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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into as of the 1st day of
December, 1999 by and among Alloy Online, Inc. ("Parent"), Alloy Acquisition
Corporation. ("Buyer"), a Delaware corporation and wholly-owned subsidiary of
Parent, and Celebrity Sightings, LLC, a Delaware limited liability company
("SELLER").
WHEREAS, Seller is engaged in the business of developing, operating and
marketing celebrity Web sites aimed at teen audiences (the "BUSINESS");
WHEREAS, Buyer wishes to purchase, and Seller wishes to sell to Buyer,
substantially all of the assets used in or related to, or intended to be used by
Seller in or related to, the Business.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:
"ACTION" means any claim, action, suit, arbitration, mediation,
inquiry, proceeding or investigation by or before any Governmental Authority (or
arbitrator or mediator, as the case may be), whether at law or in equity.
"AFFILIATE" means, with respect to any specified Person, any other
Person that directly, or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such Person.
"AFFILIATE INVESTMENT REPRESENTATION AND LOCK-UP AGREEMENT" means the
Affiliate Investment Representation and Lock-Up Agreement substantially in the
form of EXHIBIT C-1 attached hereto to be entered into between Parent and each
Seller Affiliate Member prior to transfer of any Parent Shares by Seller to such
Seller Affiliate Member.
"AGREEMENT" or "THIS AGREEMENT" means this Asset Purchase Agreement
dated the date hereof among Parent, Buyer and Seller as amended, modified or
supplemented from time to time in accordance with the provisions hereof.
"ANCILLARY AGREEMENTS" means the Assumption Agreement, the Xxxx of
Sale, the Affiliate Investment Representation and Lock-up Agreements, the
Non-Affiliate Investment Representation and Lock-up Agreements, the
Non-competition Agreements, the Escrow Agreement, the Registration Rights
Agreement and all other agreements entered into by the parties in connection
with the transactions contemplated hereby.
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"ASSUMPTION AGREEMENT" means the Assumption Agreement substantially in
the form of EXHIBIT A attached hereto to be entered into between Seller and
Buyer on the Closing Date.
"ASSUMED LIABILITIES" has the meaning specified in Section 2.03.
"XXXX OF SALE AND ASSIGNMENT" means the Xxxx of Sale and Assignment
substantially in the form of EXHIBIT B attached hereto to be entered into
between Seller and Buyer on the Closing Date.
"BUSINESS" has the meaning specified in the recitals to this Agreement.
"CHARTER DOCUMENTS" means, in the case of Seller, the Operating
Agreement and its certificate of formation, and, in the case of a Buyer or
Parent, the certificate of incorporation and bylaws of such entity.
"CLAIMS" means all actions, causes of action, suits, debts, dues, sums
of money, accounts, bonds, bills, covenants, contracts, controversies,
agreements, promises, trespasses, damages, judgments, executions, claims,
Liabilities, investigations, prosecutions and demands whatsoever, in law or
equity, regardless of when made or asserted and regardless of whether fixed or
contingent.
"CLOSING" has the meaning specified in Section 2.05.
"CLOSING DATE" has the meaning specified in Section 2.05.
"CODE" has the meaning specified in Section 2.04.
"COMPUTER PROGRAMS" means computer applications, files, tools,
utilities, software, firmware, systems and programs, including, without
limitation, all versions and releases thereof, and all data, data bases and
documentation, whether electronically or physically maintained, used by or
useful in connection with the operation or development of such applications,
files, tools, utilities, software, firmware, systems and programs, which in any
case are (i) owned or used under license with a right to sublicense by Seller
and (ii) used by Seller (whether or not under a license or other similar
agreement) in connection with the operation of the Business.
"CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH") means, with respect to the relationship between or among two or
more Persons, the possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the direction of the affairs or management of a
Person, whether through the ownership of voting securities, as trustee or
executor, by contract or otherwise, including, without limitation, the
ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"DAMAGES" means any and all costs, losses, Claims, Liabilities, fines,
penalties, damages and expenses (including interest which may be imposed in
connection therewith), court costs, and reasonable fees and expenses of counsel,
consultants and expert witnesses, incurred by a party hereto.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached hereto and
comprised of the Schedules enumerated herein, which is a part of, and is
incorporated by reference into, this Agreement.
"EFFECTIVE TIME" means 5:00 p.m. local California time on the Closing
Date.
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"ENCUMBRANCE" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse Claim, preferential arrangement, or restriction of any
kind, including, without limitation, any restriction on the use, voting,
transfer, receipt of income or other exercise of any attributes of ownership.
"ENVIRONMENTAL LAWS" means any federal, state or local law, including
any statute, rule, regulation, ordinance, code or rule of common law, as in
effect on the date hereof, and any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or
judgment, relating to the environment, health, safety or Hazardous Materials.
"ENVIRONMENTAL PERMITS" means all permits, approvals, registrations,
identification numbers, licenses and other authorizations and filings required
under any applicable Environmental Law.
"ERISA" has the meaning specified in Section 3.16.
"ESCROW AGREEMENT" means the Escrow Agreement substantially in the form
of EXHIBIT E attached hereto to be entered into by Seller, Parent and the escrow
agent named therein on the Closing Date.
"EXCLUDED ASSETS" has the meaning specified in Section 2.02.
"EXCLUDED LIABILITIES" has the meaning specified in Section 2.03.
"FINANCIAL STATEMENTS" has the meaning specified in Section 3.04.
"FORM 10-Q" has the meaning specified in Section 4.05.
"GAAP" means United States generally accepted accounting principles and
practices in effect from time to time applied consistently by Seller throughout
the periods involved.
"GOVERNMENTAL AUTHORITY" means any United States federal, state or
local or any foreign government, governmental, regulatory or administrative
authority, or commission or any court, tribunal or agency.
"HAZARDOUS MATERIALS" means any chemicals, materials or substances
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "toxic substances," "toxic pollutants,"
"contaminants" or "pollutants," or words of similar import, under any applicable
Environmental Law.
"INTELLECTUAL PROPERTY" means (i) trademarks, service marks, trade
dress, logos, trade names and corporate names and registrations and applications
for registration thereof together with all goodwill therein, (ii) inventions,
ideas and patent disclosures, whether or not reduced to practice and whether or
not yet made the subject of a pending patent application or applications, (iii)
Internet URLs, domain name registrations and applications (and any interests
therein), (iv) statutory invention registrations, patents, patent registrations
and patent applications and all improvements thereto, (v) copyrights (registered
or otherwise) and registrations and applications for registration thereof, (vi)
computer software, data, databases and any related documentation, (vii) trade
secrets and confidential business information, technology (including know-how
and show-how), copyrightable works, financial, marketing
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and business data, pricing and cost information, business and marketing plans
and customer and supplier lists and information, (viii) copies and tangible
embodiments of all the foregoing, in whatever form or medium, except for
Software, as that term is defined in Section 3.23, which shall be transferred
only electronically pursuant to Section 2.05, (ix) all rights to register
trademarks and copyrights and to obtain rights to apply for patents, and (x) all
rights to xxx for present and past infringement of any of the foregoing
Intellectual Property.
"INVENTORIES" means all inventory, merchandise, goods, raw materials,
work-in-process, finished goods, packaging and supplies owned by Seller and
related to the Business, that are maintained, held or stored by or for Seller or
any of its Subsidiaries on the Closing Date and any prepaid deposits for any of
the same, but specifically excluding any inventory, merchandise, goods, raw
materials, work-in-progress, finished goods, packaging and supplies owned by any
other Person and held by or on behalf of Seller as consignee.
"LEASED PARCEL" has the meaning specified in Section 3.19.
"LIABILITIES" means liabilities, debts or obligations, whether accrued,
absolute, contingent or otherwise, known or unknown.
"MARKET VALUE" means $16.878 per share, which is the average closing
price for the Parent Shares as quoted on the NASDAQ National Market System for
the trading days beginning on November 1, 1999 and ending on the second trading
day prior to the Closing Date.
"MATERIAL ADVERSE CHANGE" means a material adverse change in the
business, affairs, operations, assets, liabilities, prospects, results of
operations or the condition (financial or otherwise) of Seller or the Business
taken as a whole.
"MATERIAL ADVERSE EFFECT" means any circumstance, change in or effect
on Seller or the Business that, individually or in the aggregate with any other
circumstances, changes in or effects on Seller or the Business (i) is, or would
be, materially adverse to the business, affairs, operations, assets,
liabilities, prospects, results of operations or the condition (financial or
otherwise) of Seller or the Business taken as a whole, or (ii) would materially
adversely affect the ability of Buyer to own the Purchased Assets or to operate
and conduct the Business in the Ordinary course of Business from and after the
Closing Date.
"MATERIAL CONTRACTS" has the meaning specified in Section 3.21.
"1997 BALANCE SHEET" has the meaning specified in Section 3.04.
"1998 BALANCE SHEET" has the meaning specified in Section 3.04.
"1999 FINANCIAL STATEMENTS" has the meaning specified in Section 3.04.
"NON-AFFILIATE INVESTMENT REPRESENTATION AND LOCK-UP AGREEMENT" means
the Non-Affiliate Investment Representation and Lock-Up Agreement substantially
in the form of EXHIBIT C-2 attached hereto to be entered into between Parent and
each Seller Non-Affiliate Member prior to transfer of any Parent Shares by
Seller to such Seller Non-Affiliate Member.
"NON-COMPETITION AGREEMENT" means the Non-competition Agreement
substantially in the form
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of EXHIBIT D attached hereto to be entered into among Seller, the Seller
Affiliate Members, Buyer and Parent on the Closing Date.
"OPERATING AGREEMENT" means the Second Restated Operating Agreement for
Celebrity Sightings, LLC, a Delaware limited liability company, dated July __,
1999, as amended.
"ORDER" means any order, writ, judgment, injunction, decree, demand
letter, stipulation, determination or award issued or entered by or agreed to
with any Governmental Authority.
"ORDINARY COURSE OF BUSINESS" means the operation of the Business in
the ordinary course of business consistent with Seller's usual and customary
practices in managing and operating the Business as such practices existed on
October 31, 1999 without regard to the transactions contemplated hereby.
"PARENT SEC DOCUMENTS" has the meaning specified in Section 4.06.
"PARENT SHARES" means the shares of Parent's common stock, par value
$.01 per share, to be issued to Seller on the Closing Date pursuant to Section
2.04(a).
"PERMITS" has the meaning specified in Section 3.13.
"PERMITTED ENCUMBRANCES" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (i) liens for taxes, assessments and governmental charges or
levies in the nature of taxes or user fees not yet due and payable in the
Ordinary Course of Business; (ii) Encumbrances imposed by law, such as
materialmen's, mechanics', carriers', workmen's and repairmen's liens and other
similar liens arising in the Ordinary Course of Business securing obligations
that (a) are not overdue for a period of more than 30 days and (b) are not in
excess of $2,000 in the case of a single property or $20,000 in the aggregate at
any time; and (iii) pledges or deposits to secure obligations under workers'
compensation laws or similar legislation or to secure public or statutory
obligations.
"PERSON" means any individual, partnership, firm, corporation, limited
liability company, association, trust, unincorporated organization or other
governmental or non-governmental entity.
"PURCHASED ASSETS" has the meaning specified in Section 2.01.
"RECEIVABLES" means all accounts receivable, notes and other amounts
receivable from third parties, including (without limitation) customers and
employees, arising from the conduct of the Business prior to the Closing Date,
whether or not in the ordinary course, together with all unpaid financing
charges accrued thereon.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement
substantially in the form of EXHIBIT F attached hereto to be entered into among
Buyer and Seller on the Closing Date.
"SELLER AFFILIATE MEMBERS" means RHL Marketing Corporation and Guidance
Solutions, Inc.
"SELLER EMPLOYEES" has the meaning specified in Section 3.15.
"SELLER MEMBER" means any holder of a membership interest of Seller,
including both Seller
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Affiliate Members and Seller Non-Affiliate Members.
"SELLER NON-AFFILIATE MEMBER" means any Seller Member other than the
Seller Affiliate Members.
"SUBSIDIARY" means, with respect to any Person, any other Person of
which a majority of the capital stock or other ownership interests are at the
time directly or indirectly owned or controlled by such Person.
"TANGIBLE PERSONAL PROPERTY" has the meaning specified in Section 3.17.
"TAX" or "TAXES" means any and all taxes, fees, levies, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority, including,
without limitation: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes;
license, registration and documentation fees; and customs' duties, tariffs, and
similar charges.
"TRANSACTION DOCUMENTS" means this Agreement, the Ancillary Agreements,
and all certificates, instruments, financial statements, reports or other
documents delivered pursuant to this Agreement, any Ancillary Agreement or the
transactions contemplated hereby or thereby.
SECTION 1.02 SINGULAR/PLURAL. Unless the context otherwise requires,
words defined herein in the singular include the plural and words defined herein
in the plural include the singular.
SECTION 1.03 ACCOUNTING TERMS. Any accounting terms used in this
Agreement that are not specifically defined shall have the meanings customarily
given them in accordance with GAAP.
SECTION 1.04 GENDER. The use of the masculine or any other pronoun
herein when referring to any Person is for convenience only and shall be deemed
to refer to the particular Person intended regardless of the actual gender of
such Person or whether such Person is a corporate or other entity.
ARTICLE II
PURCHASE AND SALE OF THE PURCHASED ASSETS
SECTION 2.01 TRANSFER OF PURCHASED ASSETS TO BUYER. Upon the terms and
subject to the conditions set forth in this Agreement, on the Closing Date,
Seller shall transfer to Buyer, free and clear of all Encumbrances (other than
Permitted Encumbrances and other Encumbrances disclosed by Seller in the
Disclosure Schedule), all of the assets, properties, goodwill and rights owned
by Seller or in which Seller has any right or interest of every type and
description, real, personal and mixed, tangible and intangible, in each case
belonging or related to or used in the Business, wherever located, other than
the Excluded Assets (collectively, the "PURCHASED ASSETS"), including, without
limitation, the following as the exist as of the Closing Date (excluding, in
each case, the Excluded Assets):
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(a) all rights of Seller under all contracts, agreements,
leases, commitments, and sales and purchase orders, and under all commitments,
bids and offers, including the rights of Seller to receive goods or materials
for inventory as the result of orders placed by Seller in the Ordinary Course of
Business prior to the Closing Date and which services are not performed and
which goods and materials are not delivered prior to the Closing Date;
(b) all of Seller's interests in and rights to and under all
real or personal property owned or leased by Seller in connection with the
Business, including all leases or contracts relating thereto, including, without
limitation, all real property and Tangible Personal Property listed on Schedule
2.01(b) hereof;
(c) all rights of Seller in all Receivables, cash and cash
equivalents;
(d) all of Seller's books of account, general, financial, tax
and personnel records, invoices, shipping records, supplier lists,
correspondence and other documents, records and files and all Computer Programs
and files and any of Seller's rights thereto related to or used in the Business;
(e) all rights of Seller in Intellectual Property;
(f) the goodwill of Seller relating to the Business; and
(g) all of Seller's right, title and interest in, to and under
all other assets, rights and claims of every kind and nature relating to or used
by or useful to Seller in connection with the operation of the Business.
SECTION 2.02 EXCLUDED ASSETS. The Purchased Assets shall exclude the
following assets owned by Seller (the "EXCLUDED ASSETS"):
(a) the rights of Seller under all contracts, agreements and
commitments listed on SCHEDULE 2.02 attached hereto;
(b) all rights of Seller under this Agreement, the Ancillary
Agreements and any other Transaction Document;
(c) Seller's corporate records, including, without limitation,
the Operating Agreement;
(d) Assets constituting any pension or other funds for the
benefit of Seller's employees including, without limitation, Seller's 401(k)
plan;
(e) the Parent Shares;
(f) all books of account, general, financial, tax and
personnel records, invoices, shipping records, supplier lists, correspondence
and other documents, records and files and all Computer Programs and files and
any rights thereto in each case related exclusively to Excluded Assets or
Excluded Liabilities; and
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(g) all physical forms of Software Programs included as part
of the Purchased Assets.
SECTION 2.03 ASSUMPTION AND EXCLUSION OF LIABILITIES. (a) In connection
with its acquisition of the Purchased Assets, Buyer shall not assume, discharge
or perform any Liabilities of Seller other than the following Liabilities
specifically identified below (the "ASSUMED LIABILITIES"), all of which Buyer
shall assume, discharge and perform, as appropriate, from and after the
Effective Time:
(i) all of the obligations of Seller under the
Material Contracts and under other contracts, agreements, leases,
commitments, sales and purchase orders, commitments, bids and offers
included as part of the Purchased Assets (collectively, the
"Transferred Contracts"); PROVIDED, that Buyer shall not assume, and
does not hereby agree to pay, discharge or perform, any Damages which
arise out of any breach by Seller of any such Transferred Contracts or
other agreements prior to the Closing unless such breaches are
otherwise disclosed on the Disclosure Schedules;
(ii) the other accrued expenses of Seller, if any,
which have been incurred in the Ordinary Course of Business prior to
the Closing Date in amounts consistent with past practice and which are
reflected in the books of account of Seller (other than the Excluded
Liabilities), including, without limitation, the obligations of Seller
to receive and pay for services rendered and goods and materials for
inventory which were accrued by Seller in the Ordinary Course of
Business on or prior to the Closing Date and which were not rendered or
delivered prior to the Closing Date, all of which are listed on
Schedule 2.03;
(iii) all other debts and obligations of the Business
reflected on the books and records of Seller as of the Closing Date and
listed on Schedule 2.03 hereto (except as noted thereon);
(iv) the sales tax obligations arising in connection
with the transfer of the Tangible Personal Property; and
(v) the Liabilities for accrued vacation due
employees of Seller who become employed by Buyer after the Closing.
It is not the intention of Buyer or Seller that the assumption by Buyer
of the Assumed Liabilities shall in any way enlarge the rights of any third
parties relating thereto. Nothing contained herein shall prevent Buyer or Seller
from contesting any of the Assumed Liabilities with any third party obligee.
(b) Buyer shall have no Liability whatever for any Liabilities
of Seller which are not specifically assumed in accordance with the provisions
of this Agreement, and Seller shall retain, and shall be responsible for paying,
performing and discharging when due, (1) all other Liabilities and obligations
of Seller or any of its Affiliates relating to the operation or conduct of the
Business or ownership of the Purchased Assets prior to the Closing Date and (2)
all Liabilities of Seller arising out of Seller's operation of its business
after the Closing Date (collectively, the "EXCLUDED LIABILITIES"), including,
without limitation:
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(i) other than the sales taxes included as part of
the Assumed Liabilities pursuant to Section 2.03(a)(iv), all Taxes
imposed on or with respect to income now or hereafter owed by Seller or
attributable to the Business or the Purchased Assets, relating to any
period, or any portion of any period, ending on or prior to the Closing
Date;
(ii) all Liabilities relating to or arising out of
the Excluded Assets;
(iii) all costs and expenses, including, without
limitation, professional fees and expenses in excess of $60,000
incurred by Seller relating to the transactions contemplated by this
Agreement and the Ancillary Agreements;
(iv) all Liabilities based upon or arising out of a
violation of any law, rule or regulation by Seller on or prior to the
Closing Date including, without limitation, (A) any violation of any
federal or state securities laws except to the extent such violations
arise as a direct result of the actions or inaction of Buyer or Parent,
including without limitation, in connection with the issuance of the
Parent Shares and (B) all Liabilities arising out of Seller's failure
to file timely any Forms 5500 or other reports required to be filed in
respect of any of Seller's employee benefit plans;
(v) any Damages arising out of any Claim of a third
party, including, without limitation, any Liabilities arising out of
(i) any violation by Seller of any rights of third parties in respect
of any Intellectual Property, (ii) any violation by Seller of any other
Intellectual Property rights of any third parties in connection with
Seller's operation of the Business, and (iii) any express or implied
representation, warranty, agreement or guarantee made by Seller, or
which is imposed by operation of law, in connection with any products
or goods sold by Seller or any of its Affiliates or any services
performed by Seller or any of its Affiliates, including, without
limitation, any claim of a third party relating to the repair or
replacement of any such product or seeking recovery for tort claims,
property damage, consequential Damages, loss, lost revenue or income or
personal injury;
(vi) all Liabilities for any advances, loans, notes
or other obligations (including interest incurred on such advances,
loans, notes and other obligations) owed to any Seller Member, any
Affiliate of Seller or any Affiliate of any Seller Member; and
(vii) except as set forth in Section 2.03(a)(v) or as
provided pursuant to Section 6.02, all Liabilities for any pension,
payroll, severance and other employee benefits or
obligations with respect to any of Seller's employees for all periods
during their employment with Seller.
SECTION 2.04 PURCHASE PRICE. (a) In consideration of the sale
of the Purchased Assets to Buyer, at the Closing Buyer shall (1) wire to an
account designated by Seller to Buyer or Parent, readily available funds in the
amount of $1,214,000 in cash and (2) deliver, as set forth below, 200,616 Parent
Shares (together with the cash, the "Purchase Price"), payable as hereinafter
set forth. At the Closing Buyer shall:
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(i) deliver to the Seller a certificate or
certificates for an aggregate of 180,555 of the Parent Shares
registered in the name of Seller; and
(ii) deliver to State Street Bank & Trust Company, as
escrow agent (the "ESCROW AGENT") a certificate for an aggregate of
20,061 Parent Shares (the "ESCROW SHARES") to be registered in the name
of Seller to be held by the Escrow Agent pursuant to and in accordance
with the Escrow Agreement to be executed by the Escrow Agent and the
other parties hereto substantially in the form of EXHIBIT E hereto.
(a) In consideration for the transfer of the Purchased Assets,
upon the terms and subject to the conditions set forth in this
Agreement, Buyer shall, on the Closing Date, assume the Assumed
Liabilities pursuant to this Agreement and the Assumption Agreement.
SECTION 2.05 CLOSING. Subject to the satisfaction or waiver of
each of the conditions set forth in Article VIII of this Agreement, the closing
of the transactions contemplated by this Agreement (the "CLOSING") shall take
place at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., in
New York, New York at 10:00a.m. on December 3, 1999, or such other location,
date and time as may be agreed upon by the parties (such date and time being
called the "CLOSING DATE"). At the Closing, Seller shall deliver or cause to be
delivered to Buyer (i) the executed Xxxx of Sale transferring the Purchased
Assets to Buyer, (ii) the executed Assumption Agreement and (iii) all other
assignments or other instruments of transfer requested by Buyer and made
available to Seller to effect legally the transfer of any the Purchased Assets
from Seller to Buyer. Notwithstanding the foregoing, the data and related
programming for Seller's web site(s) with the URL's listed on Schedule 3.22
hereto, whether or not included in any definition of Owned Software or Third
Party Software, shall not be transferred physically, but shall, at the request
of Buyer, be sent electronically to an ISP or other internet address specified
in writing by Buyer to Seller. Buyer will send written confirmation to Seller
promptly after the successful electronic transmission thereof to confirm such
successful receipt. All books, data, documents, instruments, and other records
relating to the Business, the Purchased Assets and the Assumed Liabilities
(other than those relating exclusively to Excluded Assets or Excluded
Liabilities) shall be delivered to Buyer at the principal office of Seller in
Marina Del Rey, California. At the Closing, the parties shall also deliver or
cause to be delivered to the other parties the certificates, opinions and
Ancillary Agreements required to be delivered by the parties pursuant to Article
VIII and Buyer shall wire the cash portion of the purchase price and deliver the
Parent Shares in accordance with Section 2.04(a) above. All of the transactions
contemplated hereby shall be effective from and after 5:00 p.m. local California
time on the Closing Date (the "Effective Time").
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE SELLER
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller hereby represents and
warrants to Buyer and Parent as follows (with disclosure of any item on one
portion of the Disclosure Schedules being deemed disclosure of such item on all
relevant portions of the Disclosure Schedules and with the Disclosure Schedules
being made a part hereof):
SECTION 3.01 ORGANIZATION AND QUALIFICATION. Seller is a limited
liability company duly organized, validly existing and in good standing under
the laws of the state of Delaware and is duly licensed or qualified to transact
business as a foreign corporation and is in good standing in California and each
other jurisdiction in which the ownership or leasing of its assets or properties
or conduct of the business requires it to be so licensed or qualified, except
where the failure to be so licensed or qualified would not have a Material
Adverse Effect. Seller has no Subsidiaries.
SECTION 3.02 CORPORATE POWER AND AUTHORITY; VALIDITY. Seller has the
limited liability company power and authority (i) to own and hold its assets and
properties and to carry on the Business and (ii) to execute, deliver and perform
this Agreement and the other Transaction Documents to which it is a party. The
execution, delivery and performance of this Agreement and such other Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby have been duly authorized and approved by all necessary limited
liability company action on the part of Seller. This Agreement has been, and
each of the other Transaction Documents to be executed and delivered by Seller
and, where applicable, the Seller Affiliate Members, will be, when executed and
delivered by Seller, duly executed and delivered by Seller and, where
applicable, the Seller Affiliate Members. This Agreement constitutes, and each
other Transaction Document when so duly executed and delivered by Seller will
constitute, the legal, valid and binding obligation of the Seller and, where
applicable, the Seller Affiliate Members enforceable against each of the Seller
and, where applicable, the Seller Affiliate Members, in accordance with its and
their respective terms.
SECTION 3.03 NO CONFLICT. Neither the execution and delivery by Seller
of this Agreement and the other Transaction Documents to which it is a party,
the consummation by Seller of the transactions contemplated hereby or thereby,
nor the performance by Seller of this Agreement and such other Transaction
Documents in compliance with the terms and conditions hereof and thereof, will
(i) violate, conflict with or result in any breach of Seller's Charter
Documents, (ii) require by or on behalf of Seller any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority or any other Person (except as disclosed on SCHEDULE 3.03(i) hereto),
(iii) violate, conflict with or result in a breach in any material respect, or
default or termination (or give rise to any right of termination, cancellation
or acceleration of the maturity of any payment date of any of the obligations of
Seller or increase or otherwise affect the obligations of Seller) under any law,
rule, regulation or any governmental permit, license or Order or any of the
terms, conditions or provisions of any mortgage, indenture, note, license,
agreement or other instrument or obligation to which Seller is a party or by
which Seller any of its assets are subject or affected or (iv) result in the
creation of any Encumbrance upon any of the Purchased Assets.
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SECTION 3.04 FINANCIAL STATEMENTS. Seller has previously delivered to
Seller true and complete copies of the (i) audited balance sheet of Seller as of
December 31, 1997 and the related profit and loss statement (together, the "1997
FINANCIAL STATEMENTS"), (ii) audited balance sheet of Seller as of December 31,
1998 and the related profit and loss statement (together, the "1998 FINANCIAL
STATEMENTS"). Attached hereto as Schedule 3.04 are the unaudited balance sheet
of Seller as of October 31, 1999 and the related profit and loss statement for
the 10 month period then ended (the "1999 FINANCIAL STATEMENTS"). All such
financial statements (together, the "FINANCIAL STATEMENTS") have been prepared
in accordance with GAAP consistently applied subject, in the case of the 1999
Financial Statements, to usual and customary year-end audit adjustments, which
will not be material in amount or effect, and were prepared from the books and
records of Seller. The Financial Statements present fairly the financial
position of Seller as of the dates thereof and the results of its operations for
the periods ended on the dates thereof. Seller has made available to Buyer or
its representatives all of its books of account and documents of original entry,
including all worksheets, notes and schedules related to such financial
statements, and representatives of Buyer have examined the same.
SECTION 3.05 [Intentionally Omitted].
SECTION 3.06 ABSENCE OF MATERIAL ADVERSE CHANGE. (a) Since the date of
the 1999 Financial Statements, there has been no Material Adverse Change, and
there is no condition or development or contingency of any kind existing or in
prospect (other than (i) changes in the Ordinary Course of Business consistent
with prior practice and (ii) activities of competitors in the ordinary course of
their respective businesses) which could be expected to have any Material
Adverse Change. Seller is not bound by any agreement, or subject to any charter
or other corporate restriction or any legal requirement, which has, or would be
expected to have, a Material Adverse Effect, except as disclosed on SCHEDULE
3.06(A) hereto.
(b) Since the date of the 1999 Financial Statements, Seller
has not, except as described on Schedule 3.06(b) hereto:
(i) incurred any indebtedness for borrowed money in
excess of $25,000 in the aggregate:
(ii) declared or paid any dividend or declared or
made any other distribution of any kind to its members, or made any direct or
indirect redemption, retirement, purchase or other acquisition if any its
limited liability company interests or units;
(iii ) made any loan or advance to any of its
members, officers, managers, employees, consultants, agents or other
representatives (other than travel and other reasonable advances made in the
Ordinary Course of Business), all of which are reflected in Seller's books and
records, or made any other loan advance otherwise than in the Ordinary Course of
Business;
(iv) made any payment or commitment to pay any
severance or termination pay to any of its officers, managers, employees,
consultants, agents or other representatives, other than payments to, or
commitments to pay, persons made in the Ordinary Course of Business;
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(v) except in the Ordinary Course of Business,
entered into any lease (as lessor or lessee) other than Seller Sublease; sold,
abandoned or made any other disposition of any of its assets or properties;
granted or suffered any Encumbrances on any of its assets or properties; entered
into or amended any Material Contract or other material agreement to which it is
a party, or by or to which it or its assets or properties are bound or subject,
or pursuant to which it agrees to indemnify any party or to refrain from
competing with any party:
(vi) except for inventory or equipment acquired in
the Ordinary Course of Business, made any acquisition of all or any substantial
part of the assets, properties, capital stock or business of any other Person;
(vii) incurred any contingent liability as a
guarantor or otherwise with respect to the obligations of others, cancelled any
material debt or claim or waived any material right;
(viii) incurred any damage, destruction or loss,
whether or not covered by insurance, materially and adversely affecting its
properties, assets or Business; or
(ix) made any change in its accounting methods or
practices, credit practices or collection policies.
SECTION 3.07 INVENTORIES. The inventories and supplies of the Business
are at normal and adequate levels, and of a type and quality, necessary for the
continuation of the Business in the Ordinary Course of Business.
SECTION 3.08 RECEIVABLES. Except as set forth in Schedule 3.08, all
Receivables reflected on the 1999 Financial Statements and all Receivables
arising subsequent to the date of the 1999 Financial Statements have arisen in
the Ordinary Course of Business of Seller, represent valid and enforceable
obligations due to Seller, and to Seller's knowledge have been and are subject
to no set-off or counter-claim. Seller has no Receivables from any person, firm
or corporation which is affiliated with Seller or from any member, manager,
officer or employee of Seller.
SECTION 3.09 TAXES. (a) None of the Purchased Assets is tax-exempt use
property within the meaning of Section 168(h) of the Code. None of the Purchased
Assets is property that is or will be required to be treated as being owned by
another person pursuant to the provisions of Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986.
(b) All Federal, State and local Tax returns required to be
filed by or with respect to Seller or its assets have been properly prepared and
duly and timely filed with the appropriate taxing authorities in all
jurisdictions in which such Tax returns are required to be filed, and all such
Tax returns are true, complete and correct in all material respects. Seller has
duly and timely paid all Taxes that are due, or claimed or asserted by any
taxing authority to be due, from or with respect to it for periods covered by
such Tax returns, except as set forth on SCHEDULE 3.09(b).
(c) Seller has duly and timely withheld from employee
salaries, wages and other
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compensation and has paid over to the appropriate taxing authorities all amounts
required to be so withheld and paid over for all periods under all applicable
laws.
(d) There are no outstanding agreements, waivers or
arrangements extending the statutory period of limitation applicable to any
claim for, or the period for the collection or assessment of, Taxes due from or
with respect to Seller for any taxable period.
(e) All deficiencies asserted or assessments made as a result
of any examinations by any taxing authority of the Tax returns of or covering or
including Seller have been fully paid, and there are no other audits or
investigations by any taxing authority in progress, nor has Seller received any
notice from any taxing authority that it intends to conduct such an audit or
investigation, except as disclosed on SCHEDULE 3.09(e) hereto.
(f) Seller is not a foreign person within the meaning of
Section 1445 of the Code, nor has Seller been a United States real property
holding corporation within the meaning of Section 897(c)(2) during the
applicable period specified in Section 897(c)(1)(A)(ii).
(g) No claim has been made by a taxing authority in a
jurisdiction where Seller does not file Tax returns such that it is or may be
subject to taxation by that jurisdiction.
(h) Seller is not party to any tax sharing or similar
agreement or arrangement (whether or not written) pursuant to which it will have
obligation to make any payments after the Closing.
(i) There are no liens with respect to Taxes upon any of the
Purchased Assets.
(j) Seller has no liability for the taxes of any Person under
Regulation 1.1502-6 (or any similar provision of state, local or foreign law) as
a transferee or successor, by contract, or otherwise.
SECTION 3.10 LITIGATION. Except as set forth on SCHEDULE 3.10 attached
hereto, there is no Action pending or, to the knowledge of Seller, threatened
against, contemplated or affecting Seller, any of the Seller Affiliate Members,
the Business or the transactions contemplated hereby (whether or not Seller is a
party or prospective party thereto) that if adversely determined would have a
Material Adverse Effect or that involves the validity of this Agreement or any
Ancillary Agreement. There are no outstanding Orders involving or affecting
Seller, the Business or the transactions contemplated hereby. Except as set
forth on SCHEDULE 3.10 attached hereto, there is no Action by Seller pending or
threatened against others with respect to or relating in any way to the Business
or the Purchased Assets.
SECTION 3.11 CERTAIN PRACTICES. Neither Seller nor, to Seller's
knowledge, any of Seller's officers, employees or agents has, directly or
indirectly, given or agreed to give any significant rebate, gift or similar
benefit to any supplier, customer, governmental employee or other person who
was, is or may be in a position to help or hinder Seller or the Business (or
assist in connection with any actual or proposed transaction) which (i) could
subject Seller, or Buyer to any damage or penalty in any civil, criminal or
governmental Action, or (ii) if not continued in the future, would result in a
Material Adverse Effect.
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SECTION 3.12 COMPLIANCE WITH LAW. Seller has complied with all laws,
ordinances, legal requirements, rules, regulations and Orders applicable to it,
its operations, properties, assets, products and services and the Business and
Seller is not in violation of or in default under any such law, ordinance, legal
requirement, rule, regulation or Order, which non-compliance, violation or
default would have a Material Adverse Effect.
SECTION 3.13 LICENSES AND PERMITS. SCHEDULE 3.13 attached hereto lists
all material licenses, permits, pending applications, consents, approvals and
authorizations of or from any Governmental Authority, used in or otherwise
necessary for the operation or conduct of the Business or the ownership or use
of the Purchased Assets (collectively, the "PERMITS"). No other Permits are
required for Seller's conduct of the Business in the Ordinary Course of Business
or Seller's ownership or use of the Purchased Assets. Seller has complied in all
material respects with all conditions and requirements imposed by the Permits.
Seller owns or has the right to use the Permits in accordance with the terms
thereof, and each Permit is valid and in full force and effect, other than those
Permits the loss or invalidity of which would not have, individually or in the
aggregate, a Material Adverse Effect.
SECTION 3.14 LABOR AND EMPLOYEE RELATIONS. Seller is not a party to or
bound by any collective bargaining agreement with any labor organization, group
or association covering any of its employees, and Seller has no knowledge of any
attempt to organize any of such employees by any person, unit or group seeking
to act as their bargaining agent.
SECTION 3.15 EMPLOYEES. Attached hereto as SCHEDULE 3.15 is a true,
complete and correct list of each of Seller's employees and independent
contractors, together, solely with respect to those employees and contractors
who Seller contemplates will be available for employment by Buyer as of the
Closing Date (the "SELLER EMPLOYEES"). Seller previously has provided Buyer with
a true, complete and correct list of the current salary and benefits (or other
compensation, with respect to Seller Employees who are independent contractors)
with respect to each such person. No Seller Employee has a written employment or
consulting agreement with Seller except as disclosed on SCHEDULE 3.15 hereto. No
Seller Employee has indicated to Seller that he or she intends to terminate his
or her employment or independent contractor status in connection with the
transactions contemplated hereby or otherwise or seek a material change in his
or her duties or status in connection with the Business, except as disclosed on
SCHEDULE 3.15 hereto.
SECTION 3.16 EMPLOYEE BENEFITS.
(a) EMPLOYEE BENEFIT PLANS. SCHEDULE 3.16 attached hereto
contains a complete and correct list of each "employee benefit plan" (as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) that currently is covering any present or former officer,
director, employee of consultant of Seller and each other material plan or
arrangement providing for severance benefits, deferred compensation, fringe
benefits, pension benefits, insurance benefits, profit sharing, retirement
benefits, stock purchases, stock options, incentives, bonuses, vacations,
disability benefits, hospitalization benefits, medical insurance, life insurance
and other employee benefit plans, programs or arrangements or any similar type
of benefit or compensation covering any present or former officer, director,
employee of consultant of Seller (an "EMPLOYEE PLAN"). Seller has attached as
part of the Disclosure Schedule complete and correct copies of the material
documents comprising each
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Employee Plan and (where applicable) the summary plan description for each
Employee Plan. Each Employee Plan which is subject to ERISA conforms in all
material respects to, and its operation and administration are in all material
respects in compliance with, all applicable requirements of ERISA. There has
been no prohibited transaction under Section 406 of ERISA or Section 4975 of the
Internal Revenue Code with respect to any Employee Plan. There are no Actions
pending (other than routine claims for benefits) or, to Seller's knowledge,
threatened against any Employee Plan or against the assets of any Employee Plan.
(b) PENSION PLANS. Except as set forth on SCHEDULE 3.16,
Seller has not maintained or contributed to, and has not been required to
maintain or contribute to, any Employee Plan which is intended to be qualified
as a pension plan under Section 401(a) of the Internal Revenue Code or which is
an "employee pension benefit plan" (as defined in Section 3(2) of ERISA).
(c) WELFARE PLANS. None of the Employee Plans is an employee
welfare benefit plan (as defined in Section 3(1) of ERISA).
SECTION 3.17 TANGIBLE PROPERTIES. Except as set forth on SCHEDULE 3.17,
with respect to all tangible personal property owned by or leased to Seller and
belonging or relating to or used or intended to be used in the Business and that
is part of the Purchased Assets (the "TANGIBLE PERSONAL PROPERTY"), (i) Seller
has good title free and clear of all Encumbrances (other than Permitted
Encumbrances) to all Tangible Personal Property owned by Seller and (ii) all
leases, conditional sale contracts, franchises or licenses relating to leased
Tangible Personal Property are valid and in full force and effect, and there is
no existing default or event of default or event which with notice or lapse of
time or both would constitute such a default under any of such instruments,
which in any case individually or in the aggregate could have a Material Adverse
Effect. The Tangible Personal Property is usable for the purposes for which it
is currently used, and each item of Tangible Personal Property, whether owned or
leased, is in good operating condition and repair and has been properly
maintained, ordinary wear and tear excepted. With respect to the Tangible
Personal Property, except for the representations and warranties contained
herein or in any other Transaction Document, all such Tangible Personal Property
shall be sold and transferred "as is where is" and all other implied warranties
existing under applicable laws with respect thereto are expressly disclaimed by
Seller.
SECTION 3.18 OWNED PREMISES. There is no real property owned by Seller,
and all buildings and other structures utilized by Seller in connection with the
operation of the Business are located on the Leased Parcels.
SECTION 3.19 LEASED PARCELS. SCHEDULE 3.19 attached hereto sets forth a
summary of lease information with respect to the sole parcel of real property
leased by Seller (the "LEASED PARCEL"). The Leased Parcel is leased pursuant to
a sublease with an Affiliate of the Seller. Such lease (i) is in full force and
effect (no event of default or default which, with the lapse of time or notice
or both, would entitle the lessor to terminate the same exists under any such
lease and (ii) to Seller's knowledge, is enforceable by Seller in accordance
with its terms. Seller has the right to use the Leased Parcel in accordance with
the terms of the lease free and clear of all Encumbrances (other than Permitted
Encumbrances) or other interests or rights of third parties. Except as set forth
on Schedule 3.19, all current uses of the Leased Parcel conform in all material
respects to all applicable laws, ordinances, rules and regulations. There is no
violation by Seller or, to Seller's knowledge, by any other Person of any
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covenant, restriction or other agreement contained in any lease covering a
Leased Parcel, except those which do not or would not have a Material Adverse
Effect.
SECTION 3.20 ENVIRONMENTAL MATTERS. (a) No event has occurred or
condition exists or operating practice is being employed by Seller that could
give rise to any Action or Order under any Environmental Law or Environmental
Permit. Seller is, and, to Seller's knowledge, the Leased Parcels are, in
compliance with all Environmental Laws, except where the noncompliance therewith
has not had and would not have a Material Adverse Effect.
SECTION 3.21 MATERIAL CONTRACTS. (a) SCHEDULE 3.21 attached hereto sets
forth a list of the following written contracts, agreements, commitment, and
licenses to which Seller is a party and that relate to the Business (the
"MATERIAL CONTRACTS"):
(i) all contracts, agreements, purchase orders and
other arrangements, for the purchase or sale of merchandise, supplies
or other property or for the furnishing of services under the terms of
which Seller in the aggregate (A) paid or received during the 10 month
period ended October 31, 1999 more than $10,000 or (B) is likely to pay
or receive more than $10,000 over the remaining term of the contract;
(ii) all broker, distributor, dealer, manufacturer's
representative, agency, sales promotion, market research, marketing
consulting and advertising contracts and agreements to which Seller is
a party and which involve payments in the aggregate in excess of
$10,000;
(iii) all management contracts or contracts with
independent contractors or consultants (or similar arrangements) that
are not cancelable without penalty or further payment within 30
calendar days of notice of such cancellation and which involve payments
in the aggregate in excess of $10,000;
(iv) all contracts and agreements with any
Governmental Authority;
(v) all contracts and agreements that limit the
ability of Seller or any of its Subsidiaries to compete in any line of
business or with any Person or in any geographic area or during any
period of time;
(vi) all contracts, agreements and other arrangements
between or among Seller or any Subsidiary and any officer, director or
Seller Affiliate Members (or member of the family of any officer,
director or Seller Affiliate Members);
(vii) all contracts, agreements and other
arrangements under any Employee Plan;
(viii) all contracts, agreements, instruments or
other documents relating to Seller's indebtedness for borrowed money or
obligations under any capitalized leases or guarantees; and
(ix) all other contracts, agreements and other
arrangements, whether or not made in the Ordinary Course of Business,
the absence of which would result in a Material
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Adverse Effect.
(b) There have been delivered or made available to Buyer true
and complete copies of all of the Material Contracts (and all amendments,
waivers or other modifications thereto). Except as set forth on SCHEDULE 3.21,
all of such Material Contracts are in full force and effect, binding upon
Seller, and to the knowledge of Seller, binding upon the other parties thereto
in accordance with their terms, and Seller has paid in full or accrued all
amounts now due thereunder and has satisfied in full or provided for all of its
Liabilities and obligations thereunder which are presently required to be
satisfied or provided for, and is not in default in any material respect under
any of them, nor, to the best knowledge of Seller, is any other party to any
such contract or other agreement in default thereunder, nor does any condition
exist that with notice or lapse of time or both would constitute a default in
any material respect thereunder.
(c) Except as set forth on SCHEDULE 3.21(c) hereto, no
Material Contract specifically prohibits assignment to Buyer or states that
prior written consent for any such assignment is required, and to Seller's
knowledge, no such prohibition or requirement otherwise exists.
SECTION 3.22 INTELLECTUAL PROPERTY. (a) SCHEDULE 3.22 attached hereto
sets forth a list of all Intellectual Property rights owned, controlled,
licensed or used by Seller in connection with its operation of the Business.
SCHEDULE 3.22 indicates for each listed item, the applicable jurisdiction,
registration number (or application number), and date issued (or date filed) of
each item of Intellectual Property. Seller has delivered or made available to
Buyer true and complete copies (or descriptions) of all of such Intellectual
Property rights. All trademarks, service marks, Internet domain name
registrations and applications (and any other interests therein), patents and
copyrights listed on Schedule 3.22 are in full force, and Seller is entitled to
the use thereof. Except as set forth on Schedule 3.22, Seller owns or possesses
adequate licenses or other rights to use all Intellectual Property necessary to
conduct the Business as conducted by Seller in the Ordinary Course of Business,
except where the failure to do so would not have a Material Adverse Effect, and
Seller has not taken any action, or failed to take any action, in any event,
that could cause such rights not to be duly and validly transferred to Buyer
pursuant to the terms of this Agreement, free of all Encumbrances except
Permitted Encumbrances.
(b) The execution, delivery and performance of this Agreement
and the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby, will not breach, violate or conflict in any
material respect with any instrument or agreement governing any Intellectual
Property used in the conduct of the Business, will not cause the forfeiture or
termination or give rise to a right of forfeiture or termination of any
Intellectual Property , and Seller has not taken any action, or failed to take
any action, in any event, that could impair in any material respect the right of
Buyer to use, sell, license (or sublicense), dispose of, or bring any action for
the infringement of, any Intellectual Property or portion thereof that is part
of the Purchased Assets:
(c) Except as set forth on SCHEDULE 3.22(c), there are no
royalties, honoraria, fees or other payments payable by Seller to any person by
reason of the ownership, use, license (or sublicense), transmission, broadcast,
delivery (electronically or otherwise), sale, or disposition of the Intellectual
Property.
(d) Except as set forth on SCHEDULE 3.22, neither the
manufacture, marketing, license
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(or sublicense), sale, transmission, delivery (electronically or otherwise), or
use of any product or service currently licensed, sold, marketed, transmitted,
broadcast, delivered (electronically or otherwise) or used by Seller or
currently under development by Seller, in the conduct of the Business violates
any license (or sublicense) or agreement of Seller with any third party or, to
Seller's knowledge, infringes any common law or statutory rights of any other
party, including, without limitation, rights relating to defamation, contractual
rights, Intellectual Property and rights of privacy or publicity; nor, to the
best knowledge of Seller, is any third party materially infringing upon, or
violating any license (or sublicense), transmission, broadcast, delivery,
(electronically or otherwise) or agreement with Seller relating to, any
Intellectual Property; and there is no pending or overtly threatened claim or
litigation contesting the validity, ownership or right to use, manufacture,
sell, license (or sublicense), transmit, broadcast, deliver (electronically or
otherwise) or dispose of any Intellectual Property, nor, to Seller's knowledge,
is there any basis for any such claim. Seller has not received any notice
asserting that any Intellectual Property used in the Business or the proposed
use, manufacture, sale, license (or sublicense), transmission, broadcast,
delivery (electronically or otherwise) or disposition thereof in connection of
the Business conflicts or will conflict with the rights of any other party nor,
to Seller's knowledge, is there any basis for any such assertion.
(e) No licenses or rights have been granted by Seller, nor has
Seller authorized any employee, consultant, officer, director, member, agent or
affiliate to grant and licenses or rights, to distribute the source code of, or
to use source code to create Derivative Works, of, any product currently
marketed by, commercially available from or under development by Seller for
which Seller possesses the source code. As used herein, "Derivative Work" shall
mean a work that is based upon one or more preexisting works, such as a
revision, enhancement, modification, abridgment, condensation, expansion or any
other form in which such preexisting works may be recast, transformed or
adapted, and which, if prepared without authorization of the owner of the
copyright in such preexisting work, would constitute a copyright infringement.
For purposes herein, a "Derivative Work" shall also include any compilation that
incorporates such a preexisting work as well as translations from one type of
code to another.
(f) Except as set forth on SCHEDULE 3.22, no person has any
marketing rights to any of the Intellectual Property of Seller (excluding
Intellectual Property licensed to Seller by third parties).
(g) Seller does not own and has not filed any application for
patents. All trademarks, and copyrights are currently in compliance in all
material respects with all legal requirements (including the timely
post-registration filing of affidavits of use and incontestability and renewal
applications with respect to trademarks), and are not subject to any maintenance
fees or actions falling due within ninety (90) days after the Effective Time. No
trademark has been or is now involved in any cancellation and no such action is
overtly threatened with respect to any of the trademarks. All trademarks of
Seller set forth on SCHEDULE 3.22 have been in continuous use by Seller.
(h) SCHEDULE 3.22 sets forth a complete and accurate list of
all license agreements granting any right to use or practice any rights under
any Intellectual Property Rights that are material to the operation of the
Business in the Ordinary Course of Business, whether Seller is the licensee or
licensor thereunder and any assignments, consents, term, forbearances to xxx,
judgments, orders, settlements or similar obligations relating to any
Intellectual Property to which Seller is a party or otherwise bound
(collectively, the "License Agreements"), indicating for each, where applicable,
the title, the parties, date executed, whether or not it is exclusive and the
Intellectual Property covered
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thereby. Except as set forth on SCHEDULE 3.22, the License Agreements are valid
and binding obligations of Seller, enforceable in accordance with their terms,
and, to Seller's knowledge, there exists no event or condition which will result
in a violation or breach in any material respect of, or constitute (with or
without due notice or lapse of time or both) a default in any material respect
by Seller under any such License Agreement.
SECTION 3.23 SOFTWARE.
(a) SCHEDULE 3.23 sets forth a true and complete list and
description of all Computer Programs (A) designed or developed or under
development by employees of Seller or by consultants on Seller's behalf (the
"Owned Software") or (B) licensed by Seller from any third party or constituting
"off-the-shelf" software (the "Licensed Software"), in each case that is
manufactured or used by Seller in the operation of the Business or marketed,
licensed or sold by Seller to third parties (collectively, the "Software") and,
in the case of Licensed Software, SCHEDULE 3.23 identifies each license
agreement with respect thereto. Seller has delivered to Buyer copies of all
documentation in Seller's possession relating to the Owned Software.
(b) Seller owns all right, title and interest in and to the
Owned Software, and all copyrights thereto, free and clear of any Encumbrance
and has not sold, assigned, licensed, distributed or in any other way disposed
of or subjected the Owned Software to any Encumbrance except as provided on
SCHEDULE 3.23. None of the Owned Software incorporates, is based on or is a
derivative work of any third party code that is subject to the terms of a public
source license or otherwise imposes conditions on the terms and conditions under
which the Owned Software may be used or distributed.
(c) To Seller's knowledge, except as set forth on SCHEDULE
3.23, the Licensed Software is validly held and used by Seller and may be used
by Seller and assigned to Buyer pursuant to the applicable license agreement
with respect thereto without the consent of or notice to any third party and
Seller's use of such Licensed Software does not conflict with or violate in any
material respect any such license.
(d) To Seller's knowledge, the Owned Software is free from any
significant software defect, is free from any programming, documentation error
or virus ("Bugs") not consistent with commercially reasonable industry standards
acceptable for such Bugs, operates and runs in a reasonable and efficient
business manner, conforms to the specifications thereof, and, the applications
can be compiled from their associated source code without undue burden, except
for such Bugs which would not be expected to have a Material Adverse Effect.
(e) To Seller's knowledge, Seller has not altered its data, or
any Software or supporting software that may in turn damage the integrity of the
data, whether stored in electronic, optical or magnetic or other form. Seller
has furnished Parent with all documentation in its possession relating to the
use, maintenance and operation of the Software.
(f) Seller's Owned Software (including existing products Owned
Software and technology and Owned Software and technology currently under
development) is designed to be used in connection with dates after December 31,
1999, pursuant to written policies that were provided to Buyer.
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SECTION 3.24 CELEBRITIES. Set forth on SCHEDULE 3.24 attached hereto is
a list of celebrities and talent with whom Seller has entered into agreements
for Seller to develop, operate and market web sites on behalf of such
celebrities and talent, together with the amount of revenues attributable to
agreements with such celebrities and talent as expressed in dollars for the 9
months ended September 30, 1999. No celebrity has terminated, materially reduced
or overtly threatened to terminate its agreement with or materially reduce its
relationship with the Seller, as the case may be, whether in connection with the
transaction contemplated hereby or otherwise.
SECTION 3.25 TRANSACTIONS WITH AFFILIATES. Except as set forth on
SCHEDULE 3.25, no manager, officer or Seller Affiliate Member (i) has any direct
or indirect financial interest in any competitor, supplier or customer of
Seller, (ii) owns, directly or indirectly, in whole or in part, any tangible or
intangible property that Seller uses or has used in the conduct of the Business,
or (iii) has outstanding any indebtedness to Seller. Seller does not have any
liability or obligation to any manager, officer or Seller Affiliate Member.
SECTION 3.26 INSURANCE. SCHEDULE 3.26 sets forth a list of all policies
or binders of fire, liability, product liability, workmen's compensation,
vehicular, directors and officers and other insurance held by Seller. Such
policies and binders are in full force and effect, all premiums with respect
thereto are currently paid, are reasonably believed to be adequate for the
Business. Seller is, and will be through the Closing Date, adequately insured
with responsible insurers against risks normally insured against by companies in
similar lines of business under similar circumstances. Seller (i) has not failed
to give any notice or present any claim under any such policy or binder in due
and timely fashion, (ii) has not received notice of cancellation or non-renewal
of any such policy or binder, (iii) is not aware of any threatened or proposed
cancellation or non-renewal of any such policy or binder, (iv) has not received
notice of any insurance premiums which will be materially increased in the
future, and (v) is not aware of any insurance premiums which will be materially
increased in the future. There are no outstanding claims under any such policy
which have gone unpaid for more than 45 days, or as to which the insurer has
disclaimed liability.
SECTION 3.27 BROKER'S FEE. No Person has or will have, as a result of
the execution, delivery and performance by Seller of this Agreement or the
Ancillary Agreements, any right, interest or claim against or upon Buyer or any
other Person for any commission, fee or other compensation as finder or broker
or in any similar capacity.
SECTION 3.28 INVESTMENT INTENT. Seller will, upon consummation of the
transactions contemplated hereby, be acquiring the Parent Shares for its own
account for the purpose of investment and not with a view to, or for sale in
connection with, the distribution thereof, and it and they have no present
intention of distributing or selling the Parent Shares. Seller understands that
the Parent Shares to be delivered hereunder will not have been registered under
the Securities Act of 1933, as amended (the "Securities Act"), or the securities
laws of any state or other jurisdiction, and hereby agrees not to make any sale,
transfer or other disposition of any thereof other than in connection with a
dissolution of Seller or a distribution of the Parent Shares to Seller's members
and 3 employees of Seller unless either (i) such Parent Shares have been
registered under the Securities Act and all applicable state and other
securities laws and any such registration remains in effect or (ii) Seller shall
have received an opinion of counsel from counsel, and in form and substance,
satisfactory to Parent that registration is not required under the Securities
Act or under applicable state securities laws.
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SECTION 3.29 OPPORTUNITY TO INVESTIGATE. Seller has (i) had the
opportunity to ask questions of and has received satisfactory answers from the
officers of Parent or persons acting on Parent's behalf concerning Parent and
the terms and conditions of an investment in the Parent Shares and all such
questions posed have been answered to its satisfaction; (ii) been given the
opportunity to obtain any additional information it deems necessary to verify
the accuracy of any information obtained concerning Parent; (iii) such knowledge
and experience in financial and business matters that it is able to evaluate the
merits and risks of acquiring the Parent Shares and to make an informed
investment decision relating thereto; (iv) has been furnished with, and has read
and reviewed, the Parent SEC Documents; (v) is aware of Parent's business
affairs and financial condition and has acquired sufficient information about
Parent to reach an informed and knowledgeable decision to acquire the Parent
Shares to be issued to him, her or it; (vi) can afford to suffer a complete loss
of his, her or its investment in such Parent Shares.
SECTION 3.30 RULE 144. Seller (i) is familiar with the provisions of
Rule 144 promulgated under the Securities Act which, in substance, permits
limited public resale of "restricted securities" acquired, directly or
indirectly, from the issuer thereof, in a non-public offering subject to the
satisfaction of certain circumstances which require among other things: (1) the
availability of certain public information about the issuer, (2) the resale
occurring not less than one year after the party has purchased, and made full
payment for, within the meaning of Rule 144, the securities to be sold; and, in
the case of an affiliate, or of a non-affiliate who has held the securities less
than two years, the amount of securities being sold during any three month
period not exceeding the specified limitations stated therein, if applicable and
(3) the sale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term is
defined under the Exchange Act); (ii) understands that if all of the applicable
requirements of Rule 144 are not satisfied, registration under the Securities
Act, compliance with Regulation A, or some other registration exemption will be
required prior to any sale of the Parent Shares; and that, notwithstanding the
fact that Rule 144 is not exclusive, the staff of the SEC has expressed its
opinion that persons proposing to sell private placement securities other than
in a registered offering and otherwise than pursuant to Rule 144 will have a
substantial burden of proof in establishing that an exemption from registration
is available for such offers or sales, and that such persons and their
respective brokers who participate in such transactions do so at their own risk;
and (iii) has either alone or together with Seller's "Purchaser Representative"
(as such term is defined in Rule 501(h), as promulgated under the Securities
Act), such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of acquiring and holding the Parent
Shares.
SECTION 3.31 DISCLOSURE. All documents and schedules delivered or to be
delivered by or on behalf of Seller in connection with this Agreement are true,
complete and correct in all material respects. This Agreement, including,
without limitation, the schedules and exhibits hereto and the certificates or
other instruments or documents made or delivered in connection herewith or
therewith, taken as a whole, does not contain any untrue statement of a material
fact or omit any material fact necessary to make the statements contained herein
or therein not misleading in view of the circumstances under which they were
made.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
Buyer and Parent hereby represent and warrant to Seller as follows:
SECTION 4.01 ORGANIZATION AND QUALIFICATION. Buyer and Parent is each
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and each is duly licensed or qualified to transact business as
a foreign corporation and is in good standing in each jurisdiction in which the
ownership or leasing of its assets or properties requires it to be so licensed
or qualified, except (i) where the failure to be so licensed or qualified would
not individually, or in the aggregate, have a material adverse effect on the
business or operations of Buyer or Parent and (ii) Buyer is not yet qualified to
do business as a foreign corporation in the State of California.
SECTION 4.02 CORPORATE POWER AND AUTHORITY; VALIDITY. Buyer and Parent
each has the corporate power and authority to (i) own and hold its properties
and (ii) execute, deliver and perform this Agreement and the other Transaction
Documents to which it is a party, including, without limitation, to sell and
issue the Parent Shares. All corporate (including stockholder, if applicable)
action necessary for the execution, delivery and performance by Buyer and Parent
of this Agreement and such other Transaction Documents and the consummation by
Buyer and Parent of the transactions contemplated hereby and thereby has been
duly taken, and there are no preemptive rights with respect to issuance of the
Parent Shares. This Agreement has been, and each of the other Transaction
Documents when executed and delivered by Buyer and Parent will be, duly executed
and delivered by such party, as the case may be. This Agreement constitutes, and
each such Transaction Documents when duly executed and delivered by Buyer and
Parent will be, the valid and binding obligation of Buyer and Parent, as
applicable, enforceable against Buyer and Parent, as applicable, in accordance
with its, respective terms, except as enforceability may be subject to the
application of general equitable principles and to bankruptcy, insolvency,
moratorium or other similar laws affecting creditors' rights.
SECTION 4.03 NO CONFLICT. Neither the execution and delivery by Buyer
or Parent of this Agreement and the other Transaction Documents to which each is
to be a party, the consummation by Buyer of the transactions contemplated hereby
or thereby, nor the performance by Buyer and Parent of this Agreement and such
other Transaction Documents in compliance with the terms and conditions hereof
and thereof, will (i) violate, conflict with or result in any breach of its
Certificate of Incorporation, as amended, or Bylaws, (ii) require by or on
behalf of Buyer or Parent any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, other than (A) the
filing with the SEC of such reports and information under the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated by the SEC thereunder, as may be required in connection
with this Agreement and the transactions contemplated hereby, (B) the filing of
such documents with, and the obtaining of such orders from, various state
securities and blue-sky authorities as are required in connection with the
transactions contemplated hereby, and (C) such other consents, waivers,
authorizations, filings, approvals and registrations which if not obtained or
made would impair the Parent Shares or impair in any material respect the
ability of (1) Parent or Buyer to consummate the transactions contemplated by
this Agreement and perform its obligations hereunder or (2) Seller or Seller's
Members and not more than 3 Seller's Employees to whom the Parent Shares are to
be distributed following the Closing to receive and hold the Parent Shares in
accordance with the provisions hereof (each of the actions reflected in clauses
(A) and (B) to be taken by Parent) (subject, in
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each case, to the accuracy of each of their representations contained in their
Investment Representation and Lock-up Agreements, (iii) violate, conflict with
or result in a breach, default or termination (or give rise to any right of
termination, cancellation or acceleration of the maturity of any payment date of
any of the obligations of Buyer or Parent or increase or otherwise affect the
obligations of Buyer or Parent) under any law, rule, regulation, governmental
permit, license or any Order or any of the terms, conditions or provisions of
any mortgage, indenture, note, license, agreement or other instrument or
obligation to which Buyer or Parent is a party or by which Buyer or Parent or
any of their respective assets are bound or affected or (iv) result in the
creation of any Encumbrance upon the assets of Buyer or Parent.
SECTION 4.04 BROKER'S FEES. No Person has or will have, as the result
of the execution, delivery and performance by Buyer of this Agreement or the
Ancillary Agreements, any right, interest or claim against or upon Seller or any
other Person for any commission, fee or other compensation as finder, broker or
in any similar capacity.
SECTION 4.05 CAPITAL STOCK. Parent's Quarterly Report on Form 10-Q
filed with the SEC with respect to the fiscal quarter ended July 31, 1999 (the
"Form 10-Q"), sets forth a true, complete and accurate description of the
authorized and outstanding shares of capital stock of Parent as of such date.
Parent has duly authorized and reserved for issuance the Parent Shares as
contemplated herein, and, when issued in accordance with the terms of Article
II, the Parent Shares will be validly issued, fully paid and nonassessable and
free of preemptive rights and other Encumbrances. Parent owns all the
outstanding shares of capital stock of Buyer, and all of such shares are validly
issued, fully paid and nonassessable and not subject to preemptive rights.
SECTION 4.06 SEC DOCUMENTS.
(i) Parent has furnished or made available to Seller a correct
and complete copies of Parent's Prospectus, dated May 14, 1999,
Parent's Quarterly Report on Form 10-Q as filed with the SEC with
respect to the fiscal quarter ended April 30, 1999, the Form 10-Q, and
each report, schedule, registration statement and definitive proxy
statement filed by Parent with the SEC on or after the date of filing
of the Form 10-Q which are all the documents (other than preliminary
material) that Parent was required to file (or otherwise did file) with
the SEC in accordance with Sections 13, 14 and 15(d) of the Exchange
Act on or after the date of filing with the SEC of the Form 10-Q
(collectively, the "Parent SEC Documents"). As of their respective
filing dates, or in the case of registration statements, their
respective effective times, none of the Parent SEC Documents (including
all exhibits and schedules thereto and documents incorporated by
reference therein) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and the
Parent SEC Documents complied when filed, or in the case of
registration statements, as of their respective effective times, in all
material respects with the then applicable requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules
and regulations promulgated by the SEC thereunder.
(ii) The financial statements (including the notes thereto) of
Parent included in the Form 10-Q for the fiscal quarter then ended,
complied as to form in all material respects with the
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then applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, were prepared in
accordance with GAAP during the periods involved (except as may have
been indicated in the notes thereto) and fairly and accurately present
the financial position of Parent as at the dates thereof and the
results of their operations, stockholders' equity and cash flows for
the period then ended.
SECTION 4.08 COMPLIANCE WITH LAW. Buyer and Parent each has complied
with all laws, including securities laws, ordinances, legal requirements, rules,
regulations and Orders applicable to it, its operations, properties, assets,
products and services and the Business and neither Buyer nor Parent is in
violation of or in default under any such law, ordinance, legal requirement,
rule, regulation or Order, which non-compliance, violation or default would be
expected to have a material adverse effect on Buyer's or Parent's ability to
consummate the transactions contemplated hereby.
SECTION 4.09 ADVERSE DEVELOPMENTS. Since the date on which the 10-Q was
filed with the SEC, there has not been any material adverse change in the
assets, properties, business, operations or condition (financial or otherwise)
of Parent or Buyer.
SECTION 4.10 INTELLECTUAL PROPERTY. Neither Parent nor Buyer has taken,
nor failed to take any action, that would result in a violation by Seller of any
of its representations or warranties contained in paragraphs (a) or (b) of
Section 3.22.
ARTICLE V
COVENANTS OF SELLER
In addition to the covenants contained in other sections of this
Agreement, Seller each hereby covenants and agrees as follows:
SECTION 5.01 COOPERATION. Seller shall use all commercially reasonable
efforts to perform and fulfill all conditions and obligations to be fulfilled or
performed by it hereunder, to the end that the transactions contemplated hereby
will be fully and timely consummated. Seller shall use all commercially
reasonable efforts to obtain all authorizations, consents and permits of others
required to permit the consummation by it of the transactions contemplated by
this Agreement, except to the extent waived by the Buyer in writing. To the
extent that the assignment of any lease, contract, commitment or right which are
among the Purchased Assets shall require the consent of other parties thereto
and the Buyer shall have waived the receipt of such consent at the Closing, this
Agreement shall not constitute an assignment thereof; provided, however, Seller
shall use all commercially reasonable efforts after the Closing to obtain such
consents or waivers to assure the Buyer of the benefits of such leases,
contracts, commitments or rights. Buyer, Parent and Seller agree that nothing
herein shall be deemed a waiver by the Buyer of its right to receive at the
Closing an effective assignment of each of the Material Contracts or rights of
Seller which are among the Purchased Assets.
SECTION 5.02 ACCESS. Seller shall, upon reasonable request and notice
and at reasonable times, give Buyer, its attorneys, accountants and other
authorized representatives access to the assets and properties of Seller
(including all books of account, general, financial, tax and personnel records,
invoices, shipping records, supplier lists, patents, trademarks and other
intellectual property,
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correspondence and other documents, records and files and all computer software
programs and files), for the reasonable and legitimate due diligence inquiries
of Buyer.
ARTICLE VI
COVENANTS OF BUYER AND PARENT
SECTION 6.01 COOPERATION. Buyer and Parent shall each use all
commercially reasonable efforts to perform and fulfill all conditions and
obligations to be fulfilled or performed by it hereunder, to the end that the
transactions contemplated hereby will be fully and timely consummated. Buyer and
Parent shall each use their commercially reasonable efforts to assist Seller in
its efforts to obtain all authorizations, consents and permits of others
required to permit the consummation by Seller of the transactions contemplated
by this Agreement. To the extent that the assignment of any lease, contract,
commitment or right which are among the Purchased Assets shall require the
consent of or waiver by other parties thereto and Buyer shall have waived the
receipt of such consent at the Closing, this Agreement shall not constitute an
assignment thereof; provided, however, Seller shall use all commercially
reasonable efforts after the Closing to obtain such consents or waivers to
assure the Buyer of the benefits of such leases, contracts, commitments or
rights. Nothing herein shall be deemed a waiver by the Buyer of its right to
receive at the Closing an effective assignment of each of the Material Contracts
or rights of Seller which are among the Purchased Assets. At Buyer's request and
expense, Seller shall take all reasonable actions requested by Buyer to enforce
for the benefit of Buyer any and all rights of Seller with respect to any such
Purchased Asset that is not otherwise transferred pursuant to the provisions of
this Agreement. Seller agrees to remit promptly to Buyer all collections or
payments received by Seller in respect of all such Purchased Assets, and shall
hold all such collections or payments for the benefit of, and promptly pay the
same over to, Buyer to the extent Buyer would be entitled thereto if such
Purchased Assets had been transferred to Buyer at the Closing in accordance with
the terms of this Agreement; PROVIDED, HOWEVER, that nothing herein shall create
or provide any rights or benefits in or to third parties.
SECTION 6.02 EMPLOYEE MATTERS. On or prior to Closing, Buyer shall
offer employment to those Seller Employees listed on SCHEDULE 3.15 hereto (the
"Transferred Employees"). Buyer shall continue the employment of each of the
Transferred Employees on the terms and conditions set forth in this Section
6.02, subject, however, to the agreement of each such employee to be employed by
Buyer. Each Transferred Employee who agrees to be employed by Buyer (i)
initially shall receive salary and benefits comparable to those currently being
given similarly situated employees of Buyer, (ii) shall be an "at will" employee
of Buyer, (iii) initially shall have a position with Buyer that is similar to
the position such employee had with Seller and (iv) for purposes of Buyer or
Parent benefit plans, shall be credited for such employee's length of service at
Seller as if such employee were employed by Parent or a division or affiliate
thereof during such time.
ARTICLE VII
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CERTAIN POST-CLOSING COVENANTS
In addition to the covenants contained in other sections of this
Agreement, Seller hereby covenants and agrees as follows:
SECTION 7.01 EMPLOYEE MATTERS.
(a) As between Seller and Buyer, Seller shall retain
responsibility for and continue to pay all medical, dental, life insurance,
disability, supplemental unemployment, worker's compensation and other welfare
plan expenses and benefits (other than accrued vacation) under the employee
benefit plans and arrangements in effect on or prior to the Effective Time with
respect to Seller Employees, and their covered dependents. As between Seller and
Buyer, Buyer shall be responsible for and shall pay all such expenses and
benefits under the employee benefit plans and arrangements in effect after the
Effective Time with respect to Transferred Employees who become employed by
Buyer or Parent on and after the Closing Date, and their covered dependents. For
purposes of this subsection (a), a benefit shall be deemed paid for when the
services that are the subject of the benefit are performed or when the event
occurs which entitles the covered person or his or her dependents to such
benefit.
(b) No provision of this Section 7.01 shall create any
third-party beneficiary rights in any person or organization, including, without
limitation, employees or former employees (including any beneficiary or
dependent thereof) of Seller or any of its Affiliates, and trustees,
administrators, participants or beneficiaries of any employee benefit plan or
arrangement, including the currently existing plans of Seller, and no provision
of this Section 7.01 shall create such third-party beneficiary rights in any
such person or organization in respect of any benefits that may be provided,
directly or indirectly, under any such employee benefit plan or arrangement.
SECTION 7.02 NAME CHANGE. At the request of Buyer, and without further
consideration to Seller, Seller shall change its corporate name and shall
execute and deliver such other instruments or documents and take such further
action, as may be reasonably requested in order that Buyer may lawfully register
and file with, or obtain authorization from, any Governmental Authority to use
the name "Celebrity Sightings", any corporate trade or name similar thereto or
any derivative thereof. Notwithstanding the foregoing, Seller may continue use
of its name solely in connection with its liquidation and dissolution.
SECTION 7.03 FURTHER ASSURANCES. At any time and from time to time
after the Closing Date, at the reasonable request of Buyer, and without further
consideration to Seller, Seller shall execute and deliver such other instruments
of sale, transfer, conveyance, assignment and confirmation as may be reasonably
requested in order to more effectively transfer, convey and assign to Buyer and
to confirm Buyer's title to the Purchased Assets. In addition, at any time and
from time to time after the Closing Date, at the reasonable request of Seller,
Buyer shall execute and deliver such other instruments of assumption as may be
reasonably requested by Seller in order to more effectively effectuate the
assumption by Buyer of all of the Assumed Liabilities.
SECTION 7.04 TRANSFER OF PARENT SHARES. Buyer and Parent acknowledge
that Seller currently contemplates distributing or otherwise transferring all of
the Parent Shares received by it in connection with the transactions
contemplated hereby to Seller's members and to not more than three (3) employees
of Seller, all of whom are listed on SCHEDULE 7.04 hereto. Buyer and Parent
covenant that, at any time
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from and after the Effective Time, at the request of Seller, they shall execute
deliver such additional stock certificates representing Parent Shares are may be
required to effect such transfers to the parties listed on SCHEDULE 7.04,
subject, however, to Buyer's and Parent's prior receipt, with respect to any
such party, of an Affiliate Investment Representation and Lock-up Agreement or
Non- Affiliate Investment Representation and Lock-up Agreement, as applicable,
duly executed by such party, and such other instruments and certificates as may
be requested by Buyer or Parent in connection with such transfer.
SECTION 7.05 ACCESS TO RECORDS.
(a) Seller shall, in connection with the preparation by Buyer of
tax and financial reporting matters and other bona fide business purposes, from
and after the Closing Date afford to Buyer and its representatives the
opportunity, upon reasonable advance notice, to examine and make copies of the
books and records of Seller, or portions thereof, which relate to the Business
or the Purchased Assets for any period prior to the Closing and which were not
transferred to Buyer pursuant to Section 2.01; PROVIDED, that Seller may destroy
any record which was first offered to Buyer and not claimed or picked up by
Buyer within 30 days, and shall not destroy any record without first providing
Buyer prior written notice of its intent to destroy such record.
(b) Buyer shall, in connection with the preparation by Seller of
tax and financial reporting matters and other bona fide business purposes, for a
period of 5 years from the Closing Date afford to Seller and its representatives
the opportunity, upon reasonable advance notice, to examine and make copies of
the books and records of Buyer which were transferred to Buyer pursuant to
Section 2.01 to the extent they relate to periods prior to the Closing, and
shall maintain such records for a period of 5 years from the date hereof;
PROVIDED, that Buyer may destroy any record which was first offered to Seller
and not claimed or picked up by Seller within 30 days, and shall not destroy any
record without first providing Seller prior written notice of its intent to
destroy such record.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01 BUYER'S OBLIGATION TO CLOSE. The obligation of Buyer to
deliver the Transaction Documents to which it is a party and to consummate the
transactions contemplated hereby and thereby is subject to the satisfaction, on
or before the Closing Date, of the following conditions (each of which may be
waived by Buyer in its sole discretion):
(a) REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. All
of the representations and warranties of Seller contained in this Agreement or
any Ancillary Agreement shall be true, correct and complete in all material
respects on and as of the date hereof and on and as of the Closing Date, as if
made on and as of the Closing Date (except to the extent any such representation
or warranty speaks as of a different date, in which case such representation or
warranty shall still be true, correct and complete as of such different date).
On the Closing Date, Seller shall have executed and delivered to Buyer a
certificate, in form and substance satisfactory to Buyer, to such effect.
(b) PERFORMANCE. Seller shall have performed and complied in
all material respects with all covenants and agreements contained herein
required to be performed or complied with by it prior
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to or at the Closing Date. On the Closing Date, Seller shall have each executed
and delivered to Buyer a certificate, in form and substance satisfactory to
Buyer and its counsel, to such effect and to the further effect that all of the
conditions set forth in this Section 8.01 have been satisfied.
(c) MANAGER'S CERTIFICATE. Buyer shall have received a
certificate of the Manager, in the case of Seller, dated as of the Closing Date,
certifying as to (i) the attached true and correct copies of the Operating
Agreement and Certification of Formation, of Seller, respectively, (ii) the
incumbency of the officers executing the Transaction Documents on behalf of, and
(iii) the attached true and correct copies of resolutions of Seller authorizing
and approving the execution, delivery and performance of this Agreement and the
Ancillary Agreements and the transactions contemplated hereby and thereby, and
the acts of the officers of Seller in carrying out the terms and provisions
hereof.
(d) OPINION OF COUNSEL. Buyer shall have received the opinion
of Pillsbury Madison & Sutro LLP, counsel to Seller, in substantially the form
of EXHIBIT H attached hereto.
(e) ANCILLARY AGREEMENTS. Buyer shall have received executed
counterparts of each of the following Ancillary Agreements, including the:
(i) Assumption Agreement;
(ii) Xxxx of Sale and Assignment;
(iii) Affiliate Investment Representation and
Lock-up Agreement from Seller;
(iv) Noncompetition Agreements executed by
Xxxxxx X. Xxxxxx and Xxxxxxx Xxx; and
(v) Escrow Agreement.
(f) DELIVERY OF SELLER SUBLEASE. Seller shall have delivered
and assigned to Buyer the Seller Sublease for Buyer to continue use of Seller's
principal offices at 0000 Xxx Xxx Xxxxxx, Xxxxxx Xxx Xxx, Xxxxxxxxxx on terms
and conditions acceptable to Buyer.
(g) APPROVAL OF BUYER. All actions, proceedings, consents,
instruments and documents required to be delivered by, or at the behest or
direction of, Seller hereunder or incident to their respective performance
hereunder, and all other related matters, shall be reasonably satisfactory as to
form and substance to Buyer.
(h) EMPLOYEES. Xxxxxxx Xxxxxx and Xxxxx Xxxxxxxx shall have
accepted Buyer's offer of employment following the Closing.
SECTION 8.02 SELLER'S OBLIGATION TO CLOSE. The obligation of Seller to
transfer the Purchased Assets to Buyer, the obligation of Seller to deliver the
Transaction Documents to which it is a party and to consummate the transactions
contemplated hereby and thereby is subject to the satisfaction, on or before the
Closing Date, of the following conditions (each of which may be waived by Seller
in its sole
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discretion):
(a) REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties of Buyer and Parent contained in this Agreement
or any Ancillary Agreement shall be true, complete and correct in all material
respects on and as of the date hereof and on and as of the Closing Date, as if
made on and as of such date (except to the extent any such representation or
warranty speaks as of a different date, in which case such representation or
warranty shall still be true, correct and complete as of such different date).
On the Closing Date, Buyer and Parent each shall have executed and delivered to
Seller a certificate, in form and substance satisfactory to Seller and its
counsel, to such effect.
(b) PERFORMANCE. Buyer and Parent shall have performed and
complied with all covenants and agreements contained herein required to be
performed or complied with by it prior to or at the Closing Date, and Buyer and
Parent shall have each executed and delivered a certificate to Seller, in form
and substance satisfactory to Seller and its counsel, to such effect and to the
further effect that all of the conditions set forth in this Section 8.02 have
been satisfied.
(c) SECRETARY'S CERTIFICATE. Seller shall have received a
certificate of the Secretary or an Assistant Secretary of Buyer and of Parent,
dated as of the Closing Date, certifying as to (i) the attached true and correct
copies of the Certificates of Incorporation, as amended, and Bylaws of Buyer and
Parent, (ii) the incumbency of the officers executing the Transaction Documents
on behalf of Buyer and Parent and (iii) the attached true and correct copies of
resolutions of Buyer and Parent authorizing and approving the execution,
delivery and performance of this Agreement and the Ancillary Agreements and the
transactions contemplated hereby and thereby, and the acts of the officers of
Buyer and Parent in carrying out the terms and provisions hereof.
(d) ANCILLARY AGREEMENTS. Seller shall have received executed
counterparts of each of the following Ancillary Agreements:
(i) Assumption Agreement;
(ii) Xxxx of Sale;
(iii) Registration Rights Agreement; and
(iv) Escrow Agreement.
(e) APPROVAL OF SELLER. All actions, proceedings, consents,
instruments and documents required to be delivered by, or at the behest or
direction of, Buyer or Parent hereunder or incident to its performance
hereunder, and all other related matters, shall be reasonably satisfactory as to
form and substance to Seller.
(f) OPINION OF COUNSEL. Seller shall have received the opinion
of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., counsel to Buyer and
Parent, in substantially the form of EXHIBIT I attached hereto.
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(g) EMPLOYMENT OFFERS. Buyer shall have made offers of
employment to each of the Transferred Employees in accordance with the
provisions of Section 6.02 hereof.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01 SURVIVAL. All representations, warranties and covenants
contained in this Agreement, or in any instrument or document furnished in
connection with this Agreement or the transactions contemplated hereby
(regardless of whether any such representation, warranty or covenant is set
forth under a heading captioned "Representations and Warranties", "Covenants" or
words of similar import, or whether contained within in any covenant or other
provision this Agreement or any such instrument or document), shall survive the
Closing and any investigation at any time made by or on behalf of any party for
a period of six (6) months following the Closing Date. All such representations,
warranties and covenants shall expire on the six month anniversary of the
Closing Date (the "SPECIFIED ANNIVERSARY"), except that (i) claims, if any,
asserted in writing on or prior to the Specified Anniversary identified as a
claim for indemnification pursuant to this Article IX shall survive until
finally resolved and satisfied in full, and (ii) claims, if any, that (A) are
based upon fraud by any party hereto or (B) assert liability for any Taxes
imposed on or with respect to income shall survive for the full period of the
applicable statute of limitations, and until finally resolved and satisfied in
full if asserted on or prior to such date. Notwithstanding the foregoing, the
representations of Parent regarding the Parent Shares shall survive, as to any
individual receiving such Parent Shares in accordance with the provisions
hereof, until the applicable lock-up period with respect to such Parent Shares
shall have expired.
SECTION 9.02 OBLIGATION OF SELLER TO INDEMNIFY.
(a) Subsequent to the Effective Time, Seller shall indemnify
and hold harmless Buyer, Parent and their respective directors, officers,
employees, agents, affiliates and assigns (collectively, the "Buyer Indemnified
Persons") from and against Damages based upon, arising out of:
(i) any inaccuracy in any representation or breach of
warranty of Seller or any Seller Affiliate Member contained in this
Agreement or in any Ancillary Agreement;
(ii) any failure by Seller or any Seller Affiliate
Member to perform or observe, or to have performed or observed, in all
material respects, any covenant, agreement or condition to be performed
or observed by him, her or it under this Agreement or under any
Ancillary Agreement to which it is a party;
(iii) the Excluded Assets; or
(iv) the Excluded Liabilities.
(b) Subject to Section 9.02(d), no indemnification pursuant to
Section 9.02(a) shall be payable after the specified Anniversary, except with
respect to claims made prior to such date but not then resolved. In addition,
the amount of Damages payable by Seller under this Section 9.02 shall not
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exceed, in the aggregate, One Million Dollars ($1,000,000).
(c) The obligation of Seller to indemnify the Buyer
Indemnified Persons pursuant to Section 9.02(a) shall first be paid from the
Escrow Shares (as provided for and defined in the Escrow Agreement).
(d) The limitations on Seller to indemnify the Buyer
Indemnified Parties under Section 9.02(b) shall not apply, and in any way limit,
impair, modify or otherwise affect the rights of the Buyer Indemnified Persons
(i) to bring any claim, demand, suit or cause of action otherwise available to
the Buyer Indemnified Persons based upon an allegation or allegations that a
party hereto had an intent to defraud or made a willful, intentional or reckless
misrepresentation or willful omission of a material fact in connection with this
Agreement or the Ancillary Agreements and the transactions contemplated hereby
or thereby, or (ii) to enforce any judgment of a court of competent jurisdiction
which finds or determines that the parties hereto, or any of them, had an intent
to defraud or made a willful misrepresentation or omission of a material fact in
connection with this Agreement or the Ancillary Agreements and the transactions
contemplated hereby or thereby.
SECTION 9.03 OBLIGATION OF BUYER AND PARENT TO INDEMNIFY.
(a) Subsequent to the Effective Time, Buyer and Parent shall,
indemnify and hold harmless Seller and its respective managers, officers,
employees, members, affiliates and assigns (collectively, the "Seller
Indemnified Persons") from and against any Damages based upon, arising out of or
otherwise in respect of:
(i) any inaccuracy in any representation or breach
of warranty of Buyer or parent contained in this Agreement or in any
Ancillary Agreement;
(ii) any failure by Buyer or Parent to perform or
observe, or to have performed or observed, in all material respects,
any covenant, agreement or condition to be performed or observed by it
under this Agreement or under any Ancillary Agreement to which he, she
or it is a party;
(iii) the Purchased Assets;
(iv) the Assumed Liabilities; and
(v) Buyer's failure to qualify as a foreign
corporation in the State of California.
(b) No indemnification pursuant to Section 9.03(a) shall be
payable after the six months following the Closing Date, except with respect to
claims made prior to such date but not then resolved and with respect to the
Parent Shares, which shall survive for the period indicated in Section 9.01.
Buyer's and Parent's liability to all Seller Indemnified Persons under this
Section 9.03 or otherwise shall not exceed $4,000,000 in the aggregate.
(c) The limitations on the Buyer and Parent to indemnify
Seller Indemnified Parties
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under Section 9.03(b) shall not apply, and in any way limit, impair, modify or
otherwise affect the rights of Seller Indemnified Persons (i) to bring any
claim, demand, suit or cause of action otherwise available to Seller Persons
based upon an allegation or allegations that a party hereto had an intent to
defraud or made a willful, intentional or reckless misrepresentation or willful
omission of a material fact in connection with this Agreement or the Ancillary
Agreements and the transactions contemplated hereby or thereby, or (ii) to
enforce any judgment of a court of competent jurisdiction which finds or
determines that the parties hereto, or any of them, had an intent to defraud or
made a willful misrepresentation or omission of a material fact in connection
with this Agreement or the Ancillary Agreements and the transactions
contemplated hereby or thereby.
SECTION 9.04 NOTICE AND DEFENSE OF CLAIMS. Promptly after receipt of
notice of any claim, liability or expense for which a party seeks
indemnification under this Article IX, such party shall give written notice
thereof to the indemnifying party, but such notification shall not be a
condition to indemnification hereunder except to the extent of actual prejudice
to the indemnifying party. The notice shall state the information then available
regarding the amount and nature of such claim, liability or expense and shall
specify the provision or provisions of this Agreement under which the liability
or obligation is asserted. If within 30 days after receiving such notice the
indemnifying party gives written notice to the indemnified party stating that it
intends to defend against such claim, liability or expense at its own cost and
expense, then defense of such matter, including selection of counsel (subject to
the consent of the indemnified party which consent shall not be unreasonably
withheld), shall be by the indemnifying party and the indemnified party shall
make no payment on such claim, liability or expense as long as the indemnifying
party is conducting a good faith and diligent defense. Notwithstanding the
foregoing, the indemnified party shall at all times have the right to fully
participate in such defense at its own expense directly or through counsel;
provided, however, if the named parties to the action or proceeding include both
the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate under applicable standards of
professional conduct , the expense to separate counsel for the indemnified party
shall be paid by the indemnifying party. If no such notice of intent to dispute
and defend is given by the indemnifying party, or if such diligent good faith
defense is not being or ceases to be conducted, the indemnified party shall, at
the expense of the indemnifying party, undertake the defense of such claim,
liability or expense with counsel selected by the indemnified party, and shall
have the right to compromise or settle the same exercising reasonable business
judgement. The indemnified party shall make available all information and
assistance that the indemnifying party may reasonably request and shall
cooperate with the indemnifying party in such defense. No indemnifying party
shall without the prior written consent of the indemnified party (which consent
shall not be unreasonably withheld), settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified party is an actual or potential
party to such claim or action) unless such settlement, compromise on consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action suit or proceeding.
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ARTICLE X
MISCELLANEOUS
SECTION 10.01 NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) made by telecopy or facsimile transmission, (iii) sent by recognized
overnight courier, or (iv) sent by registered or certified mail, return receipt
requested, postage prepaid:
If to Buyer or Alloy Online, Inc.
Parent: 000 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: President
Fax: (000) 000-0000
With a copy to: Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 0211
Attn: Xxx Xxxxxx, Esquire
Fax: (000) 000-0000
If to Seller: Celebrity Sightings, LLC
c/o Guidance Solutions, Inc.
0000 Xxx Xxx Xxxxxx
Xxxxxx Xxx Xxx, XX 00000
Fax: (000) 000-0000
With a copy to: Pillsbury Madison & Sutro LLP
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxxxx, Esq.
Fax: (000) 000-0000
All notices, requests, consents and other communications hereunder shall be
deemed to have been received (i) if by hand, at the time of the delivery thereof
to the receiving party at the address of such party set forth above or as so
designated, (ii) if made by telecopy or facsimile transmission, at the time that
receipt thereof has been acknowledged by electronic confirmation or otherwise,
(iii) if sent by overnight courier, on the next business day following the day
such notice is delivered to the courier service or (iv) if sent by registered or
certified mail, on the fifth business day following the day such mailing is
made.
SECTION 10.02 ENTIRE AGREEMENT. The Transaction Documents collectively
embody the entire agreement and understanding among the parties hereto with
respect to the subject matter hereof and supersede all prior oral or written
agreements and understandings relating to the subject matter hereof.
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No statement, representation, warranty, covenant or agreement of any kind not
expressly set forth in the Transaction Documents shall affect, or be used to
interpret, change or restrict, the express terms and provisions of this
Agreement.
SECTION 10.03 MODIFICATIONS AND AMENDMENTS. The terms and provisions of
this Agreement may be amended, modified, supplemented or waived only by written
agreement executed by all parties hereto.
SECTION 10.04 NO WAIVER OF RIGHTS, POWERS AND REMEDIES. No failure or
delay by a party hereto in exercising any right, power or remedy under this
Agreement, and no course of dealing between the parties hereto, shall operate as
a waiver of any such right, power or remedy of the party. No single or partial
exercise of any right, power or remedy under this Agreement by a party hereto,
nor any abandonment or discontinuance of steps to enforce any such right, power
or remedy, shall preclude such party from any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder. The election of
any remedy by a party hereto shall not constitute a waiver of the right of such
party to pursue other available remedies. No notice to or demand on a party not
expressly required under this Agreement shall entitle the party receiving such
notice or demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand. The terms and provisions of this Agreement may be waived,
or consent for the departure therefrom granted, only by written document
executed by the party entitled to the benefits of such terms or provisions. No
such waiver or consent shall be deemed to be or shall constitute a waiver or
consent with respect to any other terms or provisions of this Agreement, whether
or not similar. Each such waiver or consent shall be effective only in the
specific instance and for the purpose for which it was given, and shall not
constitute a continuing waiver or consent.
SECTION 10.05 ASSIGNMENT. Neither this Agreement, nor any right or
obligation hereunder, may be assigned by any of the parties hereto without the
prior written consent of the other parties.
SECTION 10.06 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and their permitted
assigns, and nothing in this Agreement, express or implied, (i) is intended to
confer upon any other Person any rights or remedies of any nature whatsoever
under or by reason of this Agreement or (ii) shall be construed to create any
rights or obligations except among the parties hereto, and no Person shall be
regarded as a third-party beneficiary of this Agreement except with respect to
the provision of Section 10.12 hereof.
SECTION 10.07 GOVERNING LAW; JURISDICTION AND SERVICE OF PROCESS. This
Agreement and the rights and obligations of the parties hereunder shall be
construed in accordance with and governed by the internal law of the State of
New York, without giving effect to the conflicts of law principles thereof. Any
legal action or proceeding with respect to this Agreement shall be brought in
the courts of New York or of the United States of America for the Southern
District of New York. By execution and delivery of this Agreement, each of the
parties hereto accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each of the parties
hereto irrevocably consents to the service of process of any of the
aforementioned courts in any such action or
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proceeding by the mailing of copies thereof by certified mail, postage prepaid,
to the party at its address set forth in Section 10.01 hereof.
SECTION 10.08 SEVERABILITY. In the event that any court of competent
jurisdiction shall finally determine that any provision, or any portion thereof,
contained in this Agreement shall be void or unenforceable in any respect, then
such provision shall be deemed limited to the extent that such court determines
it enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall determine that any such provision, or portion
thereof, is wholly unenforceable, the remaining provisions of this Agreement
shall nevertheless remain in full force and effect.
SECTION 10.09 INTERPRETATION. The parties hereto acknowledge and agree
that: (i) each party and its counsel reviewed and negotiated the terms and
provisions of this Agreement (except with respect to the Disclosure Schedule
regarding the Business which is the sole responsibility of Seller) and have
contributed to its revision; (ii) the rule of construction to the effect that
any ambiguities are resolved against the drafting party shall not be employed in
the interpretation of this Agreement; and (iii) the terms and provisions of this
Agreement shall be construed fairly as to all parties hereto and not in favor of
or against any party, regardless of which party was generally responsible for
the preparation of this Agreement.
SECTION 10.10 HEADINGS AND CAPTIONS. The headings and captions of the
various subdivisions of this Agreement are for convenience of reference only and
shall in no way modify, or affect, or be considered in construing or
interpreting the meaning or construction of any of the terms or provisions
hereof.
SECTION 10.11 ENFORCEMENT. Each of the parties hereto acknowledges and
agrees that the rights acquired by each party hereunder are unique and that
irreparable damage would occur in the event that any of the provisions of this
Agreement to be performed by the other party were not performed in accordance
with their specific terms or were otherwise breached. Accordingly, in addition
to any other remedy to which the parties hereto are entitled at law or in
equity, each party hereto shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement by the other party and to enforce
specifically the terms and provisions hereof in any federal or state court of
competent jurisdiction.
SECTION 10.12 EXPENSES. Except as expressly provided herein or in any
other Transaction Document, each of the parties hereto shall pay its own fees
and expenses (including the fees of any attorneys, accountants, appraisers or
others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby whether or not the transactions contemplated
hereby are consummated, except that Buyer agrees to pay the first $60,000 of the
fees of Seller's attorneys and accountants incurred in connection with the
negotiation and consummation of the transactions contemplated hereby within 15
days after the receipt of invoices therefor.
SECTION 10.13 PUBLICITY. No party hereto may issue any press release or
otherwise make any public statement with respect to the execution of, or the
transactions contemplated by, this Agreement without the prior written consent
of the other parties hereto, except as may be required by applicable law. Prior
to making any public disclosure so required by applicable law, the disclosing
party shall give the other parties a copy of the proposed disclosure and
reasonable opportunity to prescribe or limit the same.
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SECTION 10.14 CONFIDENTIALITY. The parties acknowledge and agree that
any information or data it has acquired from the other parties, not otherwise
properly in the public domain, was received in confidence. The parties agree not
to divulge, communicate or disclose any such confidential information concerning
the subject matter hereof, including any trade or business secrets and any
technical or business materials that are treated by the disclosing party as
confidential or proprietary, including without limitation information (whether
in written, oral or machine-readable form) concerning: general business
operations; methods of doing business, servicing clients, client relations, and
of pricing and making charge for services and products; financial information,
including costs, profits and sales; marketing strategies; business forms
developed; names of suppliers, personnel, customers, clients and potential
clients; negotiations or other business contacts with suppliers, personnel,
customers, clients and potential clients; form and content of bids, proposals
and contracts; internal reporting methods; technical and business data,
documentation and drawings; software programs, however embodied; inventions;
diagnostic techniques; and information obtained by or given to the parties about
or belonging to third parties. In the event that this Agreement is terminated
and/or the Closing does not occur, the parties agree to return to the disclosing
party any such confidential information it received, and shall thereafter
continue to use its best efforts to maintain the confidentiality thereof.
SECTION 10.15 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the parties hereto in separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
PARENT:
ALLOY ONLINE, INC.
/s/ Xxxxxxx X. Xxxxxxx
By: ____________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
BUYER:
ALLOY ACQUISITION CORPORATION
/s/ Xxxxxxx X. Xxxxxxx
By: ____________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
SELLER:
CELEBRITY SIGHTINGS, LLC
/s/ Xxxxxx X. Xxxxxx
By: ____________________________
Name: Xxxxxx X. Xxxxxx
Title: Founder
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