Exhibit 2
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into this 14th day of
July, 2000, by and between XXXXXXXX.XXX, INC., a Delaware corporation
("Purchaser") and XXXXXXXXXX.XXX, INC., a Delaware corporation ("Seller").
R E C I T A L S :
A. Seller develops and operates an Internet public policy and
political community site that provides content, products and services for
candidates for political office, voters, political organizations, political
action committees and lobbyists (the "Business").
B. Purchaser desires to acquire specific assets of the Seller,
as hereinafter identified, and Seller desires to sell such assets to Purchaser.
NOW THEREFORE, IT IS AGREED AS FOLLOWS:
A G R E E M E N T :
SECTION 1 - DESCRIPTION OF TRANSACTION
1.1 ASSETS PURCHASED. Seller shall sell to Purchaser and
Purchaser shall purchase from Seller, on the terms and conditions set forth in
this Agreement, the assets set forth on EXHIBIT A, which represent all the
material assets used in the Business (except for the excluded assets listed on
Schedule 1.1), (the "Assets").
1.2 LIABILITIES ASSUMED. Purchaser shall assume no liabilities
except the obligation to perform all of Seller's future obligations under the
agreements listed on EXHIBIT B.
1.3 PURCHASE PRICE FOR ASSETS. The purchase price for the
Assets shall be Forty Million One Hundred Thousand (40,100,000) shares of
Xxxxxxxx.xxx common stock.
1.4 PAYMENT OF PURCHASE PRICE. The shares of Xxxxxxxx.xxx
common stock specified in Section 1.3 shall be issued to Seller as soon as
practicable after the Closing.
1.5 CLOSING. This Agreement shall be closed at the offices of
Xxxxxxxx.xxx, Inc. in Tempe, Arizona on or before July 21, 2000, or at such
other place and time as the parties may agree in writing (the "Closing" or the
"Closing Date"). If Closing has not occurred on or prior to July 28, 2000, then
any party may elect to terminate this Agreement. If, however, the Closing has
not occurred because of a breach of contract by one or more parties, the
breaching party or parties shall remain liable for breach of contract.
1.6 ADJUSTMENTS. The related income and expenses of the Assets
purchased up to the close of business on the day before the Closing Date shall
be for the account of Seller and thereafter for the account of Purchaser.
Expenses, including but not limited to utilities, taxes and rents shall be
prorated between Seller and Purchaser as of the close of business on the Closing
Date, the proration to be made and paid, insofar as reasonably possible, on the
Closing Date, with settlement of any remaining items to be made within 30 days
following the Closing Date.
1.7 SHARES ISSUED. Each certificate representing any of the
shares of Xxxxxxxx.xxx stock to be issued pursuant to this Agreement shall bear
a legend identical or similar in effect to the following legend (together with
any other legend or legends required by applicable state securities laws or
otherwise):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND ARE
RESTRICTED WITHIN THE MEANING OF RULE 144 OF THE ACT AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED UNLESS REGISTERED UNDER THE ACT OR UNLESS AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE."
1.8 TAX TREATMENT . Purchaser and Seller intend that the
transaction contemplated by this Agreement be treated as a transfer of property
pursuant to Section 351 of the Internal Revenue Code that would not be
reportable to the Internal Revenue Service as a taxable transaction.
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in Schedule 2 (Seller's Schedule of
Exceptions), Seller represents and warrants, to and for the benefit of
Purchaser, as follows:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the state of Delaware. Seller has all requisite corporate power and authority
to own and operate its properties and assets, to execute and deliver this
Agreement, to carry out the provisions of this Agreement and to carry on its
business as presently conducted and as presently proposed to be conducted.
Seller is duly qualified and authorized to do business and is in good standing
as a foreign corporation in all jurisdictions in which the nature of its
activities and of its properties (both owned and leased) make such
qualifications necessary, except for those jurisdictions in which failure to do
so would not have a material adverse effect on Seller or its respective
businesses. Seller has made available to Purchaser true, correct and complete
copies of Seller's articles of incorporation and bylaws, each as amended to
date.
2.2 AUTHORIZATION; BINDING OBLIGATIONS. Seller has all
requisite right, power and authority to enter into and to perform its
obligations under this Agreement. This Agreement constitutes the legal, valid
and binding obligation of Seller, enforceable against Seller in accordance with
its terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
2.3 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. EXHIBIT A is a
complete and accurate list of all material Assets (whether leased or owned),
including intellectual property, of Seller that are to be transferred to
Purchaser pursuant to this Agreement. The Assets are sufficient to operate the
business as presently conducted, being understood that no cash is being acquired
and that cash is necessary to operate the Business. However, the Assets do not
necessarily represent all of the assets historically used by Seller in the
operation of the Business.
Seller has good and marketable title to all of its properties and Assets listed
on EXHIBIT A, in each case subject to no material mortgage, pledge, lien, lease,
encumbrance or charge, other than those resulting from taxes which have not yet
become due and payable. All facilities, machinery, equipment, fixtures, vehicles
and other properties listed on EXHIBIT A are in good operating condition and
repair and are reasonably fit and usable for the purposes for which they are
being used. Seller is in compliance with all material terms of each lease listed
on EXHIBIT A to which it is a party or is otherwise bound.
2.4 PATENTS AND TRADEMARKS. To the knowledge of Seller, Seller
owns or possesses sufficient legal rights to all trademarks, service marks,
trade names, copyrights, trade secrets, licenses, patents, information and other
proprietary rights and processes listed on EXHIBIT A to operate the Business,
without any known infringement of the rights of others. There are no outstanding
options, licenses or agreements of any kind relating to the foregoing. Seller
has not received any communications alleging that, in regards to the foregoing,
it has violated any of the patents, trademarks, service marks, trade names,
copyrights or trade secrets or other proprietary rights of any other person or
entity.
2.5 SOFTWARE. All the commercial software listed on EXHIBIT A
has been licensed properly and all fees, royalties and charges payable in
connection therewith have been paid in full.
2.6 LITIGATION. There is no material action, suit, proceeding
or investigation pending, or to the knowledge of Seller, currently threatened
against Seller that questions the validity of this Agreement or the right of
Seller to enter into any such agreement, or to consummate the transactions
contemplated hereby or thereby.
2.7 TAXES. Each tax required to have been paid, or claimed by
any governmental body to be payable, by Seller with respect to the Assets listed
on EXHIBIT A (whether pursuant to any tax return or otherwise) has been duly
paid in full and on a timely basis.
2.8 COMPLIANCE WITH OTHER INSTRUMENTS. Neither the execution
and delivery of this Agreement, nor the consummation or performance of any of
the transactions contemplated thereby, will materially, directly or indirectly,
(with or without notice or lapse of time):
(i) result in a violation of (A) any of the provisions
of Seller's certificate of incorporation or bylaws, or (B) any resolution
adopted by Seller's stockholders or Seller's board of directors;
(ii) result in a violation of, or give any governmental
body or other person the right to exercise any remedy or obtain any relief
under, any legal requirement or any order to which Seller, or any of the Assets
owned or used by Seller, is subject;
(iii) result in a breach of, or result in a default
under, any provision of any contract to which Seller is a party; or
(iv) give any person the right to (A) declare a default
or exercise any remedy under any contract to which Seller is a party, (B)
accelerate the maturity or performance of any contract to which Seller is a
party or (C) cancel, terminate or modify any contract to which Seller is a
party.
2.9 APPROVALS. This Agreement and the consummation of the
transactions contemplated by this Agreement have been approved by all necessary
corporate action on the part of Seller (with the exception of final approval
from Seller's board of directors).
2.10 SECURITIES MATTERS.
(a) Seller is an accredited investor as defined in Rule
501(a) of Regulation D promulgated under the Securities Act of 1933 and is
familiar with the foregoing Regulation D. Seller is an investor in securities of
private companies and acknowledges that an investment in Purchaser involves a
high degree of risk. Seller is able to fend for itself in evaluating and
consummating the transactions contemplated by this Agreement, can bear the
economic risk of its investment (including a possible complete loss of such
investment) for an indefinite period of time and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in Purchaser. Seller is entering into this
Agreement without knowledge of any public solicitation or general advertising by
Purchaser related to its securities.
(b) Seller hereby confirms, that the capital stock of
Purchaser to be acquired by Seller will be acquired for investment for
Seller's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that Seller has no present
intention of selling, granting any participation in, or otherwise distributing
the same, except Seller may, subject to compliance with applicable securities
laws, transfer such stock to a person or entity that directly or indirectly,
through one or more intermediaries, controls or is under common control with
Seller. By executing this Agreement, Seller further represents that Seller does
not presently have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to such stock. Seller has not been formed for the specific
purpose of acquiring such stock.
2.11 FULL DISCLOSURE. Seller has made available to Purchaser
an accurate and complete copy of its Registration Statement on Form SB-2 No.
333-74569 filed with the Securities and Exchange Commission (the "SEC") on June
22, 1999 (the "Registration Statement"), its 10KSB for the period ending
December 31, 1999 (the "10K"), and its 10QSB for the period ending March 31,
2000 (the "10Q"). The Registration Statement, the 10K, and the 10Q (i) comply in
all material respects with the applicable requirements of the Securities Act of
1933 and the Securities Exchange Act of 1934 and (ii) do not contain any untrue
statements of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as set forth in Schedule 3 (Purchaser's Schedule of
Exceptions), Purchaser represents and warrants to and for the benefit of Seller,
as follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Purchaser
is a corporation duly organized, validly existing and in good standing under the
laws of the state of Delaware. Purchaser has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement, to carry out the provisions of this
Agreement and to carry on its business as presently conducted and as presently
proposed to be conducted. Purchaser is duly qualified and authorized to do
business and is in good standing as a foreign corporation in all jurisdictions
in which the nature of its activities and of its properties (both owned and
leased) make such qualifications necessary, except for those jurisdictions in
which failure to do so would not have a material adverse effect on Purchaser or
its respective businesses. Purchaser has made available to Seller true, correct
and complete copies of Purchaser's articles of incorporation and bylaws, each as
amended to date.
3.2 AUTHORIZATION; BINDING OBLIGATIONS. Purchaser has all
requisite right, power and authority to enter into and to perform its
obligations under this Agreement. This Agreement constitutes the legal, valid
and binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms, subject to (i) laws of general application relating to
bankruptcy, insolvency and the relief of debtors and (ii) rules of law governing
specific performance, injunctive relief and other equitable remedies.
3.3 CAPITALIZATION; VOTING RIGHTS. Immediately prior to
Closing, the authorized capital stock of Purchaser shall consist of (a)
50,000,000 shares of common stock and (b) 20,000,000 shares of preferred stock,
of which no shares are issued and outstanding. Immediately prior to the Closing,
the total outstanding shares of common stock and shares of common stock issuable
upon exercise of outstanding options, warrants or other rights to acquire common
stock will be 9,750,000. All issued and outstanding shares of common stock and
preferred stock (i) have been duly authorized and validly issued, (ii) are fully
paid and nonassessable, and (iii) were, to Purchaser's knowledge, issued in
compliance with all applicable state and federal laws concerning the issuance of
securities. The stock to be issued pursuant to this Agreement has been duly
authorized and, when issued in compliance with the provisions of this Agreement
and its certificate of incorporation, will be validly issued, fully paid and
nonassessable, with no personal liability attaching to the ownership thereof,
other than liabilities imposed upon stockholders generally by the provisions of
Delaware law, and will not be subject to any other restrictions, except as set
forth in or provided by this Agreement and as may be imposed by applicable law.
3.4 FULL DISCLOSURE. Purchaser has delivered to Seller an
accurate and complete copy of its Registration Statement on Form 10S-B, as
amended, No. 000-27591 filed with the Securities and Exchange Commission (the
"SEC") (the "Registration Statement"), its 10K for the period ending December
31, 1999 (the "10K"), and its 10Q for the period ending March 31, 2000 (the
"10Q"), which is the most recent document filed with the SEC as of the date
hereof. The Registration Statement, the 10K, and the 10Q (i) comply in all
material respects with the applicable requirements of the Securities Act of 1933
and the Securities Exchange Act of 1934, and (ii) do not contain any untrue
statements of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
3.5 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. EXHIBIT C is a
complete and accurate list of all material assets (whether leased or owned),
including intellectual property, of Purchaser. Purchaser has good and marketable
title to all of its properties and assets listed on EXHIBIT C, in each case
subject to no material mortgage, pledge, lien, lease, encumbrance or charge,
other than those resulting from taxes which have not yet become due and payable.
All facilities, machinery, equipment, fixtures, vehicles and other properties
listed on EXHIBIT C are in good operating condition and repair and are
reasonably fit and usable for the purposes for which
they are being used. Purchaser is in compliance with all material terms of each
lease listed on EXHIBIT C to which it is a party or is otherwise bound.
3.6 PATENTS AND TRADEMARKS. To the knowledge of Purchaser,
Purchaser owns or possesses sufficient legal rights to all trademarks, service
marks, trade names, copyrights, trade secrets, licenses, patents, information
and other proprietary rights and processes listed on EXHIBIT C to operate
Purchaser's business, without any known infringement of the rights of others.
There are no outstanding options, licenses or agreements of any kind relating to
the foregoing. Purchaser has not received any communications alleging that, in
regards to the foregoing, it has violated any of the patents, trademarks,
service marks, trade names, copyrights or trade secrets or other proprietary
rights of any other person or entity.
3.7 SOFTWARE. All the commercial software listed on EXHIBIT C
has been licensed properly and all fees, royalties and charges payable in
connection therewith have been paid in full.
3.8 LITIGATION. There is no material action, suit, proceeding
or investigation pending, or to the knowledge of Purchaser, currently threatened
against Purchaser that questions the validity of this Agreement or the right of
Purchaser to enter into any such agreement, or to consummate the transactions
contemplated hereby or thereby.
3.9 TAXES. Each tax required to have been paid, or claimed by
any governmental body to be payable, by Purchaser with respect to the assets
listed on EXHIBIT C (whether pursuant to any tax return or otherwise) has been
duly paid in full and on a timely basis.
3.10 COMPLIANCE WITH OTHER INSTRUMENTS. Neither the execution
and delivery of this Agreement, nor the consummation or performance of any of
the transactions contemplated thereby, will materially, directly or indirectly,
(with or without notice or lapse of time):
(i) result in a violation of (A) any of the provisions
of Purchaser's certificate of incorporation or bylaws, or (B) any resolution
adopted by Purchaser's stockholders or Purchaser's board of directors;
(ii) result in a violation of, or give any governmental
body or other person the right to exercise any remedy or obtain any relief
under, any legal requirement or any order to which Purchaser, or any of the
assets owned or used by Purchaser, is subject;
(iii) result in a breach of, or result in a default
under, any provision of any contract to which Purchaser is a party; or
(iv) give any Person the right to (A) declare a default
or exercise any remedy under any contract to which Purchaser is a party, (B)
accelerate the maturity or performance of any contract to which Purchaser is a
party or (C) cancel, terminate or modify any contract to which Purchaser is a
party.
3.11 APPROVALS. This Agreement and the consummation of the
transactions contemplated by this Agreement have been approved by all necessary
corporate action on the part of Purchaser.
SECTION 4 - COVENANTS
4.1 SELLER'S OPERATION OF BUSINESS PRIOR TO CLOSING. Seller
agrees that between the date of this Agreement and the Closing Date, Seller will
continue to operate its business of developing and operating an Internet public
policy and political community site (as related to the Assets) in the usual and
ordinary course and in substantial conformity with all applicable laws,
ordinances, regulations, rules, or orders, and will use its best efforts to
preserve the Assets being transferred pursuant to this Agreement.
4.2 ACCESS AND INVESTIGATION. Seller and Purchaser shall
ensure that, at all times during the Pre-Closing period:
(a) Each party and its representatives provide the other
party and its representatives with access, during normal business hours upon
reasonable notice, to its representatives, personnel and assets and to all
existing books, records, tax returns, work papers and other documents and
information relating to such party;
(b) Each party and its representatives provide the other
party and its representatives with such copies of existing books, records, tax
returns, work papers and other documents and information relating to such party
as may be requested in good faith; and
(c) Each party and its representatives compile and
provide the other party and its representatives with such additional financial,
operating and other data and information regarding such party as may be
requested in good faith. Without limiting the generality of the foregoing,
during the Pre-Closing Period, each party shall promptly provide the other party
with copies of:
(i) all material operating and financial reports
prepared for senior management, including copies of the unaudited monthly
balance sheets and the related unaudited monthly statements of operations and
statements of cash flows;
(ii) any material notice, document or other
communication sent by or on behalf of one of the parties to any party to
any contract or sent to one of the parties by any party to any contract (other
than any communication that relates solely to commercial transactions of the
type sent in the ordinary course of business);
(iii) any written notice, report or other document
filed with or sent to any governmental body in connection with the transactions
contemplated by this Agreement; and
(iv) any material written notice, report or other
document received from any governmental body.
4.3 CONDITIONS AND BEST EFFORTS. Purchaser and Seller will use
their best efforts to effectuate the transactions contemplated by this Agreement
and to fulfill all the conditions of Purchaser's and Seller's obligations under
this Agreement, and shall do all acts and things as may be required to carry out
Purchaser's and Seller's obligations and to consummate this Agreement.
4.4 PUBLIC ANNOUNCEMENTS. Neither Purchaser nor Seller (or any
of their respective representatives) shall issue any press release or make any
public statement regarding this Agreement or the transactions contemplated
thereby, without the other party's prior written consent. Each party will use
reasonable efforts to consult with the other party prior to issuing any press
release or making any public statement regarding this transaction; PROVIDED THAT
any party shall be free to make any disclosure regarding this Agreement that it
deems reasonably necessary in order to comply with applicable securities laws or
the rules of the Nasdaq Stock Market.
4.5 CONFIDENTIAL INFORMATION. If for any reason the sale of
Assets is not closed, no party will disclose to third parties any confidential
information received from the other party in the course of investigating,
negotiating, and performing the transactions contemplated by this Agreement.
4.6 RESALE. Seller shall not sell or otherwise transfer any
Xxxxxxxx.xxx stock until the requirements of Rule 144 are satisfied for such
sale or transfer unless the stock is earlier registered. Purchaser shall
endeavor to timely cooperate with Seller regarding the resale of Xxxxxxxx.xxx
stock once the requirements in the preceding sentence have been satisfied.
4.7 NONCOMPETITION OBLIGATIONS. For a period of twelve (12)
months from the date of this Agreement, Seller will not, directly or indirectly,
at any place in the world, (i) engage or become interested (as owner,
stockholder, partner, member, creditor, consultant, or employee) in any business
in competition with the business of developing and operating an Internet public
policy and political community site (as related to the Assets) conducted by
Purchaser, (ii) solicit, divert, take away, or attempt to solicit, divert or
take away, any Purchaser customers or the business or patronage of any such
customers, either for itself or on behalf of any other person, partnership,
corporation or other entity, or (iii) solicit, recruit or hire any employee of
Purchaser, either for itself or on behalf of any other person, partnership,
corporation or other entity. The parties acknowledge that Purchaser will be
conducting business throughout the world and that the worldwide geographic scope
of this covenant is reasonably necessary to protect Purchaser's legitimate
business interests.
4.8 LOCK-UP PERIOD. Notwithstanding the provisions of Section
4.6 above, Seller will not, directly or indirectly, for a period of six months
from the Closing Date, sell, offer to sell, contract to sell, grant any option
for the sale of, grant any security interest in, pledge, margin, hypothecate, or
otherwise sell or dispose of the Xxxxxxxx.xxx stock to be issued pursuant to
this Agreement. This Section 4.8 shall survive the Closing.
4.9 ELECTION OF DIRECTORS. As soon as practical after the
Closing, the number of authorized directors of Purchaser will be set at seven
and Seller shall vote or act with respect to its shares of Xxxxxxxx.xxx stock so
as to initially elect Xxxxxx X. Xxxx as one of said seven directors. Seller
shall cause Xxxxxx X. Xxxx to be nominated as a director of Purchaser and shall
vote its shares of Purchaser for the election of Xxxxxx X. Xxxx as a director of
Purchaser for a period of 2 years. The remaining six directors shall initially
be Xxxxxxx Xxxxxx, Xxxx Xxxxxxxxx and four directors selected by Xxxxxxx Xxxxxx,
Xxxx Xxxxxxxxx, and Xxxxxx X. Xxxx (based on majority vote). This Section 4.9
shall survive the Closing.
4.10 SUBLEASE. Seller shall continue to allow Purchaser to
sublease certain real property located at 000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx (the
"Sublease") and allow Purchaser to divide the profits from the Sublease
(determined by calculating the excess rent Purchaser
receives from the subtenant under the Sublease over and above the amount of rent
Purchaser pays to its landlord) between Purchaser's landlord (the "Landlord") at
such property and Xxxxxx X. Xxxx, in accordance with Purchaser's lease,
PROVIDED, HOWEVER, that before any such payments are made, Xxxxxx X. Xxxx agrees
in writing to compensate Purchaser up to the amount of such payments for any
rents due to the Landlord from Purchaser in the event that the rents received
under the Sublease are less then the rents due under Purchaser's lease.
4.11 REVERSE STOCK SPLIT. Without the consent of Seller,
Xxxxxx X. Xxxx, and Xxxxx X. Xxxx, Purchaser will not take any action to cause a
reverse split of its capital stock prior to the first anniversary of the Closing
Date.
4.12 PERSONAL GUARANTY. Seller shall indemnify Xxxxxx X. Xxxx
for any liability, costs and expenses, including reasonable attorney's fees and
costs, he may incur from the personal guarantee Xxxxxx X. Xxxx has previously
entered into in favor of Touch Screen Media Group, Inc. and Seller shall use its
best efforts to obtain the release, within 60 days of Closing, of Xxxxxx X. Xxxx
from the guarantee obligation. This Section 4.12 shall survive the Closing.
SECTION 5 - CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser to effect the transaction
contemplated by this Agreement are subject to the satisfaction, at or prior to
Closing, of each of the following conditions (any of which may be waived by
Purchaser, in whole or in part):
5.1 REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER. All
representations and warranties made in this Agreement by Seller shall be true as
of the Closing Date as fully as though such representations and warranties had
been made on and as of the Closing Date, and, as of the Closing Date, Seller
shall not have violated nor shall have failed to perform in accordance with any
covenant contained in this Agreement.
5.2 CONDITION OF THE ASSETS. There shall have been no material
adverse change in the condition of the Assets or the Business prior to the
Closing Date.
5.3 NO SUITS OR ACTIONS. At the Closing Date no suit, action,
or other proceeding shall have been threatened or instituted to restrain,
enjoin, or otherwise prevent the consummation of this Agreement or the
contemplated transactions.
5.4 SECURITIES LAW COMPLIANCE. All applicable requirements of
the Securities Act of 1933 and any applicable state securities laws shall have
been satisfied.
5.5 APPROVALS. This Agreement and the consummation of the
transactions contemplated by this Agreement shall have been approved by all
necessary corporate action on the part of Purchaser.
5.6 AGREEMENTS AND DOCUMENTS. Purchaser shall have received
the following agreements and documents, each of which shall be in full force and
effect:
(a) a Xxxx of Sale and Assignment, substantially in the
form of EXHIBIT D;
(b) a legal opinion from Seller's counsel, reasonably
acceptable to Purchaser;
(c) a certificate executed by Seller containing the
representation and warranty that (i) each of the representations and warranties
made by Seller in this Agreement are accurate in all material respects as of the
Closing Date as if made on the Closing Date and (ii) the conditions set forth in
this Section 5 have been duly satisfied; and
(d) such other documents, to the extent such documents
are reasonably available or should be reasonably available, as Purchaser may
reasonably request in good faith for the purpose of (i) evidencing the accuracy
of any representation or warranty made by Seller, (ii) evidencing the compliance
by Seller with, or the performance by Seller of, any covenant or obligation set
forth in this Agreement, (iii) evidencing the compliance with any applicable
federal or state securities law, (iv) evidencing the satisfaction of any
condition set forth in this Section 5 or (v) otherwise facilitating the
consummation or performance of any of the transactions contemplated by this
Agreement.
SECTION 6 - CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller to effect the transaction
contemplated by this Agreement are subject to the satisfaction, at or prior to
Closing, of each of the following conditions (any of which may be waived by
Seller, in whole or in part):
6.1 REPRESENTATIONS, WARRANTIES, AND COVENANTS OF PURCHASER.
All representations and warranties made in this Agreement by Purchaser shall be
true as of the Closing Date as fully as though such representations and
warranties had been made on and as of the Closing Date, and, as of the Closing
Date, Purchaser shall not have violated nor shall have failed to perform in
accordance with any covenant contained in this Agreement.
6.2 NO SUITS OR ACTIONS. At the Closing Date no suit, action,
or other proceeding shall have been threatened or instituted to restrain,
enjoin, or otherwise prevent the consummation of this Agreement or the
contemplated transactions.
6.3 SECURITIES LAW COMPLIANCE. All applicable requirements of
the Securities Act of 1933 and any applicable state securities laws shall have
been satisfied.
6.4 APPROVALS. This Agreement and the consummation of the
transactions contemplated by this Agreement shall have been approved by all
necessary corporate action on the part of Seller.
6.5 AGREEMENTS AND DOCUMENTS. Seller shall have received the
following agreements and documents, each of which shall be in full force and
effect:
(a) a list, certified as accurate as of a date
reasonably close to the Closing Date, setting forth the names of (i) the
stockholders of Purchaser and the number of shares of capital stock owned of
record by each such stockholder, and (ii) the names of all
holders of rights to acquire shares of capital stock of Purchaser and the type
of security, number of shares, and purchase prices applicable to such
securities;
(b) a legal opinion from counsel for Purchaser,
reasonably acceptable to Seller;
(c) a certificate executed by Purchaser containing the
representation and warranty that (i) each of the representations and warranties
made by Purchaser in this Agreement are accurate in all material respects as of
the Closing Date as if made on the Closing Date and (ii) the conditions set
forth in this Section 6 have been duly satisfied;
(d) a Schedule 6.5(d), certified as accurate as of the
Closing Date listing all of Purchaser's material liabilities;
(e) resignations of all of Purchasers current board
directors, other than Xxxxxx X. Xxxx;
(f) an agreement in writing, reasonably acceptable to
Seller, executed by Xxxxxx X. Xxxx and Xxxxx X. Xxxx in which Xxxxxx X. Xxxx and
Xxxxx X. Xxxx agree to lock up all shares of common stock of Purchaser owned by
them as follows: (i) all shares shall be locked up for the first 30 days after
the Closing Date, and (ii) during the following 5 months, an aggregate of
150,000 shares shall be released from lock up; and
(g) such other documents, to the extent such documents
are reasonably available or should be reasonably available, as Seller may
reasonably request in good faith for the purpose of (i) evidencing the accuracy
of any representation or warranty made by Purchaser, (ii) evidencing the
compliance by Purchaser with, or the performance by Purchaser of, any covenant
or obligation set forth in this Agreement, (iii) evidencing the compliance with
any applicable federal or state securities law, (iv) evidencing the satisfaction
of any condition set forth in this Section 6 or (v) otherwise facilitating the
consummation or performance of any of the transactions contemplated by this
Agreement.
6.6 TREATMENT. Seller's CPA firm shall have confirmed to
Seller in writing that the transaction contemplated by this Agreement will be a
nontaxable transaction pursuant to Section 351 of the Internal Revenue Code.
6.7 DUE DILGENCE. Seller shall have completed a due
diligence review of Purchaser, reasonably satisfactory to Seller.
SECTION 7 - TERMINATION
7.1 TERMINATION EVENTS. This Agreement may be terminated prior
to the Closing:
(a) by Purchaser if (i) there is a material breach of
any covenant or obligation of Seller or (ii) Purchaser reasonably determines
that the timely satisfaction of any condition set forth in Section 5 has become
impossible (other than as a result of any failure on
the part of Purchaser to comply with or perform any covenant or obligation of
Purchaser set forth in this Agreement);
(b) by Seller if (i) there is a material breach of any
covenant or obligation of Purchaser or (ii) Seller reasonably determines that
the timely satisfaction of any condition set forth in Section 6 has become
impossible (other than as a result of any failure on the part of Seller to
comply with or perform any covenant or obligation of Seller set forth in this
Agreement);
(c) by Purchaser at or after the Closing Date if any
condition set forth in Section 5 has not been satisfied by the Closing Date;
(d) by Seller at or after the Closing Date if any
condition set forth in Section 6 has not been satisfied by the Closing Date;
(e) by Purchaser if the Closing has not taken place on
or before July 28, 2000 (other than as a result of any failure on the part of
Purchaser to comply with or perform any covenant or obligation of Purchaser set
forth in this Agreement);
(f) by Seller if the Closing has not taken place on or
before July 28, 2000 (other than as a result of the failure on the part of
Seller to comply with or perform any covenant or obligation of Seller set forth
in this Agreement);
(g) by the mutual consent of Purchaser and Seller.
7.2 TERMINATION PROCEDURES. If any party wishes to terminate
this Agreement pursuant to Section 7.1, such party shall deliver to the other
party a written notice stating that they are terminating this Agreement and
setting forth a brief description of the basis on which they are terminating
this Agreement.
7.3 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 7.1, all further obligations of the parties under this
Agreement shall automatically terminate; PROVIDED, HOWEVER, that: (a) neither
Purchaser nor Seller shall be relieved of any obligation or liability arising
from any prior breach by such party of any provision of this Agreement; and (b)
the parties shall, in all events, remain bound by and continue to be subject to
the provisions set forth in Section 4.4.
SECTION 8 - INDEMNIFICATION
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in this Agreement shall survive the Closing
of this Agreement, except that any party to whom a representation or warranty
has been made in this Agreement shall be deemed to have waived any
misrepresentation or breach of representation or warranty of which such party
had knowledge prior to Closing. Any party learning of a misrepresentation or
breach of representation or warranty under this Agreement shall immediately give
written notice thereof to all other parties to this Agreement. The
representations and warranties in this Agreement shall terminate one year from
the Closing Date, and such representations or warranties shall thereafter be
without force or effect, except (i) any claim with respect to which notice has
been given to the
party to be charged prior to such expiration date and (ii) fraud claims, which
shall survive for the statute of limitations applicable to claims based on such
matters.
8.2 INDEMNIFICATION. Purchaser and Seller hereby agree to
indemnify and hold each other, their successors, and assigns harmless from and
against:
(a) Any and all claims, liabilities, and obligations of
every kind and description, contingent or otherwise, arising out of or related
to the operation of each party's respective business prior to the close of
business on the day before the Closing Date, except for claims, liabilities, and
obligations of Seller expressly assumed by Purchaser under this Agreement or
paid by insurance maintained by Seller or Purchaser.
(b) Any and all damage or deficiency resulting from any
material misrepresentation, breach of warranty or covenant, or nonfulfillment of
any agreement on the part of any party under this Agreement.
(c) The indemnity obligations under Section 8.2 shall be
subject to the following: if any claim is asserted against Purchaser or Seller
that would give rise to a claim by Purchaser or Seller against one of the other
parties to this Agreement for indemnification under the provisions of this
section, then Purchaser or Seller, as the case may be, shall promptly give
written notice to the other party concerning such claim and the party
responsible for indemnification under the provisions of this section shall, at
no expense to the other party to this Agreement, defend the claim.
SECTION 9 - MISCELLANEOUS PROVISIONS
9.1 PURCHASER'S ACCEPTANCE. Purchaser represents and
acknowledges that it has entered into this Agreement on the basis of its own
examination, personal knowledge, and opinion of the value of the Business.
Purchaser has not relied on any representations made by Seller other than those
specified in this Agreement. Purchaser further acknowledges that Seller has not
made any agreement or promise to repair or improve any of the equipment, or
other personal property being sold to Purchaser under this Agreement, and that
Purchaser takes all such property in the condition existing on the date of this
Agreement, except as otherwise provided in this Agreement.
9.2 RISK OF LOSS. The risk of loss, damage, or destruction to
any of the equipment, inventory, or other assets to be conveyed to Purchaser
under this Agreement shall be borne to the time of Closing by Seller.
9.3 AMENDMENT AND MODIFICATION. Subject to applicable law,
this Agreement may be amended, modified, or supplemented only by a written
agreement signed by all of the parties hereto.
9.4 NOTICES. All notices, requests, demands, and other
communications required or permitted hereunder will be in writing and will be
deemed to have been duly given when delivered by hand or two days after being
mailed by certified or registered mail, return receipt requested, with postage
prepaid:
If to Seller, to: Xxxxxxxxxx.xxx, Inc.
000 Xxxxxxxxxx Xxxx, Xxxxx X
Xxxx Xxxxx, XX 00000
with copy to: Xxxx Xxxxxxx
Xxxxxxx, Xxxxxx, Xxxxxxx, Rock & Fields, Chtd.
000 X. Xxxxxxx Xxxx., 00xx Xxxxx
Post Xxxxxx Xxx 000
Xxxxx, XX 00000-0000
or to such other person or address as Seller furnishes to Purchaser pursuant to
the above.
If to Purchaser, to: Xxxxxxxx.xxx, Inc.
0000 Xx. Xxxxx Xx.
Xxxxx, XX 00000
with copy to: Xxxx X. Xxxxxxx, Xx., Esq.
Brown, Rudnick, Freed & Gesmer
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
or to such person or address as Purchaser furnishes to Seller pursuant to the
above.
9.5 ATTORNEY FEES. In the event an arbitration, suit or action
is brought by any party under this Agreement to enforce any of its terms, or in
any appeal therefrom, it is agreed that the prevailing party shall be entitled
to reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.
9.6 DISPUTE RESOLUTION. The parties shall attempt in good
faith to resolve any controversy or claim arising out of or relating to this
Agreement, or the breach, termination, or validity thereof (a "Dispute")
promptly by negotiation between the parties. If a Dispute has not been resolved
within 30 days by negotiation, the parties shall attempt to mediate the Dispute
through a mediator or mediation service in Boise, Idaho, having no fewer than
three (3) years of operating experience in Boise, Idaho. If after good faith by
the parties to this Agreement a Dispute is not resolved by mediation, then the
Dispute shall be settled by arbitration by a sole arbitrator in accordance with
the Center for Public Resources Rules for Non-Administered Arbitration of
Business Disputes, and governed by the United States Arbitration Act, 9 U.S.C.
Sections 1-16, except as otherwise provided herein. Judgment upon the award
rendered by the arbitrator may be entered by any court having jurisdiction
thereof. The place of arbitration shall be Boise, Idaho. The arbitrator shall
apply the law to the dispute in the same manner as a judge were the dispute
before a court of law of the state of Idaho. The arbitrator shall have the
authority to award any remedy or relief that a court of the state of Idaho could
order or grant, including, without limitation, specific performance of any
obligation created under the Agreement, the issuance of an injunction, or the
imposition of sanctions for abuse or frustration of the arbitration process.
Notwithstanding the foregoing, the arbitrator shall not have authority to award
punitive damages. The parties shall take all reasonable steps necessary to
conduct a hearing no later than 45 days after submission of the matter to
arbitration. The arbitrator shall render his decision within 15 days after the
close of the arbitration hearing. The arbitration award shall be in writing and
shall specify the factual and legal bases for the award.
9.7 PRESUMPTION. This Agreement or any section thereof shall
not be construed against any party due to the fact that said Agreement or any
section thereof was drafted by said party. All parties acknowledge that they
have had sufficient opportunity to obtain advice from their own counsel in
regards to the drafting and creation of this Agreement.
9.8 GOVERNING LAW, TIME, TITLES, PRONOUNS. This Agreement
shall be governed by and construed in accordance with the laws of the state of
Idaho. In computing any period of time pursuant to this Agreement, the day of
the act, event, or default from which the designated period of time begins to
run shall be included, unless it is a Saturday, Sunday, or a legal holiday, in
which event the period shall begin to run on the next day which is not a
Saturday, Sunday, or legal holiday. All section titles or captions contained in
this Agreement are for convenience only and shall not be deemed part of the
context nor affect the interpretation of this Agreement. All pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural as the identity of the person or persons may require. This
Agreement contains the entire understanding between and among the parties and
supersedes any prior understandings and agreements among them respecting the
subject matter of this Agreement. Any amendments to this Agreement must be in
writing and signed by the party against whom enforcement of that amendment is
sought. This Agreement shall be binding upon the heirs, executors,
administrators, successors, and assigns of the parties hereto.
9.9 FURTHER ACTION, COUNTERPARTS, SAVINGS CLAUSE. The parties
hereto shall execute and deliver all documents, provide all information, and
take or forbear from all such action as may be necessary or appropriate to
achieve the purpose of the Agreement. This Agreement may be executed in several
counterparts and transmitted by facsimile and all so executed shall constitute
one Agreement, binding on all the parties hereto even though all the parties are
not signatories to the original or the same counterpart. Nothing herein shall be
construed to be to the benefit of any third party, nor is it intended that any
provision shall be for the benefit of any third party. If any provision of this
Agreement, or the application of such provision to any person or circumstance,
shall be held invalid, the remainder of this Agreement, or the application of
such provision to persons or circumstances other than those as to which it is
held invalid, shall not be affected thereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned have executed this
Agreement the date and year set forth above.
PURCHASER:
XXXXXXXX.XXX, INC.,
a Delaware corporation
By /s/ XXXXXX X. XXXX
-----------------------------------
Xxxxxx X. Xxxx, Chairman and President
SELLER:
XXXXXXXXXX.XXX, INC.,
a Delaware corporation
By /s/ XXXXXXX X. XXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxx, President and
Chief Executive Officer
OMITTED EXHIBITS AND SCHEDULES
(Exhibits and Schedules are omitted pursuant to Item 601(b)(2) of
Regulation S-B. The Registrant agrees, however, to furnish supplementary a copy
of such omitted items to the Commission upon request.)
Exhibit A - Assets of Seller
Exhibit B - Agreement Assumed by Purchaser
Exhibit C - Assets of Purchase
Exhibit D - Seller's Xxxx of Sale
Schedule 1.1 - Excluded Assets
Schedule 2 - Seller's Schedule of Exceptions
Schedule 3 - Purchaser's Schedule of Exceptions
Schedule 6.5(d) - Purchaser's Liabilities
