seller at the Closing an Assignment and Assumption
Agreement in substantially the form attached hereto as EXHIBIT B (the
"ASSUMPTION AGREEMENT").
ARTICLE II
PURCHASE PRICE AND ROYALTIES
2.1 PURCHASE PRICE/ESCROW OF FUNDS.
(a) The purchase price for the IFE Assets shall be the sum of One
Million Five Hundred Thousand Dollars ($1,500,000 U.S.)
reduced by an amount equal to the aggregate total of all
prepaid maintenance revenues received by Seller prior to the
Closing Date for maintenance services to be rendered by Buyer
after the Closing Date (as so adjusted, the "PURCHASE PRICE").
The Purchase Price as so determined and subject to the
reduction therein to fund the Post Closing Escrow as defined
and described in subparagraph (b) below, shall be paid by
Buyer at Closing by wire transfer of immediately available
funds to an account which will be identified by Seller not
less than two (2) days prior to the Closing Date.
(i) On the Closing Date, Buyer shall cause to be paid in
immediately available funds by wire transfer to
Bankers Trust Company, N.A., Des Moines, Iowa as
Escrow Agent, One Hundred Fifty Thousand Dollars
($150,000) being the balance of the Purchase Price
after the determination and partial payment of the
Purchase Price to Seller pursuant to subparagraph (a)
above. The One Hundred Fifty Thousand Dollar
($150,000) balance of the Purchase Price, will be
retained by the Escrow Agent as security for Seller's
obligations to Buyer following the Closing, pursuant
to the terms of the Escrow Agreement (the "POST
CLOSING ESCROW"). Pursuant to the Escrow Agreement,
to be in substantially the form attached hereto as
Exhibit C, ninety (90) days following the Closing,
50% of the Post-Closing Escrow, together with the
earnings thereon, after reduction of any claims by
Buyer against the Post Closing Escrow, including but
not limited to claims arising from (i) the failure of
Seller to perform any of its obligations hereunder;
(ii) any representation and warranty made herein by
Seller being untrue or inaccurate in any respect; and
(iii) the performance by Buyer of any obligation of
Seller
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not otherwise specifically assumed hereunder; and
less the amount of any then unresolved pending
claims by Buyer, shall be released from the
Post-Closing Escrow and paid to Seller and one
hundred and eighty (180) days following Closing the
balance (being the remaining 50% of the Post-Closing
Escrow together with earnings thereon, after
reduction of any claims by Buyer against the Post
Closing Escrow including but not limited to any of
the examples given) shall be released from the Post
Closing Escrow and paid to Seller. Exhaustion or
payment in full of the Post Closing Escrow Deposit
shall not affect Seller's liability for
indemnification or potential liabilities, if any,
under other provisions of this Agreement or any of
the Other Documents (as defined in Section 3.2
below).
(ii) Any amounts deposited in the Post Closing Escrow
pursuant to Section 6.6 below, shall only be remitted
to Seller or Buyer, as the case may be, as provided
in said Section 6.6.
2.2 ALLOCATION OF PURCHASE PRICE.
The Purchase Price shall be allocated among the IFE Assets as set forth
in Schedule 2.2.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 DUE ORGANIZATION AND QUALIFICATION.
SNAP2 is a corporation duly organized and validly existing under the
laws of the State of Nevada and is duly qualified to do business as a foreign
corporation in each jurisdiction where such qualification is necessary.
ISES is a corporation duly organized and validly existing under the
laws of the Province of Ontario, Canada, is a wholly owned subsidiary of SNAP2
and is duly qualified to do business as a foreign corporation in each
jurisdiction where such qualification is necessary.
3.2 POWER AND AUTHORITY.
Seller has all requisite power and authority to: (i) own, lease,
license or to otherwise hold and operate the IFE Assets; (ii) carry on the IFE
business and operations as they are presently being conducted in the places
where such IFE Assets are owned, leased, licensed or otherwise held and where
such business and operations are conducted; and (iii) enter into and perform the
terms of this Agreement, all other agreements by and between the parties related
to the sale of the IFE Assets to Buyer (collectively, the "OTHER DOCUMENTS"),
including without limitation the Xxxx of Sale and the Assumption Agreement, and
the transactions contemplated hereby and thereby.
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3.3 BINDING EFFECT.
The execution, delivery and performance of this Agreement by Seller
have been duly and validly authorized by all requisite corporate action. This
Agreement constitutes a legal, valid and binding agreement of Seller,
enforceable in accordance with its terms.
3.4 NO CONFLICT.
The execution, delivery and performance of this Agreement by Seller (a)
will not conflict with the Articles of Incorporation or the Bylaws of Seller;
(b) will not result in any breach or termination of, or constitute a default
under, or constitute an event that with notice or lapse of time or both, would
become a default under, or result in the creation of any Encumbrance upon any of
the IFE Assets under, or create any rights of termination, cancellation or
acceleration in any person under any IFE Contract (except to the extent that
consent to the assignment of an IFE Contract may be required), lease,
arrangement or commitment, or violate any order, writ, injunction or decree to
which Seller is a party, by which any of the IFE Assets, business or operations
of Seller may be bound or affected or under which any of the IFE Assets,
business or operations of Seller receive benefits; and (c) will not result in
the violation of any provisions of law applicable to Seller.
3.5 TITLE TO PROPERTIES; LIENS; CONDITION OF PROPERTIES.
(a) Seller owns the sole and exclusive right, title and interest
in and to all IFE Assets (except that SNAP2's License and
Distribution Agreement with Tetris Company is non-exclusive)
free and clear of all security interests, mortgages, pledges,
liens, conditional sales agreements, leases, encumbrances,
easements, charges or claims of third parties of any nature
whatsoever, except those which shall be released or discharged
at or prior to the Closing.
(b) All tangible IFE Assets of Seller, and Seller's use of the
same, comply and at all times have complied in all respects
with all laws, ordinances, codes, regulations and other
requirements of any governmental and other authority having
jurisdiction over such IFE Assets.
(c) The tangible IFE Assets being conveyed pursuant to this
Agreement, if any, are, and at the Closing will be, in
adequate operating condition and repair and suitable for use
in the operation of the IFE business, ordinary wear and tear
excepted.
(d) The IFE Assets (not including any which are Excluded Assets)
are all the assets which are or may reasonably be required to
carry on and operate the IFE business in the manner and to the
extent that it has been carried on by Seller prior to the
Closing.
3.6 IFE CONTRACTS.
(a) No event of default (or event that, with the giving of notice
or passage of time, would become an event of default) by
Seller or to the knowledge of Seller, the other party thereto
exists under any of the IFE Contracts or License and
Distribution Agreements
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that would permit a party to such IFE Contracts or License
and Distribution Agreements to terminate any of the IFE
Contracts or License and Distribution Agreements or otherwise
deprive Seller of the material benefits under any of the IFE
Contracts, and such IFE Contracts and License and
Distribution Agreements are legal, valid and binding
obligations of the respective parties thereto enforceable in
accordance with the terms thereof. No defenses, offsets or
counterclaims thereto have been asserted, or to the knowledge
of Seller or any of its officers, directors or employees, may
be made, by any party thereto other than Seller, and Seller
has not waived any substantial rights thereunder.
(b) The IFE Contracts listed in Article 1.1(a) are all the
contracts that Seller has with airline operators for the
provision of IFE products and services.
(c) The License and Distribution Agreements listed in Article
1.1(b) are all the license and distribution agreements that
the Seller has relating to its IFE business.
3.7 INTELLECTUAL PROPERTY.
(a) Set forth on Schedule 3.7 is a true, correct and complete list
of all Intellectual Property owned or used by Seller or that
Seller is licensed to use or under which Seller possesses any
rights. With the exception of those software files relating to
the game known as "Mr. Sneaky" (which are being provided for
the limited purpose described in Section 1.1(c) above) all
such Intellectual Property rights are valid and subsisting and
the Seller is the sole legal and beneficial owner of all of
them subject to the benefit of the rights licensed to SNAP2
under the License and Distribution Agreements. None of the
products, activities, or operations of Seller infringe,
involve, or have resulted in infringement of, or any claim or
infringement of, the rights of any other person. Except as
disclosed on Schedule 3.7, Seller pays no royalty to anyone
with respect to the Intellectual Property and no proceedings
have been instituted, are pending or, to the knowledge of
Seller, threatened, that challenge the rights of Seller in
respect thereof. All employees of Seller and third parties who
were involved in the creation of such Intellectual Property
rights (other than those licensed to SNAP2 under the Licence
and Distribution Agreements) have assigned in favour of Seller
or waived any rights which such employees or third parties may
have as a result of such creation.
(b) Seller has legal and beneficial title to the source code form
of the software which is the subject of each of the IFE
Contracts. Seller has taken all proper precautions to preserve
the confidentiality and integrity of all software owned or
used by it in relation to the IFE business.
(c) Seller has not adapted or modified any software held by it on
license or used by it without any consent that may be required
to such adaptation or modification.
(d) Seller has not granted any licence of or right to any of the
Intellectual Property rights save for the IFE Contracts.
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3.8 LITIGATION.
Except as set forth on Schedule 3.8, there is no action, suit,
proceeding, investigation, claim, arbitration, litigation or grievance pending
against Seller or, to the knowledge of Seller, threatened against Seller
relating to the IFE Assets or Seller's IFE business, at law or in equity or
before or by any court or federal, state, municipal or other governmental
instrumentality, domestic or foreign ("AGENCY" or "AGENCIES"). None of the
actions, suits, proceedings, or investigations listed on Schedule 3.8
individually or in the aggregate would (i) if adversely determined, result in
any material adverse change in the IFE business, operations or IFE Assets or the
condition, financial or otherwise, or results of operations of Seller's IFE
business, (ii) if adversely determined, affect the right or ability of Seller to
carry on its IFE business substantially as now conducted; or (iii) challenge or
seek to prevent, enjoin, alter or materially delay the transactions contemplated
hereby. Seller is not subject to any court or Agency order, writ, injunction or
decree applicable to the IFE Assets, or the IFE business and operations of
Seller and Seller is not in default with respect to any order, writ, injunction,
or decree of any court or Agency with respect to the IFE Assets, or the IFE
business and operations of Seller.
3.9 CONSENTS.
No consent, approval, authorization or order of, or other actions by,
or filing with or notification to, any court, Agency or any other person is
required in order to permit Seller to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement, except for (i)
compliance with the applicable reporting requirements of the Securities and
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder and (ii) notices to or the receipt of consent from other parties to
the IFE Contracts and License and Distribution Agreements.
3.10 MATERIAL FACTS.
(a) No representation or warranty made by Seller in this Agreement
and no statement made by Seller (a) in any certificate,
exhibit, schedule, or other writing executed and delivered by
Seller, (b) in any Other Agreement or other document or
writing furnished in connection with the transactions herein
contemplated and referred to herein or in the Schedules
attached hereto, or (c) in any document or other writing
delivered to Buyer after the date hereof and on or prior to
the Closing Date by or on behalf of Seller, contains or will
contain any untrue statement of a material fact, or omits or
will omit to state any material fact necessary in order to
make the statements contained herein or therein not
misleading.
(b) There is no fact or matter concerning the IFE business and/or
the IFE Assets which if disclosed to the Buyer might
reasonably affect the willingness of the Buyer to purchase the
IFE Assets or the price or the terms on which the Buyer would
be willing to purchase the IFE Assets.
(c) During the previous 12 months there has been no substantial
change in the basis or terms of the IFE Contracts or License
and Distribution Agreements apart from
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normal price changes, no customer or supplier of the Seller
in relation to the IFE business has ceased or substantially
reduced its business with the Seller, and no indication has
been received by the Seller that there will or may be any
such change, cessation or reduction.
3.11 BROKER'S AND FINDER'S FEES.
Seller has not incurred any obligation to pay any brokerage commission
or finder's fee in connection with the transactions contemplated by this
Agreement.
3.12 FINANCIAL STATEMENTS AND ACCOUNTS
(a) For the purpose of this Article 3.12, "the Accounts" means the
accounts of Seller in relation to the revenues generated by
its IFE business for the financial period which ended on June
30, 2001 ("the Accounting Date").
(b) The Accounts have been prepared in accordance with all
generally accepted accounting principles in the US on a basis
consistently applied and show a true and fair view of the
revenues of the IFE business as at the Accounting Date and are
not affected (except as disclosed in the Accounts) by any
extraordinary or exceptional item.
(c) The audited financial statements of SNAP2 for the fiscal
year-ended September 30, 2000 have been prepared in accordance
with all generally accepted accounting principles in the US on
a basis consistently applied and show a true and fair view of
the financial condition of SNAP2 at such date and are not
affected (except as disclosed in such financial statements) by
any extraordinary or exceptional items.
3.13 INSOLVENCY
No assignment has been made by Seller for the benefit of its creditors,
no receiver, trustee in bankruptcy or similar officer has been
appointed to take charge of all or any of Seller's property, no
voluntary petition has been filed by Seller and no petition has been
filed by any other person in relation to Seller under federal
bankruptcy laws or similar state statutes and no analogous event has
happened or is pending or threatened whether in the US or any other
jurisdiction.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and warranties to
Seller:
4.1 DUE ORGANIZATION AND QUALIFICATION.
Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of England and Wales, and has all requisite corporate
power and authority to enter into this Agreement, the Other Documents and to
carry out the transactions contemplated herein and therein.
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4.2 CORPORATE POWER AND AUTHORITY.
The execution, delivery, and performance of this Agreement by Buyer
have been duly authorized by all requisite corporate action. This Agreement
constitutes the legal, valid and binding agreement of Buyer, enforceable in
accordance with its terms. Buyer has all requisite power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby.
4.3 CONSENTS.
No consent, approval, authorization or order of, or other action by, or
filing with or notification to, any court, Agency, or any other person is
required in order to permit Buyer to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement.
4.4 LITIGATION.
There is no litigation, action, claim, proceeding or governmental
investigation pending or, to Buyer's knowledge, threatened against Buyer which
may have a materially adverse affect upon Buyer's ability to perform its
obligations under this Agreement.
4.5 BROKER'S AND FINDER'S FEES.
Buyer has not incurred any obligation to pay any brokerage commission
or finder's fee in connection with the transactions contemplated by this
Agreement.
ARTICLE V
COVENANTS
Seller and Buyer hereby covenant and agree as follows:
5.1 AFFIRMATIVE COVENANTS.
Prior to the Closing Date, Seller shall operate its IFE business only
in the usual, regular and ordinary course of business consistent with its past
business practices, and will use commercially reasonable efforts to:
(a) maintain and preserve intact its IFE business and the IFE
Assets;
(b) maintain its tangible properties relating to the IFE business
in good operating condition and repair;
(c) continue all existing policies of insurance (or comparable
insurance) relating to the IFE Assets in full force and effect
up to and including the Closing Date (and will not cancel any
such insurance or take or fail to take any action that would
enable the insurers under such policies to avoid liability for
claims arising out of any occurrence
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prior to the Closing Date without the prior written consent
of Buyer) and Seller will supply Buyer with details of all
existing policies of insurance and evidence that such
policies are in full force and effect up to the Closing Date;
(d) preserve its present relationships with IFE suppliers,
customers and subscribers; and
(e) maintain its books, accounts and records relating to IFE
Assets in the usual, regular and ordinary manner in accordance
with generally accepted accounting principles on a basis
consistently applied.
5.2 NEGATIVE COVENANTS.
Prior to the Closing Date, Seller will not, without the prior written
consent of Buyer, do or agree to do any of the following:
(a) sell, assign, lease or otherwise transfer or dispose of any of
the IFE Assets other than in the ordinary course of business;
(b) do or omit to do any act which will cause a breach of any IFE
Contract or License and Distribution Agreements that would
provide any party thereto a right to terminate any such
Contract or Agreement or modify, change in any respect or
terminate any of the IFE Contracts or License and Distribution
Agreements;
(c) engage or make any commitments to engage in any IFE business
or activity other than in the ordinary course of business;
(d) mortgage, pledge, transfer or otherwise dispose of or subject
to any Encumbrance any of the IFE Assets;
(e) waive or release any rights under the IFE Contracts or License
and Distribution Agreements of material value;
(f) enter into, transfer or terminate any IFE Contract or License
and Distribution Agreement or other license, arrangement or
commitment;
(g) make or become obligated to make any capital expenditures with
respect to Seller's IFE business or enter into commitments
therefor; or
(h) do or omit to do any act which may jeopardize the validity or
enforceability of or rights under the IFE Contracts or License
and Distribution Agreements.
5.3 INTERIM OPERATIONS.
During the period from the date hereof through the Closing of this
Agreement, Seller shall continue to operate its IFE business in accordance with
the terms hereof.
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5.4 NO SOLICITATION OF OFFERS.
Neither Seller nor any of its officers, directors, employees or
shareholders, nor anyone acting on their behalf will solicit, entertain,
encourage or assist any other acquisition proposal with respect to the purchase
of, and will not sell or agree to sell, the IFE Assets or any portion thereof to
any person other than Buyer.
5.5 ACCESS TO PROPERTIES AND RECORDS.
Seller will keep Buyer advised of all developments relevant to the
consummation of the transactions contemplated hereby and will cooperate fully in
(a) permitting Buyer or its representatives to make a full investigation of the
IFE business of Seller and (b) in bringing about the consummation of the
transactions contemplated hereby. Seller will, during regular business hours and
upon reasonable notice, afford to Buyer and its representatives full access to
all of Seller's offices, IFE records and the employees. Seller will furnish to
Buyer all information concerning the IFE business of Seller as Buyer may
reasonably request. Promptly upon any change in the information set forth in
each of the Schedules referred to herein or any other disclosure in writing from
Seller required by this Agreement, Seller will update such Schedules or written
disclosures by amendment or supplement. Seller hereby represents and warrants
that such Schedules and such written disclosures, as so amended or supplemented,
shall be true, correct, and complete as of the date or dates thereof.
5.6 APPROVALS OF THIRD PARTIES.
As soon as practicable after the date hereof, Seller and Buyer will
each use commercially reasonable efforts to secure all necessary consents,
approvals and clearances of third parties that shall be required to consummate
the transactions contemplated hereby including, without limitation, the required
consents, approvals and clearances of the parties to the IFE Contracts and
License and Distribution Agreements other than Seller, and Seller and Buyer will
otherwise use commercially reasonable efforts to cause the consummation of such
transactions in accordance with the terms and conditions of this Agreement.
5.7 CONTINUING ACCESS TO BOOKS AND RECORDS; TECHNICAL SUPPORT.
(a) Seller agrees to provide Buyer, during normal business hours
and upon reasonable notice, for a period of three (3) years
after the Closing Date, access to the books, records and other
underlying data and documentation of Seller relating to the
IFE business (but which are not delivered to Buyer in
accordance with Article 1.1(d)) for the period prior to the
Closing Date. Seller agrees that, for such period, it will
preserve and keep intact all such books and records.
(b) After the Closing Date Seller shall provide technical support
on site at Seller's offices (including phone support) or,
provided that Buyer shall reimburse Seller for all of its
reasonable out-of-pocket travel and lodging expense, at such
location as may be reasonably requested by Buyer, equal to six
man weeks during the one year period from and after the
Closing Date. During such one year period, any technical
support
12
in excess of six man weeks will be billed by Seller to Buyer
at Seller's then standard hourly rates not to exceed Two
Hundred Dollars ($200) per hour. During each of the second
full year following the Closing Date and the third full year
following the Closing Date, Seller will also provide phone
support at the then standard hourly rate for phone support of
Seller. Seller represents and warrants that each of Seller's
employees providing any of such support shall be knowledgeable
about the IFE Assets transferred hereunder and competent to
provide such support.
5.8 NON-COMPETITION AND NON-SOLICITATION OF EMPLOYEES.
(a) For a period of three (3) years after the Closing Date, Seller
hereby covenants and agrees with the Buyer that it will not
and will procure that none of its officers, directors and
employees who are or have in the most recent 24 month period
been engaged in the IFE business, will (as an individual,
joint venturer, stockholder, trustee, partner, proprietor,
member, agent or employee of any person, or in any other
capacity whatsoever);
(i) directly or indirectly engage in the business of, or
own any debt or equity interest in, manage, operate,
join, control, lend money or other assistance to, or
participate in or be connected with any Person
engaged, directly or indirectly, in any of the
Business Activities within the Territory; or
(ii) directly or indirectly provide service or services as
a consultant, employee, partner, owner or otherwise
to any Person engaged, directly or indirectly, in any
of the Business Activities within the Territory; or
(iii) otherwise directly or indirectly engage in any of the
Business Activities within the Territory.
(b) For a period of three (3) years after the Closing Date, Seller
hereby covenants and agrees with the Buyer that it will not
and will procure that none of its officers, directors and
employees who are or have in the most recent 24 month period
been engaged in the IFE business, will (as an individual,
joint venturer, stockholder, trustee, partner, member, agent
or employee of any Person or in any other capacity whatsoever)
directly or indirectly solicit, encourage or endeavour to
entice away from Buyer, or otherwise interfere with Buyer's
IFE relationship with any Person who is, or was, within the
most recent 24 month period, an IFE customer or client of
Seller.
(c) Neither Buyer nor Seller shall, during a period of three (3)
years, from and after the Closing Date, without the prior
written consent of the other, for its own account or jointly
with another, directly or indirectly solicit, or in any manner
attempt to solicit, any person employed or engaged by the
other party (including, without limitation, any employee or
independent contractor known to be engaged by the other
party), to leave that person's employment or engagement.
Notwithstanding the foregoing, this Section 5.8(c) shall not
preclude either party from soliciting any person employed by
the other party where such person independently responds to an
employment opportunity publicized through posting and/or
general advertising by Buyer or Seller to the general public.
13
(d) Notwithstanding the foregoing, nothing in this Section 5.8
shall forbid or limit ownership by any of Seller's officers,
directors or employees in the aggregate of less than 1% of the
outstanding equity interests in any publicly traded company.
(e) For the purpose of this Section 5.8:-
"BUSINESS ACTIVITIES" shall mean the business of software
product development and service provider for embedded IFE
Systems;
"PERSON" means any individual, corporation, partnership, joint
venture, association, limited liability company,
proprietorship, joint-stock company, trust, strategic
alliance, firm or other entity;
"TERRITORY" means (i) the State of Iowa; and (ii) all states
contiguous to the State of Iowa; (iii) all other states
comprised in the United States of America; (iv) the United
Kingdom; (v) the rest of Europe (vi) Australia and (vii) the
rest of the world.
(f) Seller and Buyer agree that the restrictions contained in this
Section 5.8 are reasonable and necessary to protect legitimate
interests of each party. In the event that any court later
determines that the restrictions in these sections are not
reasonable and/or too broad to be enforceable at law or in
equity, Seller and Buyer agree that the court is authorized to
restrict the scope of these sections to a time, area and/or
activity that it deems to be reasonable, so long as the
restrictions of the court is no broader than that contained in
these sections, and so modified this Section 5.8 shall remain
in full force and effect.
(g) Each party acknowledges that the other party may be
irreparably harmed by a breach or threatened breach of any
provision of this Section 5.8 and confirms that damages at law
may be an inadequate remedy for such breach or threatened
breach. Each party agrees that in the event of its breach or
threatened breach of any provision, the other party may
enforce its rights by specific performance, injunction or
other equitable remedy. Nothing contained herein is intended
to, or shall, limit the right of either party, in addition to
such remedies, to pursue any and all other remedies available
to it, including, but not limited to, a suit for damages, for
a breach or threatened breach of any provision of this Section
5.8. In the event of an action, or proceeding, by any party to
enforce the terms and conditions of this Section 5.8 or
seeking damages for the breach of this Section 5.8, each party
agrees that the prevailing party shall be paid, in addition to
any damages caused by a breach of this Section 5.8, all costs
and expenses, including, but not limited to, reasonable
attorneys' fees, incurred by the prevailing party, in
connection with any action or proceeding.
(h) Notwithstanding anything set forth in this Section 5.8 to the
contrary, Buyer agrees that Seller may contract with Rockwell
International, for the development of system level core
software for utilization in platforms developed by Rockwell
International. Any such software development for Rockwell
International, shall not be construed as a breach of the
noncompetition obligations of Seller included herein.
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ARTICLE VI
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement shall be subject to the
satisfaction on or prior to the Closing Date of all of the following conditions,
except such conditions as Buyer may waive in writing:
6.1 REPRESENTATIONS AND WARRANTIES OF SELLER.
All of the representations and warranties of Seller in this Agreement
or in any Schedule or other written disclosure (the "SELLER'S REPRESENTATIONS")
shall have been true and correct when made, and shall be true and correct in all
MATERIAL respects on and as of the Closing Date and with the same force and
effect as though such Seller's Representations had been made on and as of the
Closing Date (and for the avoidance of doubt if any of the Seller's
Representations contained in Sections 3.1, 3.2, 3.3, 3.4, 3.5(a), 3.5(d),
3.10(a), 3.10(b) and 3.13 are not true and correct in any respect on and as of
the Closing Date it shall be deemed to be "material" for the purpose of this
Section).
6.2 COVENANTS OF SELLER.
All of the covenants and agreements herein of Seller to be complied
with or performed on or before the Closing Date shall have been complied with
and performed in accordance with this Agreement.
6.3 NO MATERIAL ADVERSE CHANGES IN IFE BUSINESS AND DUE DILIGENCE.
(a) There shall not have occurred any material adverse change in
the IFE business or operations of Seller (provided that no
material adverse change shall be deemed to have occurred by
reason of a general deterioration in the economy or events or
conditions generally affecting the embedded software
industry). A "material adverse change" as used herein shall
include, for the avoidance of doubt, any change to the IFE
Contracts (including the installation schedules) between SNAP2
and (i) British Airways; (ii) Qantas; or (iii) Delta Air
Lines; which was not given prior approval by Buyer.
(b) Buyer shall be satisfied with the results of its investigation
of the IFE business of the Seller and that it has had full
access to information in accordance with Article 5.5.
6.4 SELLER'S CERTIFICATE.
There shall be delivered to Buyer a certificate dated as of the Closing
Date and signed by the President of SNAP2 to the effect that the conditions set
forth in SECTIONS 6.1, 6.2, and 6.3(a) have been met, which certificate shall
have the effect of a representation and warranty made by Seller on and as of the
Closing Date.
15
6.5 LITIGATION.
At the Closing Date, there shall not be pending or threatened any
litigation in any court or any proceeding before any Agency (i) in which it is
sought to restrain, invalidate, set aside or obtain damages in respect to
consummation of the purchase and sale of the IFE Assets or the other
transactions contemplated hereby; (ii) that could, if adversely determined,
result in any material adverse change in the IFE Assets; (iii) that could, if
adversely determined, have a material adverse effect on the right or ability of
Seller to operate the IFE business as now operated; or (iv) as a result of
which, in the reasonable judgment of Buyer, Buyer would be deprived of any
material benefits of its ownership of the IFE Assets.
6.6 CONSENTS.
Seller shall have obtained all orders, approvals of consents of third
parties that shall be required to consummate the transactions contemplated
hereby, including, without limitation, consents to the assignment of the IFE
Contracts and License and Distribution Agreements, and no material conditions or
obligations shall have been imposed or incurred in connection therewith;
provided, however, that in the event that any necessary consent to the
assignment of an IFE Contract is not received by the Closing Date, a percentage
of the Purchase Price equal to the percentage of revenues (on an annual calendar
year basis) such IFE Contract bears to the revenues of all IFE Contracts (on an
annual calendar year basis) shall be deposited by Buyer into the Post Closing
Escrow Account (in addition to the sum referred to and for the purpose described
in Section 2.1(b) above) and shall be immediately remitted to Seller (together
with accrued interest thereon) upon receipt of such consent. In the event that
such consent is not received prior to the termination of the Post Closing
Escrow, said amount shall be remitted to Buyer (together with accrued interest
thereon) and such IFE Contract shall no longer be subject to this Agreement.
Notwithstanding anything contained herein to the contrary, Buyer shall not be
obligated to close unless and until consents to the transfer of Seller's IFE
Contracts with British Airways, Delta, and Qantas have been obtained.
6.7 INJUNCTION.
No federal, state or provincial court nor any governmental or
regulatory authority of competent jurisdiction shall have issued an injunction
or order preventing or limiting in any manner the sale of the IFE Assets to
Buyer, nor shall there be pending or threatened any action seeking such an
injunction or order.
6.8 ESCROW AGREEMENT.
Seller, Buyer and Bankers Trust Company, Des Moines, Iowa shall have
executed and delivered the Escrow Agreement in substantially the form attached
hereto as Exhibit C.
6.9 OPINION OF SELLER'S COUNSEL.
Buyer shall have received an opinion of counsel to SNAP2 in
substantially the form and substance attached hereto as Exhibit D, with such
modifications as may be acceptable to counsel for Buyer.
16
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement shall be subject to the
satisfaction on or prior to the Closing Date of all of the following conditions,
except such conditions as Seller may waive in writing:
7.1 REPRESENTATIONS AND WARRANTIES OF BUYER.
All of the representations and warranties of Buyer contained in this
Agreement or in any Schedule or other written disclosure (the "BUYER'S
REPRESENTATIONS") shall have been true and correct when made, and shall be true
and correct in all material respects on and as of the Closing Date with the same
force and effect as though the Buyer's Representations had been made on and as
of the Closing Date.
7.2 COVENANTS OF BUYER.
All of the covenants and agreements herein on the part of Buyer to be
complied with or performed on or before the Closing Date shall have been fully
complied with and performed.
7.3 BUYER'S CERTIFICATE.
There shall be delivered to Seller a certificate dated as of the
Closing Date and signed by the President or a Vice President of Buyer to the
effect that the conditions set forth in SECTION 7.1 and 7.2 have been met, which
certificate shall have the effect of a representation and warranty made by Buyer
on and as of the Closing Date.
7.4 LITIGATION.
As of the Closing Date, there shall not be pending or threatened any
litigation in any court or any proceeding before any Agency in which it is
sought to restrain, invalidate, set aside or obtain damages in respect of the
consummation of the purchase and sale of the IFE Assets or the other
transactions described herein.
7.5 ESCROW AGREEMENT.
Seller, Buyer and Bankers Trust Company, N.A., Des Moines, Iowa shall
have executed and delivered the Escrow Agreement in substantially the form
attached hereto as Exhibit C.
ARTICLE VIII
CLOSING
8.1 DATE AND PLACE OF CLOSING.
17
Subject to satisfaction or waiver of all the other conditions to the
obligations of the parties set out in Articles VI and VII, the purchase and sale
of the IFE Assets pursuant to this Agreement shall be consummated at a closing
(the "CLOSING") to be held at such place as the parties may agree within 5
business days of the date of satisfaction of the condition set forth in Section
6.6 or such other date as may be mutually agreed to by the parties (the "CLOSING
DATE"). Title to the IFE Assets shall pass from Seller to Buyer as of the
Closing Date. Risk of loss of the IFE Assets shall remain with Seller until the
Closing Date. The parties shall use their respective reasonable endeavours to
satisfy the conditions, in the case of Seller, set out in Article VI and, in the
case of Buyer, set out in Article VII as soon as practicable following this
Agreement having been entered into.
8.2 SELLER'S PERFORMANCE.
At the Closing, concurrently with the performance by Buyer of its
obligations to be performed at the Closing, Seller shall:
(a) CONVEYANCES. Execute and deliver to Buyer, in form and
substance acceptable to Buyer (i) the Xxxx of Sale conveying
to Buyer the IFE Assets; (ii) the Assumption Agreement
assigning to Buyer the IFE Contracts and License and
Distribution Agreements; and (iii) all other assignments,
endorsements and instruments of transfer as shall be necessary
or appropriate to carry out the intent of this Agreement and
as shall be sufficient to vest in Buyer title to all of the
IFE Assets and all right, title and interest of Seller
thereto.
(b) BOOKS AND RECORDS. Deliver to Buyer all IFE Documentation that
are in Seller's possession or under its control.
(c) CERTIFICATE. Execute and deliver the certificate referred to
in SECTION 6.4.
(d) OTHER ACTION. Take all such other steps as may be necessary or
appropriate to put Buyer in actual and complete ownership and
possession of the IFE Assets.
(e) CONSENTS. Deliver to Buyer copies of all consents and
approvals required by SECTION 6.6.
(f) ENCUMBRANCES. Seller will deliver to Buyer the written release
(or termination or amendment of financing statement) of the
IFE Assets from any Encumbrance, in a form satisfactory to
Buyer and within 7 days of Closing shall file with the
appropriate entity the necessary UCC financing amendment form
(or other such equivalent form) which releases the IFE Assets
from any such Encumbrance and shall deliver a copy to Buyer.
(g) ESCROW AGREEMENT. Execute and deliver the Escrow Agreement.
(h) OPINION OF COUNSEL. Cause the delivery of the opinion of
counsel required by Section 6.9.
18
8.3 BUYER'S PERFORMANCE.
At the Closing, concurrently with the performance by Seller of its
obligations to be performed at the Closing, Buyer shall:
(a) PURCHASE PRICE. Deliver to Seller the Purchase Price as
specified in SECTION 2.1.
(b) ASSUMPTION AGREEMENT. Execute and deliver to Seller the
Assumption Agreement.
(c) CERTIFICATES. Execute and deliver the certificate referred to
in SECTION 7.3.
(d) ESCROW AGREEMENT. Execute and deliver the Escrow Agreement and
deposit the Post Closing Escrow Deposit with the Escrow Agent
in accordance with the Escrow Agreement.
8.4 FURTHER ASSURANCES.
In addition to the foregoing, at any time and from time to time, at or
after the Closing, upon request of Buyer, Seller shall, at the expense of Buyer,
take such further actions and execute and deliver such further documents as may
reasonably be required in order to vest in and confirm to Buyer full and
complete title to, possession of and the right to use the IFE Assets or
otherwise carry out the transactions contemplated hereby. At any time and from
time to time, at or after the Closing, upon request of Seller, Buyer shall take
such further actions and execute and deliver such further documents as may
reasonably be required in order to assure and confirm to Seller the assumption
by Buyer of the obligations to render performance that are to be assumed by
Buyer pursuant to this Agreement.
8.5 TRANSFER TAXES AND SIMILAR CHARGES.
All costs of transferring the IFE Assets in accordance with this
Agreement, including recordation, transfer and documentary taxes and fees and
any excise, sales or use or intangible taxes, shall be borne by Buyer. Buyer
shall respond to or defend against any action or proceeding brought by any
Agency relating to any costs of transferring the IFE Assets and the costs of
such response or defence shall be borne by Buyer. The value for the tangible
personal property to be conveyed hereunder for purposes of Iowa sales tax
reporting shall be consistent with the allocation of the Purchase Price in
accordance with SECTION 2.2.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
9.1 SURVIVAL.
All representations, and warranties, made in or pursuant to this
Agreement or in any certificate furnished pursuant hereto shall survive for a
period of two (2) years after the Closing Date,
19
and shall not be modified, waived or extinguished by the Closing or by any
investigation made by or on behalf of any party hereto. Buyer or Seller may
pursue any claim or action under this Article IX after the expiration of such
two-year period if the party asserting the claim has first given the other
party a notice of such claim, which reasonably identified the claim, prior to
the expiration of such two-year period.
9.2 BUYER'S LOSSES.
Seller agrees to indemnify and defend Buyer against and hold Buyer
harmless from any and all damages (including, without limitation, amounts paid
in settlement with Seller's consent), losses, obligations, liabilities, liens,
deficiencies, costs and expenses, including without limitation reasonably
attorneys' fees (hereinafter referred to collectively as "BUYER'S LOSSES"),
suffered, incurred or paid by Buyer by reason of (i) any Seller's Representation
being untrue or incorrect in any material respect; (ii) any failure by Seller to
observe or perform its covenants and agreements set forth in this Agreement; or
(iii) any failure by Seller to satisfy and discharge any liability or obligation
not expressly assumed by Buyer pursuant to this Agreement.
9.3 SELLER'S LOSSES.
Buyer agrees to indemnify and defend Seller and hold Seller harmless
from, any and all damages (including without limitation, amounts paid in
settlement with Buyer's consent), losses, obligations, liabilities, claims,
deficiencies, costs and expenses, including without limitation reasonable
attorneys' fees (hereinafter referred to collectively as "SELLER'S LOSSES")
suffered, incurred or paid by Seller by reason of (i) any Buyer's Representation
being untrue or incorrect in any material respect; (ii) any material failure by
Buyer to observe or perform its covenants and agreements set forth in this
Agreement; or (iii) any failure by Buyer to satisfy and discharge any liability
or obligation expressly assumed by Buyer pursuant to this Agreement.
9.4 NOTICE OF LOSS.
Upon receipt by an Indemnified Party of notice of any action, suit,
proceeding, claim, demand or assessment that might give rise to a claim for
indemnity pursuant to this Article IX, the Indemnified Party shall give written
notice thereof within 20 days to the Indemnifying Party indicating the nature of
such claim and the basis therefore. Any delay or failure to so notify the
Indemnifying Party shall relieve the Indemnifying Party of its obligations
hereunder only to the extent, if at all, that the Indemnifying Party is
prejudiced by reason of such delay or failure. With respect to Buyer's Losses,
Seller shall be the "INDEMNIFYING PARTY" and Buyer shall be the "INDEMNIFIED
PARTY". With respect to Seller's Losses, Buyer shall be the "INDEMNIFYING PARTY"
and Seller shall be the "INDEMNIFIED PARTY".
9.5 RIGHT TO DEFEND.
Upon receipt of notice of any suit, action, investigation, claim or
proceeding for which indemnification might be claimed by an Indemnified Party,
the Indemnifying Party shall be entitled promptly to defend against such suit,
action, investigation, claim, or proceeding at its own cost and expense. The
Indemnified Party shall have the right, but not the obligation, to participate
at its own
20
expense in a defence thereof by counsel of its own choosing, but the
Indemnifying Party shall be entitled to control the defense unless the
Indemnified Party has relieved the Indemnifying Party from liability with
respect to the particular matter or the Indemnifying Party fails to assume
defense of the matter. In the event the Indemnifying Party shall fail to
defend in a timely manner against any such suit, action, investigation, claim
or proceeding, the Indemnified Party shall have the right, but not the
obligation, to defend, contest, or otherwise protect against the same and make
any compromise or settlement thereof and recover the entire cost thereof from
the Indemnifying Party, including reasonable attorneys' fees and all amounts
paid as a result of such suit, action, investigation, claim or proceeding or
the compromise or settlement thereof. In the event that the Indemnifying Party
undertakes the defence of such matters, the Indemnified Party shall not be
entitled to recover from the Indemnifying Party any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defence
thereof other than the reasonable costs of investigation undertaken by the
Indemnified Party with the prior written consent of the Indemnifying Party. No
settlement to be entered into by the Indemnified Party or the Indemnifying
Party shall be executed unless the terms thereof include an unconditional
release of the other party unless the other party consents thereto.
9.6 LIMITATIONS ON LIABILITY.
Buyer's right to indemnification under this Article IX for Buyer's
Losses resulting from the circumstances, actions or failures to act described in
SECTION 9.2 shall be limited to an amount not to exceed the Purchase Price.
Seller's right to indemnification under this Article IX for Seller's Losses
resulting from the circumstances, actions or failures to act described shall be
limited to an amount not to exceed the Purchase Price. The parties agree that
the Post Closing Escrow may be charged for any amounts due to Buyer from Seller
pursuant to this Article IX provided that any such charge shall not be Buyer's
exclusive remedy in enforcing Seller's obligations for indemnification of Buyer
hereunder.
ARTICLE X
TERMINATION
10.1 CAUSES FOR TERMINATION.
This Agreement may be terminated at any time on or prior to the Closing
Date:
(a) by the mutual consent in writing of Buyer and Seller;
(b) by Buyer by written notice to Seller if any federal, state or
provincial court or governmental or regulatory authority of
competent jurisdiction shall issue an injunction or order
preventing the sale of the IFE Assets to Buyer;
(c) by Buyer or Seller by written notice to the other party if the
other party has breached any of its representations or
warranties set forth in this Agreement and has failed to
promptly cure such breach; or
(d) by Buyer or Seller if the Closing has not occurred on or
before the expiry of forty-five (45) days after the date this
Agreement was entered into.
21
10.2 EFFECT OF TERMINATION.
In the event of the termination of this Agreement pursuant to the
provisions of SECTION 10.1, this Agreement shall be deemed null, void and of no
further force or effect, except for SECTION 11.1, which shall not be affected by
termination of this Agreement, and except that no termination of this Agreement
shall relieve any party hereto of liability for a breach by such party of any of
its covenants or agreements contained in this Agreement or limit or impair any
remedy which any other party hereto may have for such breach.
ARTICLE XI
MISCELLANEOUS
11.1 EFFORTS TO CLOSE.
Buyer and Seller shall use all reasonable efforts to cause the
conditions to the obligations of Buyer and Seller under this Agreement to be
satisfied in a timely manner and to do or cause to be done all things necessary
or advisable to consummate the transactions contemplated by this Agreement.
11.2 GUARANTEE
SNAP 2 hereby unconditionally and irrevocably guarantees the
obligations of ISES under this Agreement as they come due.
11.3 EXPENSES.
Except as otherwise expressly provided herein, Seller and Buyer shall
each pay its own expenses in connection with the preparation of this Agreement
and the consummation of the transactions contemplated hereby, including, without
limitation, fees of its own counsel, auditors and other experts, whether or not
such transactions are consummated.
11.4 SUCCESSORS AND ASSIGNS.
The terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective successors and assigns of the parties
hereto. Nothing in this Agreement, express or implied, is intended to confer any
rights or remedies upon any party, other than the parties hereto and their
respective successors and assigns. Seller acknowledges that Buyer has the right
to assign its rights and obligations under this Agreement only to an entity
affiliated with Buyer. Neither party shall otherwise have the right to assign
its rights and obligations under this Agreement without the prior written
consent of the other party provided that in the event of the sale of the IFE
business by the Buyer, it shall have the rights to assign, as part of the same
transaction, the license set out in Article 1.1(c) to the purchaser of the IFE
business. The Buyer shall further have the right to sub-contract and sub-license
its rights under Article 1.1(c).
22
11.5 COUNTERPARTS.
This Agreement may be executed in one or more counterparts and it shall
not be necessary for all parties to execute the same counterpart. Each such
counterpart shall be deemed to be an original document, but all of such
counterparts shall constitute a single agreement.
11.6 AMENDMENT.
This Agreement may not be modified or amended except in writing signed
by the parties hereto.
11.7 NUMBER, GENDER.
Whenever the context hereof shall so require, the singular shall
include the plural, the male gender shall include the female gender and the
neuter, and vice versa.
11.8 GOVERNING LAW.
This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Iowa.
11.9 WAIVER, ESTOPPEL.
No term or condition of this Agreement shall be deemed to have been
waived nor shall there be any estoppel to enforce any provision of this
Agreement except by written instrument of the party charged with such waive or
estoppel.
11.10 NOTICES.
Any notice given pursuant to this Agreement must be in writing and may
be given by registered or certified mail or by facsimile, and if given
registered or certified mail, shall be determined to have been given and
received when a registered or certified letter containing such notice, properly
addressed with postage prepaid, is deposited in the United States mails; and if
given otherwise than by registered or certified mail, it shall be deemed to have
been given when delivered to and received by the party to whom addressed. Such
notices shall be given to the parties hereto at the following addresses:
(a) If to Seller:
Xxxx X. Xxxxxxx, III, President
SNAP2 Corporation
00000 Xxxxxx Xxxxx
Xxxxxxxxx, Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
23
Xxxxxxx X. Page
Nyemaster, Goode, Voigts, West, Xxxxxxx &
O'Brien, P.C.
000 Xxxxxx, Xxxxx 0000
Xxx Xxxxxx, Xxxx 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
(b) If to Buyer:
Xxx Xxxxxxx
President
Inflight Digital Limited
00 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxx Xxxxxx, X.X.
Tel: 00-000-000-0000
Fax: 00-000-000-0000
with a copy to:
Xxxxxxxx Xxxxxx
M and A Solicitors
Xxxxxxx Xxxxxxx Xxxxx
0-00 Xxxxxxxxx Xxxx
Xxxx Xxxxxxx, XX00 0XX
Tel: (000) 00-00-00-00
Fax: (000) 00-00-00-00
Any party hereto may, by giving five (5) days written notice to the other party,
designate any other address in substitution of the foregoing address to which
such notice shall be given.
11.11 TIME OF THE ESSENCE.
Time is of the essence in the performance of the obligations of the
parties under this Agreement.
24
11.12 REMEDIES FOR PRE-CLOSING BREACH OF REPRESENTATION WARRANTY.
Notwithstanding any other provision contained herein, if prior to the
Closing, a party (the "NON-BREACHING PARTY") shall become aware of any breach of
any of the other party's representations or warranties contained herein (a
"PRE-CLOSING BREACH"), whether by virtue of the Non-Breaching Party's due
diligence investigation or otherwise, and if the Pre-Closing Breach is not
cured, the exclusive remedy of the Non-Breaching party shall be to terminate the
Agreement pursuant to SECTION 10.1(c). Failure to terminate the Agreement in
accordance with SECTION 10.1(c) shall constitute a waiver of the Pre-Closing
Breach.
11.13 ANNOUNCEMENTS
Subject to Seller's obligations to make periodic reports under the
Securities and Exchange Act of 1934, as amended, the parties mutually agree that
no press or public announcements shall be made by either of them in relation to
this Agreement or the transactions referred to in this Agreement without the
text of the same having first been approved in writing by the other (and
approval shall be given in the case of Seller by Xxxx X. Xxxxxxx III and in the
case of Buyer by Xxx Xxxxxxx).
IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be executed as of the date first written above.
SELLER: SNAP2 CORPORATION ISES CANADA INCORPORATED
By: /s/ Xxxx X. Xxxxxxx, III By: /s/ Xxxx X. Xxxxxxx, III
------------------------------- -------------------------------
Xxxx X. Xxxxxxx, III, President Xxxx X. Xxxxxxx, III, President
BUYER: INFLIGHT DIGITAL LIMITED
By: /s/ Xxx Xxxxxxx
-----------------------
Xxx Xxxxxxx, President
25
SCHEDULE 2.2
ALLOCATION OF PURCHASE PRICE
Games Purchase Price Allocation
----- -------------------------
1. Backgammon 5.9%
2. Blackjack 5.9%
3. Chinese Solitaire 5.9%
4. Crossword 5.9%
5. Hangman 5.9%
6. Keno 5.9%
7. Noisy Farm 5.9%
8. Noughts & Crosses (a.k.a. Tic Tac Toe) 5.9%
9. Othello 5.9%
10. Poker 5.9%
11. Professional Gold Digger 5.9%
12. Slots 5.9%
13. Solitaire 5.9%
14. Tetris-TM- 5.9%
15. Trivia 5.8%
16. Twins Cafe Match Game 5.8%
17. Zero G 5.8%
OTHER ASSETS $1.00
SCHEDULE 3.7
INTELLECTUAL PROPERTY
Royalty Payments to Tetris and Lonely Planet
LIST OF ASSETS: (See Attached)
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS EXHIBIT
SCHEDULE 3.8
SCHEDULE OF LITIGATION
None.
EXHIBIT A
XXXX OF SALE
This XXXX OF SALE is made as of _____________, 2001 by and between
SNAP2 CORPORATION., a Nevada corporation and ISES Canada Incorporated, a
Canadian corporation organized under the laws of the Province of Ontario
(collectively "Seller") and INFLIGHT DIGITAL LIMITED, a company incorporated
under the laws of England and Wales ("Buyer").
WHEREAS, Seller and Buyer are parties to that certain
Asset Purchase
Agreement, dated as of August __, 2001, as amended (the "Agreement"), pursuant
to which Seller has agreed to sell, and Buyer has agreed to buy the IFE Assets
used in connection with the operation of Seller's IFE Business. Capitalized
terms used herein, unless separately defined herein, shall have the meanings
ascribed to them in the Agreement.
NOW THEREFORE, in consideration of the payment by Buyer of the Purchase
Price, the receipt and sufficiency of which are hereby acknowledged, and in
further consideration of the mutual covenants and agreements contained in the
Agreement, Seller hereby sells, assigns, transfers, conveys and delivers to
Buyer, free and clear of all liens, encumbrances and security interests (except
as provided in the Agreement), all of Seller's IFE Assets and rights of every
kind and nature, real, personal, and mixed, tangible and intangible, of every
type and description owned by Seller or in which Seller has an interest which
are used or held for use in connection with the IFE business and operations of
Seller, including, without limitation, the following:
(i) The IFE Contracts described in Section 1(a) of the Agreement;
(ii) The License and Distribution Agreements described in Section
1(b) of the Agreement;
(iii) A perpetual, royalty-free exclusive world-wide license to
use the Intellectual Property described in Section 1(c) of the Agreement for
IFE business;
(iv) The IFE Documentation described in Section 1(d) of the
Agreement;
(v) All IFE Tangible Property and physical assets wherever
located, utilized solely in Seller's IFE business and more specifically
described in Schedule A hereto; and
(vi) All goodwill relating to the IFE Business described in Section
1(e) of the Agreement.
There shall, however, be excluded from such purchase and sale the
following property owned or used by Seller (the "EXCLUDED ASSETS"):
(i) Seller's corporate franchise, stock record books, corporate
record books, including minutes of meetings of directors and stockholders, and
such other records as deal exclusively with Seller's organization or stock
capitalization; and
(ii) All other assets not utilized solely in Seller's IFE business.
This sale is in accordance with and is subject to all the
representations, warranties, covenants and exclusions set forth in the
Agreement.
This Xxxx of Sale shall be binding upon Seller, its successors and
assigns, and shall inure to the benefit of Buyer, its successors and assigns.
IN WITNESS WHEREOF, Seller and Buyer have caused this Xxxx of Sale to
be executed by its duly authorized officer as of the day and year first above
written.
SELLER:
SNAP2 CORPORATION ISES CANADA INCORPORATED
By: By:
------------------------------- -------------------------------
Name: Xxxx X. Xxxxxxx, III Name:
Title: President -----------------------------
Title:
----------------------------
BUYER:
INFLIGHT DIGITAL LIMITED
By:
-------------------------------
Name: Xxx Xxxxxxx
Title: President
2
EXHIBIT B
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is made as of _____________,
2001 by and between SNAP2 CORPORATION, a Nevada corporation and ISES Canada
Incorporated, a Canadian corporation organized under the laws of the Province of
Ontario (collectively "Seller") and INFLIGHT DIGITAL LIMITED, a company
incorporated under the laws of England and Wales ("Buyer").
WHEREAS, pursuant to an
Asset Purchase Agreement dated as of August
___, 2001 (the "Purchase Agreement"), made between Seller and Buyer, Seller
agreed to sell, and Buyer agreed to purchase certain IFE Assets; owned by
Seller, as more fully described in the Purchase Agreement;
WHEREAS, the Purchase Agreement provides that certain IFE Contracts and
License and Distribution Agreements will be transferred by the Seller to the
Buyer;
WHEREAS, Section 1.3 of the Purchase Agreement provides, among other
things, that the Buyer shall, as of the date hereof, assume certain of Seller's
obligations and liabilities accruing after the Closing Date under the assumed
IFE Contracts and License and Distribution Agreements.
NOW, THEREFORE, in consideration of the promises, covenants and
agreements contained in the Purchase Agreement, the closing of the transactions
contemplated by the Purchase Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
each of the parties, Seller and Buyer agree as follows:
1. All capitalized words and phrases used but not defined herein shall
have the meaning attributed thereto in the Purchase Agreement.
2. Seller hereby assigns and transfers to Buyer all of the obligations
and liabilities of Seller accruing after the date hereof under the IFE Contracts
referred to in Section 1(a) of the Purchase Agreement and the License and
Distribution Agreements referred to in Section 1(b) of the Purchase Agreement.
3. Buyer hereby assumes and agrees to perform the obligations and
liabilities of the Seller arising on or after the date hereof under the IFE
Contracts referred to in Section 1(a) of the Purchase Agreement and the License
and Distribution Agreements referred to in Section 1(b) of the Purchase
Agreement, subject to the terms of Section 1.3 and the other terms and
provisions of the Purchase Agreement.
4. Seller and Buyer shall execute and deliver from time to time
hereafter, upon reasonable request, all such further documents and instruments,
and shall do and perform all such acts as may be necessary, to give full effect
to the intent and meaning of the Purchase Agreement and this Assignment and
Assumption Agreement.
5. This Assignment and Assumption Agreement is executed and delivered
by Seller and Buyer pursuant to the Purchase Agreement, subject to the
covenants, representations and warranties thereof. No provisions set forth
herein shall be deemed to enlarge, alter or amend the terms or provisions of the
Purchase Agreement. In the event of any conflict between the provisions herein
and the Purchase Agreement, the provisions of the Purchase Agreement shall
control.
6. This Assignment and Assumption Agreement shall be governed by and
construed in accordance with the laws of the State of
Iowa.
7. This Assignment and Assumption Agreement may be executed in several
counterparts, all of which taken together shall constitute one instrument.
IN WITNESS WHEREOF, the parties have caused this Assignment and
Assumption Agreement to be executed and delivered by their duly officers as of
the day and year first above written.
SELLER:
SNAP2 CORPORATION ISES CANADA INCORPORATED
By: By:
------------------------------------ --------------------------------
Name: Xxxx X. Xxxxxxx, III Name:
Title: President ------------------------------
Title:
-----------------------------
BUYER:
INFLIGHT DIGITAL LIMITED
By:
----------------------------------
Name: Xxx Xxxxxxx
Title: President
2
EXHIBIT C
ESCROW AGREEMENT
TO: Bankers Trust Company
X.X. Xxx 000
000 Xxxxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
The following property is deposited with you by the undersigned in their joint
names:
1. $150,000 by wire transfer pursuant to Section 2.1(a) of
Asset
Purchase Agreement dated as of August _____, 2001 ("Purchase
Agreement") by and among SNAP2 Corporation, a Nevada
corporation ("SNAP2"), ISES Canada Incorporated, a company
incorporated under the laws of the Province of Ontario, Canada
("ISES") (SNAP2 and ISES being the Sellers under the Purchase
Agreement) and Inflight Digital Limited, a company
incorporated under the laws of England and Wales ("Buyer").
2. $_________ by wire transfer pursuant to Section 6.6 of the
Purchase Agreement.
A copy of the Purchase Agreement has been provided to you in your capacity as
the Escrow Agent contemplated by Section 2.1(a) thereof.
Cash and other property, if any, as identified from time to time by SNAP2 and
Buyer.
As Escrow agent, you are hereby directed to hold (in accordance with the
Investment Direction attached hereto as Exhibit A and by this reference
incorporated herein), deal with and dispose of the aforesaid property and any
other property at any time held by you hereunder in the following manner
subject, however, to the terms and conditions hereinafter set forth:
TERMS AND CONDITIONS
--------------------
1. Your duties and responsibilities shall be limited to those expressly
set forth in these Escrow Instructions, and you shall not be subject
to, nor obliged to recognize, any other agreement between, or direction
or instruction of, any or all of the parties hereto even though
reference thereto may be made herein; provided, however, with your
written consent, these escrow instructions may be amended at any time
or times by an instrument in writing signed by all the then parties in
interest.
2. You are authorized, in your sole discretion, to disregard any and all
notices or instructions given by any of the undersigned or by any other
person, firm or corporation, except only such notices or instructions
as are hereinabove provided for and orders or process of any court
entered or issued with or without jurisdiction. If any property subject
hereto is at any time attached, garnished, or levied upon under court
order or in case the payment, assignment, transfer, conveyance or
delivery of any such property shall be stayed or enjoined by any court
order, or in case any order, judgment or decree shall be made or
entered by any court affecting
such property or any part thereof, then and in any of such events you
are authorized, in your sole discretion, to rely upon and comply with
any such order, writ, judgment or decree which you are advised by
legal counsel of your own choosing is binding upon you; and if you
comply with any such order, writ, judgment or decree you shall not be
liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance even though such order, writ,
judgment or decree may be subsequently reversed, modified, annulled,
set aside or vacated.
3. You shall not be personally liable for any act taken or omitted
hereunder if taken or omitted by you in good faith and in the exercise
of your own best judgment, provided that any such action does not
constitute gross negligence or willful misconduct. You shall also be
fully protected in relying upon any written notice, demand, certificate
or document which you in good faith believe to be genuine.
4. Unless otherwise specifically indicated herein you shall proceed as
soon as practicable to collect any checks or other collection items, if
any, at any time deposited hereunder. All such collections shall be
subject to the usual collection agreement regarding items received by
your commercial banking department for deposit or collection. You shall
not be required or have a duty to notify anyone of any payment or
maturity under the terms of any instrument deposited hereunder, nor to
take any legal action to enforce payment of any check, note or security
deposited hereunder.
5. You shall not be responsible for the sufficiency or accuracy of the
form, execution, validity or genuineness of documents or securities now
or hereafter deposited hereunder, if any, or of any endorsement
thereon, or for any lack of endorsement thereon, or for any description
therein, nor shall you be responsible or liable in any respect on
account of the identity, authority or rights of the persons executing
or delivering or purporting to execute or deliver any such document,
security or endorsement or these escrow instructions.
6. Any notices which you are required or desire to give hereunder to any
of the undersigned shall be in writing and may be given by mailing the
same to the address indicated below opposite the signature of such
undersigned (or to such other address as said undersigned may have
theretofore substituted therefore by written notification to you), by
United States mail, postage prepaid. For all purposes hereof any notice
so mailed shall be as effectual as though served upon the person of the
undersigned to whom it was mailed at the time it is deposited in the
United States mail by you whether or not such undersigned thereafter
actually receives such notice. Notices to you shall be in writing and
shall not be deemed to be given until actually received by your trust
department employee or officer who administers this escrow. Whenever
under the terms hereof the time for giving a notice or performing an
act falls upon a Saturday, Sunday, or holiday, such time shall be
extended to the next business day.
7. If you believe it to be reasonably necessary to consult with counsel
concerning any of your duties in connection with this escrow, or in
case you become involved in litigation on account of being Escrow Agent
hereunder or on account of having received property subject hereto,
then in either case, your costs, expenses, and reasonable attorney's
fees shall be paid by SNAP2, Buyer and Bankers Trust proportionately.
2
8. You shall be paid a reasonable fee of $750.00 for your services
hereunder by SNAP2. The fees will be paid by SNAP2 upon receipt of the
fee xxxx being faxed from Bankers Trust.
9. If you receive a joint notice from SNAP2 and Buyer stating that any
claim under the Purchase Agreement has been admitted by Seller or
evidence reasonably acceptable that any such claim has been finally
awarded by any court of competent jurisdiction or in any arbitration in
favour of Buyer, then you shall distribute funds to the amount so
admitted or awarded up to the maximum of the amount of this Escrow
being, in relation to claims under Section 6.6 of the Purchase
Agreement, the amount deposited under that section and, in relation to
any other claims, the amount deposited under Section 2.1(a) of the
Purchase Agreement and to pay the balance (or if there are no claims at
the relevant dates outstanding the full amount) to SNAP2 at the times
and in the amounts indicated in Section 2.1(c)(i) of the Purchase
Agreement.
10. Interest accrued on the amount deposited in this Escrow (less any tax
thereon which you may be required by law to deduct) will be paid by you
to SNAP2 and/or the Buyer in proportion to the amount (other than
costs) paid to them pursuant to paragraph 9 above.
11. These escrow instructions shall be construed, enforced, and
administered in accordance with the laws of the State of
Iowa.
Dated at Des Moines,
Iowa, August 24, 2001
Parties to Escrow Address
----------------- -------
SNAP2 CORPORATION 00000 Xxxxxx Xxxxx
Xxx Xxxxxx, Xxxx 00000
ISES CANADA INCORPORATED 00000 Xxxxxx Xxxxx
x/x XXXX0 XXXXXXXXXXX Xxx Xxxxxx, Xxxx 00000
Inflight Digital Limited 00 Xxxxx Xxxxxx
Xxxxxxxxxx Xxxx Xxxxxx, X.X.
Bankers Trust Company, N.A 000 Xxxxxx Xxxxxx
Attn: Xxxxx Xxxxxxxx Xxx Xxxxxx, Xxxx 00000
BANKERS TRUST, ESCROW AGENT SNAP2 CORPORATION
BY: BY:
---------------------------- --------------------------
TITLE: VICE PRESIDENT TITLE:
-----------------------
TAX ID #:
--------------------
ISES CANADA INCORPORATED INFLIGHT DIGITAL LIMITED
BY: BY:
------------------------ --------------------------
TITLE: TITLE:
--------------------- -----------------------
3
RECEIPT
The undersigned Escrow Agent hereby acknowledges receipt of the property
described in the above Escrow Instructions and agrees to hold, deal with and
dispose of said property and other property at any time held by it hereunder in
accordance with the foregoing Escrow Instructions.
Dated at Des Moines, Iowa,
----------------------------, 20__.
Bankers Trust Company
By
--------------------------
ATTEST:
-------------------------------
Executed in ________ copies
4
INVESTMENT DIRECTION
All funds held in the account are to be invested in the Fidelity Institutional
Money Market Government Fund XX X.
SNAP2 CORPORATION
BY:
--------------------------------- --------------------------
Xxxx X. Xxxxxxx, III, President Date
INFLIGHT DIGITAL LIMITED
BY:
--------------------------------- --------------------------
Xxx Xxxxxxxx, President Date
5
EXHIBIT D
FORM OF OPINION OF SELLER'S COUNSEL
__________, 2001
INFLIGHT DIGITAL LIMITED
00 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxx Xxxxxx, Xxxxxx Xxxxxxx
Re:
Asset Purchase Agreement dated ____________, 2001 between
SNAP2 Corporation as a Seller and Inflight Digital Limited
as Buyer
Gentlemen:
This opinion is furnished to you pursuant to Section 6.9 of the
Asset
Purchase Agreement dated August ___, 2001 (herein called the "Agreement") by and
between SNAP2 Corporation, (herein called the "Company"), and you.
We have acted as counsel for the Company in connection with its sale
and license (as applicable) to you of its IFE Assets as defined in and
contemplated by the Agreement. As such counsel, we have reviewed the Agreement
and the corporate proceedings of the Company relating to the authorization and
approval by the Board of Directors of the Company of the transaction
contemplated by the Agreement. We have examined the originals or copies
certified or otherwise authenticated to our satisfaction of the Articles of
Incorporation and By-Laws of the Company, resolutions adopted by the Board of
Directors, including the respective documents submitted thereto for approval or
ratification, and certificates or letters of public officials.
As to questions of fact relating to the Company which are material to
our opinion, we have relied solely upon the representations and warranties of
the Company in the Agreement and documents referred to therein. In rendering our
opinion, we have assumed the genuineness and authenticity of all documents
submitted to us as originals and the conformity with genuine and authentic
originals of all documents submitted to us as copies; we have assumed the due
authorization, execution and delivery of the Agreement and the documents
referred to therein by you, the binding effect of such documents on you and the
enforceability thereof against you; we have made no independent investigation as
to the accuracy for completeness of any certificates, representations, data or
other information, written or oral, made or furnished in connection with the
Agreement or otherwise, and we have assumed that none of such information
contains any untrue statement of a material fact or omits a material fact
necessary to make the statements made not misleading.
Based upon the foregoing assumptions and limitations and subject to the
further limitations set forth below, we are of the opinion that:
1. The Company is a corporation organized under the laws of Nevada in
good standing under the laws of such State and is authorized to transact
business in the State of Iowa as a foreign corporation.
Page 2
2. The Company is validly existing and has all requisite corporate
power to own its assets and conduct its business now being conducted and to
execute and deliver the Agreement and to consummate the transactions
contemplated thereby.
3. The consummation of the transactions contemplated by the Agreement
will not conflict with any term or provision of the Articles of Incorporation by
By-Laws of the Company.
4. The Agreement has been duly executed and delivered by officers of
the Company, and has been duly authorized by all necessary corporate action of
the Company. The Agreement is a valid, enforceable and binding agreement of the
Company except that (i) the validity, enforceability and binding effect of the
obligations contained in the Agreement may be limited or affected by bankruptcy,
insolvency, reorganization, moratorium or other laws applicable to creditors'
rights generally and (ii) the enforceability of any obligations contained in the
Agreement, other than for the payment of money, are subject to the principles of
equity which may limit the availability of certain equitable remedies (such as
specific performance).
5. We have no knowledge of any action or proceeding which has been
instituted or, threatened before any court or governmental authority, which
would enjoin or make illegal the performance and consummation of this Agreement.
6. We have no knowledge of any material pending or threatened
litigation against the Company except as disclosed in Schedule 3.8 to the
Agreement.
7. To our knowledge having made reasonable enquiry of the relevant
officers of Seller, the share purchase agreement dated June 26, 2001 ("Share
Purchase Agreement") for the sale and purchase of all issued and outstanding
shares of capital stock of ISES Canada, Incorporated has been entered into
between Company as Purchaser in the Share Purchase Agreement and certain
individuals as Vendors and such sale and purchase has closed substantially in
accordance with the terms of the Share Purchase Agreement.
We are members of the bar of the State of Iowa only and do not hold
ourselves out as experts on the laws of any other State or foreign country.
Consequently, we express no opinion with respect to the laws of any jurisdiction
other than the State of Iowa and the United States of America.
In the foregoing opinions, phrases such as "to our knowledge," "known
to us," "we know of," "of which we have knowledge" and those with equivalent
wording refer to the actual conscious awareness of information by the lawyers of
this firm who have prepared this opinion or have been actively involved in
assisting and advising the Company in connection with the transaction
contemplated by the Agreement. In that regard, we have not undertaken any
independent investigation of or inquiry into such matters as are not
specifically addressed in numbered paragraphs (1) through (7).
This opinion is limited to the matters stated herein and no opinion is
implied or may be incurred beyond the matters expressly stated herein.
This opinion is limited in its use to reliance by you in consummating
the transaction contemplated by the Agreement. No other person or entity may
rely or claim reliance upon this opinion.
Page 3
The opinions expressed herein are made as of the date hereof and we do
not undertake to update this opinion with respect to any changes of which we may
later become aware.
Very truly yours,
NYEMASTER, GOODE, VOIGTS, WEST, XXXXXXX
& O'BRIEN, P.C.
By:
----------------------------------
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