EXHIBIT 10.1
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InterWorld Holdings, L.L.C.,
the Buyer
and
IW HOLDINGS, INC.,
the Seller
________________________________
ASSET PURCHASE AGREEMENT
________________________________
Dated as of September 9, 2004
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of this 9th day
of September 2004, by and between INTERWORLD HOLDINGS, L.L.C., a Delaware
limited liability company (the "Buyer"), and IW HOLDINGS, INC., a Delaware
corporation (the "Seller").
W I T N E S S E T H :
_ _ _ _ _ _ _ _ _ _
WHEREAS, the Seller is engaged in the business of developing,
marketing and selling computer software solutions for its customers, using
its own technology and services, and/or the technology or services of third
parties (the "Business"); and
WHEREAS, the Buyer has been formed by Xxxxxx Xxxx ("Xxxx"), the Vice
President of the Seller, in order to purchase the Business; and
WHEREAS, Weis is the Manager and sole member of the Buyer; and
WHEREAS, the Seller and its parent, J Net Enterprises, Inc. ("J Net"),
have determined to divest the Business; and in connection therewith, the
Seller has agreed to sell all of the assets and properties of the Business,
and the Business as a going concern, to the Buyer, and the Buyer has agreed
to purchase such assets and properties, and the Business as a going
concern, all upon the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein set forth, the parties hereby covenant and
agree as follows:
1. ASSETS.
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1.1 Acquired Assets. Subject to the terms and conditions of this
Agreement, on the Closing Date (as such term is hereinafter defined), the
Seller shall sell, transfer and deliver to the Buyer, and the Buyer shall
purchase and receive from the Seller, all of the assets, properties,
improvements and business owned by the Seller and exclusively utilized in
and/or relating to the Business (other than the Excluded Assets, as such
term is hereinafter defined), as same are constituted on the Closing Date
(collectively, the "Assets"), in each case free and clear of all liens,
pledges, claims, security interests and encumbrances of every kind and
nature, including, but not limited to, the following:
(a) All tangible fixed assets, furniture, fixtures,
machinery, equipment, tools, computers, computer systems, supplies and
vehicles utilized in and/or related to the Business, all such assets,
furniture, fixtures, machinery, equipment, tools, computers, computer
systems, supplies and vehicles being listed in Schedule 1.1(a) annexed
hereto (collectively, the "Fixed Assets");
(b) All inventory (whether raw materials, work in process or
finished goods) and supplies utilized in and/or relating to the Business;
(c) Any and all prepaid expenses (including, without
limitation, any equipment leases being assumed by the Buyer), down
payments, customer deposits, and all notes and accounts receivable,
contract rights and other rights to receive payment for products sold
and/or services rendered (including, without limitation, any outstanding
purchase and sale orders) of the Business;
(d) The trade names, trademarks, service marks, patents (and
applications thereof), copyrights, domain names and URLs, and artwork
listed in Schedule 1.1(d) annexed hereto;
(e) All customer lists, supplier lists, price lists, sales
data, quality control records, secrecy agreements, trade secrets, marketing
and technical information, and other such knowledge and information
constituting the "know-how" used or usable in the Business, and the
goodwill of the Business;
(f) All contract rights, commitments and claims of the
Business including, without limitation, all manufacturing and distribution
contracts, all customer contracts, real property leases, equipment leases,
vehicle leases, operating leases, service contracts, licenses or license
agreements (including, with limitation those relating to patents,
trademarks or other intangibles), and any security deposits under any of
the foregoing;
(g) to the extent transferable, all governmental and other
registrations, licenses, approvals and permits utilized in the Business;
(h) All books, records, software programs, printouts,
drawings, data, files, notes, notebooks, accounts, invoices,
correspondence, memoranda and other material information relating to the
Assets and/or the Business; provided, however, that the Seller may retain
copies of all historical financial records of the Business; and
(i) All other rights and assets of any kind, tangible or
intangible, utilized in and/or relating to the Business, whether or not
reflected in the Seller's financial statements or on its books and records
listed in Schedule 1.1(i) annexed hereto.
1.2 Excluded Assets. Notwithstanding anything in this Agreement
to the contrary, the Assets shall not include, and the Seller shall retain,
(a) all rights to any tax refunds of the Seller, (b) the Seller's stock
record books, minute books and tax returns, (c) all of the Seller's rights
under this Agreement and the Assumption Agreement (as such terms are
defined herein), and (d) the Seller's insurance policies (collectively, the
"Excluded Assets").
2. LIABILITIES.
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2.1 Assumed Liabilities. Subject to the terms and conditions of
this Agreement, on the Closing Date, the Buyer shall assume all liabilities
and obligations associated with the performance and maintenance of, or
compliance with, as applicable, the contracts, leases, registrations,
licenses, approvals and permits acquired pursuant to Section 1.1 above and
listed in Schedule 2.1 annexed hereto (collectively, but subject to the
following proviso, the "Assumed Liabilities").
2.2 Excluded Liabilities. Except for those specific Assumed
Liabilities described in Section 2.1 above, the Buyer will not assume, and
hereby expressly disclaims any assumption of, any debts, liabilities or
obligations (absolute or contingent) of any kind of the Sellers, including
but not limited to (a) liabilities or obligations of any kind in respect of
any past or present Stockholder, directors, officers, employees or
consultants of the Sellers, whether under any contract or agreement,
pursuant to any pension plan or employee benefit or welfare plan, or
otherwise, (b) liabilities or obligations relating to any employee benefit
plan (within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), oral or written retirement or
deferred compensation plan, incentive compensation plan, stock plan,
consulting agreement, unemployment compensation plan, severance plan, bonus
plan, stock compensation plan or any other type or form of similar
employee-related (or independent contractor-related) arrangement, program,
policy, plan or agreement maintained or contributed to by the Seller or any
Affiliate for the benefit of or in agreement with any employee or
independent contractor of the Seller or any Affiliate (each of such
arrangements, programs, policies, plans or agreements hereinafter being
referred to as an "Employee Benefit Plan"), (c) any obligations or
liabilities in respect of any unfunded pension or retirement benefits, or
in respect of any funding obligations to, or transactions in or relating to
any trust funds under, any pension, employee benefit or retirement plans
now or heretofore maintained by or on behalf of the Seller for the benefit
of any past or present employees, (d) liabilities or obligations relating
to recapture of any depreciation deduction or investment tax credit of the
Seller, and/or (e) liabilities or obligations relating to or arising out of
any pending claims, actions, arbitrations and/or other proceedings against
or with respect to the Seller.
3. PURCHASE PRICE.
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3.1 Consideration to the Seller. The purchase price for the
Assets (the "Purchase Price") shall be equal to (a) Five Hundred Thirty-
our Thousand Dollars ($534,000), which shall be payable by delivery to the
Seller of a promissory note (the "Note") substantially in the form attached
hereto as Exhibit A, plus (b) membership interests (the "Membership
Interest") in the Buyer representing 19.9% of the fully diluted equity
interest in the Buyer. The foregoing purchase price for the Assets shall
be in addition to the assumption of the Assumed Liabilities set forth in
Section 2.1 above.
3.2 Allocation of Consideration. The Purchase Price specified in
Section 3.1 above shall be allocated, as among the Assets, in accordance
with Schedule 3.2 annexed hereto, and the parties shall abide by such
allocations in all tax filings and other reports which the parties shall
make or render.
3.3 Sales Taxes. To the extent that any sales or use taxes may
be payable in respect of the transactions pursuant to this Agreement, such
sales and use taxes shall be reported and paid by the party upon whom taxes
are imposed by law in a timely manner.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
____________________________________________
In connection with the sale of the Assets to the Buyer, except as
disclosed in the Schedules annexed hereto, the Seller hereby represents and
warrants to the Buyer as follows:
4.1 Organization and Qualification. The Seller is a corporation
duly organized and validly existing under the laws of the State of Delaware,
with full corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby, and to own the Assets
and conduct the Business as owned and conducted on the date hereof. The
Seller is duly qualified to do business as a foreign corporation under the
laws of each jurisdiction where the nature of the Business or the location of
the Assets makes such qualification necessary and the failure to be so
qualified would have a material adverse effect on the Seller, the Assets or
the Business.
4.2 Authorization of Agreement. The execution, delivery and
performance of this Agreement and the Xxxx of Sale, and the consummation of
the transactions contemplated hereby and thereby by the Seller has been duly
and validly authorized by the Board of Directors and the sole stockholder of
the Seller and the Seller has the full legal right, power and authority to
execute and deliver this Agreement and the Xxxx of Sale, to perform its
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. No further corporate authorization is
required on the part of the Seller to consummate the transactions
contemplated hereby.
4.3 Valid and Binding Agreements. This Agreement and, when
executed and delivered, the Xxxx of Sale, constitute and will constitute the
legal, valid and binding obligations of the Seller, enforceable against the
Seller in accordance with their respective terms, except, in each case, to
the extent limited by bankruptcy, insolvency, reorganization and other laws
affecting creditors' rights generally, and except that the remedy of specific
performance or similar equitable relief is available only at the discretion
of the court before which enforcement is sought.
4.4 No Breach of Statute or Contract. Except as set forth on
Schedule 4.4 annexed hereto, neither the execution and delivery of this
Agreement or the Xxxx of Sale by the Seller, nor compliance with the terms
and provisions of such agreements, on the part of the Seller, will: (a)
violate any statute or regulation of any governmental authority, domestic or
foreign, affecting the Seller, (b) require the issuance of any authorization,
license, consent or approval of any federal or state governmental agency or
any other person; or (c) conflict with or result in a breach of any of the
terms, conditions or provisions of the Articles of Incorporation or By-laws
of the Seller, or any judgment, order, injunction, decree, lease, note,
indenture, loan or other agreement or instrument to which the Seller is a
party, or by which the Seller is bound, or constitute a default thereunder.
4.5 Ownership of Business. No portion of the Business is owned or
operated by any person or entity other than the Seller.
4.6 Financial Information. The balance sheets, and statements of
income, changes in cash flows and stockholders' equity relating to the Seller
annual reports, quarterly reports, proxy statements and other reports
(collectively, the "SEC Documents") filed by J Net under the Securities
Exchange Act of 1934, as amended, through the date hereof, each as filed with
the Securities and Exchange Commission fairly present the financial condition
and results of operations of the Seller as of their respective dates and for
the periods presented, and have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior
periods (and, in the case of unaudited financial information, on a basis
consistent with year-end audits).
4.7 No Material Changes. Except as and to the extent described in
Schedule 4.7 annexed hereto (which Schedule may make reference to any other
Schedule hereto or to any other document(s) referred to in this Agreement
which has heretofore been delivered to the Buyer), and/or in the Seller SEC
Documents, since June 30, 2003, the Business has been operated only in the
ordinary course, and there has not been any event or condition arising from
or out of the operation of the Seller which has or will materially and
adversely affect the business, financial condition, results of operations or
prospects of the Business.
4.8 Tax Returns and Tax Audits.
__________________________
(a) The Seller has, to the date hereof, filed all federal,
state and local tax reports and tax returns required to be filed by the
Seller, and the Seller has paid all taxes, assessments and other impositions
with respect to the Seller and its income as and to the extent required by
applicable federal, state and local law. All taxes and other assessments and
levies which the Seller is required by law to withhold or to collect have
been duly withheld and collected, and have been paid over to the proper
governmental authorities to the extent due and payable on or before the date
hereof. There are no outstanding or pending claims, deficiencies or
assessments for taxes, interest or penalties with respect to any taxable
period of the Seller. The Seller will, from time to time from and after the
date hereof, provide to the Buyer and its representatives, upon request
therefor, copies of any and all tax reports and/or tax returns heretofore
filed by the Seller.
(b) There are no audits pending with respect to any federal,
state or local tax reports or tax returns of the Seller, and no waiver of
statutes of limitations have been given or requested with respect to any tax
years or tax filings of the Seller.
4.9 Personal Property; Liens. Except as set forth on Schedule 4.9
annexed hereto, the Seller has and owns good, marketable and indefeasible
title to the Fixed Assets utilized in the Business, free and clear of all
liens, pledges, claims, security interests and encumbrances whatsoever,
except for: (a) rights of lessors in respect of any Fixed Assets which are
leased by the Seller (which leased Fixed Assets are specifically listed as
such in Schedule 1.1(a) annexed hereto); (b) liens which solely secure the
deferred purchase price of machinery, equipment, vehicles and/or other Fixed
Assets, as indicated on Schedule 1.1(a); (c) liens in respect of any Fixed
Assets for current taxes not yet due and payable or which are being contested
in good faith by appropriate proceedings; and (d) liens, pledges, claims,
security interests, encumbrances, conditions or restrictions in respect of
Fixed Assets which are not, individually or in the aggregate, material in
character or amount and do not interfere with the use made or presently
proposed to be made of any such property (collectively, "Permitted Liens").
All material items of machinery, equipment, vehicles and other Fixed Assets
owned or leased by the Seller and utilized in the Business are listed in
Schedule 1.1(a) annexed hereto, and all of such fixed assets are in good
operating condition and repair (reasonable wear and tear excepted) and are
adequate for their use in the Business as presently conducted.
4.10 Permits and Licenses. The Seller possesses all required
permits, licenses and/or franchises, from whatever governmental authorities
or agencies (domestic and/or foreign) requiring the same and having
jurisdiction over the Seller, necessary in order to operate the Business in
the manner presently conducted, all of which permits, licenses and/or
franchises are valid, current and in full force and effect, except where the
failure to have or maintain any such permit, license and/or franchise would
not have or could not reasonably be expected to have a material adverse
effect on the Assets or the Business. The Seller has heretofore conducted
the Business in compliance in all material respects with the requirements of
such permits, licenses and/or franchises, and the Seller has not received
written notice of any default or violation in respect of or under any of such
permits, licenses and/or franchises except where such default would not have
or could not reasonably be expected to have a material adverse effect on the
Assets or the Business.
4.11 Contracts and Commitments.
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(a) Schedule 4.11 annexed hereto lists all material contracts,
leases, commitments, indentures and other agreements relating to the Business
to which the Seller is a party (collectively, "Material Contracts"), except
that Schedule 4.11 need not list any such agreement that was entered into in
the ordinary course of the business of the Seller and that, in any case: (i)
is for the purchase of supplies or other inventory items in the ordinary
course of the Business; (ii) is related to the purchase or lease of any
capital asset involving aggregate payments of less than $10,000 per annum; or
(iii) may be terminated without penalty, premium or liability by the Seller
on not more than thirty (30) days' prior written notice; provided, however,
that Schedule 4.11 shall list any agreement or arrangement (written or
verbal) in respect of the Business between the Seller (on the one hand) and
any Affiliate of the Seller (on the other hand), regardless of the amount of
payments called for, required or made thereunder.
(b) To the best of Seller's knowledge with respect to the
other party to any Material Contract, all Material Contracts are in full
force and effect, and the Seller is in compliance with all of its obligations
under the Material Contracts, and has not received any written notice that
any party to any Material Contract is in breach or default of such Material
Contract or is now subject to any condition or event which has occurred and
which, after notice or lapse of time or both, would constitute a default by
any party under any such contract, lease, agreement or commitment.
(c) To the best of the Seller's knowledge, no purchase
commitment by the Seller relating to the Business is materially in excess of
the normal, ordinary and usual requirements of the Business.
(d) Except as set forth in Schedules 4.11 and 4.13, the Seller
does not have any outstanding contracts with or commitments to officers,
employees, agents or advisors relating to the Business that are not
cancelable by the Seller without penalty, premium or liability (for severance
or otherwise) on less than thirty (30) days' prior written notice.
4.12 Customers and Suppliers. The Seller has not received any
written notice of any claim by or dispute with, or any existing, announced or
anticipated changes in policies of, any clients, customers, referral sources
or suppliers of the Seller which could materially adversely affect the
Business as presently conducted and as hereafter proposed to be conducted.
4.13 Labor, Benefit and Employment Agreements.
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(a) Except as set forth in Schedule 4.13 annexed hereto, the
Seller is not a party to and does not have any commitment or obligation in
respect of (i) any collective bargaining agreement or other labor agreement
relating to any employees of the Business, or (ii) any agreement with respect
to the employment or compensation of any non-hourly and/or non-union
employee(s) of the Business. Schedule 4.13 sets forth the amount of all
compensation or remuneration (including any discretionary bonuses) paid by
the Seller during the 2003 calendar year to employees or consultants of the
Business who presently receive aggregate compensation or remuneration at an
annual rate in excess of $40,000.
(b) No union is now certified or, to the best of the Seller's
knowledge, claims to be certified as a collective bargaining agent to
represent any employees of the Business, and there are no labor disputes
existing or, to the best of the Seller's knowledge, threatened, involving
strikes, slowdowns, work stoppages, job actions or lockouts of any employees
of the Business.
(c) There are no unfair labor practice charges or petitions
for election pending or being litigated before the National Labor Relations
Board or any other federal or state labor commission relating to any
employees of the Business. The Seller has not received any written notice of
any actual or alleged violation by the Seller of any law, regulation, order
or contract term affecting the collective bargaining rights of employees,
equal opportunity in employment, or employee health, safety, welfare, or
wages and hours.
(d) Except as set forth on Schedule 4.13, neither the Seller
nor any other member of the Controlled Group (i) has at any time maintained,
contributed to or participated in, (ii) has or had at any time any obligation
to maintain, contribute to or participate in, or (iii) has any liability or
contingent liability, direct or indirect, with respect to any Employee
Benefit Plan (as such term is defined in Section 2.2(b), hereof). Whenever
used in this Agreement, the term "Controlled Group" shall refer to the Seller
and each other corporation or other entity under common control with the
Seller (pursuant to the provisions of Sections 414(b), (c), (m) or (o) of the
Internal Revenue Code of 1986, as amended (the "Code")) at any time during
the sixty (60) month period ending on the Closing Date.
(e) With respect to the Employee Benefit Plans included, or
required to be included, in Schedule 4.13, (i) there has been no violation of
any applicable provision of ERISA; (ii) each such Employee Benefit Plan
intended to qualify under Section 401(a) of the Code or for any other tax-
exempt or tax-favored status under the Code so qualifies; (iii) neither the
Seller nor any other member of the Controlled Group is subject to any
outstanding or potential liability or obligation, direct or indirect, that
could, in any way, form or fashion, be imposed on the Buyer or with respect
to which the Buyer could become subject; and (iv) there are no actual or
potential claims or actions (other than claims for benefits in the normal
course) relating to any such Employee Benefit Plan with respect to which the
Buyer could become subject.
(f) Insofar as it relates to employees of the Business, except
for the group insurance programs listed in Schedule 4.13, the Seller does not
maintain any medical, health, life or other employee benefit insurance
programs or any welfare plans (within the meaning of Section 3(1) of ERISA)
for the benefit of any current or former employees, and, except as required
by law, the Seller does not have any liability, fixed or contingent, for
health or medical benefits to any former employee of the Business.
4.14 Accounts Payable. Schedule 4.14 annexed hereto lists, as of
the date hereof, or, if the date hereof is not a Monday, the Monday prior to
the date hereof, all accounts payable relating to the Business and the aging
of such accounts payable. The Seller has received no notice from any vendor,
supplier or other person with respect to non-payment of any current accounts
payable of the Business, or any threatened suspension or termination of the
provision of goods or services to the Business.
4.15 Legal Compliance. The Seller is in compliance in all material
respects with all laws, statutes, regulations, rules and ordinances
applicable to the conduct of the Business as presently constituted; and the
Seller has not received written notice of any default or violation under or
in respect of any of the foregoing. The Seller is not in violation of any
requirements of any of its insurance carriers.
4.16 Litigation. Except as disclosed in Schedule 4.16 annexed
hereto, there is no suit, action, arbitration, or legal, administrative or
other proceeding, or governmental investigation (including, without
limitation, any claim alleging the invalidity, infringement or interference
of any patent, patent application, or rights thereunder owned or licensed by
the Seller in respect of the Business) pending, or to the best knowledge of
the Seller, threatened, by or against the Seller that relates in any way to
the Business or any of the Assets. The Seller is not aware of any state of
facts, events, conditions or occurrences which might properly constitute
grounds for or the basis of any suit, action, arbitration, proceeding or
investigation against or with respect to the Seller that relate to the
Business or any of the Assets, which, if adversely determined, would have a
material adverse effect on the Business or any material portion of the
Assets.
4.17 Patents, Licenses and Trademarks. Schedule 1.1(d) annexed
hereto correctly sets forth a list and brief description of the nature and
ownership of: (a) all patents, patent applications, copyright registrations
and applications, registered trade names, and trademark and service xxxx
registrations and applications, both domestic and foreign, which are
presently owned, filed or held by the Seller and/or any of its directors,
officers or employees and which in any way relate to or are used in the
Business; (b) all licenses, both domestic and foreign, which are owned or
controlled by the Seller and/or any of its directors, officers or employees
and which in any way relate to or are used in the Business; and (c) all
franchises, licenses and/or similar arrangements granted to the Seller by
others and/or to others by the Seller on behalf of the Business. None of the
patents, patent applications, copyright registrations or applications,
registered trade names, trademark and service xxxx registrations or
applications, franchises, licenses or other arrangements set forth or
required to be set forth in Schedule 1.1(d) is subject to any pending
challenge known to the Seller. The Seller has the valid right to utilize all
trade names and other intellectual property utilized in the Business, and the
Seller has not received any written notice of any claimed infringement or
prior use of any such intellectual property with the right or property of any
other person.
4.18 Transactions with Affiliates. No material asset utilized in
the Business is owned by, leased from or leased to any Affiliate of the
Seller. Following the Closing, the Seller and its Affiliates will not have
any claims in respect of obligations owed by the Business to the Seller and
its Affiliates (other than with respect to the Purchase Price hereunder or as
to the Assumption Agreement).
4.19 Accuracy of Information. None of the representations and
warranties of the Seller contained herein or in any Schedule hereto contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein not misleading in light of
the circumstances in which made.
5. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
___________________________________________
In connection with the purchase of the Assets from the Seller hereunder,
the Buyer hereby represents and warrants to the Seller as follows:
5.1 Organization, Qualification and Good Standing. The Buyer is a
limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware, with all necessary power
and authority to execute and deliver this Agreement, to perform its
obligations hereunder, and to consummate the transactions contemplated
hereby.
5.2 Authorization of Agreement. The execution, delivery and
performance of this Agreement, the Xxxx of Sale and the Assumption Agreement,
and the consummation of the transactions contemplated hereby and thereby by
the Buyer has been duly and validly authorized by the Managing Member of the
Buyer; and the Buyer has the full legal right, power and authority to execute
and deliver this Agreement, the Xxxx of Sale and the Assumption Agreement, to
perform its obligations hereunder and thereunder, and to consummate the
transactions contemplated hereby and thereby. No further corporate
authorization is necessary on the part of the Buyer to consummate the
transactions contemplated hereby.
5.3 Valid and Binding Agreement. This Agreement and, when executed
and delivered, the Xxxx of Sale and the Assumption Agreement, constitute and
will constitute the legal, valid and binding obligations of the Buyer,
enforceable against the Buyer in accordance with their respective terms,
except, in each case, to the extent limited by bankruptcy, insolvency,
reorganization and other laws affecting creditors' rights generally, and
except that the remedy of specific performance or similar equitable relief is
available only at the discretion of the court before which enforcement is
sought.
5.4 No Breach of Statute or Contract. Neither the execution and
delivery of this Agreement, the Xxxx of Sale or the Assumption Agreement by
the Buyer, nor compliance with the terms and provisions of such agreements,
on the part of the Buyer, will: (a) violate any statute or regulation of any
governmental authority, domestic or foreign, affecting the Buyer; (b) require
the issuance of any authorization, license, consent or approval of any
federal or state governmental agency or any other person (except to the
extent that the Buyer may be required to be qualified as a foreign
corporation in certain jurisdictions in which it is not currently so
qualified, and to the extent that the Buyer may be required to reapply for
any permits, licenses and/or franchises which are not assignable as part of
the Assets); or (c) conflict with or result in a breach of any of the terms,
conditions or provisions of the Certificate of Incorporation of By-laws of
the Buyer, or any judgment, order, injunction, decree, lease, note,
indenture, loan or other agreement or instrument to which the Buyer is a
party, or by which the Buyer is bound, or constitute a default thereunder.
5.5 Accuracy of Information. None of the representations and
warranties of the Buyer contained herein contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make
the statements therein not misleading in light of the circumstances in which
made.
6. ADDITIONAL AGREEMENTS OF THE PARTIES.
____________________________________
6.1 Confidentiality. Notwithstanding anything to the contrary
contained in this Agreement, and subject only to any disclosure requirements
which may be imposed upon any party under applicable state or federal
securities or antitrust laws, it is expressly understood and agreed by the
parties that, except with respect to matters or information which are
publicly available other than by reason of a breach of this Section 6.1, (a)
this Agreement, the Schedules hereto, and the conversations, negotiations and
transactions relating hereto and/or contemplated hereby, and (b) all
financial information, business records and other non-public information
concerning either party which the other party or its representatives has
received or may hereafter receive, shall be maintained in the strictest
confidence by the recipient and its representatives, and shall not be
disclosed to any person that is not associated or affiliated with the
recipient and involved in the transactions contemplated hereby, without the
prior written approval of the party which provided the information. The
parties hereto shall use their best efforts to avoid disclosure of any of the
foregoing or undue disruption of any of the business operations or personnel
of the parties, and no party shall issue any press release or other public
announcement regarding the transactions contemplated hereby without the prior
approval of each other party (such approval not to be unreasonably withheld
or delayed) unless compelled to do so upon advice of counsel and there is
insufficient time to practicably obtain approval hereunder. In the event
that the transactions contemplated hereby shall not be consummated for any
reason, each party covenants and agrees that neither it nor any of its
representatives shall retain (other than information which is publicly
available other than by reason of a breach of this Section 6.1) any
documents, lists or other writings of any other party which it may have
received or obtained in connection herewith or any documents incorporating
any of the information contained in any of the same (all of which, and all
copies thereof in the possession or control of the recipient or its
representatives, shall be returned to the party which provided the
information).
6.2 Conduct of Business. During the period from the date of this
Agreement to the Closing Date, the Seller shall, and shall cause its
employees and advisors to (a) conduct the Business with diligence and in the
ordinary and usual course in substantially the same manner as heretofore
conducted, (b) refrain from disposing of any of the Assets other than
inventory sold in the ordinary course of operations of the Business, (c)
maintain satisfactory relationships with suppliers, distributors and clients
of the Business and other persons with which it has material business
relationships with respect thereto, (d) maintain its Articles of
Incorporation and By-laws in their respective forms as of the date of this
Agreement, (e) refrain from taking any action, or from omitting to take any
action, which would cause the representations and warranties contained in
Section 4 hereof to be untrue or incorrect and (f) notify the Buyer of any
unexpected circumstance or change in the normal course of the operations of
the Business and of any governmental complaints, investigations, hearings or
judicial or arbitral proceedings (or communications indicating that any of
the same may be contemplated) involving or potentially impacting on the
Business or the Assets and (g) keep the Buyer fully informed with respect to
any circumstance, change or event of the kind described in clause (e) above
and afford the Buyer's representatives prompt access to all materials
prepared in connection therewith.
6.3 Bulk Sales Laws. The Buyer and the Seller agree that the
transactions contemplated by this Agreement shall be consummated in
accordance with the bulk sales laws of the State of Delaware. Each of the
Buyer and the Seller shall (a) take all appropriate actions to comply with
such laws and (b) provide such assistance as is reasonably requested by the
other party in order to assist such party's efforts to comply with such laws.
6.4 Xxxx of Sale; Assumption Agreement.
(a) On the Closing Date, the Seller shall execute and deliver
to the Buyer a Xxxx of Sale and Assignment in respect of the Assets in
substantially the form of Exhibit B annexed hereto (the "Xxxx of Sale"). In
addition, to the extent that specific assignments may be necessary or
appropriate in respect of any of the Assets, and/or to the extent that any of
the Assets are represented by certificates of title or other documents, then
the Seller shall execute and deliver to the Buyer any additional transfer
documents, and shall endorse to and in the name of the Buyer all certificates
of title and other such documents, as may be necessary or appropriate and
requested by the Buyer in order to effect the full transfer to the Buyer or
its designee(s) of all of the Assets.
(b) On the Closing Date, the Buyer shall execute and deliver
to the Seller an Instrument of Assumption in substantially the form of
Exhibit C annexed hereto (the "Assumption Agreement").
6.5 Additional Agreements and Instruments. On or before the
Closing Date, the Seller and the Buyer shall execute, deliver and file all
exhibits, agreements, certificates, instruments and other documents, not
inconsistent with the provisions of this Agreement, which, in the opinion of
counsel to the parties hereto, shall reasonably be required to be executed,
delivered and filed in order to consummate the transactions contemplated by
this Agreement.
6.6 Reasonable Efforts; No Inconsistent Action. The Seller will
use its commercially reasonable efforts to effect the transactions
contemplated by this Agreement and to fulfill the conditions set forth in
Section 7. The Buyer will use its commercially reasonable efforts to effect
the transactions contemplated by this Agreement and to fulfill the conditions
set forth in Section 8. Each party will provide such cooperation to the
other party as may be reasonably requested in order for such other party to
fulfill its obligations pursuant to this Section 6.6. No party shall take
any actions inconsistent with its obligations under this Agreement or that
could hinder or delay the consummation of the transactions contemplated
hereby; provided, however, that nothing in this Section 6.7 shall limit the
respective rights of the parties under Sections 7, 8 and 10.
7. CONDITIONS PRECEDENT TO THE BUYER'S PERFORMANCE.
_______________________________________________
In addition to the fulfillment of the parties' agreements in Section 6
above, the obligations of the Buyer to consummate the transactions
contemplated by this Agreement are further subject to the satisfaction, at or
before the Closing Date, of the following conditions.
7.1 Accuracy of Representations and Warranties. All
representations and warranties made by the Seller in this Agreement shall be
true and correct on and as of the Closing Date and all Schedules hereto as
have been modified pursuant to Section 15.1 shall be true and correct on and
as of the Closing Date.
7.2 Performance. The Seller shall have performed, satisfied and
complied with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Seller on or
before the Closing Date.
7.3 No Adverse Change. Prior to the Closing Date, there shall have
been no material adverse change (including, without limitation, any material
adverse change due to force majeure or the actions of a governmental
authority or any material adverse change reflected in the modification by the
Seller of the Schedules hereto pursuant to Section 15.1) in (a) the condition
of the Assets or (b) the assets or liabilities, operations, condition
(financial or otherwise) or results of operations of the Business.
7.4 Certification. The Buyer shall have received a certificate,
dated the Closing Date, signed by the Seller, certifying, in such detail as
the Buyer and its counsel may reasonably request, that the conditions
specified in Sections 7.1, 7.2 and 7.3 above have been fulfilled.
7.5 Corporate Approvals. The Buyer shall have received certified
resolutions of the Board of Directors and the shareholders of the Seller, in
form reasonably satisfactory to counsel for the Buyer, duly authorizing the
Seller's execution, delivery and performance of this Agreement and all
actions to be taken by the Seller hereunder.
7.6 Execution and Delivery of Exhibits. On or before the Closing
Date, the Seller shall have executed and delivered to the Buyer the Xxxx of
Sale and the Assumption Agreement.
7.7 Note and Security Agreement. On or before the Closing Date,
the Seller shall have executed and delivered to the Buyer the Note and the
Security Agreement relating to the Business.
8. CONDITIONS PRECEDENT TO THE SELLER'S PERFORMANCE.
________________________________________________
In addition to the fulfillment of the parties' agreements in Section 6
above, the obligations of the Seller to consummate the transactions
contemplated by this Agreement are further subject to the satisfaction, at or
before the Closing Date, of all of the following conditions, any one or more
of which may be waived in writing by the Seller:
8.1 Accuracy of Representations and Warranties. All
representations and warranties made by the Buyer in this Agreement shall be
true and correct on and as of the Closing Date.
8.2 Performance. The Buyer shall have performed, satisfied and
complied with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Buyer on or
before the Closing Date.
8.3 Certification. The Seller shall have received a certificate,
dated the Closing Date, signed by the Buyer, certifying, in such detail as
the Seller and its counsel may reasonably request, that the conditions
specified in Sections 8.1 and 8.2 above have been fulfilled.
8.4 Corporate Approvals. The shareholders of the Seller shall have
approved the Seller's execution, delivery and performance of this Agreement
and all actions to be taken by the Seller hereunder. The Seller shall have
received certified resolutions of the Board of Directors of the Buyer in form
reasonably satisfactory to counsel for the Seller, duly authorizing the
Buyer's execution, delivery and performance of this Agreement and all actions
to be taken by the Buyer hereunder.
8.5 Execution and Delivery of Exhibits. On or before the Closing
Date, the Buyer shall have executed and delivered to the Seller the Xxxx of
Sale and the Assumption Agreement.
9. CLOSING.
_______
9.1 Place and Date of Closing. The closing (the "Closing") shall
take place at the offices of Xxxxxxxxx Xxxxxxx XXX, Xxx Xxxx, Xxx Xxxx 00000
at 10:00 a.m. New York City time, subject to the prior satisfaction or waiver
of the conditions set forth in Sections 7 and 8 (other than those conditions
that by their nature are to be satisfied at the Closing, but subject to the
satisfaction or waiver of those conditions), or at such other place, time
and/or date as shall be mutually agreed by the Buyer and the Seller (the date
of the Closing, the "Closing Date"). For purposes of determining the Assets
and Assumed Liabilities purchased by the Buyer hereunder, such Assets and
assumed Liabilities shall be as listed on Schedule 3.2 annexed hereto as of
September 1, 2004.
9.2 Actions at Closing. At the Closing, there shall be made, by
all necessary and appropriate persons, all payments and deliveries stated in
this Agreement to be made at the Closing and/or on or prior to the Closing
Date.
10. TERMINATION OF AGREEMENT.
________________________
10.1 General. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing: (a) by the mutual written consent of the Seller and the Buyer or
(b) by the Buyer or by the Seller, at any time on or after September 15, 2004
(the "Outside Closing Date"), if the transactions contemplated hereby shall
not have been consummated prior thereto, and the party directing termination
shall not then be in breach or default of any obligations imposed upon such
party by this Agreement.
10.2 Effect of Termination. In the event of termination by either
party as above provided in this Section 10, prompt written notice shall be
given to the other party. Termination of this Agreement shall not relieve
any party of any of its obligations pursuant to Section 6.1 above, and shall
not relieve any breaching party from liability for any breach of this
Agreement.
11. POST-CLOSING EVENTS.
___________________
The parties hereby further agree that, from and after the Closing:
11.1 Books and Records. At any time and from time to time from and
after the Closing Date, the Buyer shall permit the Seller to have access,
during normal business hours and without undue disruption of the Buyer's
business, to those books and records transferred to the Buyer as part of the
Assets, for purposes of preparing any tax filings or any other legitimate
purpose of the Seller. Such books and records may be made available at any
location where the Buyer maintains same, and all costs and expenses relating
to such access and inspection shall be the responsibility of the Seller. In
the event that, at any time and from time to time after the Closing Date, the
Buyer shall determine to destroy or dispose of any such books and records,
the Buyer shall give notice thereof to the Seller not less than thirty (30)
days prior to such disposition, and the Seller shall have the right, at its
own cost and expense, to take possession of such books and records prior to
its disposition.
11.2 Corporate Name. From and after the Closing Date, the Seller
and its Affiliates shall cease and desist from any and all further use of the
name "InterWorld" or any confusingly similar name, other than for purposes of
filing routine reports, tax returns and other such items.
11.3 Further Assurances. From time to time from and after the
Closing Date, the parties will take any and all such action and execute and
deliver to one another any and all further agreements, instruments,
certificates and other documents, as may reasonably be requested by any other
party in order more fully to consummate the transactions contemplated hereby,
and to effect an orderly transition of the ownership and operations of the
Business.
12. COSTS.
_____
12.1 Finder's or Broker's Fees. Each of the Buyer (on the one
hand) and the Seller (on the other hand) represents and warrants that neither
it nor any of its respective Affiliates have dealt with any broker or finder
in connection with any of the transactions contemplated by this Agreement,
and no broker or other person is entitled to any commission or finder's fee
in connection with any of these transactions.
12.2 Expenses. The Buyer and the Seller shall each pay all of its
own respective costs and expenses incurred or to be incurred by them,
respectively, in negotiating and preparing this Agreement and in closing and
carrying out the transactions contemplated by this Agreement.
13. FORM OF AGREEMENT.
_________________
13.1 Effect of Headings. The Section headings used in this
Agreement and the titles of the Schedules hereto are included for purposes of
convenience only, and shall not affect the construction or interpretation of
any of the provisions hereof or of the information set forth in such
Schedules.
13.2 Entire Agreement; Waivers. This Agreement (including the
Schedules and Exhibits hereto) constitutes the entire agreement between the
parties pertaining to the subject matter hereof, and supersedes all prior
agreements or understandings as to such subject matter. No party hereto has
made any representation or warranty or given any covenant to the other except
as set forth in this Agreement and the Schedules and Exhibits hereto. No
waiver of any of the provisions of this Agreement shall be deemed, or shall
constitute, a waiver of any other provisions, whether or not similar, nor
shall any waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
13.3 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.4 Survival. The parties hereto agree that the representations
and warranties contained in this Agreement shall not survive the Closing
hereunder, and neither of the parties nor any of their respective officers,
directors, representatives, employees, advisors or agents shall have any
liability to the other after the Closing for any breach thereof. The parties
hereto agree that only the covenants contained in this Agreement to be
performed at or after the Closing Date shall survive the Closing hereunder,
and each party hereto shall be liable to the other after the Closing Date for
any breach thereof.
14. PARTIES.
_______
14.1 Parties in Interest. Nothing in this Agreement, whether
expressed or implied, is intended to confer any rights or remedies under or
by reason of this Agreement on any persons other than the parties to it and
their respective successors and permitted assigns, nor is anything in this
Agreement intended to relieve or discharge the obligations or liability of
any third persons to any party to this Agreement, nor shall any provision
give any third persons any right of subrogation or action over or against any
party to this Agreement.
14.2 Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed
to have been duly given on the date of service if served personally on or
telecopied to the party to whom notice is to be given, one day after being
deposited for overnight delivery with a recognized overnight courier service
in a properly addressed package with all charges prepaid or billed to the
account of the sender, as follows:
(a) If to the Seller, to:
IW Holdings, Inc.
c/o J Net Enterprises, Inc.
0000 Xxxxxx Xxxxxxx, #000
Xxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxx X. Xxxxxx
Executive Vice President
with a copy to:
Xxxxxxxxx Traurig, LLP
MetLife Building
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxx X. Annex, Esq.
(b) If to the Buyer, to:
InterWorld Holdings, L.L.C.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxx X. Xxxx, Xx.
Manager
with a copy to:
Xxxxxx & Xxxxxxx, PC
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn.: Xxxxxx X. Xxxxxxx, Esq.
or to such other address or telecopier number as any party shall have
specified by notice in writing given to all other parties.
15. MISCELLANEOUS.
_____________
15.1 Amendments and Modifications. No amendment or modification
of this Agreement or any Exhibit or Schedule hereto shall be valid unless
made in writing and signed by the party to be charged therewith.
Notwithstanding the foregoing, the Seller may, prior to the Closing Date,
by notice duly provided to the Buyer, amend one or more of the Schedules
hereto to reflect events occurring subsequent to the date hereof.
15.2 Non-Assignability; Binding Effect. Neither this Agreement,
nor any of the rights or obligations of the parties hereunder, shall be
assignable by any party hereto without the prior written consent of all
other parties hereto, except that the Buyer may, without requirement of any
consent of the Seller, assign the Buyer's rights to indemnification
hereunder to any secured lender to the Buyer from time to time, and except
further that the Seller may, without requirement of any consent of the
Buyer, assign its rights and obligations hereunder to a purchaser of
substantially all of the assets of the Seller. Otherwise, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
15.3 Governing Law; Dispute Resolution. This Agreement shall be
construed and interpreted and the rights granted herein governed in
accordance with the laws of the State of New York applicable to contracts
made and to be performed wholly within such State. Any claim, dispute or
controversy arising under or in connection with this Agreement or any
actual or alleged breach hereof shall be settled exclusively by arbitration
to be held in New York, New York, which arbitration proceeding shall,
except as provided herein to the contrary, be conducted in accordance with
the commercial arbitration rules of the American Arbitration Association
then obtaining. Any arbitration proceeding conducted pursuant to this
Section 15.3 shall be before a panel of three arbitrators, one of which
shall be appointed by each of the Seller and the Buyer and the third of
which, who shall be the chairman of such panel, shall be appointed by the
two arbitrators so selected. As part of his or her award, the arbitrator
shall make a fair allocation of the fee of the American Arbitration
Association, the cost of any transcript, and the parties' reasonable
attorneys' fees, taking into account the merits and good faith of the
parties' claims and defenses. Judgment may be entered on the award so
rendered in any court having jurisdiction. Any process or other papers
hereunder may be served by express courier or by personal service, provided
that a reasonable time for appearance or response is allowed.
IN WITNESS WHEREOF, the parties have executed this Agreement on and as
of the date first set forth above.
IW HOLDINGS, INC.
By: /s/ Xxxx X. Xxxxxx
_________________________
Name: Xxxx X. Xxxxxx
Title: Executive Vice President
INTERWORLD HOLDINGS, L.L.C.
By: /s/ Xxxxxx X. Xxxx, Xx.
________________________
Xxxxxx X. Xxxx, Xx.
Manager
EXHIBIT A
PROMISSORY NOTE
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND ARE SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY AS SET FORTH IN THIS CERTIFICATE.
THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
UNDER SUCH ACT.
September 9, 0000
Xxx Xxxx, Xxx Xxxx
$534,000.00
FOR VALUE RECEIVED, the undersigned, InterWorld Holdings, L.L.C., a
Delaware limited liability company (the "Maker") with principal offices
located at 00 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at
such other place as Maker may from time to time designate by written notice
to Payee, subject to the provisions contained herein, hereby promises to
pay to the order of IW HOLDINGS, INC. (the "Payee") with principal offices
located at 0000 Xxxxxx Xxxxxxx, #000, Xxxxx, Xxxxx 00000, or at such other
place as Payee may from time to time designate by written notice to Maker,
the principal sum of FIVE HUNDRED THIRTY-FOUR THOUSAND and 00/100 Dollars
($534,000.00), together with interest thereon in the manner and at the rate
provided herein. All payments of principal and/or interest shall be paid
as set forth below without setoff or counterclaim, and each such payment
shall be made in lawful money of the United States of America. Maker
further agrees as follows:
Section 1. Payments.
_________
(a) Accrued interest under this Note shall be due and payable
quarterly commencing on December 9, 2004 and continuing on the first day of
each quarterly period thereafter through and including September 9, 2009.
(b) The principal of this Note shall be due and payable not
later than twenty (20) days after the end of each fiscal year in which cash
flows (excluding capital expenditures in excess of $25,000 per annum) of
Maker exceeds $300,000. In such event, Maker shall pay to Payee at least
fifty percent (50%) of such excess cash flows as specified above.
(c) The principal of this Note shall be due and payable on
September 9, 2009.
(d) Maker shall have the right to prepay this Note in full or in
part at any time, without premium or penalty. All prepayments shall be
applied first to principal and then to accrued interest.
(e) The principal amount set forth herein represents the entire
aggregate balance payable by Maker to Payee under that certain Asset
Purchase Agreement of even date herewith.
Section 2. Interest Rate.
_____________
(a) Interest shall accrue at a rate of six and one-half percent
(6.5%) per annum. The amount of interest payable quarterly shall be
computed on the basis of a 360-day year of twelve 30-day months. The
amount of interest payable for any partial period shall be computed on the
basis of the actual number of days elapsed in a 360-day year of twelve
months. In lieu of the payment of interest due on each quarterly period,
Maker may defer such payment of interest for a period not to exceed the
term of the Note. To the extent permitted by applicable law, interest, the
payment of which has been deferred pursuant to the immediately preceding
sentence, will bear interest thereon at six and one-half percent (6.5%) per
annum compounded quarterly for each quarter of deferred interest payments
("Compounded Interest"). Upon payment in full of the outstanding principal
balance, Maker also shall pay any and all interest accrued but unpaid on
the Note, including any Compounded Interest that shall be payable to Payee
on such date.
(b) All agreements between Maker and Payee are expressly limited
so that in no contingency or event whatsoever shall the amount paid or
agreed to be paid to Payee for the use, forbearance, or detention of the
indebtedness evidenced by this Note exceed the maximum amount permissible
under applicable law. If from any circumstance Payee should ever receive
as interest an amount which would exceed the highest lawful rate, such
amount as would be excessive interest shall be applied to the reduction of
the principal amount owing under this Note and not to the payment of
interest.
Section 3. Rank. This Note shall be a senior obligation of Maker and
all other obligations of Maker shall be subordinated to this Note,
regardless of whether such obligations are presently existing or are
subsequently incurred; provided, however, that, at the request of Maker,
this Note shall be subordinated to any senior secured credit facility from
a bank on commercially reasonable terms.
Section 4. Security Interest. Simultaneous with the making of this
Note, Maker shall deliver to Payee a Security Agreement in the form
attached hereto as Exhibit A, providing Payee with a preferred security
interest in certain of Maker's assets, intellectual property, inventory and
accounts receivable. Such security interest shall not relieve Maker of its
obligations hereunder.
Section 5. Default. It shall be an event of default ("Event of
Default"), and the entire unpaid principal of this Note, together with
accrued interest, shall become immediately due and payable, at the election
of Payee, upon the occurrence of any of the following events:
(a) any failure on the part of Maker to make any payment when
due, whether by acceleration or otherwise;
(b) Maker shall commence (or take any action for the purpose of
commencing) any proceeding under any bankruptcy, or for the reorganization
of any party liable hereon, whether as maker, endorser, guarantor, surety
or otherwise, or for the readjustment of any of the debts of any of the
foregoing parties, under the Federal Bankruptcy Code, as amended, or any
part thereof, or under any other laws, whether state or Federal, for the
relief of debtors, now or hereafter existing, by any of the foregoing
parties, or against any of the foregoing parties, which shall not be
discharged within thirty (30) days of their commencement;
(c) a proceeding shall be commenced against Maker under any
bankruptcy, reorganization, arrangement, readjustment of debt, moratorium
or similar law or statute and relief is ordered against it, or the
proceeding is controverted but is not dismissed within sixty (60) days
after the commencement thereof;
(d) the appointment of a receiver, trustee or custodian for any
party liable hereon, whether as maker, endorser, guarantor, surety or
otherwise, or for any substantial part of the assets of any of the
foregoing parties, or the institution of proceedings for the dissolution or
the full or partial liquidation of any of the foregoing parties;
(e) the admission by any party liable hereon, whether as maker,
endorser, guarantor, surety or otherwise, of its inability to pay its debts
as they mature, or an assignment for the benefit of the creditors of any of
the foregoing parties; or
(f) any transfer of property by a party liable hereon, whether
as maker, endorser, guarantor, surety or otherwise, under circumstances
which would entitle a trustee in bankruptcy or similar fiduciary to avoid
such transfer under the Federal Bankruptcy Code, as amended, or under any
other laws, whether state or Federal, for the relief of debtors, now or
hereafter existing.
Section 6. Waivers. Maker waives demand, presentment, protest,
notice of protest, notice of dishonor, and all other notices (other than
those specifically required hereby) or demands of any kind or nature with
respect to this Note.
Section 7. Collection Costs. Upon demand, Maker will pay to Payee
the amount of any and all reasonable costs and expenses, including, without
limitation, the reasonable fees and disbursements of its counsel (whether
or not suit is instituted) and of any experts and agents, which Payee may
incur in connection with the following: (i) the enforcement of this Note;
and (ii) the enforcement of payment of all obligations of Maker by any
action or participation in, or in connection with, a case or proceeding
under Chapters 7, 11, or 13 of the Bankruptcy Code, or any successor
statute thereto.
Section 8. Assignment of Note. Maker may not assign or transfer this
Note or any of its obligations under this Note in any manner whatsoever
without the prior written consent of Payee. This Note may be assigned at
any time by Payee.
Section 9. Jurisdiction and Service of Process. Maker irrevocably
consents to the jurisdiction of the courts of the State of New York and of
any federal court located in such State in connection with any action or
proceeding arising out of or relating to this Note, any document or
instrument delivered pursuant to, in connection with, or simultaneously
with this Note, or a breach of this Note or any such document or
instrument. Maker waives, to the full extent permitted by law, any
objection which it may now or hereafter have to the laying of venue of any
action or proceeding arising out of or relating to this Note brought in the
State of New York, and further irrevocably waives, to the full extent
permitted by law, any claim that any such action or proceeding brought in
such State has been brought in an inconvenient forum. In any such action
or proceeding, Maker waives, to the full extent permitted by law, personal
service of any summons, complaint, or other process and agrees that service
thereof may be made in accordance with subsection 10(e) of this Note.
Within thirty (30) days after such service, or such other time as may be
mutually agreed upon in writing by the attorneys for the parties to such
action or proceeding Maker shall appear or answer such summons, complaint,
or other process. Should Maker so served fail to appear or answer within
such thirty (30)-day period or such extended period, as the case may be,
Maker shall be deemed in default and judgment may be entered by Payee
against Maker for the amount as demanded in any summons, complaint, or
other process so served.
Section 10. Miscellaneous.
_____________
(a) This Note may be altered only by prior written agreement
signed by the party against whom enforcement of any waiver, change,
modification, or discharge is sought. This Note may not be modified by an
oral agreement, even if supported by new consideration.
(b) This Note shall be governed by, and construed in accordance
with, the laws of the State of New York, without giving effect to such
state's principles of conflict of laws.
(c) Subject to Section 8, the covenants, terms, and conditions
contained in this Note apply to and bind the heirs, successors, executors,
administrators and assigns of the parties.
(d) This Note constitutes a final written expression of all the
terms of the agreement between the parties regarding the subject matter
hereof, is a complete and exclusive statement of those terms, and supersede
all prior and contemporaneous agreements, understandings, and
representations between the parties. If any provision or any word, term,
clause, or other part of any provision of this Note shall be invalid for
any reason, the same shall be ineffective, but the remainder of this Note
shall not be affected and shall remain in full force and effect.
(e) Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be mailed by certified
mail, return receipt requested (or by the most nearly comparable method if
mailed from or to a location outside of the United States of America) or by
FedEx, Express Mail, or similar nationally recognized overnight delivery or
courier service, or delivered in person or by facsimile, or similar
telecommunications equipment, against receipt therefore at the address of
such party set forth on the first page of this Note (or to such other
address as the party shall have furnished in writing in accordance with the
provisions of this Section 10(e)). Such addresses may be changed by notice
given as provided in this subsection. Notices shall be effective upon the
date of receipt; provided, however, that a notice (other than a notice of a
changed address) sent by certified or registered U.S. mail, with postage
prepaid, shall be presumed received not later than three (3) business days
following the date of sending.
(g) Time is of the essence under this Note.
IN WITNESS WHEREOF, Maker has executed this Note effective as of the
date first set forth above.
InterWorld Holdings, L.L.C.
By: /s/ Xxxxxx X. Xxxx, Xx.
_____________________
Xxxxxx X. Xxxx, Xx.
Manager
EXHIBIT A TO PROMISSORY NOTE
SECURITY AGREEMENT
__________________
This Security Agreement (the "Agreement") is entered into as of the
9th day of September 2004, by and between InterWorld Holdings, L.L.C.
("Debtor") and IW HOLDINGS, INC. ("Secured Party"), with reference to the
following facts:
RECITALS
________
Debtor as the Maker and Secured Party as the Holder have entered into
that certain Promissory Note, dated concurrently herewith (the "Note"), in
the aggregate principal amount of Five Hundred Thirty-Four Thousand Dollars
($534,000);
As security for the prompt and complete payment of all indebtedness
evidenced by the Note, Debtor has agreed to grant Secured Party a security
interest in and to all of its right, title and interest in and to the
property hereinafter described.
NOW, THEREFORE, for good and valuable consideration, including the
mutual promises, conditions and covenants of the parties, it is agreed as
follows:
1. Grant of Security Interest. As assurance and security for prompt and
complete payment of the Note and performance by Debtor of all of its
respective obligations and covenants under this Agreement and the Note, and
any renewals or extensions thereof or amendments thereto, including,
without limitation, the due payment of the principal and interest
(including interest on interest) and all other monies (if any) for the time
being and from time to time owing pursuant to the Note, Debtor hereby
pledges, grants, bargains, assigns and transfers to Secured Party a
security interest, pursuant to the New York Uniform Commercial Code, in and
to the collateral described on Schedule 1 attached hereto, and incorporated
herein by this reference, and all substitutions, replacements and proceeds
thereof, including cash proceeds. Such property and all such proceeds are
hereafter collectively referred to as the "Collateral." For purposes
hereof, all terms set forth on Schedule 1 shall be defined as provided in
the New York Uniform Commercial Code.
2. Representations and Warranties of Debtor. Debtor represents and
warrants that upon the execution of this Agreement by Debtor and the
delivery hereof to the Secured Party, and the filing of a Form UCC-1
Financing Statement with the Delaware Secretary of State, the Secured Party
shall have a senior and perfected security interest in and to the
Collateral subordinable, at the request of Debtor, only to a senior secured
credit facility from a bank on commercially reasonable terms.
3. Default. Default under this Agreement will be deemed to have occurred
upon the default or failure of performance by Debtor under the Note, which
default is not cured within any grace period granted with respect to such
default or, if no specific grace period is granted with respect to such
default, where such default is not cured within ten (10) business days
after written notice thereof from the Holder hereof.
4. Remedies on Default. Upon the occurrence of a default, Secured Party
shall have all of the remedies of a secured party under the New York
Uniform Commercial Code and any other law, which rights shall include the
sale or disposal of the Collateral, or any part thereof, at public or
private sale, and the foreclosure of the lien or security interest created
pursuant to this Agreement by any available judicial procedure if notified
to do so by Secured Party. The Collateral may then be sold on such day and
at such place as determined by Secured Party. Secured Party shall deduct
and retain from the proceeds of such sale Secured Party's indebtedness and
the surplus, if any, shall be paid to the person or persons lawfully
entitled to receive the same. At any sale or sale made under this
Agreement, or authorized herein, Secured Party or any person on behalf of
Secured Party, or any other person, may bid for and purchase the Collateral
being sold.
5. Further Documents. Debtor agrees to execute and deliver such further
documents as may be required by Secured Party to more fully perfect or
secure its position under this Agreement, including, without limitation,
the execution of a financing statement on Form UCC-1 with the Secretary of
State of the State of New York.
6. Covenants. Debtor will at all times keep proper books and records of
account in accordance with GAAP, and Debtor will furnish the same to
Secured Party:
A. Within forty-five (45) days after the close of each fiscal year, a
consolidated balance sheet fairly presenting the financial condition of
Debtor as of the close of each fiscal year and consolidated statements of
operations fairly presenting the results of operations of Debtor for such
fiscal year, and a consolidated statement of cash flows, all prepared in
accordance with GAAP, and certified by Debtor's President and/or Chief
Executive Officer.
B. Within thirty (30) days after the close of each quarter, a
consolidated balance sheet fairly presenting the financial condition of
Debtor as of the close of said quarter, and consolidated statements of
operations fairly presenting the results of operations of Debtor for such
quarter, and consolidated statements of cash flows, all prepared in
accordance with GAAP, and certified by Debtor's President and/or Chief
Executive Officer.
C. Debtor will promptly notify Secured Party upon the occurrence of
any existing default of which the Debtor has any knowledge.
D. Debtor will not change the general character of its business as
conducted on the date hereof or engage directly or indirectly in any other
type of business not reasonably related to the general character of its
business.
7. Release. Upon payment in full of the Note and Debtor's satisfaction of
its obligations under this Agreement, the Secured Party shall cause its
security interest in the Collateral to be released and shall do all such
acts and execute all such documents as may be necessary to evidence such
release. Thereafter, this Agreement shall have no further force and
effect.
8. Assignment. This Agreement and all rights hereunder may not be
assigned by Debtor, but may be assigned by the Secured Party with prior
written notice to the Debtor.
9. Notices. All notices or other communications permitted or required
pursuant to this Agreement shall be in writing and shall be deemed given
upon deposit in the mail of the United States, first class, postage
prepaid, certified with return receipt, addressed to the last known address
of the parties. Either party shall have the right to change the place of
giving notices to it by providing written notice to the other party.
10. Entire Agreement. This Agreement, together with the Note of even date
herewith, and any other documents, instruments or amendments executed or
delivered pursuant to any of the foregoing, constitutes the entire
agreement between the parties pertaining to the security interest being
granted hereby. This Agreement may not be amended or modified except by a
writing executed by Secured Party and Debtor.
11. Governing Law. This Agreement is to be governed by, interpreted and
enforced in accordance with the laws of the State of New York.
12. Counterparts. This Agreement may be executed in counterparts, each of
which shall constitute an original document, but which together shall
constitute one and the same instrument.
AGREED TO AND ACCEPTED as of this 9th day of September 2004.
SECURED PARTY: DEBTOR:
IW HOLDINGS, INC. InterWorld Holdings, L.L.C.
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxx, Xx.
_____________________ __________________________
Name: Xxxx X. Xxxxxx Name: Xxxxxx X. Xxxx, Xx.
Title: Executive Vice President Title: Manager
SCHEDULE 1
__________
The Collateral shall include the following:
(a) all present and future rights of the Debtor to payment for
services rendered, for goods sold or leased, or for loans or other financial
accommodations extended, whether or not evidenced by instruments or chattel
paper, and whether or not earned by performance (the "Accounts");
(b) all present and future contract rights, general intangibles
(including, but not limited to, tax and duty refunds, drawings, blueprints,
customer lists, licenses, whether as licensor or licensee (to the extent that
the granting of the Secured Party's lien and security interest therein will
not cause a termination of such licenses or result in the loss of the
benefits of such licenses to the Debtor), chooses in action and other claims
and existing and future leasehold interests in equipment, real estate and
fixtures, all property owned by Debtor that is located at the address set
forth in Section 10(f) of the Note, and the right to xxx for infringement
and/or unauthorized use of any intangibles), securities, equity interests,
chattel paper, documents, instruments, letters of credit, bankers'
acceptances and guaranties;
(c) all present and future monies, securities, credit balances,
deposits, deposit accounts and other property of the Debtor now or hereafter
held or received by or in transit to the Secured Party or its affiliates or
at any other depository or other institution from or for the account of the
Secured Party, whether for safekeeping, pledge, custody, transmission,
collection or otherwise, and all present and future liens, security
interests, rights, remedies, title and interest in, to and in respect of
Accounts and other Collateral, including, without limitation, (i) rights and
remedies under or relating to guaranties, contracts of suretyship, letters of
credit and credit and other insurance related to the Collateral, (ii) rights
of stoppage in transit, replevin, repossession, reclamation and other rights
and remedies of an unpaid vendor, lienor or secured party, (iii) goods
described in invoices, documents, contracts or instruments with respect to,
or otherwise representing or evidencing, Accounts or other Collateral,
including, without limitation, returned, repossessed and reclaimed goods, and
(iv) deposits by and property of account debtors or other persons securing
the obligations of account debtors;
(d) all of the Debtor's now owned and hereafter existing or acquired
raw materials, work in process, finished goods, supplies, and all other
inventory of whatsoever kind or nature, wherever located;
(e) all of the Debtor's now owned and hereafter acquired equipment,
machinery, computers and computer hardware and software (whether owned or
licensed), vehicles, tools, furniture, fixtures, all attachments, accessions
and property now or hereafter affixed thereto or used in connection
therewith, and substitutions and replacements thereof, wherever located;
(f) all of the Debtor's present and future books of account of every
kind or nature, invoices, purchase and sale agreements, ledger cards, bills
of lading and other shipping evidence, statements, correspondence, memoranda,
credit files and other data relating to the Collateral or any account debtor,
together with the tapes, disks, diskettes and other data and software storage
media and devices, file cabinets or containers in or on which the foregoing
are stored (including any rights of the Debtor with respect to the foregoing
maintained with or by any other person); and
(g) all products and proceeds of the foregoing, in any form, including,
without limitation, insurance proceeds and all claims against third parties
for loss or damage to or destruction of any or all of the foregoing.
EXHIBIT B
XXXX OF SALE AND ASSIGNMENT
XXXX OF SALE AND ASSIGNMENT, dated September 9, 2004 (this "Xxxx of
Sale and Assignment"), from IW Holdings, Inc., a Delaware corporation (the
"Seller"), to InterWorld Holdings, LLC, a Delaware limited liability
company (the "Buyer"). Unless otherwise defined herein, capitalized terms
shall be used herein as defined in the Asset Purchase Agreement (as defined
below).
WHEREAS, the Seller and the Buyer have entered into that certain Asset
Purchase Agreement, dated as of September 9, 2004 (the "Asset Purchase
Agreement"); and
WHEREAS, the execution and delivery of this Xxxx of Sale and
Assignment by the Seller is a condition to the obligations of the Buyer to
consummate the transactions contemplated by the Asset Purchase Agreement.
NOW, THEREFORE, in consideration of the promises and mutual agreements
set forth in the Asset Purchase Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Seller does hereby agree as follows:
1. Sale and Assignment of Assets and Properties. The Seller hereby
sells, assigns, transfers, conveys and delivers to Buyer and its successors
and assigns free and clear of all liens, pledges, claims, security
interests and encumbrances whatsoever (other than Permitted Liens) the
entire right, title and interest of the Seller in, to and under the Assets.
2. Obligations and Liabilities Not Assumed. Nothing expressed or
implied in this Xxxx of Sale and Assignment shall be deemed to be an
assumption by the Buyer of any liabilities of the Seller. The Buyer by
this Xxxx of Sale and Assignment does not agree to assume or agree to pay,
perform or discharge any liabilities of the Seller of any nature, kind or
description whatsoever.
3. Further Assurances. The Seller hereby covenants and agrees that,
at any time and from time to time after the date of this Xxxx of Sale and
Assignment, at the Buyer's request, the Seller will do, execute,
acknowledge and deliver, or to the extent practicable will cause to be
done, executed, acknowledged and delivered, any and all further acts,
conveyances, transfers, assignments, and assurances that are necessary for
the better assuring, conveying and confirming unto the Buyer the entire
right, title and interest of the Seller in the Assets.
4. Power of Attorney. The Seller hereby constitutes and appoints
Buyer, its successors and assigns, and each of them, the true and lawful
attorney of the Seller, with full power of substitution, in the name of the
Buyer or in the name and stead of the Seller, but on behalf of and for the
benefit of the Buyer, its successors and assigns:
(a) to collect, demand and receive any and all Assets transferred
hereunder and to give receipts and releases for and in respect of the same;
(b) to institute and prosecute in the Seller's name or otherwise,
at the expense and for the benefit of the Buyer any and all actions, suits
or proceedings, at law, in equity or otherwise, which the Buyer may deem
proper in order to collect, assert or enforce any claim, right or title of
any kind in or to the Assets hereby sold and assigned to the Buyer or
intended so to be, to defend or compromise any and all such actions, suits
or proceedings in respect of any of such Assets, and to do all such acts
and things in relation thereto as the Buyer shall deem advisable for the
collection or reduction to possession of any of such Assets;
(c) to take any and all other reasonable action designed to vest
more fully in the Buyer the Assets hereby sold and assigned to the Buyer or
intended so to be and in order to provide for the Buyer the benefit, use,
enjoyment and possession of such Assets; and
(d) to do all reasonable acts and things in relation to the
Assets sold and assigned hereunder.
The Seller acknowledges that the foregoing powers are coupled with an
interest and shall be irrevocable by them or upon their subsequent
dissolution or in any manner or for any reason. The Buyer shall be
entitled to retain for its own account any amounts collected pursuant to
the foregoing powers, including any amounts payable as interest with
respect thereto.
5. No Third Party Beneficiaries. This Xxxx of Sale and Assignment
shall be binding upon the Seller, its successors and permitted assigns and
shall inure solely to the benefit of the Buyer, its successors and
permitted assigns, and nothing herein, express or implied, is intended to
or shall confer upon any other person, any legal or equitable right,
benefit or remedy of any nature whatsoever, under or by reason of this Xxxx
of Sale and Assignment.
6. Severability. If any term or other provision of this Xxxx of Sale
and Assignment is invalid, illegal or incapable of being enforced by any
law or public policy, all other terms and provisions of this Xxxx of Sale
and Assignment shall nevertheless remain in full force and effect so long
as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to the Seller or to the
Buyer.
7. Governing Law. This Xxxx of Sale and Assignment shall be governed
by, and construed in accordance with, the laws of the State of New York
applicable to contracts executed in and to be performed in that State
(without regard to conflicts of law provisions thereof).
IN WITNESS WHEREOF, this Xxxx of Sale and Assignment has been executed
by the Seller as of the date first above written.
THE SELLER:
IW HOLDINGS, INC.
By: /s/ Xxxx X. Xxxxxx
________________________________
Name Printed: Xxxx X. Xxxxxx
Title: Executive Vice President
THE BUYER:
INTERWORLD HOLDINGS, L.L.C.
By: /s/ Xxxxxx X. Xxxx, Xx.
__________________________________
Name Printed: Xxxxxx X. Xxxx, Xx.
Title: Manager
EXHIBIT C
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT, dated September 9, 2004 (this
"Agreement"), is between IW Holdings, Inc., a Delaware corporation (the
"Seller"), and InterWorld Holdings, LLC, a Delaware limited liability
company (the "Buyer"). Unless otherwise defined herein, capitalized terms
shall be used herein as defined in the Asset Purchase Agreement (as defined
below).
WHEREAS, the Seller and the Buyer have entered into that certain
Asset Purchase Agreement, dated as of September 9, 2004 (the "Asset
Purchase Agreement"); and
WHEREAS, pursuant to the Asset Purchase Agreement, the Buyer has
agreed to assume, pay, perform and discharge when due, any and all of the
Assumed Liabilities; and
WHEREAS, the execution and delivery of this Agreement by the
Buyer is a condition to the obligations of the Seller to consummate the
transactions contemplated by the Asset Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants set forth in the Asset Purchase Agreement and
hereinafter set forth, the Buyer and the Seller hereby agree as follows:
1. Assumption of Liabilities.
_________________________
(a) The Buyer hereby assumes, and agrees to pay, perform and
discharge when due, all of the Assumed Liabilities, (the "Assumed
Liabilities").
(b) For the avoidance of doubt, the Buyer does not assume, or
agree to pay, perform or discharge when due, any liabilities of the Seller
other than the Assumed Liabilities.
2. Assignment. This Agreement may not be assigned by operation
of law or otherwise without the express written consent of the Seller and
the Buyer (which consent may be granted or withheld in the sole discretion
of the Seller or the Buyer).
3. No Third Party Beneficiaries. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and
their successors and permitted assigns, and nothing herein, express or
implied, is intended to or shall confer upon any other person, including,
without limitation, any union or any employee or former employee of the
Seller, any legal or equitable right, benefit or remedy of any nature
whatsoever, including, without limitation, any rights or employment for any
specified period, under or by reason of this Agreement.
4. Amendment. This Agreement may not be amended or modified
except by an instrument in writing signed by, or on behalf of, the Seller
and the Buyer.
5. Waiver. Any party to this Agreement may (a) extend the time
for the performance of any of the obligations or other acts of the other
parties, (b) waive any inaccuracies in the representations and warranties
of the other parties contained herein or in any document delivered by the
other parties pursuant hereto or (c) waive compliance with any of the
agreements of the other parties or conditions to such parties' obligations
contained herein. Any such extension or waiver shall be valid only if set
forth in an instrument in writing signed by the parties to be bound
thereby. Any waiver of any term or condition shall not be construed as a
waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition of this Agreement.
The failure of any party to assert any of its rights hereunder shall not
constitute a waiver of any such rights.
6. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated by this Agreement are consummated as originally
contemplated to the greatest extent possible.
7. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by
the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement.
8. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable
to contracts executed in and to be performed in that State (without regard
to conflicts of law provisions thereof).
IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereto as of the date first above written.
THE SELLER:
IW HOLDINGS, INC.
By: /s/ Xxxx X. Xxxxxx
_____________________________
Name Printed: Xxxx X. Xxxxxx
Title: Executive Vice President
THE BUYER:
INTERWORLD HOLDINGS, L.L.C.
By: /s/ Xxxxxx X. Xxxx, Xx.
__________________________________
Name Printed: Xxxxxx X. Xxxx, Xx.
Title: Manager
