Exhibit 2.3
ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of the
14th day of May, 2001, by and among Novus List Marketing, LLC, a Minnesota
limited liability company ("Seller"), Henry A. Cousineau, III (the
"Shareholder") and L90, Inc., a Delaware corporation ("Purchaser").
R E C I T A L S
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A. Seller employs substantially all of its assets to operate a list
marketing services business, including, without limitation, list management
services, database enhancement services, list rental fulfillment services,
modeling and analytical services, e-mail list management services and list
maintenance hygiene services. Such operations are referred to herein as the
"Business."
B. Seller and Shareholder desire that Seller sell to Purchaser, and
Purchaser desires to purchase from Seller, substantially all the assets of the
Business.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto hereby mutually covenant and
agree as follows:
ARTICLE I.
PURCHASE AND SALE OF ASSETS
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1.1 Purchase and Sale. Subject to the terms and conditions set
forth herein, at the Closing (as hereinafter defined), Seller agrees to sell,
convey, transfer, assign and deliver to Purchaser, and Purchaser agrees to
purchase from Seller, free and clear of all liens, mortgages, charges, security
interests, claims, restrictions, easements and encumbrances of any kind or
nature whatsoever (collectively, "Liens"), other than those Liens specifically
set forth on Schedule 1.1 hereto (the "Permitted Liens"), all of Seller's
assets, properties and rights of any kind and description (other than the
Excluded Assets (as defined below)), wherever located, all of which are
collectively referred to herein as the "Assets."
1.1.1 Assets. The Assets include, without limitation:
(a) all inventories of Seller, wherever located;
(b) all fixed assets of Seller, wherever located, including
without limitation all leasehold improvements, property, plant, equipment,
machinery, furniture, fixtures and office equipment;
(c) all intangible property owned or used by Seller, including
without limitation all data relating to the Business (including, without
limitation, such data in the Mercury and Clipper databases relating to the
Business), the AMSS Software (as defined
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below), all Internet domain names, all patents, trademarks, trade names,
services marks, (including without limitation the AMSS Advanced Marketing
Selectivity System mark), all registrations and pending applications therefor,
logos, slogans and licenses and other intellectual property (including, without
limitation, all customer and supplier lists), all of the proprietary and
confidential information of Seller, trade secrets, technical information,
know-how, ideas, designs, processes, procedures, discoveries, copyrights and all
improvements thereof;
(d) all notes receivable and accounts receivable, together with
all agreements, collateral, guarantees, security interests and other liens and
all rights of, or amounts owing to, Seller;
(e) all of Seller's right, title and interest under customer
orders, commitments, equipment and personal property leases, real property
leases, bids, contracts, license agreements, distributor agreements and other
agreements and contracts of Seller, whether or not entered into in the ordinary
course of Seller's conduct of the Business;
(f) all of Seller's right, title and interest under agreements
which are entered into after the date hereof in the ordinary course of the
Business of Seller which are disclosed to Purchaser in writing at or before the
Closing and accepted by Purchaser in writing prior to the Closing in its sole
and absolute discretion;
(g) all the goodwill associated with the Business;
(h) all rights of Seller under or pursuant to all warranties,
representations and guarantees made by suppliers in connection with products or
services furnished to Seller;
(i) all of the books and records relating to the Assets or the
Business, and all other properties, rights and assets related thereto, whether
tangible or intangible, absolute, contingent, or otherwise;
(j) all rights, choses in action and claims, known or unknown,
matured or unmatured, accrued or contingent, against third parties related to
the Assets and the Assumed Liabilities (as defined below);
(k) all of Seller's leasehold and other interests in the real
estate and leases described in Schedule 3.5(c); and
(l) all of the assets set forth on Schedule 1.1.1(l).
For purposes of this Agreement, the "AMSS Software" shall mean the
A.M.S.S. Advanced Marketing Selectivity System owned by Seller, including,
without limitation, all the related executable files, source code, object code,
documentation and databases.
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1.1.2 Excluded Assets. The Assets do not include, and Seller is not
selling to Purchaser, the following assets (collectively, the "Excluded
Assets"):
(a) Seller's corporate record books; provided, however, that
Purchaser shall have a right to retain copies of, and use, any corporate record
books of Seller relating to the Business;
(b) Seller's cash and cash equivalents;
(c) Seller's right, title and interest to the "Novus" name and
marks;
(d) Seller's right, title and interest under the Asset Purchase
Agreement dated October 16, 1996 by and between Paradysz Matera & Co., Inc. and
Novus Marketing, Inc. (the "PMC Agreement");
(e) Seller's rights, choses in action and claims, known or
unknown, matured or unmatured, accrued or contingent, against third parties
related to the Excluded Liabilities (as defined below);
(f) Seller's right, title and interest under Seller's insurance
policies;
(g) Seller's Mercury software (other than the data related to
the Business in the Mercury databases );
(h) Seller's Clipper software (other than the data related to
the Business in the Clipper databases); and
(i) All employee benefit plans covering the employees of
Seller.
1.2 Limited Assumption of Liabilities. On the terms and subject to
the conditions set forth herein, Purchaser shall assume, and agrees to pay,
perform and discharge in due course, only those liabilities and obligations of
Seller set forth in Schedule 1.2 hereto (collectively, the "Assumed
Liabilities"). Except for the Assumed Liabilities, Purchaser shall not assume or
have any responsibility for any debt, liability, obligation, commitment of any
nature, whether now or hereafter existing, absolute, contingent or otherwise,
known or unknown, relating to Seller, Shareholder, the Assets or the Business
(the "Excluded Liabilities").
1.3 Purchase Price
(a) Purchaser shall pay or deliver to Seller, as the case may
be, in consideration for the sale, transfer, assignment, conveyance and delivery
of the Assets, (i) subject to the Closing Cash Consideration adjustment
provisions of Section 1.7, an aggregate amount of One Million Nine Hundred
Fifty-Four Thousand Six Hundred Fifteen Dollars and Fifty-Nine Cents
($1,954,615.59) at Closing (the "Closing Cash Consideration") by wire
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transfer of immediately available funds to an account designated in writing by
Seller, (ii) within three (3) days following the Closing, Nine Hundred Fourteen
Thousand Two Hundred Ten (914,210) shares (the "Stock Consideration") of
Purchaser's common stock, $.001 par value per share, and (iii) and subject to
and in accordance with the Post-Closing Cash Consideration adjustment provisions
of Section 1.8 and the provisions of Section 6.1(e), an aggregate amount of
Seven Hundred Fifty Thousand Dollars ($750,000) within 60 days following the
first anniversary of the Closing Date by wire transfer of immediately available
funds to an account designated in writing by Seller ("Post-Closing Cash
Consideration" and together with the Closing Cash Consideration shall be
referred to as the "Cash Consideration") The Cash Consideration together with
the Stock Consideration shall be referred to collectively as the "Purchase
Price".
1.4 Allocation. The parties agree that the Purchase Price is being
paid for, and allocated among, the Assets as set forth on Annex A attached
hereto in conformity with Section 1060(b) of the Internal Revenue Code of 1986
(as amended, the "Code"), and the regulations promulgated thereunder. After the
Closing Date, Purchaser's accountants shall make any adjustments required to
such allocations, and Seller and Shareholder agree to cooperate in filing all
information required by Section 1060(b) of the Code and the regulations
thereunder, and to take no position on any income tax return, report or filing
that is inconsistent with such allocation.
1.5 Earnout Provisions.
(a) As additional consideration for the Assets, Seller shall
have the right to receive up to an additional One Million Dollars
($1,000,000.00) (the "Earnout"), payable, if applicable, in accordance with the
terms of this Section 1.5.
(b) For purposes of this Agreement, "Offline Operating Income"
shall have the meaning assigned to such term in the L90 Bonus Plan (as defined
below).
(c) If Offline Operating Income for the period between May 1,
2001 and April 30, 2002 ("Year One") is greater than $2,480,000 (subject to
Section 1.5(e), the "Year One Target"), then Purchaser shall pay to Seller an
amount equal to $400,000 (the "Year One Earnout"), and if Offline Operating
Income for Year One is equal to or less than the Year One Target, then Seller
shall not receive any portion of the Year One Earnout.
(d) If Offline Operating Income for the period between May 1,
2002 and April 30, 2003 ("Year Two") is greater than $3,670,000 (subject to
Section 1.5(e), the "Year Two Target"), then Purchaser shall pay to Seller an
amount equal to $600,000 (the "Year Two Earnout"), and if Offline Operating
Income for Year Two is equal to or less than Year Two Target, then Seller shall
not receive any portion of the Year Two Earnout.
(e) All portions of the Earnout, if any, shall be promptly paid
by Purchaser to Seller or to such persons as Seller may direct within 45 days
after the end of Year One or Year Two, as the case may be. To the extent Seller
disputes the calculation of the Earnout, Seller and Purchaser shall negotiate in
good faith for 30 days to resolve such
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dispute. In the event of the occurrence of any merger or acquisition by, or of,
the Purchaser, the result of which materially affects the Business, the
Purchaser, Seller and Shareholder agree to negotiate in good faith to make
appropriate adjustments to the Year One Target and/or the Year Two Target.
Notwithstanding the provisions of Section 7.16 hereof, to the extent Seller and
Purchaser are unable to resolve such dispute within such 30 day period, Seller
and Purchaser shall select a nationally recognized independent accounting firm
(other than an accounting firm then engaged by Seller or Purchaser) to resolve
such dispute within thirty (30) days. The determination of such accounting firm
as to the calculation of the Earnout shall be conclusive and binding upon the
parties for purposes of this Section 1.5. The fees and expenses of the
accounting firm shall be borne equally by Seller and Purchaser.
1.6 Transferee Liability. The parties hereto acknowledge and agree
that:
(a) all consent fees, sales, use, excise, transfer, value added
and similar taxes and assignment or transfer fees, and other fees and charges
and taxes payable in connection with the transactions contemplated hereby, if
any, shall be paid by Seller or Shareholder; provided, however, that any sales
tax liability related to the transactions contemplated herein shall be borne
fifty percent (50%) by Purchaser and fifty percent (50%) by Seller and
Shareholder;
(b) all Federal and state income taxes, if any, incurred by
Purchaser, Seller or Shareholder shall be borne by the party incurring such
taxes;
(c) in the event that Seller or Shareholder pays any fees,
charges or taxes in connection with the transactions contemplated hereby which
it is not required to pay hereunder (including without limitation, any broker
fees, finder fees or other fees or expenses payable to The Winterberry Group),
Purchaser agrees to reimburse Seller or Shareholder immediately in the amount of
such fees, charges or taxes paid by Seller or Shareholder;
(d) in the event that Purchaser pays any fees, charges or taxes
in connection with the transactions contemplated hereby which it is not required
to pay hereunder (including, without limitation, any broker fees, finder fees or
other fees or expenses payable to U.S. Bancorp Piper Jaffray Inc. or under the
Equity Participation Plans (as described in Schedule 3.9), Seller and
Shareholder agree to reimburse Purchaser immediately in the amount of such fees,
charges or taxes paid by Purchaser.
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1.7 Adjustment to Closing Cash Consideration.
(a) Within thirty (30) days following the Closing, Seller shall
prepare, at its sole cost and expense, and shall deliver to Purchaser a final
balance sheet of Seller as of the Closing on the Closing Date (the "Closing
Balance Sheet"), prepared in accordance with generally accepted accounting
principles, consistently applied ("GAAP") except as set forth on Schedule 1.7,
accompanied by the Closing Calculation (collectively, the "Closing Financial
Documentation"). Purchaser, together with its certified public accountants,
shall be entitled to review the Closing Balance Sheet and related Closing
Calculation. To enable Purchaser to conduct such review, Seller shall provide
Purchaser with access to all records in Seller's possession or under Seller's
control as are reasonably requested by Purchaser. Purchaser shall complete its
review and deliver to Seller, no later than thirty (30) days following
Purchaser's receipt of the Closing Financial Documentation (the "Post-Closing
Review Period"), Purchaser's written calculation of the Closing Balance Sheet
and the Closing Calculation with respect to Seller as of the Closing on the
Closing Date (collectively, the "Purchaser Calculation"). If the Purchaser
Calculation is not delivered to Seller by the end of the Post-Closing Review
Period, the Closing Balance Sheet and Closing Calculation as calculated by
Seller shall be deemed final and binding for purposes of this Section 1.7, and,
promptly thereafter, the Closing Cash Consideration shall be adjusted by the
parties in accordance with the provisions of Section 1.7(c) below. If Purchaser
timely delivers the Purchaser Calculation, Seller and Purchaser shall promptly
seek to agree on any disputed matters with respect to the determination of the
Closing Balance Sheet and the Closing Calculation of Seller (the "Disputed
Amount"). If full agreement is not reached by the parties within fifteen (15)
days of delivery of the Purchaser Calculation, Seller and Purchaser shall select
a nationally recognized independent accounting firm (other than an accounting
firm then engaged by Seller or Purchaser or their respective affiliates) to
resolve the Disputed Amount within thirty (30) days. The determination of such
accounting firm as to the Disputed Amount shall be conclusive and binding upon
the parties for purposes of this Section 1.7, and the Closing Cash Consideration
shall be adjusted by the parties promptly following such determination in
accordance with the provisions of Section 1.7(c) below. The fees and expenses of
the accounting firm shall be borne equally by Seller and Shareholder, on the one
hand, and Purchaser, on the other hand.
(b) "Closing Calculation" shall mean the AP minus Net AR,
where:
Net AR = the sum of Seller's accounts receivable as of the Closing
on the Closing Date (other than Seller's income tax refunds
receivable and Seller's accounts receivable under the PMC
Agreement), as reflected on the Closing Balance Sheet
("Gross AR") minus the product of 5.5% multiplied by the
Gross AR (the "Reserve"); and
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AP = the sum of the Assumed Liabilities as calculated on an
accrual basis and as reflected on the Closing Balance Sheet
plus the Accrued Vacation (as defined in Schedule 1.2).
(c) The Closing Cash Consideration payable at the Closing shall
be increased or decreased as follows:
(i) If the Closing Calculation is less than Five Hundred
Ninety-Five Thousand Three Hundred Eighty-Four Dollars and Forty-One Cents
$595,384.41 (the "Preliminary Calculation"), then the Closing Cash Consideration
payable at the Closing shall be increased by such difference. Purchaser shall
pay to Seller cash in the amount of such difference by means of wire transfer of
immediately available funds to an account designated by Seller in writing no
later than three (3) days of after the final determination of the Closing
Balance Sheet and Closing Calculation.
(ii) If the Closing Calculation is greater than the
Preliminary Calculation, then the Closing Cash Consideration payable at the
Closing shall be decreased by such difference. Seller shall pay to Purchaser
cash in the amount of such difference by means of wire transfer of immediately
available funds to an account designated by Purchaser in writing no later than
three (3) days of after the final determination of the Closing Balance Sheet and
Closing Calculation.
1.8 Adjustment to Post-Closing Cash Consideration.
(a) Within fifteen (15) days following the first anniversary of
the Closing, Purchaser shall prepare, at its sole cost and expense, and shall
deliver to Seller Purchaser's calculation of the Final Calculation (as defined
below), prepared in accordance with GAAP. Seller, together with its certified
public accountants, shall be entitled to review Purchaser's Final Calculation.
To enable Seller to conduct such review, Purchaser shall provide Seller with
access to all relevant records in Purchaser's possession or under Purchaser's
control as are reasonably requested by Seller. Seller shall complete its review
and deliver to Purchaser, no later than fifteen (15) days following receipt by
Seller of Purchaser's Final Calculation (the "Final Review Period"), Seller's
written calculation of the Final Calculation (collectively, the "Seller
Calculation"), prepared in accordance with GAAP. If the Seller Calculation is
not delivered to Purchaser by the end of the Final Review Period, the Final
Calculation of Purchaser shall be deemed final and binding for purposes of this
Section 1.8, and, promptly thereafter, the Post-Closing Cash Consideration shall
be adjusted by the parties in accordance with the provisions of Section 1.8(c)
below. If Seller timely delivers the Seller Calculation, Seller and Purchaser
shall promptly seek to agree on any disputed matters with respect to the
determination of the Final Calculation of Purchaser (the "Final Disputed
Amount"). If full agreement is not reached by the parties within fifteen (15)
days of delivery of the Seller Calculation, Seller and Purchaser shall select a
nationally recognized independent accounting firm (other than an accounting firm
then engaged by Seller or Purchaser or their respective affiliates) to resolve
the Final Disputed Amount within fifteen (15) days. The determination of such
accounting firm as to the Final Disputed
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Amount shall be conclusive and binding upon the parties for purposes of this
Section 1.8, and the Post-Closing Cash Consideration shall be adjusted by the
parties promptly following such determination in accordance with the provisions
of Section 1.8(c) below. The fees and expenses of the accounting firm shall be
borne equally by Seller and Shareholder, on the one hand, and Purchaser, on the
other hand.
(b) "Final Calculation" shall mean Net Uncollected AR minus the
Reserve, where:
Net Uncollected AR = Uncollected AR (defined below) less the amount of
AP outstanding as of the first anniversary of the
Closing (to the extent these AP amounts have
corresponding accounts receivable within the
Uncollected AR).
Uncollected AR = Gross AR as of the Closing on the Closing Date
(as determined from the Closing Calculation) less
the aggregate cash collected by Purchaser with
respect to such Gross AR during the period
beginning on the Closing Date and ending on the
first anniversary of the Closing Date.
(c) The Post-Closing Cash Consideration payable pursuant to
Section 1.3 shall be increased or decreased as follows:
(i) If the Final Calculation is greater than zero, then the
Post-Closing Cash Consideration payable pursuant to Section 1.3 shall be
decreased by the Final Calculation. To the extent the Final Calculation exceeds
the Post-Closing Cash Consideration, Seller and Shareholder shall also pay to
Purchaser cash in the amount of such excess by means of wire transfer of
immediately available funds to an account designated by Purchaser in writing no
later than three (3) days of after the final determination of the Final
Calculation.
(ii) If the Final Calculation is less than zero, then the
Post-Closing Cash Consideration payable pursuant to Section 1.3 shall be
increased by the Final Calculation.
(iii) If the Final Calculation is equal to zero, then the
Post-Closing Cash Consideration payable pursuant to Section 1.3 shall not be
adjusted.
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ARTICLE II.
THE CLOSING
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2.1 Closing. The transactions contemplated by this Agreement shall be
consummated (the "Closing") at 10:00 a.m. at the offices of Paul, Hastings,
Janofsky & Walker, 555 South Flower Street, 23rd Floor, Los Angeles, California
on May 14, 2001, or on such other date and such other place as the parties shall
mutually agree (the "Closing Date").
2.2 Deliveries of Purchaser. At the Closing Purchaser shall:
(a) assume the Assumed Liabilities;
(b) pay to Seller by wire transfer of immediately available
funds to an account designated in writing by Seller the Closing Cash
Consideration subject to the Closing Cash Consideration adjustment provisions of
Section 1.7; and
(c) all of the documents and instruments required to be
delivered to Seller under Section 5.2 hereof.
In addition, within three (3) days following the Closing, Purchaser shall
deliver to Seller one or more stock certificates, as determined by Seller,
issued in the name of Seller, representing in the aggregate the Stock
Consideration.
2.3 Deliveries of Seller and Shareholder. At the Closing, Seller
shall:
(a) convey, assign, transfer and deliver to Purchaser all of
Seller's right, title and interest in and to the Assets, free and clear of all
Liens (other than the Permitted Liens), and in furtherance thereof shall deliver
to Purchaser a General Assignment and Bill of Sale in substantially the form
attached hereto as Annex B, together with such other deeds, bills of sale,
assignments, certificates of title, documents and other instruments of transfer
and conveyance as Purchaser and its legal counsel shall reasonably request; and
(b) all of the documents and instruments required to be
delivered to Purchaser under Section 5.1 hereof.
2.4 Seller's Representative. In order to efficiently administer the
transactions contemplated hereby, including (i) the defense or settlement of any
claims for which Seller and Shareholder may be required to indemnify Purchaser
pursuant to Article VI hereof, Shareholder (the "Representative") has agreed to
his appointment as the Representative. The Representative is hereby authorized
to take any and all action as is contemplated to be taken by Seller by the terms
of this Agreement. All decisions and actions by the Representative shall be
binding upon Seller and Seller shall have no right to object, dissent, protest
or otherwise contest the same. Each of Seller (without waiving any rights
against the Representative) and Shareholder agree that:
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(a) Purchaser shall be able to rely exclusively on the
instructions and decisions of the Representative as to the settlement of claims
for indemnification by Purchaser pursuant to Article VI hereof, or any other
actions taken by the Representative hereunder, and neither Seller nor
Shareholder shall have any cause of action against Purchaser in reliance upon
the instructions or decisions of the Representative;
(b) all actions, decisions and instructions of the
Representative shall be final, conclusive and binding upon Seller and
Shareholder; and
(c) the provisions of this Section 2.4 are independent and
severable, are irrevocable and coupled with an interest, and shall be
enforceable notwithstanding any rights or remedies that Seller or Shareholder
may have in connection with the transactions contemplated by this Agreement; and
the provisions of this Section 2.4 shall be binding upon the assigns, executors,
heirs, legal representatives and successors of Seller and Shareholder, and any
references in this Agreement to Seller or Shareholder shall mean and include the
successors to the rights hereunder of Seller or Shareholder, as the case may be,
whether pursuant to testamentary disposition, the laws of descent and
distribution or otherwise.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
OF SELLER AND SHAREHOLDER
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As an inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, Shareholder and Seller, jointly
and severally, hereby represent and warrant to, and covenant with, Purchaser as
follows:
3.1 Organization and Authority. Seller (a) is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Minnesota, (b) has full limited liability company power and
authority to own and lease the Assets and to carry on the Business as and where
the Assets are now owned or leased and the Business is now conducted, and (c) is
qualified to do business as a foreign limited liability company in each
jurisdiction wherein the nature of its activities or its properties owned or
leased makes such qualification necessary. A list of such foreign jurisdictions
is set forth on Schedule 3.1 hereto.
3.2 Absence of Conflicts. Neither the execution and delivery of
this Agreement by Seller and Shareholder, the compliance by Seller and
Shareholder with the terms and conditions hereof nor the consummation by Seller
and Shareholder of the transactions contemplated hereby will (a) conflict with
any of the terms, conditions or provisions of the articles of organization,
operating agreement or other charter documents of Seller, (b) violate any
provision of, or require any consent, authorization or approval under, any law
or administrative regulation or any judicial, administrative or arbitration
order, award, judgment, writ, injunction or decree applicable to Seller,
Shareholder, the Assets or
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the Business, or any governmental permit or license issued to Seller, (c)
violate or be in conflict with, result in a breach or constitute (with or
without notice or lapse of time or both) a default under, or accelerate or
permit the acceleration of the performance required by, or except as set forth
in Schedule 3.2, require any consent, authorization or approval (other than
those required to be obtained which have been, or prior to the Closing will be,
duly obtained by Seller or Shareholder) under, any term or provision of any
Lien, lease, agreement or instrument to which Seller or Shareholder is a party
or by which he or it or the Assets are bound, (d) result in the creation of any
Lien upon any of the Assets or (e) give to others any rights or interests
(including rights of purchase, termination or cancellation) under any such Lien,
lease, agreement or instrument.
3.3 Power and Authority.
(a) Each of Seller and Shareholder has full power and authority
to execute, deliver and carry out all the terms and provisions of this Agreement
and to perform its or his obligations under this Agreement. On or prior to the
Closing Date, Seller and Shareholder shall have taken, or caused to have been
taken, all necessary action, limited liability company or otherwise, to
authorize Seller's and Shareholders' execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby.
(b) This Agreement constitutes, and upon the execution and
delivery by Seller and Shareholder of the other agreements among the parties
referred to herein and each instrument and certificate delivered by Seller and
Shareholder pursuant hereto, such agreements, instruments and certificates shall
constitute, the legal, valid and binding obligations of Seller and Shareholder
(as appropriate), enforceable against Seller and Shareholder (as appropriate) in
accordance with their respective terms, except as such obligations and
enforceability are limited by bankruptcy, insolvency and other similar laws of
general application affecting the enforcement of creditors' rights and by
equitable principles.
(c) Neither Seller nor Shareholder is subject to any
restriction of any kind or character which prohibits Seller or Shareholder from
entering into this Agreement or would prevent or impede its or his performance
of or compliance with all or any part of this agreement or the consummation of
the transactions contemplated hereby.
3.4 Financial Statements. Schedule 3.4 contains copies of Seller's
financial statements previously delivered to Purchaser (collectively, the
"Financial Statements"). Such Financial Statements are true and correct in all
material respects as of the dates reflected on them and have been prepared in
accordance with GAAP except as set forth on Schedule 1.7 and present fairly the
financial condition of Seller as at the respective dates thereof and the results
of its operations and its cash flows for the periods then ended.
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3.5 Title to Property; Encumbrances.
(a) Except as set forth on Schedule 3.5(a), the Assets are all
of the assets necessary to conduct the business of Seller as currently being
conducted and as conducted during the periods covered by the Financial
Statements. Seller has, and upon consummation of the transactions contemplated
by this Agreement at the Closing, Purchaser will have, good and marketable title
to all of the Assets, real and personal, moveable and immovable, tangible and
intangible, free and clear of any and all Liens (other than the Permitted
Liens).
(b) Schedule 3.5(b) contains a list of all tangible personal
property having a cost or fair market value in excess of $5,000 owned by Seller.
All of the machinery, equipment, vehicles and all other tangible personal
property, which constitute part of the Assets, are in good condition and repair,
subject to normal wear and tear, suited for the use intended and operated in
conformity with all applicable laws, rules, regulations and ordinances,
including, without limitation, all applicable building and zoning laws,
ordinances, and regulations.
(c) Seller owns no real property. Schedule 3.5(c) contains a
list of all real property leases, licenses and personal property leases under
which Seller is the lessee or licensee, together with (i) the location and
nature of each of the leased or licensed properties, (ii) the termination date
of each such lease or license, (iii) the name of the lessor or licensor and (iv)
all rental and other payments made or required to be made for the remaining life
thereof. All leases and licenses pursuant to which Seller leases or licenses
from others real or personal property are valid, subsisting in full force and
effect in accordance with their respective terms, and there is not, under any
real property lease, personal property lease or license, any existing material
default by or event of default (or event that, with notice or passage of time,
or both, would constitute a material default by Seller, or would constitute a
basis of force majeure or other claim of excusable delay or nonperformance),
except as set forth in the Schedule 3.5(c). True and complete copies of all real
property leases, licenses and personal property leases, as well as copies of any
title reports, surveys or environmental reports or audits relating to any leased
real property are appended to the Schedule 3.5(c). Except as set forth in the
Schedule 3.5(c), no such lease or license will require the consent of the lessor
or licensor to or as a result of the consummation of the transactions
contemplated by this Agreement. For the purposes of this Section 3.5(c), a
"lease" shall include a sublease.
3.6 Receivables. The amounts of the notes and accounts receivable
reflected on the Financial Statements are true and correct and are stated in
accordance with generally accepted accounting principles, consistently applied.
To the knowledge of Seller, all notes and accounts receivable reflected on the
Financial Statements and all notes and accounts receivable that have arisen
since March 31, 2001 (the "Balance Sheet Date") (except such accounts receivable
as have been collected since such date) (i) have arisen from bona fide
transactions in the ordinary course of the Business, (ii) are not subject to any
defense, offset or counterclaim, and (iii) are valid and enforceable against the
account debtor and are fully collectable in the aggregate recorded amounts
thereof, except to the extent of
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the allowance for doubtful accounts reflected on the Financial Statements.
Schedule 3.6 hereto contains a true and complete aging of Seller's accounts
receivable as of the Balance Sheet Date.
3.7 Proprietary Information.
(a) Schedule 3.7 contains a true and complete list of all
Internet domain names, letters patent, patent applications, trade names,
trademarks, service marks, trademark and service mark registrations and
applications, copyrights, copyright registrations and applications, grants of a
license or right to Seller with respect to the foregoing, both domestic and
foreign, claimed by Seller or used or proposed to be used by Seller in the
conduct of the Business, whether registered or not (collectively herein,
"Registered Rights"). Except as described in Schedule 3.7 hereto, Seller is not
obligated or under any liability whatever to make any payments by way of
royalties, fees or otherwise to any owner or licensor of, or other claimant to,
any Registrable Right with respect to the use thereof in the conduct of the
Business or otherwise. Neither Seller nor Shareholder has any knowledge of any
claim of infringement or other complaint that its operations violate or infringe
the Registrable Rights of any third party.
(b) Except as set forth on Schedule 3.7(b), Seller owns and has
the unrestricted right to use every trade secret, customer and supplier list,
promotional idea, marketing and purchasing strategy, computer program,
discovery, know-how, confidential data and all other intellectual property and
information (collectively herein, "Proprietary Information") required for or
incident to the operation of the Business, free and clear of any right, equity
or claim of others. Notwithstanding the foregoing sentence, "Proprietary
Information" shall not include the lists owned by customers of the Business,
which lists are managed by Seller as part of the Business. Seller has taken
reasonable security measures to protect the secrecy, confidentiality and value
of all Proprietary Information.
(c) Except as set forth on Schedule 3.7(c), Seller has not
sold, transferred, assigned, licensed or subjected to any right, lien,
encumbrance or claim of others, any Registrable Rights or Proprietary
Information or any interest therein. There are no claims or demands of any
person pertaining to, or any proceedings that are pending or, to the knowledge
of Seller or Shareholder, threatened, which challenge the rights of Seller in
respect of any Registrable Rights or Proprietary Information.
3.8 Insurance. Schedule 3.8 contains a complete list and
description of all fire, theft, casualty, life, title, automobile, liability and
other policies of insurance maintained by MIH, Inc. with respect to the Assets
and Business, all of which are, and will be maintained through the Closing Date,
in full force and effect. All premiums due thereon have been paid and Seller has
not received any notice of cancellation with respect thereto. All such policies
taken together provide adequate coverage to insure the Assets and Business
through the Closing Date against such risk of loss and in such amounts as are
customary for companies engaged in the same or similar business and similarly
situated.
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3.9 Employees and Labor Matters. Schedule 3.9 contains a true and
complete list of all employees of Seller. None of Seller's employees is subject
to any collective bargaining agreement to which Seller is a party or is bound.
Seller is in compliance with all federal and state laws respecting employment
and employment practices and has not engaged in any unfair labor practice.
Schedule 3.9 sets forth (a) a statement describing all employee benefits that
are enforceable obligations of Seller; and (b) a list of all employees who have
employment contracts, whether oral or written, or loan or other agreements with
Seller, true and complete copies of which have heretofore been delivered to
Purchaser. To the knowledge of Seller and Shareholder, no union or other labor
organization has attempted to organize any of the employees of Seller. No
worker's compensation or similar claim relating to or involving Seller or the
Business has been filed or, to the knowledge of Seller or Shareholder, is
threatened.
3.10 Litigation. Except as set forth on Schedule 3.10 hereto, there
is no legal action, suit, arbitration or other legal, administrative or
governmental investigation, inquiry or proceeding (whether federal, state, local
or foreign) pending or, to the best of Seller's and Shareholders' knowledge,
threatened against or affecting Seller, the Business or the Assets. Except as
set forth on Schedule 3.10, Seller is not in default with respect to any order,
writ, judgment, injunction, decree, determination or award of any court or of
any governmental agency or instrumentality (whether federal, state, local or
foreign).
3.11 Income and Other Taxes. All taxes (including, without
limitation, all income, property, sales, use, customs, franchise, value added,
ad valorem, withholding, employees' income withholding, and social security
taxes, and all other taxes imposed on Seller or its income, properties, sales,
franchises, operations, the Assets or Benefit Plans or trusts), and all deposits
in connection therewith required by applicable law, imposed by any federal,
state, local or foreign jurisdiction, or by any other governmental unit or
taxing authority, and all interest and penalties thereon (all of the foregoing
hereafter collectively referred to as "Taxes"), which are due and payable by
Seller for all periods through the date hereof have been paid in full, or
adequate reserves for all other Taxes, whether or not due and payable, and
whether or not disputed, have been set up on the books of Seller, its members or
Shareholder. From and after the date of this Agreement, Seller will duly file
all returns and reports with respect to Taxes, and will pay all Taxes imposed on
Seller related to periods on or prior to the Closing Date which directly or
indirectly affect Purchaser's operation of the Assets or the Business after the
Closing, or which might create a lien or encumbrance on the Assets, or which
would adversely affect Purchaser's ability to carry on Seller's business after
the Closing Date. Seller has duly filed all federal, state, local and foreign
tax returns and reports (including, without limitation, returns for estimated
tax), and all returns and reports of all other governmental units or taxing
authorities having jurisdiction, with respect to all Taxes, all such returns and
reports show the correct and proper amount due, and all Taxes shown on such
returns or reports and all assessments received by Seller have been paid to the
extent that such Taxes, or any estimates thereon, have become due. To the extent
any federal income tax returns of Seller have been examined by the Internal
Revenue Service through December 31, 2000, except as set forth in Schedule 3.11,
all the deficiencies proposed and
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indicated as a result of the examination of such tax returns have been paid,
settled or are being disputed in good faith.
3.12 Employee Benefit Matters.
(a) Schedule 3.12 lists all "employee benefit plans" (within
the meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) and any other employee benefit or fringe benefit
arrangements, practices, contracts, policies or programs of every type (other
than programs merely involving the regular payment of wages), established,
maintained or contributed to by Seller (the "Benefit Plans").
(b) Purchaser will have no liability under any Benefit Plan
(including, without limitation, any termination thereof) as a result of the
transactions contemplated hereby.
3.13 No Undisclosed Liabilities. Except (a) to the extent set forth
or provided for in the Financial Statements, (b) as set forth on Schedule 3.13
hereto or (c) for current liabilities incurred since the Balance Sheet Date in
the usual and ordinary course of business (none of which, individually or in the
aggregate, are material to the Business), as of the date hereof, Seller has no
debts, liabilities or obligations of any kind, whether accrued, absolute,
contingent or otherwise, whether due or to become due and whether the amounts
thereof are readily ascertainable or not, or any unrealized or anticipated
losses from any commitments of a contractual nature, including taxes with
respect to or based upon the transactions or events occurring at or prior to the
Closing.
3.14 Permits, Licenses, Etc. Seller possesses, and is operating in
compliance with, all franchises, licenses, permits, certificates,
authorizations, rights and other approvals of governmental bodies, agencies and
instrumentalities thereof necessary to conduct the Business as currently
conducted and as proposed to be conducted (the "Permits"). Schedule 3.14 hereto
contains a true and complete list of all Permits. The consummation of the
transactions contemplated by this Agreement will not result in the revocation,
suspension or limitation of any Permit and, except as set forth in Schedule
3.14, no Permit will require the consent of its issuing authority to, or as a
result of, the consummation of the transactions contemplated hereby.
3.15 Environmental Matters. Seller (including its predecessors for
whose acts and omissions it is responsible) has complied in all material
respects with all applicable laws, rules, regulations and ordinances relating to
pollution and environmental control. All hazardous or toxic waste, materials and
substances on, in, under or off-site from the real property owned or operated by
Seller (the "Real Property") have been properly removed and disposed of, and no
past or present disposal, spill or other release of, or treatment,
transportation or other handling of, hazardous waste, materials or substances
on, in, under or off-site from any Real Property, or adjacent property, will
subject Seller, the Business, the Assets or Purchaser to corrective or
compliance action or any other liability. Schedule 3.15 sets forth a correct and
complete description of (a) all permits, regulatory plans and
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compliance schedules with respect to Seller, the Business or the Assets, and (b)
all litigation, investigations, inquiries, and other proceedings, rulings,
orders or citations pending, or to the knowledge of Seller or Shareholder,
threatened or contemplated by government officials with respect to Seller, the
Business or the Assets, in each case relating to emissions or potential
emissions into the environment of solids, liquids, gases, heat, light, noise,
radiation and other forms of matter or energy ("Emissions") or the proper
disposal of materials, including solid waste materials ("Disposals"). Seller is
not, nor has it been, required to obtain any permit, regulatory plan or
compliance schedule required by the Business related to environmental hazards,
Emissions or Disposals. Seller is not, nor has it been, required to keep records
or make any filing pursuant to applicable laws, rules, regulations and
ordinances with respect to Emissions and Disposals.
3.16 Consents. All consents, authorizations and approvals of any
court, governmental body or agency or instrumentality thereof or any arbitrator
or any other person to or as a result of the consummation of the transactions
contemplated by this Agreement or that are necessary or convenient in connection
with the Business as currently conducted and as proposed to be conducted, or for
which the failure to obtain the same might have, individually or in the
aggregate, an adverse effect on the Business or its financial condition,
properties, prospects or operations, have been obtained by Seller, except as
described in Schedule 3.16 hereto. Except as set forth on Schedule 3.16 hereto,
all consents, authorizations and approvals described in Schedule 3.16 will have
been duly obtained prior to the Closing.
3.17 Material Contracts. Schedule 3.17 contains a true and complete
list of all material contracts, agreements, leases, permits, commitments,
arrangements and instruments (collectively, "Material Contracts") to which
Seller is a party or by which Seller, the Business or the Assets are bound or
affected. For purposes of this Section 3.17, any contract, agreement, lease,
permit, commitment, arrangement or instrument shall be deemed "material" if it
(a) involves performance by any party more than 60 days after the date hereof,
(b) involves payments to or receipts by Seller in excess of $5,000, (c) relates
to any sales representative or similar relationship between Seller and any third
party, (d) restricts Seller from carrying on the Business or engaging any
activity, (e) involves any agreement or understanding between Seller and any
employee, representative or affiliate of Seller or (f) otherwise materially
affects the Business. The Material Contracts include all existing contracts and
commitments of Seller (i) which are necessary to conduct Seller's business in
the same manner as currently conducted by Seller or (ii) by which the Assets may
be bound or affected. All such Material Contracts have been entered into in the
ordinary course of Seller's business, and are valid and effective in accordance
with their terms. Seller has performed all obligations to be performed by it as
of the date of this Agreement under all Material Contracts, and Seller is not in
default or in arrears under any of the terms thereof, and to the knowledge of
Seller and Shareholder, no condition exists or has occurred which, with the
giving of notice or the lapse of time, or both, would constitute a default or
accelerate the maturity of, or otherwise modify, any Material Contract. All
Material Contracts are in full force and effect. No default by any other party
to any Material Contract is known or claimed by Seller or Shareholder to exist.
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3.18 Compliance with Law. The Business has not been conducted and is
not being conducted, and Seller is not and has not been, in violation of any
applicable federal, state or local statute, law, rule, regulation, ordinance,
permit, order, decree of, or other lawful obligation imposed by, any court or
governmental authority or instrumentality. Seller has made all required
registrations and filings with all applicable federal, state and local
government authorities relating to the Business as currently conducted and as
proposed to be conducted. Seller has not received notice nor has knowledge of
any violation of any applicable zoning regulation, zoning ordinance or land use
law or regulation (including setback requirements) relating to the Business or
the Real Property or any other real property owned, operated or leased by
Seller.
3.19 Absence of Certain Changes. Except as set forth on Schedule
3.19, since the Balance Sheet Date:
(a) there has been no change in the business, assets,
liabilities, results of operations or financial condition of the Business or
Seller or in its relationships with suppliers, customers, employees, lessors or
others, other than changes in the ordinary course of business, none of which
have been or will be, in the aggregate, materially adverse to the Assets or the
Business;
(b) there has been no damage, destruction or loss to the
properties or the Business, whether or not covered by insurance, which has or
will have a material adverse effect on such properties or the Business or the
operations of Seller;
(c) the Business has been operated in the ordinary course and
consistent with its prior practices, and not otherwise;
(d) the Assets have been maintained in good order, repair and
condition, ordinary wear and tear excepted;
(e) the books, accounts and records of Seller and the Business
have been maintained in the usual, regular and ordinary manner on a basis
consistent with prior years, it being understood that Seller did not keep
separate financials for the Business prior to 2001;
(f) there has been since February 1, 2001, no (i) increase in
the compensation or in the rate of compensation or commissions payable or to
become payable by Seller to any director, officer, manager, or to any other
employee or agent of Seller earning $50,000 or more per annum, (ii) general
increase in the compensation or in the rate of compensation payable or to become
payable to hourly or salaried employees of Seller earning less than $50,000 per
annum ("general increase" for the purpose hereof shall mean any increase
generally applicable to a class or group of employees and shall not include
increases granted to individual employees for merit, length of service, change
in position or responsibility or other reasons applicable to specific employees
and not generally applicable to a class or group thereof), (iii) employee hired
at a salary in excess of $50,000 per annum,
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or (iv) payment of or commitment to pay any bonus, profit share or other
extraordinary compensation to any employee;
(g) there has been no labor dispute, organizational effort by
any union or unfair labor practice charge involving Seller or the Business or
any material adverse change in employee relations which has or is reasonably
likely to have an adverse effect on the productivity, financial condition,
results of operations or Business of Seller or the relationships between the
employees of Seller and the management of Seller;
(h) there has been no mortgage, charge, lien, claim or other
encumbrance or security interest (other than liens for current taxes which are
not past due) created on or in any of the Assets or assumed by Seller with
respect to any Assets;
(i) there has been no indebtedness or other liability or
obligation (whether absolute, accrued, contingent or otherwise) incurred by
Seller or the Business, except current liabilities incurred in connection with
the purchase of goods or services in the ordinary course of business and
consistent with its prior practice, none of which individually or in the
aggregate adversely affects the business or financial condition of Seller or the
Business;
(j) no indebtedness, liability or obligation (whether absolute,
accrued, contingent or otherwise) has been discharged or satisfied by Seller or
the Business, other than current liabilities reflected in the Financial
Statements, and current liabilities incurred since the date thereof in the
ordinary course of business and consistent with its prior practice;
(k) there has been no sale, transfer, lease or other
disposition of any Assets except in the ordinary course of business, and no debt
to, or claim or right of, Seller or the Business has been canceled, compromised,
waived or released;
(l) there has been no amendment, termination or waiver of, or
any notice of any amendment, termination or waiver of, any material right of
Seller or the Business under any Material Contract or any governmental license,
permit or permission relating to the Business;
(m) there have been no amendments or other corporate actions
having the effect of an amendment increasing past or future contributions of any
kind whatsoever to any Benefits Plan of Seller relating to the Business;
(n) Seller has not, except as set forth on Schedule 3.19(n) (i)
paid any judgment resulting from any suit, proceeding, arbitration, claim or
counterclaim or (ii) made any payment to any party of more than $1,000 in
settlement of any suit, proceeding, arbitration, claim or counterclaim,
relating, in any way, to the Business;
(o) Seller has not discontinued or determined to discontinue
the sale of any products or provision of any services previously sold or
provided by Seller or the
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Business, representing more than one percent (1.0%) of annual sales of the
Business during the period covered by the Financial Statements;
(p) Except as set forth in Schedule 3.19(p), Seller has not
transferred or granted any rights under, or entered into any settlement
regarding the breach or infringement of, any United States or foreign license,
patent, copyright, trademark, trade name, trade secret, invention or similar
rights comprising a part of the Registered Rights or Proprietary Information, or
modified any existing rights with respect thereto;
(q) Seller has not made any purchase commitment in excess of
the normal, ordinary and usual requirements of the Business or at any price in
excess of the then-current market price or upon terms and conditions more
onerous than those normal, customary and consistent with its prior practices
(which are prudent business practices prevailing in the industry), or made any
change in its selling, pricing, advertising or personnel practices inconsistent
with its prior practice and prudent business practices prevailing in the
industry;
(r) there has not been any change in accounting methods,
principles or practices affecting in any material respect the Assets, the
Assumed Liabilities or the Business;
(s) there has not been any declaration, setting aside or
payment of dividends or distributions by Seller except consistent with past
practices;
(t) there has not been any failure by Seller to use its
reasonable business efforts to carry on diligently the Business in the ordinary
course so as to keep available to Purchaser the services of the employees of the
Business and to preserve for Purchaser the Business and the goodwill of the
suppliers and customers of the Business and others having business relations
with the Business;
(u) there has not been the existence of any other event or
condition which in the aggregate has or would reasonably be expected to have a
material adverse effect on Seller, the Assets or the Business; and
(v) neither Seller nor Shareholder has entered into any
agreement to do any of the things described in the preceding clauses (a) through
(u) other than as expressly provided for or permitted herein.
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3.20 Questionable Payments. Neither Seller, Shareholder nor any
director, officer, agent, employee or other person associated with or acting on
behalf of Seller has used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, made
any direct or indirect unlawful payments to government officials or employees
from corporate funds, established or maintained any unlawful or unrecorded fund
of corporate monies or other assets, made any false or fictitious entries on the
books of account of Seller made or received any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment, or made any other payment, favor or
gift not fully deductible for federal income tax purposes.
3.21 Affiliations. Except as set forth on Schedule 3.21 hereto, none
of Seller, , any officer, director or employee of Seller or any associate or
affiliate of Seller or any of such persons has, directly or indirectly, (a) an
interest in any corporation, partnership or other entity or person that (i)
furnishes or sells, or proposes to furnish or sell, services or products that
are furnished or sold by Seller or (ii) purchases from or sells or furnishes, or
proposes to purchase from or sell or furnish, to Seller any goods or services or
(b) a beneficial interest in any contract or agreement to which Seller is a
party or by which it or any Assets or the Business are bound or affected.
3.22 Governmental Reports. Schedule 3.22 contains a true, correct
and complete list, and Seller has heretofore furnished Purchaser with true,
correct and complete copies of, all reports, if any, filed during the past five
years, by Seller with (a) the Equal Employment Opportunity Commission, Federal
Trade Commission, Department of Justice, Occupational Safety and Health
Administration, Internal Revenue Service (other than tax returns and standard
forms relating to compensation or remuneration of employees), Environmental
Protection Agency and Securities and Exchange Commission or (b) any state or
local agency which performs equivalent functions, relating to, in any way,
Seller's business.
3.23 Investment Intent. In connection with the Stock Consideration
to be issued to Seller as provided for herein:
(a) Seller has substantial experienced in evaluating and
investing in private placement transactions of securities in companies similar
to Purchaser so that it is capable of evaluating the merits and risks of its
investment in Company and has the capacity to protect its own interests.
(b) Seller is an "accredited investor" within the meaning of
Rule 501 of Regulation D of the Securities Act of 1933, as amended (the
"Securities Act").
(c) Seller is acquiring Stock Consideration for investment for
its own account, not as a nominee or agent, and not with the view to, or for
resale in connection with, any distribution thereof. Seller understands that the
Stock Consideration has not been, and will not be, registered under the
Securities Act, the availability of which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of Seller's
representations as expressed herein.
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(d) Seller acknowledges that the Stock Consideration must be
held indefinitely unless subsequently registered under the Securities Act or
unless an exemption from such registration is available. Seller is aware of the
provisions of Rule 144 promulgated under the Securities Act which permit limited
resale of shares purchased in a private placement subject to the satisfaction of
certain conditions, including, among other things, the existence of a public
market for the Stock Consideration, the availability of certain current public
information about Purchaser, the resale occurring not less than one year after a
party has purchased and paid for the security to be sold, the sale being
effected through a "broker's transaction" or in transactions directly with
"market maker" and the number of shares being sold during any three-month period
not exceeding specified limitations.
(e) Seller has had the opportunity to discuss Purchaser's
business, management and financial affairs with Purchaser's management.
(f) Seller understands that Purchaser has a limited financial
and operating history and that an investment in Purchaser involves substantial
risks. Seller further understands that the purchase of the Stock Consideration
will be a speculative investment. Seller is able, without impairing Seller's
financial condition, to hold the Stock Consideration for an indefinite period of
time.
(g) Seller has reviewed with its own tax advisors the federal,
state, local and foreign tax consequences of the transactions contemplated by
this Agreement. Seller relies solely on such advisors and not on any statements
or representations of Purchaser, Purchaser's counsel, or any of Purchaser's
agents. Seller understands that it (and not Purchaser) shall be responsible for
its own tax liability that may arise as a result of the transactions
contemplated by this Agreement.
3.24 Disclosure. No representation or warranty of Seller or
Shareholder in this Agreement and no information contained in any Schedule or
other writing delivered pursuant to this Agreement or at the Closing contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact required to make the statements herein or therein not
misleading. Except as set forth on Schedule 3.24, to the best knowledge of
Seller and Shareholder, there is no material fact specific to the Business (as
opposed to the general economy or the offline direct marketing industry) that
Seller or Shareholder has not disclosed to Purchaser in writing that Seller or
Shareholder in good faith believes has had or will have a materially adversely
effect on (a) the Assets, the Business or Seller's financial condition,
properties, prospects or results of operations of the Business as such will
exist on the Closing Date, or (b) the ability of Seller or Shareholder to
perform fully its or his obligations of this Agreement. To the extent any
representation or warranty by Seller or Shareholder is limited to his or its
"knowledge" or "best knowledge," each of Seller and Shareholder represents and
warrants that it or he, as the case may be, has made a reasonable investigation
sufficient to express an informed view concerning the matters to which such
representation or warranty relates, including, without limitation, diligent
inquiries of Seller's employees and representatives.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser hereby represents and warrants to Seller and Shareholder as
follows:
4.1 Organization and Good Standing. Purchaser has been duly
organized and is existing as a corporation in good standing under the laws of
the State of Delaware with full corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby.
4.2 Absence of Conflicts. Neither the execution and delivery of
this Agreement by Purchaser, the compliance by Purchaser with the terms and
conditions hereof nor the consummation by Purchaser of the transactions
contemplated hereby will (a) conflict with any of the terms, conditions or
provisions of the certificate of incorporation, bylaws or other charter
documents of Purchaser, (b) violate any provision of, or require any consent,
authorization or approval under, any law or administrative regulation or any
judicial, administrative or arbitration order, award, judgment, writ, injunction
or decree applicable to, or any governmental permit or license issued to
Purchaser, or (c) conflict with or result in a breach of or require any consent,
authorization or approval (other than those required to be obtained which have
been duly obtained by Purchaser) under, any indenture, mortgage, lien, lease,
agreement or instrument to which Purchaser is a party or by which it is bound.
4.3 Corporate Power and Authority.
(a) Purchaser has the corporate power and authority to execute,
deliver and carry out all the terms and provisions of this Agreement and to
perform its obligations under this Agreement and, on the Closing Date, Purchaser
shall have taken, or caused to have been taken, all necessary action, corporate
or otherwise, to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby.
(b) This Agreement constitutes, and upon the execution and
delivery by Purchaser of the other agreements among the parties referred to
herein and each instrument and certificate delivered by Purchaser pursuant
hereto, such agreements, instruments and certificates shall constitute, the
legal, valid and binding obligations of Purchaser, and this Agreement and each
such other agreement, instrument and certificate is and will be enforceable
against Purchaser in accordance with its terms, except as such obligations and
enforceability are limited by bankruptcy, insolvency and other similar laws of
general application affecting the enforcement of creditors' rights and by
equitable principles.
(c) Stock Consideration. All of the Stock Consideration to be
issued pursuant to this Agreement, when issued in accordance with this
Agreement, will be duly authorized, validly issued, fully paid, nonassessable,
free of all preemptive rights and,
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subject to official notice of issuance, authorized for listing on the NASDAQ
National Market System.
ARTICLE V.
CONDITIONS PRECEDENT TO CLOSING
-------------------------------
5.1 Conditions of Purchaser. Notwithstanding any other provision of
this Agreement, the obligations of Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction, at or prior
to the Closing, of the following conditions, and if Purchaser terminates this
Agreement prior to Closing because any such condition is not so satisfied,
Purchaser shall have no liability hereunder:
(a) There shall not be instituted or pending or threatened any
action, suit or proceeding by or before any court, arbitrator or governmental
agency challenging Purchaser's acquisition of the Assets or the Business or
otherwise seeking to restrain or prohibit the consummation of the transactions
contemplated hereby or seeking damages in connection therewith;
(b) The representations and warranties of Seller and
Shareholder in this Agreement shall be true and correct on and as of the Closing
Date with the same effect as if made on the Closing Date and Seller and
Shareholder shall have complied with all covenants and agreements and satisfied
all conditions on its or his part to be performed or satisfied on or prior to
the Closing Date;
(c) Any approval, consent or waiting period required by any
governmental agency or authority necessary to consummate the transactions
contemplated hereby shall have been obtained or expired, as the case may be;
(d) Purchaser shall have received a certificate of Seller
substantially in the form attached as Annex C hereto;
(e) Purchaser shall have received a certificate of the
Secretary or any Assistant Secretary of Seller substantially in the form
attached as Annex D hereto;
(f) Purchaser shall have received a certificate of Shareholder
substantially in the form attached as Annex E hereto;
(g) Each of Seller and Shareholder shall have entered into a
non-competition agreement with Purchaser substantially in the form of Annex F
hereto;
(h) Joanne Capria shall have entered into a non-competition
agreement with Purchaser substantially in the form of Annex G hereto;
(i) Britt Vatne shall have entered into a non-competition
agreement with Purchaser substantially in the form of Annex H hereto;
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(j) Purchaser shall have received from Fafinski, Mark &
Johnson, P.A., counsel to Seller and Shareholder, a written opinion dated the
Closing Date substantially in the form attached as Annex I hereto;
(k) Purchaser shall have concluded (through its
representatives, accountants, counsel and other experts) an investigation of the
Assets and the Business and Seller's condition (financial and other),
properties, assets, prospects, operations and affairs and shall be satisfied in
its sole discretion with the results thereof;
(l) Seller, Shareholder and Purchaser shall have received all
consents or waivers from all parties necessary or desirable to vest in Purchaser
the Assets;
(m) All Liens (other than the Permitted Liens) on any of the
Assets (other than for taxes not yet due) shall have been released;
(n) Purchaser shall be reasonably satisfied that such employees
of Seller as Purchaser may determine will remain employees of the Business after
the Closing;
(o) Seller shall have provided to Purchaser assignments of all
leases under which Seller leases real property in a form satisfactory to
Purchaser and consented to by the respective landlords;
(p) Seller shall have executed and delivered to Purchaser a
General Assignment and Bill of Sale substantially in the form attached as Annex
B hereto;
(q) Purchaser, Seller, Shareholder, Novus Print Media Inc.
("NPM") and MIH, Inc. shall have entered into a Software Cross-License and
Support Agreement substantially in the form attached hereto as Annex J;
(r) Purchaser and NPM shall have entered into a Trademark
Licensing Agreement substantially in the form attached hereto as Annex K;
(s) Purchaser and NPM shall have entered into a Letter
Agreement substantially in the form attached hereto as Annex L;
(t) All proceedings taken by Seller and Shareholder and all
instruments executed and delivered by Seller or Shareholder on or prior to the
Closing Date in connection with the transactions herein contemplated shall be
reasonably satisfactory to Purchaser and its counsel.
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5.2 Conditions of Seller and Shareholder. Notwithstanding any other
provision of this Agreement, the obligations of Seller and Shareholder to
consummate the transactions contemplated by this Agreement shall be subject to
the satisfaction, at or prior to the Closing, of each of the conditions set
forth in subsections (a) and (c) of Section 5.1 hereof and the following
conditions, and if Seller or Shareholder terminate this Agreement prior to
closing because any such condition is not so satisfied, neither Seller nor
Shareholder shall have any liability hereunder:
(a) the representations and warranties of Purchaser in this
Agreement shall be true and correct on and as of the Closing Date with the same
effect as if made on the Closing Date;
(b) Purchaser, Seller and Shareholder shall have entered into a
Registration Rights Agreement with respect to the Stock Consideration
substantially in the form attached hereto as Annex M;
(c) Joanne Capria shall have entered into an employment
agreement with Purchaser in substantially the form of Annex N;
(d) Purchaser shall have adopted a Bonus Plan of up to
$2,000,000 (the "Bonus Plan") substantially in the form attached as Annex O
hereto;
(e) Seller shall have received a certificate of Purchaser
substantially in the form attached as Annex P hereto;
(f) Seller shall have received a certificate of the Secretary
or any Assistant Secretary of Purchaser substantially in the form attached as
Annex Q hereto;
(g) Seller shall have received from Paul, Hastings, Janofsky &
Walker, LLP, counsel to Purchaser, a written opinion dated the Closing Date
substantially in the form attached as Annex R hereto; and
(h) All proceedings taken by Purchaser and all instruments
executed and delivered by Purchaser on or prior to the Closing Date in
connection with the transactions herein contemplated shall be reasonably
satisfactory to Seller and its counsel.
ARTICLE VI.
INDEMNIFICATION
---------------
6.1 Indemnification.
(a) Seller and Shareholder, jointly and severally, covenant and
agree to defend, indemnify and save and hold harmless Purchaser, together with
its officers, directors, employees, attorneys and representatives and each
person who controls Purchaser within the meaning of the Securities Act, from and
against any loss, cost, expense, liability, claim or legal damages (including,
without limitation, reasonable fees and disbursements of
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counsel and accountants and other costs and expenses incident to any actual or
threatened claim, suit, action or proceeding) (collectively, the "Damages")
arising out of or resulting from: (i) any inaccuracy in or breach of any
representation, warranty, covenant or agreement made by Seller or Shareholder in
this Agreement or in any writing delivered pursuant to this Agreement or at the
Closing; (ii) the failure of Seller or Shareholder to perform or observe fully
any covenant, agreement or provision to be performed or observed by it or him
pursuant to this Agreement; (iii) the Excluded Liabilities; (iv) any broker
fees, finder fees or other fees or expenses payable to U.S. Bancorp Piper
Jaffray Inc. or under the Equity Participation Plans (as defined in Schedule
3.9(a)); or (v) the non-competition provision of Section 6.6(a) of the PMC
Agreement.
(b) Purchaser covenants and agrees to defend, indemnify and
save and hold harmless Shareholder and Seller, together with Seller's officers,
directors, employees, attorneys and representatives and each person who controls
Seller within the meaning of the Securities Act, from and against any Damages
arising out of or resulting from: (i) any inaccuracy in or breach of any
representation, warranty, covenant or agreement made by Purchaser in this
Agreement or in any writing delivered pursuant to this Agreement or at the
Closing; (ii) the failure by Purchaser to perform or observe any covenant,
agreement or condition to be performed or observed by it pursuant to this
Agreement; (iii) the Assumed Liabilities; (iv) any actual or threatened claim,
suit, action or proceeding arising out of or resulting from the conduct of the
Business or its operations after the Closing Date; or (v) any broker fees,
finder fees or other fees or expenses payable to The Winterberry Group.
(c) The liability of Seller and Shareholder under Section
6.1(a)(i) (other than with respect to the provisions of Section 1.7, Section 1.8
and Section 7.16 hereof) shall not exceed Three Million Three Hundred Thousand
Dollars ($3,300,000). The liability of Purchaser under Section 6.1(b)(ii) shall
not exceed Three Million Three Hundred Thousand Dollars ($3,300,000).
(d) Notwithstanding anything in this Agreement to the contrary,
including this Article VI, the indemnification obligations of the Shareholders
under Section 6.1 (a) hereof (other than with respect to the provisions of
Section 1.7, Section 1.8 and Section 7.16 hereof) and the Purchaser under
Section 6.1(b) hereof (i) shall apply only to the extent that the amount of
Damages suffered by the Indemnified Party exceeds an accumulated total of
$100,000.00 in the aggregate, at which point the obligations of Seller and
Shareholder, or Purchaser, as the case may be, shall be to indemnify only for
all Damages (including the first $100,000.00).
(e) Seller and Shareholder acknowledge and agree that Purchaser
(in its sole discretion) may deduct any Damages amount (or portion thereof)
payable by Seller or Shareholder under this Article VI from the Post-Closing
Cash Consideration payable to Seller pursuant to the provisions of Section 1.3
to the extent that Seller agrees with such Damages amount or there is a final,
unappealable judgment for such Damages amount in lieu of Seller and Shareholder
making payment of such amount under this Article VI.
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6.2 Third Party Claims.
(a) If any party entitled to be indemnified pursuant to Section
6.1 (an "Indemnified Party") receives notice of the assertion by any third party
of any claim or of the commencement by any such third person of any Action (any
such claim or Action being referred to herein as an "Indemnifiable Claim") with
respect to which another party hereto (an "Indemnifying Party") is or may be
obligated to provide indemnification, the Indemnified Party shall promptly
notify the Indemnifying Party in writing (the "Claim Notice") of the
Indemnifiable Claim; provided, however, that the failure to provide such notice
shall not relieve or otherwise affect the obligation of the Indemnifying Party
to provide indemnification hereunder, except to the extent that any Damages
directly resulted or were caused by such failure. For purposes of this
Agreement, "Action" shall mean any actual claim, action, suit, arbitration,
hearing, inquiry, proceeding, complaint, charge or investigation by or before
any arbitrator or any local, state, federal or foreign (i) court, (ii)
government or (iii) governmental department, commission, instrumentality, board,
agency or authority, including the Internal Revenue Service and other taxing
authorities, and any appeal from any of the foregoing.
(b) The Indemnifying Party shall promptly after receipt of the
Claim Notice undertake, conduct and control, through counsel of his own
choosing, and at the Indemnifying Party's expense, the settlement or defense
thereof, and the Indemnified Party shall cooperate with the Indemnifying Party
in connection therewith; provided, however, that (i) the Indemnifying Party
shall permit the Indemnified Party to participate in such settlement or defense
through counsel chosen by the Indemnified Party (subject to the consent of the
Indemnifying Party, which consent shall not be unreasonably withheld), provided
that the fees and expenses of such counsel shall not be borne by the
Indemnifying Party, and (ii) the Indemnifying Party shall not settle any
Indemnifiable Claim without the Indemnified Party's consent. So long as the
Indemnifying Party is vigorously contesting any such Indemnifiable Claim in good
faith, the Indemnified Party shall not pay or settle such claim without the
Indemnifying Party consent, which consent shall not be unreasonably withheld.
(c) If the Indemnifying Party does not notify the Indemnified
Party within thirty (30) days after receipt of the Claim Notice that it elects
to undertake the defense of the Indemnifiable Claim described therein, or to the
extent that the Indemnified Party will be prejudiced prior to the end of such 30
day period, the Indemnified Party shall have the right to contest, settle or
compromise the Indemnifiable Claim in the exercise of its reasonable discretion;
provided, however, that the Indemnified Party shall notify the Indemnifying
Party of any compromise or settlement of any such Indemnifiable Claim as soon in
advance as is reasonably practicable.
(d) Anything contained in this Section 6.2 to the contrary
notwithstanding, the Indemnifying Party shall not be entitled to assume the
defense for any Indemnifiable Claim if the Indemnifiable Claim seeks an order,
injunction or other equitable relief or relief for other than money damages
against the Indemnified Party which
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Indemnified Party determines, after conferring with its counsel, cannot be
separated from any related claim for money damages and which, if successful,
would adversely affect the business, properties or prospects of the Indemnified
Party; provided, however, if such equitable relief portion of the Indemnifiable
Claim can be so separated from that for money damages, the Indemnifying Party
shall be entitled to assume the defense of the portion relating to money
damages.
6.3 Indemnification Claims.
(a) In order to seek indemnification under this Article VI, an
Indemnified Party shall give written notification (a "Claim Notice") to the
Indemnifying Party (provided, however, that the failure to provide such notice
shall not relieve or otherwise affect the obligation of the Indemnifying Party
to provide Indemnification however, except to the extent that any Damages
directly resulted or were caused by such failure) which contains (i) a
description and the amount (the "Claimed Amount") of any Damages incurred or
reasonably expected to be incurred by the Indemnified Party, (ii) a statement
that the Indemnified Party is entitled to indemnification under this Article VI
for such Damages and a reasonable explanation of the basis therefor, and (iii) a
demand for payment (in the manner provided in paragraph (b) or (c) below) in the
amount of such Damages. The procedures set forth in clause (b) below shall apply
with respect to any claim for indemnification brought by a Purchaser Indemnified
Party and the procedures set forth in clause (c) below shall apply with respect
to any claim for indemnification brought by a Seller Indemnified Party.
(b) Within 20 days after delivery of a Claim Notice delivered
by a Purchaser Indemnified Party, the Indemnifying Party shall deliver to the
Purchaser Indemnified Party a written response (the "Seller Response") in which
the Indemnifying Party shall: (i) agree that the Purchaser Indemnified Party is
entitled to receive all of the Claimed Amount, (ii) agree that the Purchaser
Indemnified Party is entitled to receive part, but not all, of the Claimed
Amount (the "Seller Agreed Amount") or (iii) dispute that the Purchaser
Indemnified Party is entitled to receive any of the Claimed Amount. If the
Indemnifying Party in the Seller Response disputes its liability for all or part
of the Claimed Amount, the Indemnifying Party and the Purchaser Indemnified
party shall follow the procedures set forth in Section 7.16 for the resolution
of such dispute.
(c) Within 20 days after delivery of a Claim Notice delivered
by a Seller Indemnified Party, the Indemnifying Party shall deliver to the
Seller Indemnified Party a written response (the "Purchaser Response") in which
the Indemnifying Party shall: (i) agree that the Seller Indemnified Party is
entitled to receive all of the Claimed Amount (in which case the Purchaser
Response shall be accompanied by a payment by the Indemnifying Party to the
Seller Indemnified Party of the Claimed Amount, by check or by wire transfer of
immediately available funds), (ii) agree that the Seller Indemnified Party is
entitled to receive part, but not all, of the Claimed Amount (the "Purchaser
Agreed Amount') (in which case the Purchaser Response shall be accompanied by a
payment by the Indemnified Party to the Seller Indemnified Party of the
Purchaser Agreed Amount, by check or by wire transfer of immediately available
funds) or (iii) dispute that the Seller Indemnified Party is entitled to
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receive any of the Claimed Amount. If the Indemnifying Party in the Purchaser
Response disputes its liability for all or part of the Claimed Amount, the
Indemnifying Party and the Seller Indemnified Party shall follow the procedures
set forth in Section 7.16 for the resolution of such dispute.
ARTICLE VII.
GENERAL PROVISIONS
------------------
7.1 Survival of Representations and Warranties. The
representations, warranties, covenants and agreements of the parties hereto
contained in this Agreement or in any writing delivered pursuant to the
provisions of this Agreement or at the Closing shall survive any examination by
or on behalf of any party hereto and shall survive the Closing and the
consummation of the transactions contemplated hereby for a period of two (2)
years following the Closing Date.
7.2 Complete Agreement. This Agreement, including the exhibits,
annexes and schedules hereto (a) constitutes the entire agreement and supersedes
all other prior and contemporaneous agreements and undertakings, both written
and oral, between the parties hereto with regard to the subject matter hereof
including, without limitation, that letter dated March 6, 2001 from Purchaser to
Seller; (b) is not intended to confer upon any person any rights or remedies
hereunder or with respect to the subject matter hereof except as specifically
provided in this Agreement; and (c) may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which counterparts
shall together constitute a single agreement.
7.3 Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party or parties incurring the same.
7.4 Fees. Purchaser represents and warrants to Seller and
Shareholder that it has taken no action and has entered into no agreement,
understanding or other arrangement that would obligate Seller to pay any
broker's or finder's fee or any other commission or similar fee to any agent,
broker, investment banker or other firm or person in connection with any of the
transactions contemplated by this Agreement. Seller and Shareholder represent
and warrant to Purchaser that neither Seller nor Shareholder has taken any
action or entered into any agreement, understanding or other arrangement that
would obligate Seller or Shareholder or Purchaser to pay any broker's or
finder's fee or any other commission or similar fee to any agent, broker,
investment banker or other firm or person in connection with any of the
transactions contemplated by this Agreement (other than fees payable to U.S.
Bancorp Piper Jaffray Inc. or under the Equity Participation Plans, which fees
shall be borne by Shareholder or Seller).
7.5 Further Action. Seller and Shareholder hereby agree that, from
time to time after the Closing, at Purchaser's request and without further
consideration, it or he, as the case may be, shall execute and deliver such
other instrument of conveyance, assignment
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and transfer and take such other action as Purchaser reasonably may require to
more effectively convey, transfer to and invest in Purchaser, and to put
Purchaser in possession of, all of the Assets.
7.6 Notices. All notices and other communications under or in
connection with this Agreement shall be in writing and shall be deemed given (a)
if delivered personally, upon delivery, (b) if delivered by registered or
certified mail (return receipt requested), upon the earlier of actual delivery
or three days after being mailed, or (c) if given by telecopy, upon confirmation
of transmission by telecopy, in each case to the parties at the addresses set
forth on the signature page hereto.
7.7 Publicity. Without the prior consent of the other parties, no
party shall, and each party shall cause its directors, officers, employees and
representatives not to, make any public statement or press release with respect
to the transactions contemplated by this Agreement or otherwise disclose to any
person or entity the existence, terms, content or effect of this Agreement;
provided, however, that if a disclosure is required by law, the party required
to make such disclosure shall make a good faith effort to consult with the other
party and then may make the required disclosure; provided, further, that
Purchaser shall be permitted to issue, with the consent of Seller, which consent
shall not be unreasonably withheld, a press release or public statement with
respect to the transactions contemplated by this Agreement.
7.8 Attorneys' Fees. If any litigation or arbitration shall ensue
between the parties concerning the interpretation of or performance under this
Agreement, the prevailing party shall recover from the nonprevailing party or
parties its reasonable attorneys' and other fees as fixed by the court or the
arbitrator, as the case may be.
7.9 Corporate Name. Except as set forth in the Software
Cross-License and Support Agreement attached hereto as Annex J, Seller and
Shareholder agree to permanently discontinue the use of the names "Advanced
Marketing Selectivity System," "LMAS" or "AMSS," or any similar names, and the
name "Novus List Marketing." Within ten days after the Closing, Seller shall
cause the preparation, execution and filing with the Secretary of State of the
State of Minnesota of an amendment to Seller's articles of organization changing
the name of Seller to a name reasonably acceptable to Purchaser. Furthermore,
Seller grants to Purchaser, during the period commencing on the date hereof and
continuing for a period of ninety (90) days thereafter, a worldwide, exclusive,
irrevocable license to use the "Novus" name, logo, design, trademark and
servicemark in connection with Purchaser's business (including, without
limitation, the continuation by Purchaser of the Business)
7.10 Headings. The article and section headings used herein are
inserted for reference purposes only and shall not in any manner affect the
meaning or interpretation of the terms of this Agreement.
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7.11 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
regard to choice of law principles.
7.12 Bulk Sales Law Compliance. Neither Seller nor Shareholder shall
be liable to Purchaser for failure to comply with the bulk sales laws except to
the extent that any claims arising thereunder constitute Excluded Liabilities.
7.13 Employees. On the Closing Date, Seller shall terminate all of
its employees and Purchaser shall offer employment to the employees of Seller,
such employment to commence on the Closing Date. Notwithstanding anything else
in this Agreement to the contrary, (a) Seller shall be liable for any and all,
if any, severance obligations, shut-down pay or benefits, accrued vacation and
similar obligations, if any, to its employees resulting from or arising out of
the transactions contemplated by this Agreement, and (b) nothing in this
paragraph creates or is intended to create any rights of any kind or nature in
any third parties, including, without limitation, any rights or remedies in
favor of any of Seller's employees to be employed, or respecting the terms of
employment, for any specified period of time
7.14 Transition Period. Seller and Shareholder shall cause MIH, Inc.
to continue to provide the following information technology systems and support
to the Business following the Closing for a period of ninety (90) days: T-1 data
line, telephones, telephone lines, local and long distance telephone access, web
site hosting support for Seller's web sites relating to the Business, Exchange
email server, print server, all other servers used in the operation of the
Business, systems administration for the aforementioned servers, Rightfax
6.0/7.2, Brio software and data backups; provided, however, that Purchaser shall
reimburse MIH, Inc., Seller or Shareholder, as the case may be, for the fully
allocated costs and expenses of such systems and support. Purchaser shall be
solely responsible for contracting with third parties for such systems and
support ninety (90) days after this Agreement, including, without limitation,
obtaining any necessary third party software licenses; provided, further, that
Purchaser shall use its best efforts to obtain replacement systems and support
within 60 days following the Closing
7.15 Bank Accounts. Until the first anniversary of the Closing Date,
Seller and Shareholder agree to use reasonable efforts to cause NPM to pay to
Purchaser by wire transfer of immediately available funds to an account
designated in writing by Purchaser all amounts received by NPM with respect to
Gross AR or relating to the Business as conducted by Purchaser following the
Closing (collectively, "NPM Payments") within five (5) days of NPM's receipt of
any such NPM Payments. For the three (3) month period following the Closing,
Seller and Shareholder, jointly and severally, agree that if NPM receives an NPM
Payment and does not pay to Purchaser such NPM Payment within five (5) days of
NPM's receipt of such NPM Payment, Seller and Shareholder shall pay to Purchaser
by wire transfer of immediately available funds to an account designated in
writing by Purchaser such NPM Payment within three (3) days' of NPM's failure to
make such payment. Seller and Shareholder further agree to use reasonable
efforts to cause NPM to deliver to Purchaser with
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each NPM Payment copies of all relevant documentation with respect to such NPM
Payment (including, without limitation, applicable bank account statements and
invoices) and to cause NPM to provide Purchaser (upon reasonable notice to NPM
and during normal business hours) access the books and records relating to the
NPM Payments in order to verify such NPM Payments. As promptly as possible
following the Closing, Purchaser agrees to send notices to all customers of the
Business, directing such customers to deliver all future payments to an account
designated by Purchaser in such notice.
7.16 Arbitration.
(a) Except as otherwise provided for in Section 1.5(e), Section
1.7 and Section 1.8 hereof, any controversy, claim or dispute involving the
parties (or their affiliated persons) directly or indirectly concerning this
Agreement or the subject matter hereof, including any issues and matters arising
under the federal and state securities laws and questions concerning the scope
and applicability of this Section 7.16, shall be finally settled by arbitration
held in either Los Angeles, California or New York, New York, (at the election
of the party seeking arbitration) in accordance with the rules of commercial
arbitration then followed by the American Arbitration Association or any
successor to the functions thereof. The arbitrator shall have the right and
authority to determine how his decision or determination as to each issue or
matter in dispute may be implemented or enforced. Any decision or award of the
arbitrator shall be final and conclusive on the parties to this Agreement and
their respective affiliates, and there shall be no appeal therefrom other than
from gross negligence or willful misconduct.
(b) The parties hereto agree that any action to compel
arbitration pursuant to this Agreement may be brought in any court of competent
jurisdiction and in connection with such action to compel the laws of the State
of New York shall control. Application may also be made to such court for
confirmation of any decision or award of the arbitrator, for an order of the
enforcement and for any other remedies which may be necessary to effectuate such
decision or award. The parties hereto hereby consent to the jurisdiction of the
arbitrator and the exclusive jurisdiction of such court and waive any objection
to the jurisdiction of such arbitrator and court.
(c) Notwithstanding the foregoing in this Section 7.16,
however, nothing contained herein shall require arbitration of any issue arising
under this Agreement for which injunctive relief is successfully sought by any
party hereto, and this Section 7.16 may not be raised as a defense to such
injunctive relief.
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[ASSET PURCHASE AGREEMENT]
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or has caused this Agreement to be executed on its behalf by a
representative duly authorized, all as of the date first above set forth.
L90, INC.,
a Delaware corporation
By: /s/ John C. Bohan
--------------------------
Name: John C. Bohan
Title: President & CEO
Address for Notices:
L90, Inc.
Attention: General Counsel
4499 Glencoe Avenue
Marina del Rey, CA 90292
Telecopy: (310) 578-9942
/s/ Henry A. Cousineau III
NOVUS LIST MARKETING LLC, ---------------------------
a Minnesota limited liability company HENRY A. COUSINEAU III
By: /s/ Scott T. Jagodzinski
-------------------------- Address for Notices:
Name: Scott T. Jagodzinski 11477 Cedar Pass
Title: Minnetonka, Minnesota 55305
Telecopy: 612-525-1953
Address for Notices:
13605 First Avenue North
Plymouth, MN 55441
Attention: Scott T. Jagodzinski
Telecopy: 763-449-6510
and a copy to:
Robert R. Fafinski, Jr., Esq.
Fafinski, Mark & Johnson, P.A.
6600 City West Parkway
Suite 300
Minneapolis, MN 55344
Telecopy: (952) 995-9577
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