1
EXHIBIT 10.1
DIAMOND.COM, LLC
- and -
SI DIAMOND TECHNOLOGY, INC.
ASSET PURCHASE AGREEMENT
DATED: OCTOBER 21, 1999
- ii -
2
ARTICLE 1 PURCHASE OF ASSETS..........................................1
1.1 Agreement to Purchase and Sell..............................1
1.2 Amount of Purchase Price....................................2
1.3 Payment of Purchase Price...................................2
1.4 Allocation of Purchase Price................................2
ARTICLE 2 CLOSING ARRANGEMENTS........................................3
2.1 Closing.....................................................3
2.2 Vendor's Closing Deliveries.................................3
2.3 Purchaser's Closing Deliveries..............................4
2.4 Transfer of the Domain Name.................................4
2.5 Possession..................................................5
2.6 Notices.....................................................5
2.7 Non-Transferable and Non-Assignable Assets..................5
ARTICLE 3 CONDITIONS OF CLOSING.......................................6
3.1 Purchaser's Conditions......................................7
3.2 Conditions not Fulfilled....................................7
3.3 Vendor's Conditions.........................................7
3.4 Condition not Fulfilled.....................................7
3.5 Reassignment of Domain Name.................................8
ARTICLE 4 REPRESENTATIONS AND WARRANTIES..............................8
4.1 Representations and Warranties of the Vendor................8
4.2 Representations and Warranties of the Purchaser............12
4.3 Survival of Representations and Warranties.................13
ARTICLE 5 INDEMNIFICATION............................................13
5.1 Indemnity by the Vendor....................................14
5.2 Indemnity by the Purchaser.................................14
5.3 Notice of Claim............................................14
5.4 Set-off....................................................14
5.5 Arbitration................................................14
ARTICLE 6 GENERAL....................................................15
6.1 Certain Definitions........................................15
6.2 Headings and Table of Contents.............................16
6.3 Number and Gender..........................................17
6.4 Business Days..............................................17
6.5 Change of Name.............................................17
6.6 Non-Merger.................................................17
6.7 Further Assurances.........................................17
- iii -
3
6.8 Expenses...................................................17
6.9 Payment of Taxes...........................................17
6.10 Notices....................................................17
6.11 Time of Essence............................................18
6.12 Entire Agreement...........................................18
6.13 Waiver.....................................................19
6.14 Severability...............................................19
6.15 Governing Law..............................................19
6.16 Attornment.................................................19
6.17 Successors and Assigns.....................................19
6.18 Counterparts...............................................20
- iv -
4
ASSET PURCHASE AGREEMENT
THIS AGREEMENT made this 21st day of October, 1999, between SI DIAMOND
TECHNOLOGY, INC. of Austin, Texas, a Texas corporation duly organized under law
(the "Vendor") and DIAMOND.COM, LLC, a Massachusetts limited liability company
(the "Purchaser").
WHEREAS, the Vendor owns or has rights in or a prior involvement in
the Internet Website known as DIAMOND.COM (the "Website") and is willing to
sell all of the Vendor's right, title and interest in and to certain assets,
including the Internet domain name DIAMOND.COM (the "Domain Name") to the
Purchaser, and the Purchaser is willing to purchase such assets on and subject
to the terms and conditions of this Agreement;
AND WHEREAS, capitalized terms used herein have the meanings given to
them in this Agreement, including Section 6.1.
In consideration of the sum of $75,000.00 now paid by the Purchaser to
Vendor and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledge, the parties agree as follows:
ARTICLE 1
PURCHASE OF ASSETS
1.1 AGREEMENT TO PURCHASE AND SELL.
(1) At the Closing Time on the Closing Date (as such terms are defined
in Section 2.1), subject to the terms and conditions of this
Agreement, the Vendor shall sell and the Purchaser shall purchase
the Vendor's right, title and interest in and to the following
assets (collectively, the "Assets"):
(a) the following intellectual property (collectively, the
"Intellectual Property"):
(i) all common law trade-marks associated with the domain
name used in or on or in connection with the domain name
together with all registrations and applications for
registration therefor;
(ii) the Domain Name;
(b) all goodwill related to the Domain Name;
(c) all confidential information, trade secrets and now-how used
in connection with the Domain Name.
1.2 AMOUNT OF PURCHASE PRICE. The purchase price payable by the Purchaser to
the Vendor for the Domain Name (the "Purchase Price") shall be
$250,000.00 plus 10% equity interest in Purchaser which includes a 10%
share in profits from the subsequent sale of Assets covered hereunder
per Schedule 1.2. All of Vendor's equity interest in Diamond.com, LLC
shall be transferred to Field Emission Picture Element Technology, Inc.,
a wholly owned subsidiary of SI Diamond Technology, Inc.
1.3 PAYMENT OF PURCHASE PRICE.
(1) Subject to the provisions of this Agreement, the Purchase Price
shall be paid and satisfied as follows:
(a) on the date this Agreement is signed, the amount of
$75,000.00;
(b) on the Closing Date, the Purchaser shall pay to the Vendor the
amount of $75,000.00;
5
(c) every 30 days, for a period of 6 months, the sum of $16,666.66
(total $100,000.00) which includes interest on $100,000.00.
(2) A default under this Section 1.3 shall occur if the Purchaser fails
to pay any amount due under this Section 1.3 within 15 days of its
due date.
(3) In the event Purchaser is in default under the terms of this
Agreement, the Vendor, at Vendor's option, has the right to:
(a) recover any and all rights, title and trademarks of the domain
name from the Purchaser pursuant to Section 3.5 of this
Agreement; and/or
(b) receive advertising revenue due to Purchaser until all sums
due and owing under this Agreement are paid in full.
(4) In the event the Purchaser transfers the Domain Name to a third
party purchaser, at the sole option of the Vendor, the unpaid
balance of the Purchase Price and all interest amounts otherwise
payable under Section 1.3(1) which have not yet accrued shall
become immediately due and payable. Purchaser shall be permitted to
(a) sell, transfer, assign, convey or dispose of the Domain Name to
any of its Affiliates; and (b) mortgage, pledge, encumber or create
a security interest in the Domain Name in favor of any of its
creditors. Any security interest created due to a subsequent
transfer by Purchaser shall be subordinate to this Agreement.
1.4 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Assets in the following manner:
(a) the Domain Name $200,000.00
(b) the Non-Competition Agreements $ 50,000.00
The Purchaser and the Vendor shall follow the allocations set out above
in determining and reporting their liabilities for any taxes and, without
limitation, shall file their respective income tax returns prepared in
accordance with such allocations.
ARTICLE 2
CLOSING ARRANGEMENTS
2.1 CLOSING. The Closing of the purchase and sale transaction contemplated
by this Agreement (the "Closing"), shall take place at 10:00 a.m. (the
"Closing Time") on the next business day following receipt by the
Purchaser of notification (the "Confirmation Notice") from InterNIC,
Network Solutions, Inc. ("InterNIC") or any successor in title thereto
and/or any person which may now or in the future be responsible for the
registration of domain names and the transfer of registrations of domain
names having the top level domains .com, .net, .org and all similar or
corresponding persons which may now or in the future be responsible for
the registration of domain names and the transfer of domain names having
other top level domains (a "Registrar")
3
6
that the existing Domain Name registration has been modified in
accordance with the RNCA filed under Section 2.4(1)(d) and that, as a
consequence, the Purchaser is listed as the owner of the Domain Name in
the records of InterNIC or any other appropriate Registrar and in the
Website accessible on the Internet ("WHOIS") which advises who is
recorded as the owner of and provides pertinent contact information in
respect of a given domain name or such earlier or later date as may be
agreed upon in writing by the parties to this Agreement and provided
that all conditions of Closing have been satisfied or waived. The
Closing shall take place at the offices of Phillips, Gerstein, Holber &
Channen in Haverhill, Massachusetts or at such other time on the Closing
Date or such other place as may be agreed orally or in writing by the
Vendor and the Purchaser.
Purchaser shall provide an electronic link to Vendor's home page located
at www.carbontech.net in a format which is satisfactory to Vendor, for a
period of no less than one (1) year from the date of closing. The
electronic link shall be on Purchaser's first visible page (home page or
splash page) so that an individual viewing the page can see the link to
Vendor on a fourteen (14) inch monitor without scrolling down the page.
Purchaser shall also allow Vendor thirty (30) days from date of closing
to transfer all electronic mail accounts from diamond.com to
carbontech.net.
2.2 VENDOR'S CLOSING DELIVERIES. At the Closing, the Vendors shall deliver
or cause to be delivered to the Purchaser the following documents:
(1) Conveyance/Bill of Sale of the "Assets";
(2) a Certificate of the Secretary or other officer of SI Diamond
Technology, Inc. (the "Vendor Entity") in the form of Exhibit B;
(3) a Certificate of the Vendor (executed, in the case of the Vendor
Entity, by a senior officer of such Vendor Entity) in the form of
Exhibit C; and
(4) written confirmation by the Vendor which is satisfactory to the
Purchaser that the Vendor has paid all taxes collectable or payable
by the Vendor in respect of the transfer of the Assets under sales
tax legislation of the State of Texas, if any.
2.3 PURCHASER'S CLOSING DELIVERIES. At the Closing, the Purchaser shall
deliver or cause to be delivered to the Vendor the following documents
and payments:
(1) a Certificate of the Secretary or other officer of the Purchaser in
the form of Exhibit G;
(2) a Certificate of a senior officer of the Purchaser in the form of
Exhibit H;
(3) an opinion of the Purchaser's counsel relative to enforceability
and authenticity;
(4) all such other assurances, consents, agreements, documents and
instruments as may be reasonably required by the Vendor to complete
the transactions provided for in this Agreement;
4
7
(5) $75,000.00 in immediately available funds.
2.4 TRANSFER OF THE DOMAIN NAME.
(1) Prior to Closing, the Vendor shall transmit to InterNIC and all
other appropriate Registrars:
(a) if required, a Domain Name Registration Agreement in the form
of Exhibit J or similar documents to be filed with InterNIC or
any other appropriate Registrar to request the transfer of the
Domain Name from Vendor to Purchaser (a "DNRA");
(b) a Registrant Name Change Agreement in the form of Exhibit K or
similar documents necessary to be completed and filed with
InterNIC or any other appropriate Registrar to effect the
transfer of the Domain Name from Vendor to Purchaser (a
"RNCA");
(c) if required, a DNRA to request the transfer of the Domain Name
from Vendor to the Purchaser; and
(d) an RNCA to effect the transfer of the Domain Name from Vendor
to the Purchaser.
(2) The Vendor agrees to promptly provide InterNIC and all other
appropriate Registrars with such other forms as InterNIC or any
other Registrar may request and to take all other steps reasonably
necessary, including without limitation, providing to InterNIC and
the other Registrars all information necessary, to effect the
transfer of the Domain Name to the Purchaser as quickly as
possible.
(3) The Vendor covenants that, after submitting such DNRAs and the
RNCAs, the Vendor shall not take any action to withdraw, suspend or
otherwise terminate the DNRAs and the RNCAs and that, if requested
to do so by InterNIC or any other Registrar, the Vendor shall
confirm that each of such DNRAs and the RNCAs are genuine, as long
as Purchaser is not in default under the contract.
2.5 POSSESSION. On the Closing Date, the Vendor shall deliver or cause to be
delivered to the Purchaser possession of the Domain Name.
2.6 NOTICES. On the Closing Date, the Vendor shall deliver the Notices to
the persons to whom they are addressed.
2.7 NON-TRANSFERABLE AND NON-ASSIGNABLE ASSETS. To the extent that the
Domain Name transferred to the Purchaser on the Closing or any claim,
right or benefit (collectively, the "Rights") is not capable of being
transferred without the approval, consent or waiver of any third person,
including InterNIC or any Registrar or if the transfer of a Right would
constitute a breach of any obligation or a violation of any applicable
law unless the approval, consent or waiver of such third person is
obtained then, except as expressly otherwise provided in this Agreement
and without limiting the rights and remedies of the Purchaser contained
elsewhere in this Agreement,
5
8
this Agreement shall not constitute an agreement to transfer such Rights
unless and until such approval, consent or waiver has been obtained.
After the Closing and until all such Rights are transferred to the
Purchaser, the Vendor shall:
(a) maintain its existence and hold the Rights in trust for the
Purchaser;
(b) comply with the terms and provisions of the Rights as agent
for the Purchaser at the Purchaser's cost and for the
Purchaser's benefit;
(c) cooperate with the Purchaser in any reasonable and lawful
arrangements designed to provide the benefits of such Rights
to the Purchaser; and
(d) enforce, at the request of the Purchaser and at the expense
and for the account of the Purchaser, any rights of the Vendor
arising from such Rights against any third person, including
the right to elect to terminate any such rights in accordance
with the terms of such rights upon the written direction of
the Purchaser.
In order that the full value of the Rights may be realized for the
benefit of the Purchaser, the Vendor shall, at the request and expense and
under the direction of the Purchaser, in the name of such Vendor or otherwise
as the Purchaser may specify, take all such action and do or cause to be done
all such things as are, in the opinion of the Purchaser, necessary or proper in
order that the obligations of the Vendor under such Rights may be performed in
such manner that the value of such Rights is preserved and enures to the
benefit of the Purchaser and that any monies due and payable and to become due
and payable to the Purchaser in and under the Rights are received by the
Purchaser. The Vendor shall promptly pay to the Purchaser all monies collected
by or paid to the Vendor in respect of every such Right. The Purchaser shall
indemnify and hold the Vendor harmless from and against any Claim (as defined
in Section 6.1) under or in respect of such Rights arising because of any
action of the Vendor taken pursuant to this Section.
ARTICLE 3
CONDITIONS OF CLOSING
3.1 PURCHASER'S CONDITIONS. The Purchaser shall not be obliged to complete
the purchase and sale of the Domain Name pursuant to this Agreement
unless, at or before the Closing Time, each of the following conditions
has been satisfied, it being understood that the following conditions
are included for the exclusive benefit of the Purchaser and may be
waived, in whole or in part, in writing by the Purchaser at any time;
and the Vendor agrees with the Purchaser to take all such actions, steps
and proceedings as are reasonably within its control as may be necessary
to ensure that the following conditions are fulfilled at or before the
Closing Time:
(1) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Vendor in Section 4.1 shall be true and correct at the
Closing.
(2) VENDOR'S COMPLIANCE. The Vendor shall have performed and complied
with all of the terms and conditions in this Agreement on its part
to be performed or complied with at or before Closing and shall
have executed and delivered or caused to have been executed
6
9
and delivered to the Purchaser at the Closing all the documents
contemplated in Section 2.2 or elsewhere in this Agreement.
(3) DUE DILIGENCE INVESTIGATION. The Purchaser shall have conducted and
completed its investigation of the Domain Name and the Purchaser,
in its sole discretion, shall have been satisfied in all respects
with the results of such investigation and, in its sole discretion,
shall have determined to proceed with the transactions contemplated
by this Agreement.
(4) NO LITIGATION. There shall be no litigation or proceedings:
(a) outstanding, pending or threatened against any of the parties
hereto or against any of their respective Affiliates or any of
their respective directors or officers or involving the assets
or property of any of them, for the purpose of enjoining,
preventing or restraining the completion of the transactions
contemplated hereby or otherwise claiming that such completion
is improper; or
(b) outstanding, pending or threatened against any of the parties
or against any of their respective Affiliates or any of their
respective directors or officers which in the result could
adversely affect the right of the Purchaser to acquire or
retain the Assets or in the judgment of the Purchaser would
make the completion of the transactions contemplated by this
Agreement inadvisable.
3.2 CONDITION NOT FULFILLED. If any condition in Section 3.1 has not been
fulfilled at or before the Closing Time, then the Purchaser, in its sole
discretion may, without limiting any rights or remedies available to the
Purchaser at law or in equity, either:
(1) terminate this Agreement by notice to the Vendor in which event
the Purchaser shall be released from its obligations under this
Agreement (other than its obligations under Section 3.5); or
(2) waive compliance with any such condition without prejudice to its
right of termination in the event of non-fulfillment of any other
condition.
3.3 VENDOR'S CONDITIONS. The Vendor shall not be obliged to complete the
transactions contemplated by this Agreement unless at or before the
Closing Time, each of the following conditions have been satisfied, it
being understood that the following conditions are included for the
exclusive benefit of the Vendor and may be waived, in whole or in part,
in writing by the Vendor at any time; and the Purchaser agrees with the
Vendor to take all such actions, steps and proceedings within the
Purchaser's reasonable control as may be necessary to ensure that the
following conditions are fulfilled at or before the Closing Time:
(1) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchaser in Section 4.2 shall be true and
correct at the Closing.
(2) PURCHASER'S COMPLIANCE. The Purchaser shall have performed and
complied with all of the terms and conditions in this Agreement
on its part to be performed by or complied with at or before
Closing and shall have executed and delivered or caused to have
been
7
10
executed and delivered to the Vendor at the Closing all the
documents contemplated in Section 2.3 or elsewhere in this
Agreement.
3.4 CONDITION NOT FULFILLED. If any condition in Section 3.3 shall not have
been fulfilled at or before the Closing Time, then the Vendor, in its
sole discretion may, without limiting any rights or remedies available
to the Vendor at law or in equity, either:
(1) terminate this Agreement by notice to the Purchaser in which event
the Vendor shall be released from all obligations under this
Agreement; or
(2) waive compliance with any such condition without prejudice to its
right of termination in the event of non-fulfillment of any other
condition.
3.5 REASSIGNMENT OF DOMAIN NAME. In the event either the Purchaser or the
Vendor terminate this Agreement pursuant to Section 1.3(a), Section
3.2(1) or Section 3.4(1) and the Confirmation Notice has been received
by the Purchaser, the Purchaser agrees to promptly provide InterNIC and
all other appropriate Registrars with a DNRA (if required), a RNCA and
such other forms as InterNIC or any other Registrar may request and to
take all other steps reasonably necessary, including without limitation,
providing to InterNIC and the other Registrars all information necessary
to effect the transfer of the Domain Name to Vendor.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF THE VENDOR. As a material inducement
to the Purchaser's entering into this Agreement and completing the
transactions contemplated by this Agreement and acknowledging that the
Purchaser is entering into this Agreement in reliance upon the
representations and warranties of the Vendor set out in this Section
4.1, the Vendor represents and warrants to the Purchaser to the best of
Vendor's knowledge and belief as follows:
(1) INCORPORATION AND POWER. The Vendor Entity is a corporation
incorporated or duly formed and validly subsisting under the laws
of the jurisdiction of its incorporation or origin. The Vendor
Entity has the power and authority and is qualified to own and
dispose of the Assets in which it has an interest. No act or
proceeding has been taken by or against any of the Vendor in
connection with the dissolution, liquidation, winding up,
bankruptcy or reorganization of the Vendor.
(2) DUE AUTHORIZATION. The Vendor Entity has the power, authority and
capacity to enter into this Agreement and all other agreements
and instruments to be executed by it as contemplated by this
Agreement and to carry out its obligations under this Agreement
and such other agreements and instruments. The Vendor has the
capacity to enter into this Agreement and all other agreements
and instruments to be executed by it as contemplated by this
Agreement and to carry out its obligations under this Agreement
and such other agreements and instruments. The execution and
delivery of this Agreement and such other agreements and
instruments and the completion of the transactions contemplated
by this Agreement and such other agreements and instruments
8
11
have been duly authorized by all necessary action on the part of
each of the Vendor Entity and its members or shareholders.
(3) ENFORCEABILITY OF OBLIGATIONS. This Agreement constitutes a
legal, valid and binding obligation of the Vendor enforceable
against such Vendor in accordance with its terms subject,
however, to limitations on enforcement imposed by bankruptcy,
insolvency, reorganization or other laws affecting the
enforcement of the rights of creditors or others and to the
extent that equitable remedies such as specific performance and
injunctions are only available in the discretion of the court
from which they are sought. The Vendor is not an insolvent person
within the meaning of applicable U.S. Federal or state bankruptcy
or fraudulent conveyance law and will not become an insolvent
person as a result of the Closing.
(4) TITLE TO ASSETS. The Vendor has good and marketable title to all
the Assets free and clear of any and all liens. Other than this
Agreement, there is no agreement, option or other right or
privilege outstanding in favor of any person for the purchase
from the Vendor of any of the Assets.
(5) CONTRACTS. The Vendor has not received notice of any default and
the Vendor is not in default, under any Contract and there has
not occurred any event which, with a lapse of time or giving of
notice, or both, would constitute such a default. Each Contract
is in full force and effect, unamended by written or oral
agreement, and the Vendor that is party thereto is entitled to
the full benefit and advantage of such Contract in accordance
with its terms.
Each Contract is in good standing and there has not been any default by
any party under any Contract nor any dispute between the Vendor and any
party under any Contract.
(6) INTELLECTUAL PROPERTY.
(a) To the Vendor's best knowledge and belief, it is the sole
owner of the Intellectual Property, with good and marketable
title thereto, free and clear of any and all liens and have
the right to sell, transfer and convey the Intellectual
Property to the Purchaser;
(b) The Vendor has protected its legal rights to the exclusive
use of the Intellectual Property.
(c) The Vendor is the first and only owner of the Intellectual
Property and the Vendor is entitled to the exclusive and
uninterrupted use of the Intellectual Property without
payment of any royalty or other fees. No shareholder,
member, manager, officer, director, partner, employee or
spouse of the Vendor or any person (other than the Vendor)
has any right, title or interest in any of the Intellectual
Property;
9
12
(d) Neither the Intellectual Property and the use, reproduction,
display or communication thereof or any other activity
therewith infringes upon or otherwise violates the
intellectual property rights in any country of any other
person or violates any confidentiality or other obligation or
duty under contract, common law, statute or otherwise;
(e) No person has infringed or otherwise violated or is infringing
or otherwise violating, any intellectual property rights in
any country of the Vendor in and to any of the Intellectual
Property;
(f) Vendor was the owner and the sole user of the non-registered
common law Trade-mark "diamond.com" in association with the
publication and dissemination of information at all material
times;
(g) The Vendor is the owner and the sole user of the
non-registered common law Trade-mark "diamond.com" in
association with the operation of a website relating to the
publication and dissemination of information at all material
times;
(h) The registration of the Domain Name in the name of the Vendor
is in good standing. The registration of the Domain Name in
the name of Diamond.com, LLC as contemplated in Section 2.4
will be in good standing until its transfer to the Purchaser
as contemplated by this Agreement. No action has been taken or
is pending to suspend, cancel or disable the Domain Name or
any registration thereof;
(i) To the Vendor's best knowledge and belief, the DNRA and the
RNCA are the only filings necessary to confirm the transfer to
the Purchaser of the Vendor's right, title and interest in and
to the Domain Name, and upon receipt of the Confirmation
Notice from InterNIC and any other appropriate Registrars, the
Purchaser shall own all right, title and interest in and to
and shall possess all rights necessary to use on the Internet
and otherwise as a trade-mark and trade name, the Domain Name;
(j) The Vendor has not purposefully withheld from the Purchaser
knowledge of any circumstance that might cause the
registration of the transfers of the Domain Name as
contemplated by Section 2.4 to be delayed, object to or
refused by InterNIC, any other appropriate Registrar or any
other person;
(k) There is no contract, commitment, option or any other right of
any person binding upon or which at any time in the future may
become binding upon the Vendor to sell, transfer, assign,
license or in any other way dispose of or subject to any lien
any of the Intellectual Property other than pursuant to the
provisions of this Agreement;
(l) All of the Vendor's permissions and licenses to use any
intellectual property of other persons are disclosed in
Schedule 4.1(6). The Vendor has not permitted or licensed any
person to use any of the Intellectual Property except as
disclosed in
10
13
Schedule 4.1(6). All licences referred to in Schedule 4.1(6)
are in full force and effect and the Vendor is not in default
of its obligations.
(7) CONSENTS AND APPROVALS. Except for the consents and approvals listed on
Schedule 4.1(7), no consent or approval of any person is required and no
notice is required to be given to any person in connection with the
execution and delivery of this Agreement and the completion of the
transactions contemplated by this Agreement.
(8) ABSENCE OF CONFLICTING AGREEMENTS. The execution, delivery and
performance of this Agreement by the Vendor and the completion (with any
required Consents and Approvals) of the transactions contemplated by
this Agreement do not and will not result in or constitute any of the
following:
(a) a default, breach or violation or an event that, with notice
or lapse of time or both, would be a default, breach or
violation of any of the terms, conditions or provisions of the
incorporation documents or by-laws or operating agreement of
the Vendor Entity or of any Contract;
(b) an event which, pursuant to the terms of any Contract causes
any right or interest of the Vendor to come to an end or be
amended in any way or entitles any other person to terminate
or amend any such right or interest;
(c) the creation or imposition of any lien on any Asset; or
(d) the violation of any applicable law.
(9) LITIGATION. There is no action, suit, proceeding, claim, application,
complaint or investigation in any court or before any arbitrator or
before or by InterNIC or any Registrar or any regulatory body or
non-governmental body outstanding, pending or threatened by or against
the Vendor which is related to the Business or which may affect the
Business, the Assets or the transactions contemplated by this Agreement;
and there is no factual or legal basis which could give rise to any such
action, suit, proceeding, claim, application, complaint or
investigation.
(10) BROKERAGE FEES. The Vendor has not entered into any agreement which
would entitled any person to any valid claim against the Purchaser for a
broker's commission, finder's fee or any like payment in respect of the
purchase and sale of the Assets or any other matters contemplated by
this Agreement.
(11) COMPLIANCE WITH APPLICABLE LAWS. The Website has been operated and is
being operated in compliance with applicable laws.
(12) FULL DISCLOSURE. To the best knowledge and belief of the Vendor, none of
the foregoing representations and warranties and no document furnished
by the Vendor to the Purchaser in connection with the negotiation of the
transactions contemplated by this Agreement contain any untrue statement
of a material fact or omit to state any material fact necessary to make
any such statement or representation not misleading to a
11
14
prospective purchaser of the Assets seeking full information as to the
Vendor and their respective properties, businesses and affairs.
4.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. As a material
inducement to the Vendor's entering into this Agreement and completing
the transactions contemplated by this Agreement and acknowledging that
the Vendor is entering into this Agreement in reliance on the
representations and warranties of the Purchaser set out in this Section
4.2, the Purchaser represents and warrants to the Vendor as follows:
(1) INCORPORATION AND POWER. The Purchaser is a corporation duly
incorporated under the laws of the jurisdiction of its
incorporation and is duly organized, validly subsisting and in good
standing under such laws.
(2) DUE AUTHORIZATION. The Purchaser has all necessary corporate power,
authority and capacity to enter into this Agreement and all other
agreements and instruments to be executed by it as contemplated by
this Agreement and to carry out its obligations under this
Agreement and such other agreements and instruments. The execution
and delivery of this Agreement and such other agreements and
instruments and the completion of the transactions contemplated by
this Agreement and such other agreements and instruments have been
duly authorized by all necessary corporate action on the part of
the Purchaser.
(3) ENFORCEABILITY OF OBLIGATIONS. This Agreement constitutes a legal,
valid and binding obligation of the Purchaser enforceable against
the Purchaser in accordance with its terms subject, however, to
limitations on enforcement imposed by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of the
rights of creditors or others and to the extent that equitable
remedies such as specific performance and injunctions are only
available in the discretion of the court from which they are
sought.
4.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(1) The representations and warranties of the Vendor contained in
Section 4.1 or any other agreement, certificate or instrument
delivered pursuant to this Agreement shall survive the Closing and
shall continue for 12 months after the date of execution of this
Agreement (the "Warranty Date"), after which time the Vendor shall
be released from all obligations in respect of such representations
and warranties except with respect to any Claims asserted by the
Purchaser in writing (setting out in reasonable detail the nature
of the Claim and the approximate amount of such Claim) before the
expiration of such period, but there shall be no time limit on the
representations and warranties of the Vendor set out in Sections
4.1(1), (2), (3) and (4).
(2) The representations and warranties of the Purchaser contained in
Section 4.2 or any other agreement, certificate or instrument
delivered pursuant to this Agreement shall survive the Closing
until the Warranty Date and notwithstanding the Closing and any
inspection or inquiries made by or on behalf of the Vendor shall
continue in full force and effect for the benefit of the Vendor,
after which time the Purchaser shall be released from all
obligations in respect of such representations and warranties
except with respect to any
12
15
Claims asserted by the Vendor in writing (setting out in reasonable
detail the nature of the Claim and the approximate amount of such
claim) before the expiration of such period, but there shall be no
time limited on the representations and warranties of the Purchaser
set out in Sections 4.2(1), (2) and (3).
ARTICLE 5
INDEMNIFICATION
5.1 INDEMNITY BY THE VENDOR.
(1) Subject to Sections 5.1(2), the Vendor agrees to indemnify and hold
the Purchaser, its directors, officers and employees and the
Purchaser's Affiliates and their respective directors, officers and
employees harmless in respect of any Claim which may be made or
brought against an Indemnified Party or which it may suffer or
incur directly or indirectly as a result of, in respect of or
arising out of:
(a) any incorrectness in or breach of any representation or
warranty of the Vendor contained in this Agreement or in any
other agreement, certificate or instrument executed and
delivered pursuant to this Agreement; or
(b) any breach of or any non-fulfillment of any covenant or
agreement on the part of the Vendor under this Agreement or
under any other agreement, certificate or instrument executed
and delivered pursuant to this Agreement.
(2) The Vendor's liability for Claims under Section 5.1(1)(a) shall not
exceed the amount of the Purchase Price.
5.2 INDEMNITY BY THE PURCHASER. The Purchaser shall indemnify and hold the
Vendor and its directors, officers, members, managers and employees and
such Vendor's Affiliates and its directors, officers and employees
harmless in respect of any Claim which may be made or brought against an
Indemnified Party or which it may suffer or incur directly or indirectly
as a result of in respect of or arising out of:
(a) any incorrectness in or breach of any representation or
warranty of the Purchaser contained in this Agreement or in
any other agreement, certificate or instrument executed and
delivered pursuant to this Agreement;
(b) any breach of or any non-fulfilment of any covenant or
agreement on the part of the Purchaser under this Agreement or
under any other agreement, certificate or instrument executed
and delivered pursuant to this Agreement;
(c) any and all obligations of the Purchaser arising from the
Purchaser's ownership and operation of the Website following
the Closing.
5.3 NOTICE OF CLAIM. If an Indemnified Party becomes aware of a Claim in
respect of which indemnification is provided for pursuant to either of
Section 5.1 or 5.2, as the case may be, the
13
16
Indemnified Party shall give written notice of the Claim to the
Indemnifying Party. Such notice shall specify whether the Claim arises
as a result of a claim by a Person against the Indemnified Party (a
"Third Party Claim") or whether the Claim does not so arise (a "Direct
Claim"), and shall also specify with reasonable particularity (to the
extent that the information is available):
(a) the factual basis for the Claim; and
(b) the amount of the Claim, if known.
5.4 SET-OFF. The Purchaser and Vendor shall be entitled to set-off the
amount of any Claim submitted under Section 5.1 as damages or by way of
indemnification against any other amounts payable by the Purchaser to
the Vendor whether under this Agreement or otherwise.
5.5 ARBITRATION. Any party shall have the right to refer any dispute or
matter under this Agreement (except where injunctive relief is claimed)
to final and binding arbitration. Matters referred to final and binding
arbitration pursuant to this Agreement shall be arbitrated in accordance
with the Arbitration Rules of the American Arbitration Association in
Boston, Massachusetts, and in accordance with the following procedures:
(a) The arbitration shall be conducted by a single arbitrator
appointed by mutual agreement of the parties or in the event
of a failure to reach agreement within 15 days, the Purchaser
shall choose one arbitrator and the Vendor shall choose one
arbitrator and the arbitrators chosen by the parties shall
choose a single arbitrator who shall revolve the dispute. If
the Purchaser or the Vendors fail to designate an arbitrator
within 30 days of a written request therefor by the other
party or parties, then the Purchaser or the Vendor, as the
case may be, shall be deemed to have forfeited its/their right
to participate in the selection of an arbitrator;
(b) the arbitrator selected shall be qualified by education and
training to pass upon the matter to be decided;
(c) the arbitrator shall be instructed that time shall be of the
essence in proceeding with the determination of the dispute;
(d) the arbitration shall be conducted in Boston, Massachusetts;
(e) the award of the arbitrator shall be in writing and shall be
final, binding upon the parties, not subject to any appeal and
shall deal with the question of costs of arbitration;
(f) the prevailing party or parties shall be entitled to have the
award of the arbitrator enforced by any court of competent
jurisdiction.
ARTICLE 6
GENERAL
6.1 CERTAIN DEFINITIONS. In this Agreement, the following terms shall have
the meanings set out
14
17
below:
(1) "AFFILIATE" means any wholly owned subsidiary or company in which
Purchaser or Vendor maintains 2/3 voting interest.
(2) "AGREEMENT" means this Agreement, including the Exhibits and the
Schedules to this Agreement, as it or they may be amended or
supplemented from time to time, and the expressions "HEREOF",
"HERETO", "HEREUNDER", "HEREBY" and similar expressions refer to
this Agreement and not to any particular Section or other portion
of this Agreement.
(3) "BUSINESS DAY" means any day except Saturday, Sunday or any day on
which banks are generally not open for business in the City of New
York, New York.
(4) "CLAIM" means any claim, demand, action, cause of action, damage,
loss or Liability.
(5) "INDEMNIFIED PARTY" means a Person whom the Vendor or the
Purchaser, as the case may be, has agreed to indemnify under
Article 5.
(6) "INDEMNIFYING PARTY" means, in relation to an Indemnified Party,
the party to this Agreement that has agreed to indemnify that
Indemnified Party under Article 5.
(7) "INTELLECTUAL PROPERTY" means only the common law rights, title,
and interest specifically pertaining to the domain name,
"diamond.com", and the domain name (diamond.com) itself; it
specifically excludes any and all reference to the rights, title
and interest to any other patent, trademark, or copyright of SI
Diamond Technology, Inc. or any Affiliates.
(8) "LIABILITIES" means all costs, expenses, charges, debts,
liabilities, Claims, demands and obligations, whether primary or
secondary, direct or indirect, fixed, contingent, absolute or
otherwise, and whether arising under or in respect of any contract,
agreement, arrangement, lease commitment or undertaking, applicable
law, taxes, in tort or otherwise.
(9) "LIEN" means any lien, mortgage, charge, hypothetic, pledge,
security interest, prior assignment, option, warrant, lease,
sublease, right to possession, encumbrance, claim, right or
restriction which affects the right, title or interest in or to any
particular property.
(10) "PERSON" is to be broadly interpreted and includes an individual, a
corporation, a partnership, a trust, an unincorporated
organization, the government of a country or any political
subdivision thereof, or any agency or department of any such
government, and the executors, administrators or other legal
representatives of an individual in such capacity.
(11) "PRIME RATE" means the prime rate of interest per annum quoted by
Fleet Bank from time to time as its reference rate of interest for
dollar demand loans made to its commercial customers in Boston,
Massachusetts, and which Fleet Bank refers to as its "prime rate",
as such rate may be changed from time to time.
15
18
6.2 HEADINGS AND TABLE OF CONTENTS. The division of this Agreement into
Articles and Sections, the insertion of headings, and the provision of
any table of contents are for convenience of reference only and shall
not affect the construction or interpretation of this Agreement.
6.3. NUMBER AND GENDER. Unless the context requires otherwise, words
importing the singular include the plural and vice versa and words
importing gender include all genders.
6.4 BUSINESS DAYS. If any payment is required to be made or other action is
required to be taken pursuant to this Agreement on a day which is not a
Business Day, then such payment or action shall be made or taken on the
next Business Day.
6.5 CHANGE OF NAME. Within 15 days after the Closing, the Vendor shall
cancel all registrations of business names and trade names included in
the Intellectual Property and provide the Purchaser with proof of having
done so.
6.6 NON-MERGER. Each party hereby agrees that all provisions of this
Agreement, other than (a) the representations and warranties contained
in Article 4 and the related indemnities in Section 5.1 and 5.2 hereof
(which shall be subject to the special arrangements provided in such
Articles or Sections) shall forever survive the execution, delivery and
performance of this Agreement, Closing and the execution, delivery and
performance of any and all documents delivered in connection with this
Agreement.
6.7 FURTHER ASSURANCES. Each party shall promptly do, execute, deliver or
cause to be done, executed and delivered all further acts, documents and
things in connection with this Agreement that any other party may
reasonably require, for the purposes of giving effect to this Agreement.
6.8 EXPENSES. Each party shall be responsible for its own legal and other
expenses (including any taxes imposed on such expenses) incurred in
connection with the negotiation, preparation, execution, delivery and
performance of this Agreement and the transactions contemplated by this
Agreement and for the payment of any broker's commission, finder's fee
or like payment payable by it in respect of the purchase and sale of the
Assets pursuant to this Agreement.
6.9 PAYMENT OF TAXES. The Purchaser shall pay all sales and other transfer
taxes and filing or recording fees payable in connection with the
instruments of transfer provided for in this Agreement. The Vendor shall
pay all other taxes applicable to, or resulting from transactions
contemplated by this Agreement.
6.10 NOTICES
(1) Any notice, certificate, consent, determination or other
communication required or permitted to be given or made under this
Agreement shall be in writing and shall be effectively given and
made if (i) delivered personally, (ii) sent by prepaid courier
service or mail, or (iii) sent prepaid by fax or other similar
means of electronic communication, in each case to the applicable
address set out below:
16
19
(a) if to the Vendor, to:
S.I. Diamond Technology, Inc.
3006 Longhorn Boulevard, Suite 107
Austin, TX 78758
(b) if to the Purchaser, to:
Diamond.com, LLC
c/o Herbert P. Phillips, Esq.
Phillips, Gerstein, Holber & Channen
25 Kenoza Avenue
Haverhill, MA 01830
And in all cases with a copy to:
Herbert P. Phillips, Esq.
Phillips, Gerstein, Holber & Channen
25 Kenoza Avenue
Haverhill, MA 01830
(2) Any such communication so given or made shall be deemed to have
been given or made and to have been received on the day of delivery
if delivered, or on the day of faxing or sending by other means of
electronic communication, provided that such day in either event is
a Business Day and the communication is so delivered, faxed or sent
before 4:30 p.m. on such day. Otherwise, such communication shall
be deemed to have been given and made and to have been received on
the next following Business Day. Any such communication sent by
mail shall be deemed to have been given and made and to have been
received on the fifth Business Day following the mailing thereof;
provided however that no such communication shall be mailed during
any actual or apprehended disruption of postal services. Any such
communication given or made in any other manner shall be deemed to
have been given or made and to have been received only upon actual
receipt.
(3) Any party hereto may from time to time change its address under
this Section 6.11 by notice to the other parties hereto given in
the manner provided by this Section.
6.11 TIME OF ESSENCE. Time shall be of the essence of this Agreement in all
respects.
6.12 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter of this Agreement
and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written. There are no conditions,
warranties, representations or other agreements between the parties in
connection with the subject matter of this Agreement (whether oral or
written, express or implied, statutory or otherwise) except as
specifically set out in this Agreement.
6.13 WAIVER. A waiver of any default, breach or non-compliance under this
Agreement is not
17
20
effective unless in writing and signed by the party to be bound by the
waiver. No waiver shall be inferred from or implied by any failure to
act or delay in acting by a party in respect of any default, breach or
non-observance or by anything done or omitted to be done by any other
party. The waiver by a party of any default, breach or non-compliance
under this Agreement shall no operate as a waiver of that party's rights
under this Agreement in respect of any continuing or subsequent default,
breach or non-observance (whether of the same or any other nature).
6.14 SEVERABILITY. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such prohibition or unenforceability and
shall be severed from the balance of this Agreement, all without
affecting the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
6.15 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts and the
federal laws of the United States applicable therein (without giving
effect to principles of conflict of laws thereof) and shall be treated,
in all respects, as a Massachusetts contract.
6.16 ATTORNMENT. Each party agrees (i) that any action or proceeding relating
to this Agreement may (but need not) be brought in any court of
competent jurisdiction in the Commonwealth of Massachusetts, and for
that purpose now irrevocably and unconditionally attorns and submits to
the jurisdiction of such Massachusetts Court; (ii) not to oppose any
such Massachusetts action or proceeding on the basis of FORUM NON
CONVENIENS or for any other reason; and (iii) not to oppose the
enforcement against it in any other jurisdiction of any judgment or
order duly obtained from a Massachusetts Court as contemplated by this
Section 6.17. Each of the parties to this Agreement further irrevocably
consents to the service of any and all legal process in any such action,
suite or proceeding by the mailing of copies of such process in the
manner specified in Section 6.11. Nothing in this Section will affect
the rights of the parties to this Agreement to serve legal process in
any other manner permitted by law.
6.17 SUCCESSORS AND ASSIGNS. This Agreement shall enure to the benefit of,
and be binding on, the parties and their respective successors and
permitted assigns. No party shall assign or transfer, whether
absolutely, by way of security or otherwise, all or any part of its
respective rights or obligations under this Agreement without the prior
written consent of the other parties hereto; provided that the Purchase
shall be permitted to assign or transfer its rights and obligations
hereunder to any of its Affiliates and in connection with any transfer
or creation of a security interest in the Domain Name pursuant to
Section 1.3(4).
6.18 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which taken together shall be deemed to constitute on and the same
instrument. Counterparts may be executed either in original or faxes
form and the parties adopt any signatures received by a receiving fax
machine as original signatures of the parties; provided, however, that
any party providing its signature in such manner shall promptly forward
to the other parties an original of the signed copy of this Agreement
which was so faxed.
IN WITNESS WHEREOF the parties have executed this Agreement.
18
21
SI DIAMOND TECHNOLOGY, INC.
By: /s/ Marc W. Eller
----------------------------------
Name: Marc W. Eller
Title: President
DIAMOND.COM, LLC
By: /s/ Michael Zapolin
----------------------------------
Name: Michael Zapolin
Title: Manager/Member
By: /s/ Christopher J. McWade
----------------------------------
Name: Christopher J. McWade
Title: Manager/Member
19