ASSET PURCHASE AGREEMENT

Exhibit 2.1

Execution Copy

ASSET PURCHASE AGREEMENT

effective as of

September 1, 2008

by and among

Bankrate, Inc.,

LinkSpectrum Co.,

and

Rafael David

TABLE OF CONTENTS

 

 

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TABLE OF CONTENTS

(continued)

 

 

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TABLE OF CONTENTS

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EXHIBITS AND SCHEDULES

 

 

 

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ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (this “ Agreement ”) dated as of September 1, 2008 (the “ Effective Date ”), by and among Bankrate, Inc., a Florida corporation (“ Buyer ”), LinkSpectrum Co., a North Carolina corporation (“ Seller ”), and Rafael David (“ Shareholder ” along with Buyer and Seller they are sometimes referred to individually as a “ Party ” and collectively as the “ Parties ”).

RECITALS:

A. Seller operates a business which provides various financial services products and financial services to consumers, including, but not limited to, credit card product offers, credit card and financial information and research tools over the Internet (the “ Business ”).

B. Shareholder owns one hundred percent (100%) of the outstanding capital stock of Seller.

C. Buyer desires to purchase certain assets and assume certain Liabilities of the Business from Seller, and Seller desires to sell certain assets and assign certain Liabilities of the Business to Buyer, upon the terms and subject to the conditions set forth in this Agreement, along with the attached Exhibits and Schedules.

NOW, THEREFORE , in consideration of the foregoing and the representations, warranties, covenants and agreements contained in this Agreement, the parties to this Agreement agree as follows:

ARTICLE I

DEFINITIONS

1.1 Definitions .

(a) The following terms, as used in this Agreement, have the following meanings:

“ Accounting Referee ” has the meaning set forth in Section 2.8(e).

“ Accounts Receivable ” means all trade receivables, accounts receivable, accrued receivable and notes receivable relating to or arising out of the Business or any Purchased Asset.

“ Acquired Accounts Receivable ” has the meaning set forth in Section 2.2(d).

“ Affiliate ” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified.

“ Agreement ” has the meaning set forth in the preamble.

“ Allocation Statement ” has the meaning set forth in Section 2.1(b).

“ Ancillary Agreements ” means the Bill of Sale and Assignment and Assumption Agreement, Copyright Assignment, Consulting Agreement, Escrow Agreement, Trademark Assignment, and Domain Name Transfer Agreement and Limited Release Agreement (as each is defined in this Agreement) and all other agreements and instruments executed in connection thereto or hereto.

“ Assumed Contracts ” has the meaning set forth in Section 2.2(c).

“ Business ” has the definition set forth in the Recitals.

“ Business Day ” means a day, other than a Saturday or Sunday, on which commercial banks in Palm Beach County, Florida are open for the general transaction of business.

“ Business Intellectual Property ” means all Intellectual Property, including but not limited to all intellectual property rights conveyed to Seller under the Business IP Agreements, that is held in connection with the Business, used, or that is being, or has been, used, or is currently under development for use, in the Business as it is has been, is currently or is currently planned to be conducted.

“ Business IP Agreements ” means (a) licenses of Intellectual Property by Seller to third parties, (b) licenses of Intellectual Property by third parties to Seller, (c) agreements between Seller and third parties relating to the development or use of Intellectual Property, the development or transmission of data, or the use, modification, framing, linking, advertisement or other practices with respect to Internet Web sites and (d) consents, settlements, decrees, orders, injunctions, judgments or rulings concerning the use, validity or enforceability of Business Intellectual Property.

“ Business Systems ” has the meaning set forth in Section 3.10(e).

“ Buyer ” has the meaning set forth in the preamble.

“ Claims ” means any and all administrative, regulatory or judicial actions, suits, petitions, appeals, demands, demand letters, claims, Liens, notices of noncompliance or violation, proceedings, consent orders or consent agreements.

“ Closing Date ” means the Effective Date.

“ Code ” means the Internal Revenue Code of 1986, as amended, along with any applicable proposed, temporary or final regulations promulgated thereunder.

“ Contemplated Transactions ” has the meaning set forth in Section 2.1(b).

“ Contracts ” shall mean all contracts, agreements, arrangements, leases, subleases, licenses, indentures, bonds, notes, mortgages, commitments, sales and purchase orders and other instruments.

 

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“ Customer ” shall mean those customers who have purchased or subscribed for goods or services from Seller.

“ Customer Information ” means any and all sales and marketing information held or used by Seller or its Affiliates regarding the Customers, including, but not limited to, respective mailing addresses, telephone numbers and email address, credit histories, order histories, and records related to Web site page views.

“ Damages ” means all judgments, losses, penalties, fines and damages (including, without limitation, reasonable attorneys’ fees and expenses in connection with any action, suit or proceeding or in enforcing the terms of this Agreement or any of the Ancillary Agreements subject to Section 8.16).

“ Domain Names ” shall have the definition set forth in Section 2.2(f).

“ Earn-Out Payment ” means an amount, if any, payable to Seller pursuant to Section 2.9 and Schedule 2.9 .

“ Earn-Out Period ” means either Earn-Out Year One or Earn-Out Year Two, as applicable.

“ Earn-Out Year One ” means the one year period beginning on the Closing Date and ending on September 1, 2009.

“ Earn-Out Year Two ” means the one year period beginning on September 2, 2009 and ending on September 2, 2010.

“ EBITDA ” means, for any Earn-Out Period, (A) the Net Income for such period, as determined in accordance with GAAP applied on a basis consistent with Buyer’s past practices, plus (B) to the extent included as a deduction in calculating the Net Income referred to in clause (A) above, the sum of, without duplication, all income tax expense, interest expense (net of interest income (including cash and non-cash items)), amortization expense and depreciation expense, plus (C) to the extent included in calculating the net income or net loss, as the case may be, referred to in clause (A) above, any and all losses that result from the sale of any assets or securities by Buyer or any of its subsidiaries outside the Ordinary Course of Business; minus (D) to the extent included in calculating the net income or net loss, as the case may be, referred to in clause (A) above, any and all income or gain that results from the sale of any assets or securities by Buyer or any of its subsidiaries outside the Ordinary Course of Business; all (meaning clauses (A), (B), (C) and (D)) as reasonably determined by Buyer based on such information (including Buyer’s financial statements) as Buyer deems appropriate.

“ Effective Date ” has the meaning set forth in the preamble.

“ Environmental Laws ” mean all federal, state, local and foreign statutes, rules, regulations, and ordinances concerning pollution or protection of the environment or public health or welfare matters.

“ ERISA Affiliate ” has the meaning set forth in Section 2.5(a).

 

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“ Escrow Deposit ” means the sum of $3,200,000, which Buyer will deposit in escrow with the Escrow Agent at the Closing in accordance with Section 2.1(c) as partial security for the performance of Seller’s and Shareholder’s obligations under this Agreement.

“ Escrow Fund ” means the escrow fund established pursuant to the Escrow Agreement.

“ Excluded Accounts Receivable ” has the meaning set forth in Section 2.3(h).

“ Excluded Assets ” has the meaning set forth in Section 2.3.

“ Excluded Contracts ” has the meaning set forth in Section 2.3(b).

“ Excluded Liabilities ” has the meaning set forth in Section 2.5.

“ GAAP ” means United States generally accepted accounting principles.

“ Governmental Body ” means any: (a) nation, state, province, county, city, town, village, district, or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign, or other government; (c) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal); (d) multi-national organization or body; or (e) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature.

“ Indebtedness ” means indebtedness for borrowed money, whether or not contingent, or any capitalized lease obligation.

“ Insider ” means any stockholder, partner, officer or director (or similar official) of Seller, any Affiliate or natural or adoptive member of the immediate family of any of the foregoing Persons, or any Person in which any of the foregoing Persons directly or indirectly owns any material beneficial interest. The “immediate family” of any individual means such individual’s (and such individual’s present or former spouse’s) grandparents, spouse, siblings, children or grandchildren.

“ Intellectual Property ” means all tangible or intangible proprietary information and materials, including without limitation:

(i) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereon, and all patents, patent applications and patent disclosures, together with all re-issuances, continuations, continuations-in-part, divisions, revisions, extensions and re-examinations thereof;

(ii) all trademarks, services marks, trade dress, logos, trade names, domain names, Web sites (and underlying software and contents contained in such Web sites) and corporate names, together with all translations, adaptations, derivations and combinations thereof and including all goodwill associated therewith, and all applications, registrations and renewals in connection therewith;

 

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(iii) all copyrights and all applications, registrations and renewals in connection therewith;

(iv) all mask works and all applications, registrations and renewals in connection therewith;

(v) all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, methods, schematics, technology, technical data, designs, drawings, flowcharts, block diagrams, specifications, customer and supplier lists, customer data, mailing lists pricing and cost information and business and marketing plans and proposals);

(vi) all software (in both source and object code form) and firmware (including data, databases and related documentation);

(vii) all Web site content, data, Software, the “look and feel,” design, and organization related thereto;

(viii) all documents, records, instructions and files relating to design, end user documentation, manufacturing, quality control, sales, marketing or customer support for, and tangible embodiments of, all Intellectual Property;

(ix) all books, articles, pamphlets and other publications whether in tangible or electronic form; and

(x) all licenses, agreements and other rights in any third party product or any third party intellectual property described in (i) and (ii) above.

“ Interim Balance Sheet Date ” shall mean July 31, 2008.

“ Key Customer ” has the meaning set forth in Section 3.16.

“ Law ” means any law, statute, rule, regulation, ordinance and other pronouncement having the effect of law of the United States of America, any foreign country or any domestic or foreign state, county, city or other political subdivision or of any Governmental Body.

“ Lease ” means that certain Lease Agreement, dated as of July 11, 2008 by and between Nathan Zenack, Mary K Miller, Johnson Children Irrevocable Trust, Clair M and Mary K Johnson Revocable Trust, Matthew J Johnson, Robert C and Dorothy A Johnson, collectively as the lessor, and Seller as the lessee, for certain real estate located in Fairfield, Iowa, as set forth therein.

“ Liability ” means any liability, claim or obligation (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including, but not limited to, any liability for Taxes.

 

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“ Licensed Intellectual Property ” means Intellectual Property licensed to Seller pursuant to the Business IP Agreements.

“ Lien ” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest, encumbrances, right of first refusal or other similar restriction in respect of such asset, excluding any Permitted Lien.

“ Material Adverse Effect ” when used with respect to the Business or Seller means any result, occurrence, fact, change, event or effect that, individually or in the aggregate with any such other related results, occurrences, facts, changes, events or effects, is or would reasonably be expected to have a materially adverse effect on (a) the business, operations, assets, liabilities, condition (financial or otherwise), results of operations, working capital or cash flow of the Business taken as a whole or (b) the ability of Seller or Shareholder to consummate any transaction contemplated by this Agreement or any Ancillary Agreements; provided, however, that in determining whether a Material Adverse Effect has occurred, any effect directly attributable to the following shall not be considered: (i) changes in applicable Law applicable to the industry in which the Business operates, (ii) changes in general economic conditions in the United States as a whole or in the industry in which Seller operates to the extent that such changes do not affect the Business in a substantially disproportionate manner; and (iii) any effects resulting from a public announcement of this Agreement.

“ Maximum Earn-Out Amount ” has the meaning set forth on Schedule 2.9.

“ Net Income ” means, with respect to the applicable Earn-Out Period and subject to the provisions of Schedule 2.9 , the net income of the Business as operated by Buyer after the Effective Date that is attributable to Purchased Assets.

“ Ordinary Course of Business ” means an action taken by a Person will be deemed to have been taken in the Ordinary Course of Business only if that action: (a) is consistent in nature, scope and magnitude with the past practices of such Person and is taken in the ordinary course of the normal, day-to-day operations of such Person; and (b) does not require authorization by the board of directors or stockholders of such Person (or by any Person or group of Persons exercising similar authority).

“ Owned Intellectual Property ” means all Intellectual Property owned by Seller.

“ Party ” and “ Parties ” have the respective definitions set forth in the preamble.

“ Permit ” means any Governmental Body authorization, license, permit, membership, approval, concession or franchise.

“ Permitted Liens ” means: (a) Liens on Purchased Assets arising by operation of Law and securing the payment of Taxes which are not yet due and payable; (b) mechanics’, carriers’, workers’, repairers’ and similar and non-consensual Liens arising by operation of Law and relating to obligations that are incurred in the Ordinary Course of Business and which secure only Assumed Liabilities which are not yet due and payable; (c) purchase money Liens and Liens securing rental payments under capital lease arrangements which are set forth on Schedule 1.1(i) ; and (d) such other Liens set forth on Schedule 1.1(ii) .

 

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“ Person ” means an individual, corporation, partnership, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

“ Post-Closing Tax Period ” means any Tax period (or portion thereof) beginning after the Closing Date.

“ Pre-Closing Tax Period ” means any Tax period (or portion thereof) ending on or before the Closing Date.

“ Preliminary Closing Balance Sheet ” means a balance sheet for the Business as of the close of business on the day immediately preceding the Closing Date that (x) fairly presents the financial position of the Business as at the close of business on the day immediately preceding the Closing Date on a basis consistent with the presentation in the Interim Balance Sheet, (y) includes line items substantially consistent with those used in the preparation of the Interim Balance Sheet and (z) is prepared in accordance with GAAP as consistently applied and, without limiting the generality of the foregoing.

“ Property Tax ” means a real property tax (other than a real property transfer tax), a personal property tax and any other ad valorem tax imposed by any Governmental Body upon Seller or Seller’s assets by reason of Seller’s ownership thereof.

“ Publicly Available Software ” shall mean any Software that requires as a condition of its use, modification, and/or distribution that such Software or other Software incorporated into or derived from such Software (a) be disclosed or distributed in source code form; (b) be licensed for the purpose of making derivative works; or (c) be redistributable at no or minimal charge. Publicly Available Software includes Software licensed or distributed pursuant to the GNU General Public License (GPL) or the Lesser/Library GPL (LGPL).

“ Purchase Price ” has the meaning set forth in Section 2.1.

“ Purchased Assets ” has the meaning set forth in Section 2.2.

“ Required Consent ” has the meaning set forth in Section 3.3(b).

“ Seller ” has the meaning set forth in the preamble.

“ Seller’s Knowledge, ” “ Known to Seller ” and words of similar import mean the knowledge that Shareholder, or Seller’s officers and directors possess or are aware of or the knowledge that a reasonably prudent Person, in such Person’s capacity as a shareholder, officer, employee or member of a board of directors, would reasonably be expected to discover or otherwise become aware of, in the course of performing such person’s duties for Seller.

“ SEO Methods ” has the meaning set forth in Section 2.2(i).

“ Shareholder ” has the meaning set forth in the preamble.

“ Sites ” has the meaning set forth in Section 2.2(h).

 

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“ Site Content ” has the meaning set forth in Section 2.2(h).

“ Software ” means computer software, programs and data in any form, including Internet web sites, web content and links, source code, object code, operating systems, specifications, data, databases, database management code, utilities, graphical user interfaces, menus, images, icons, forms, methods of processing, software engines, platforms and data formats, all versions, updates, corrections, enhancements and modifications thereof, and all related documentation, developer notes, comments and annotations.

“ Tangible Personal Property ” has the meaning set forth in Section 3.6(a).

“ Tax ” means any federal, state, local or foreign net income, alternative or add-on minimum, gross income, gross receipts, sales, use, value-added, franchise, capital, paid-up capital, profits, lease, service, transfer, bulk sales, greenmail, license, withholding, estimated, payroll, employment, excise, severance, stamp, occupation, premium, environmental or windfall profit tax, customs duty or other tax, governmental fee or other like governmental assessment or charge of any kind whatsoever (including liability for Taxes imposed on another Person, whether incurred or borne as a transferee or successor or by contract or otherwise), but not including any Property Tax; together with any interest or any penalty, addition to tax or additional amount imposed by any governmental authority (domestic or foreign) responsible for the imposition of any such tax.

“ Tax Return ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“ Total Purchase Price ” means the Purchase Price plus any amounts paid or payable to Seller pursuant to Section 2.8 and Section 2.9.

“ Transfer Taxes ” has the meaning set forth in Section 5.10(d).

(b) Definitions for the other defined terms used herein are set forth in this Agreement.

(c) In this Agreement, unless a clear contrary intention appears:

(i) the singular number includes the plural number and vice versa;

(ii) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are not prohibited by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually;

(iii) reference to any gender includes each other gender;

(iv) reference to any agreement, document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof;

 

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(v) reference to any Law means such Law as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder, and reference to any section or other provision of any Law means that provision of such Law from time to time in effect and constituting the substantive amendment, modification, codification, replacement or reenactment of such section or other provision;

(vi) “hereunder,” “hereof,” “hereto,” “herein” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Article, Section or other provision hereof;

(vii) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term;

(viii) “or” is used in the inclusive sense of “and/or”;

(ix) with respect to the determination of any period of time, “from” means “from and including” and “to” means “to but excluding”; and

(x) references to documents, instruments or agreements shall be deemed to refer as well to all addenda, exhibits, schedules or amendments thereto.

(d) Unless otherwise specified herein, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with GAAP, as defined herein.

(e) All references to “Dollars” or “$” shall mean U.S. Dollars unless otherwise specified.

(f) The capitalized terms set forth on Schedule 2.9 , not otherwise defined, shall have the definitions set forth in this Agreement.

ARTICLE II

PURCHASE AND SALE AND CLOSING

2.1 Purchase Price .

(a) Purchase Price . The purchase price to be paid by Buyer to Seller for the Purchased Assets is (i) $32,136,000 in cash, and (ii) the assumption of the Assumed Liabilities (the “ Purchase Price ”), plus any additional payments pursuant to Section 2.8 and Section 2.9, all subject to adjustment pursuant to the terms and conditions of this Agreement. The Purchase Price, less the Escrow Deposit, shall be paid by Buyer to Seller at Closing by wire transfer in immediately available funds to an account designated by Seller.

(b) Allocation of Purchase Price . As soon as practicable after the Closing, Buyer shall deliver to Seller a statement (the “ Allocation Statement ”), setting forth the value of the Purchased Assets which shall be used for the allocation of the Purchase Price and the

 

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Assumed Liabilities among the Purchased Assets and the Assumed Liabilities, and which shall comply with Section 1060 of the Code; provided however, Buyer and Seller agree that a portion of the Purchase Price shall be allocated to the services to be performed by the Shareholder under the Consulting Agreement (as defined herein) as set forth on Schedule 2.1(b) . Seller shall have a period of fifteen (15) Business Days after the delivery of the Allocation Statement to present in writing to Buyer notice of any objections Seller may have to the allocation set forth in the Allocation Statement. Unless Seller timely objects, the Allocation Statement shall be binding on the Parties without further adjustment. If Seller shall raise any objections within the fifteen (15) Business Day period, Seller and Buyer shall negotiate in good faith and use their best efforts to resolve such dispute. If Seller and Buyer fail to agree within five (5) Business Days after the delivery of the notice of objection, then the disputed items shall be resolved by Accounting Referee (defined below). The Accounting Referee shall resolve the dispute (the “ Accounting Determination ”) within thirty (30) days of having the item referred to it and such Accounting Determination shall be final and binding on the parties hereto. The costs, retainers, fees and expenses of the Accounting Referee shall be borne equally by Seller and Buyer. Any payments made by either Buyer or Seller pursuant to Section 2.8 and Section 2.9 of this Agreement shall be allocated in accordance with the determination mutually agreed by Seller and Buyer. The Parties acknowledge that the allocations set forth on the Allocation Statement shall be binding upon the Parties for all applicable federal, state, local and foreign Tax purposes. Seller and Buyer agree to report the allocation of the Purchase Price among the Purchased Assets in a manner that is entirely consistent with the Allocation Statement and agree to act in accordance with such Allocation Statement in the preparation of financial statements and filing of all Tax Returns (including, without limitation, filing Form 8594 with its federal income Tax Return for the taxable year that includes the date of the Closing) and in the course of any Tax audit, Tax review or Tax litigation relating thereto. No later than ten (10) days prior to the filing of their respective Forms 8594 relating to the transactions contemplated by this Agreement (together with the transactions contemplated by the Ancillary Agreements, (the “ Contemplated Transactions ”), the Buyer and Seller shall deliver to each other a copy of its respective Form 8594. In addition, no later than ten (10) days prior to filing, Buyer and Seller shall also deliver to each other copies of any supplemental statements or subsequent amendments to such initial Forms 8594 that may be filed by Buyer and Seller as a result of any payments that may be made pursuant to Section 2.8 or Section 2.9 of this Agreement or otherwise. Each Party shall notify the other Party if it receives notice that the IRS or other Governmental Body proposes any allocation different than that set forth in the Allocation Statement. Except as otherwise required by Law, Buyer and Seller shall cooperate fully in connection with the appropriate Tax reporting and Tax characterization of any Earn-Out Payments to be made under Section 2.9, including, but not limited to, specifically allocating any such payments when made to Seller’s Class VII assets (goodwill and going-concern value) in accordance with the Allocation Statement, and imputing an appropriate amount of interest in connection with any such payments under Sections 483 and 1274 or other applicable provisions of the Code or similar provisions of state and local law.

(c) Escrow Deposit . At or prior to the Closing, Seller and Buyer shall enter into an escrow with Wells Fargo Bank, National Association (the “ Escrow Agent ”) in substantially the form attached hereto as Exhibit A (the “ Escrow Agreement ”). On the Closing Date, Buyer shall deliver the Escrow Deposit to the Escrow Agent by wire transfer of immediately available funds to an account to be administered by the Escrow Agent in accordance with the terms of this Agreement and the Escrow Agreement (the “ Escrow Account ”).

 

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2.2 Purchase and Sale . Upon the terms and subject to the conditions of this Agreement, Buyer shall purchase from Seller and Seller shall sell, transfer, assign and deliver, or cause to be sold, transferred, assigned and delivered, to Buyer at Closing, all of Seller’s right, title and interest in, to and under the assets, rights, properties and business, of every kind and description, wherever located, real, personal or mixed, tangible or intangible, owned, held or used in the conduct of the Business by Seller or any Affiliate of Seller, as the same shall exist on the Closing Date, other than the Excluded Assets, including, without limitation, all right, title and interest of Seller, to and under, each of the foregoing as more specifically described below as the same shall exist on the Closing Date (the “ Purchased Assets ”):

(a) all personal property and interests therein used by Seller or held by Seller for use in connection with the Business, including furniture, office equipment, communications equipment, computers, servers, software and other tangible property;

(b) all supplies and other inventories, if any, wherever situated used by Seller or held by Seller for use in connection with the Business;

(c) all rights under the Contracts, used by Seller or held by Seller for use in connection with the Business, other than the Excluded Contracts (collectively, the “ Assumed Contracts ”);

(d) all Accounts Receivable other than Excluded Accounts Receivable are “Acquired Accounts Receivable”;

(e) all prepaid expenses and deposits held by Seller for use in connection with the Business;

(f) all of the Business Intellectual Property, including without limitation the trademarks and names used in the Business listed on Schedule 2.2(f)(i) , the logos listed on Schedule 2.2(f)(ii) , and the domain names of Seller, including those Web sites listed on Schedule 2.2(f)(iii) (the “ Domain Names ”);

(g) all transferable Permits affecting, or relating in any way to, the Business;

(h) all materials, content, property and interests used by Seller and/or necessary for the operation and maintenance of the Web sites owned by Seller (collectively, the “ Sites ”), including, without limitation, all content on the Sites, tools, testimonials, and calculators owned or licensed by Seller for use on the Sites (collectively, the “ Site Content ”);

(i) all books, records, files and papers, whether in hard copy or computer format used by Seller or held by Seller for use in connection with the Business, including, without limitation, accounting and contract records, sales and promotional literature, manuals and data, sales and purchase correspondence, lists of present and former suppliers, lists of present and former Customers, Customer Information, Internet traffic records, files, logic and search engine optimization analysis and methods (“ SEO Methods ”), all databases, mailing lists and related information pertaining to prospective Customers, personnel and employment records, and all information relating to Taxes imposed on or with respect to the Business or the Purchased Assets;

 

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(j) the deposit bank account of Seller used in the operation of the Business (the “ Acquired Bank Account ”); and

(k) all goodwill associated with the Business or the Purchased Assets, together with the right to represent to third parties that Buyer is the successor to the Business.

2.3 Excluded Assets . Buyer expressly understands and agrees that the following assets, properties and rights of Seller (the “ Excluded Assets ”) shall be excluded from the Purchased Assets:

(a) all rights of Seller and Shareholder under this Agreement and the Ancillary Agreements;

(b) the Lease and all other Contracts set forth on Schedule 2.3(b) (collectively, the “ Excluded Contracts ”) and all rights of Seller thereunder;

(c) the corporate charter, qualifications to conduct business as a foreign corporation, arrangements with registered agents relating to foreign qualifications, taxpayer and other identification numbers, Tax Returns, seals, minute books relating to the organization, maintenance and existence of Seller as a company;

(d) any records relating to Excluded Assets and Excluded Liabilities (including all Tax Returns and financial statements of Seller), and any work papers or materials in the possession of Seller or any of their Affiliates or any of their respective shareholders, members, officers, directors, employees, agents or attorneys relating to the evaluation and consideration by Seller of the Contemplated Transactions or the sale of assets of Seller or the Business to other Persons, or all personnel records and other records that Seller is required by Law to retain in their possession or is not permitted under Law to provide to Buyer;

(e) all cash and cash equivalents;

(f) any inter and intra company accounts, notes and other receivables from Seller and any of its Affiliates which are set forth on Schedule 2.3(f) ;

(g) all other properties, bank accounts, rights and assets of Seller which are not used by Seller in Seller’s operation of the Business which are set forth on Schedule 2.3(g) ;

(h) the Accounts Receivable in excess of $2,500,000 (the “ Excluded Accounts Receivable ”);

(i) all rights, claims, counterclaims, credits, causes of action and rights of set-off against third parties to the extent relating primarily to the Excluded Assets or the Excluded Liabilities;

(j) all rights of Seller or Shareholder to receive Tax refunds, credits or similar payments attributable to Taxes that are Excluded Liabilities;

(k) all insurance policies and all claims by Seller thereunder;

 

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(l) all non-transferable governmental permits and licenses;

(m) all telephone and fax numbers of Seller not listed on the Sites or used as an integral part of the operations of the Business;

(n) the bank accounts and credit card accounts used in the operation of the Business other than the Acquired Bank Account;

(o) the name “LinkSpectrum”; and

(p) the other assets identified on Schedule 2.3(p) hereto.

2.4 Assumption of Liabilities . Upon the terms and subject to the conditions of this Agreement, Buyer agrees, effective as of the Closing Date, to assume and timely discharge and satisfy, only the following Liabilities (the “ Assumed Liabilities ”):

(a) all Liabilities of Seller arising after the Closing Date under the Contracts set forth on Schedule 2.4(a) (other than Liabilities attributable to any failure by Seller to comply with the terms thereof prior to the Closing Date); and

(b) all Liabilities resulting from the ownership of the Purchased Assets and the operation of the Business by Buyer that arise on or after the Closing Date.

2.5 Excluded Liabilities . Notwithstanding any provision in this Agreement or any other writing to the contrary, Buyer is assuming only the Assumed Liabilities and is not assuming any other Liability of Seller or any Affiliate of Seller (or any predecessor owner of all or part of its business and assets) or the Business of whatever nature whether presently in existence or arising or asserted hereafter, including but not limited to, any debt owed by Seller to any party and all such other Liabilities of Seller shall be retained by and remain obligations and liabilities of Seller or its Affiliates (all such Liabilities of Seller not being assumed are referred to as the “ Excluded Liabilities ”). Without limiting the generality of the foregoing, the following Liabilities of Seller shall be Excluded Liabilities for the purpose of this Agreement, all Liabilities of Seller:

(a) relating to or arising under or in connection with any Plan, any “employee benefit plan” (as each is defined herein), or any other benefit plan, program or arrangement of any kind at any time maintained, sponsored or contributed or required to be contributed to by Seller or any Person that is or has ever been under common control, or that is or has ever been treated as a single employer, with Seller under the Code (“ ERISA Affiliate ”) or with respect to which Seller or any ERISA Affiliate has any Liability, including but not limited to, any accrued obligations owed or owing to any Person, including but not limited to, the employee benefits listed on Schedule 2.5(a) ;

(b) pertaining to the pre-Closing Date employment or service with, or termination from employment or service from, Seller or any ERISA Affiliate, of any individual;

(c) relating to any claims (whether asserted before or after the Closing Date) for any breach of a representation, warranty or covenant, or for any claim for indemnification,

 

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contained in any Assumed Contract agreed to be performed pursuant to this Agreement by Buyer, to the extent that such breach or claim arises out of or by virtue of Seller’s performance or nonperformance thereunder prior to the Closing Date, it being understood that, as between the Parties hereto, this subsection shall apply notwithstanding any provision which may be contained in any form of consent to the assignment of any such Assumed Contract, which by its terms, imposes such Liabilities upon Buyer and which assignment is accepted by Buyer notwithstanding the presence of such a provision;

(d) arising under product warranty or other warranty Liabilities of Seller with respect to any products, merchandise or services of the Business sold or rendered on or prior to the Closing Date; it being understood and agreed that any such claim or Liability asserted after the Closing Date arising out of any such sale or service prior to the Closing Date shall be considered to be a claim against or a Liability of Seller and therefore not assumed hereunder by Buyer;

(e) with respect to Seller’s failure to take reasonable steps to safeguard the Business Systems;

(f) for injury to or death of persons or damage to or destruction of property (including, without limitation, any worker’s compensation claim) with respect to acts or omissions by Seller that occur on or prior to the Closing Date regardless of when said claim or Liability is asserted, including, without limitation, any claim for consequential damages in connection with the foregoing; it being understood and agreed that any such claim or Liability asserted after the Closing Date, but arising from acts or omissions by Seller which occur before the Closing Date shall be considered to be a claim against or a Liability of Seller for injury to or death of persons or damages to or destruction of property and therefore not assumed hereunder by Buyer;

(g) arising out of infringement for misappropriation of or other conflict with the Intellectual Property of any Person to the extent the same arise out of acts or omissions occurring on or prior to the Closing Date;

(h) arising out of any violation by Seller of any Laws, including any Environmental Law occurring on or prior to the Closing Date;

(i) in respect of any Claim related to the Business or any Purchased Asset arising prior to the Closing Date (whether asserted or commenced before or after the Closing Date);

(j) relating to or arising out of the Excluded Assets;

(k) with respect to Indebtedness of Seller or dividends payable by Seller whether incurred or accrued before or after the Closing Date;

(l) relating to the capital stock of Seller or the partnership interests, membership interests or any shareholder or partnership operating agreements to which Seller is party;

 

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(m) relating to obligations of Seller under this Agreement or any Transaction Document;

(n) relating to claims or items set forth on Schedule 3.8 ;

(o) relating to any transactions between Seller and any of its Insiders whether occurring before or after the Effective Date;

(p) any Taxes that are not included in the definition of Assumed Liabilities and that relate to the Purchased Assets or the Business and that arose before the Effective Date (excluding any Transfer Taxes and excluding Property Taxes to the extent specified in Assumed Liabilities);

(q) relating to Liens on the Purchased Assets arising before the Effective Date, to the extent not an obligation arising on or after the Effective Date under the Assumed Contracts or that do not constitute Assumed Liabilities;

(r) any amounts payable for fees or expenses incurred by Seller in respect to this Agreement, the agreements contemplated hereby and/or the Contemplated Transactions or otherwise in connection with Seller’s sale of the Business, including, all amounts payable to Shuttleworth & Ingersoll, P.L.C., to Frederick Swartz & Co., PC or any of their respective Affiliates and all amounts payable in connection with any employee or consultant transaction bonuses;

(s) any amounts payable to any Affiliate of Seller; and

(t) without limitation by the specific enumeration of the foregoing, any other obligation or Liability of Seller not expressly included in the definition of Assumed Liabilities.

2.6 Assignment of Contracts and Rights .

(a) General . Notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to assign any Purchased Asset or any claim or right or any benefit arising thereunder or resulting therefrom if an attempted assignment thereof, without consent of a third party thereto, would constitute a breach or other contravention thereof or in any way adversely affect the rights of Buyer or Seller thereunder.

(b) In the Event a Consent is Not Obtained . In the event any such consent is not obtained on or before the Closing Date, the Parties to this Agreement will use their best efforts (but without any payment of money by Seller or Buyer) to obtain the consent of any other Person to any such Purchased Asset or claim or right or any benefit arising thereunder for the assignment thereof to Buyer as Buyer may request. If such consent is not obtained, or if an attempted assignment thereof would be ineffective or would adversely affect the rights of Seller thereunder so that Buyer would not in fact receive all such rights, the Parties will cooperate in a mutually agreeable arrangement under which Buyer would obtain the benefits and assume the obligations thereunder in accordance with this Agreement, including subcontracting, sub-licensing, or subleasing to Buyer, or under which Seller would enforce for the benefit of Buyer, with Buyer assuming Seller’s obligations, any and all rights of Seller against a third party thereto.

 

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(c) Payment of Monies Received . Seller will promptly pay to Buyer when received all monies received by Seller under any Purchased Asset or any claim or right or any benefit arising thereunder, including but not limited to, any payments in connection with any Accounts Receivable, except to the extent the same represents an Excluded Asset.

2.7 Closing . The closing of the purchase and sale of the Purchased Assets and the assumption of the Assumed Liabilities pursuant to the terms of this Agreement (the “ Closing ”) shall take place on the date hereof via facsimile or electronic mail (or at such other time or place or by such other method as Buyer and Seller may agree) and shall be effective as of the Effective Date. At the Closing simultaneously with the execution of this Agreement:

(a) Deliverables to Buyer . Buyer shall have received copies of the following documents:

(i) the Bill of Sale and Assignment and Assumption Agreement in the form attached hereto as Exhibit B (the “ Bill of Sale and Assignment and Assumption Agreement ”) executed by Seller;

(ii) the Consulting Agreement in the form attached hereto as Exhibit C (the “ Consulting Agreement ”) executed by Shareholder;

(iii) the Escrow Agreement executed by Seller and Escrow Agent;

(iv) the Copyright Assignment in the form attached hereto as Exhibit D (the “ Copyright Assignment ”) executed by Seller;

(v) the Trademark Assignment in the form attached hereto as Exhibit E (the “ Trademark Assignment ”) executed by Seller;

(vi) the Domain Name Transfer Agreement in the form attached hereto as Exhibit F (the “ Domain Name Transfer Agreement ”) executed by Seller;

(vii) the Limited Release Agreement in the form attached hereto as Exhibit G (the “ Limited Release Agreement ”) executed by Shareholder and Seller;

(viii) Schedules to this Agreement;

(ix) certificate issued by the Secretary of State of North Carolina as to Seller’s legal existence and good standing;

(x) certificate issued by the Secretary of State of North Carolina certifying Seller’s Articles of Incorporation;

(xi) certificates of an appropriate officer of Seller as to the incumbency and signatures of Seller’s officers executing this Agreement and the Ancillary Agreements;

 

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(xii) copies of the resolutions duly adopted by the board of directors of Seller and Shareholder authorizing Seller to enter into and perform this Agreement and the Ancillary Agreements, and to consummate the Contemplated Transactions certified by an appropriate officer of Seller;

(xiii) the Bylaws and Articles of Incorporation of Seller certified by a proper officer of Seller as in full force and effect on and as of the Closing Date;

(xiv) the Preliminary Closing Balance Sheet;

(xv) [RESERVED];

(xvi) a certificate of non-foreign status pursuant to Section 1.1445-2(b)(2) of the Code satisfactory to Buyer;

(xvii) [RESERVED];

(xviii) fully executed UCC-3 termination statements and other terminations, pay-offs and/or releases, or, at Buyer’s option, assignments, necessary to terminate, release or assign, as the case may be, all Liens on any Purchased Asset; and

(xix) all other agreements, certificates, instruments and documents reasonably requested by Buyer in order to fully consummate the Contemplated Transactions and carry out the purposes and intent of this Agreement.

(b) Deliverables to Seller . Seller, shall have received each of the following:

(i) the Purchase Price less the Escrow Deposit (which shall be delivered to Escrow Agent by Buyer), and either plus the Preliminary Adjustment Increase Amount, or minus Preliminary Adjustment Decrease Amount (as set forth in Section 2.8 below);

(ii) the Assignment and Assumption Agreement executed by Buyer;

(iii) the Consulting Agreement for Shareholder executed by Buyer;

(iv) the Domain Name Transfer Agreement executed by Buyer;

(v) the Trademark Assignment executed by Buyer;

(vi) the Copyright Assignment executed by Buyer;

(vii) the Escrow Agreement executed by Buyer and Escrow Agent;

(viii) the Limited Release Agreement executed by Buyer;

(ix) all other agreements, certificates, instruments and documents reasonably requested by Seller in order to fully consummate the Contemplated Transactions and carry out the purposes and intent of this Agreement.

 

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2.8 Purchase Price Adjustment .

(a) At least three (3) business days prior to the Closing Date, Seller shall prepare in good faith and provide the Buyer an estimate of the Closing Working Capital (the “ Estimated Working Capital ”), together with reasonable supporting documentation, and Seller shall make appropriate personnel reasonably available to discuss such estimate with Buyer prior to the Closing.

(b) General .

(i) At Closing, as an adjustment to the Purchase Price, if any,

(1) if Estimated Working Capital is a smaller number than the Base Working Capital, then the Purchase Price shall be initially reduced by the amount by which Base Working Capital exceeds Estimated Working Capital (the “ Preliminary Adjustment Decrease Amount ”); or

(2) if Estimated Working Capital is a larger number than the Base Working Capital, then the Purchase Price shall be initially increased by the amount by which Estimated Working Capital exceeds the Base Working Capital (the “ Preliminary Adjustment Increase Amount ”).

(ii) After the Closing, as an adjustment to the Purchase Price, if any,

(1) if Final Working Capital is a smaller number than the Estimated Working Capital, then the Purchase Price (as adjusted by Section 2.8) shall be reduced by the amount by which the Estimated Working Capital exceeds Final Working Capital (the “ Post-Closing Adjustment Decrease Amount ”), and within ten (10) Business Days following the determination of Final Working Capital in accordance with Section 2.8(c), Seller shall deliver or cause to be delivered to Buyer the Post-Closing Adjustment Decrease Amount; or

(2) if Final Working Capital is a larger number than the Estimated Working Capital, then the Purchase Price (as adjusted by Section 2.8) shall be increased by the amount by which Final Working Capital exceeds the Estimated Working Capital (the “Post-Closing Adjustment Increase Amount”), and within ten (10) Business Days following the determination of Final Working Capital in accordance with Section 2.8(c), Buyer shall deliver or cause to be delivered to Seller the Post-Closing Adjustment Increase Amount by wire transfer of immediately available funds.

(c) Definitions . The following terms, as used herein, have the following meanings:

“ Base Working Capital ” means Fifty Thousand Dollars ($50,000).

“ Closing Balance Sheet ” means a balance sheet for the Business as of the close of business on the day immediately preceding the Closing Date that (x) fairly presents the financial position of the Business as at the close of business on the day immediately preceding the Closing Date on a basis consistent with the presentation in the Financial Statements, (y) includes line

 

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items substantially consistent with those used in the preparation of the Financial Statements and (z) is prepared in accordance with GAAP as consistently applied and, without limiting the generality of the foregoing.

“ Closing Working Capital ” means the current assets to the extent included in the Purchased Assets (as determined in accordance with GAAP as in effect on the day immediately preceding the Effective Date and as consistently applied in the Financial Statements) of the Business (excluding cash, cash equivalents, any inter and intra company accounts, notes and other receivables from Seller and any of its Affiliates, Excluded Accounts Receivable, and all other Excluded Assets), all as of the close of business on the day immediately preceding the Effective Date. For purposes of the Accounts Receivable of Seller included in the current asset category for Closing Working Capital, the Accounts Receivable of Seller shall include, without limitation, (a) all revenue to be received from credit card applications applied or approved prior to Closing as reported by third party providers and the credit card issuers, and (b) all bonus payments to be received from such providers or issuers with respect to the period prior to Closing (with payments prorated based on number of days prior to Closing versus after Closing for any period beginning prior to Closing but ending after Closing).

“ Final Working Capital ” means Closing Working Capital (i) as shown in Buyer’s calculation delivered pursuant to Section 2.8(c) if no timely Objection Notice with respect thereto is delivered by Seller to Buyer pursuant to Section 2.8(d) or (ii) if such Objection Notice is delivered by Seller to Buyer, (A) as agreed by Seller and Buyer pursuant to Section 2.8(e) or (B) in the absence of such agreement, as shown in the Accounting Referee’s calculation delivered pursuant to Section 2.8(e).

(d) Preparation of the Closing Balance Sheet and Working Capital Certificate . As promptly as practicable after the Closing Date, Buyer will cause the Closing Balance Sheet to be prepared and prepare a certificate based on such Closing Balance Sheet setting forth the Closing Working Capital (the “ Closing Working Capital Certificate ”). As promptly as practicable, but no later than sixty (60) days, after the Closing Date or such later date as Seller and Buyer agree, Buyer will cause the Closing Working Capital Certificate to be delivered to Seller. Seller and Buyer will, and will cause their respective independent accountants to, cooperate and assist in the preparation of the Closing Balance Sheet and the calculation of Closing Working Capital and in the conduct of the audits and reviews referred to in this Section 2.8, and each of Seller and Buyer agree to make available, and provide reasonable access, to the other upon reasonable request and to the extent necessary, all books, records, work papers, personnel and other backup documents reasonably necessary to assist in the analysis of the Closing Working Capital and the Closing Balance Sheet.

(e) Disagreement by Seller . If Seller disagrees with Buyer’s calculation of Closing Working Capital, as set forth on the Closing Working Capital Certificate, Seller may, within twenty (20) days after receipt of the documents referred to in Section 2.8(c), deliver written notice to Buyer disagreeing with such calculation and setting forth Seller’s calculation of the Closing Working Capital (an “ Objection Notice ”). Any Objection Notice shall specify those items or amounts as to which Seller disagrees, and Seller shall be deemed to have agreed with all other items and amounts contained in the calculation of Closing Working Capital delivered by Buyer pursuant to Section 2.8(c).

 

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(f) Dispute Resolution .

(i) If an Objection Notice shall have been timely delivered by Seller to Buyer pursuant to Section 2.8(d), Seller and Buyer shall, during the twenty (20) days following such delivery, use their best efforts to reach agreement on the disputed items or amounts in order to determine the amount of Closing Working Capital, which amount may be more or less than the amount shown in Buyer’s calculation thereof delivered pursuant to Section 2.8(c) or may be more or less than the amount shown in Sellers’s calculation thereof delivered pursuant to Section 2.8(d). If, during such period, Seller and Buyer are unable to reach agreement, then the disputed items shall be resolved by Ernst & Young, or if such firm declines to act in such capacity, or if such firm cannot provide the calculation in a timely fashion acceptable to both Buyer and Seller, then by such other firm of independent nationally recognized accountants having no material relationship with any Party and reasonably acceptable to both Seller and Buyer (the “ Accounting Referee ”).

(ii) Buyer and Seller shall jointly instruct the Accounting Referee that it (1) shall act as an expert in accounting, and not as arbitrators, to resolve, in accordance with GAAP as in effect on the day immediately preceding the Effective Date and as consistently applied in the Financial Statements, only the matters specified in any timely delivered Objection Notice that remain in dispute, (2) shall adjust the calculation of Closing Working Capital based thereon to reflect such resolution, and (3) shall deliver to Buyer and Seller a written decision as promptly as practicable and in any event within seventy-five (75) days following the submission of the matters that remain in dispute to the Accounting Referee for resolution. The Accounting Referee shall deliver to Buyer and Seller, as promptly as practicable, a report setting forth such calculation.

(iii) Each Party agrees to execute, if requested by the Accounting Referee, a reasonable engagement letter. The cost of such review and report (including any retainer) shall be borne (1) by Buyer if Seller’s calculation of Closing Working Capital is closer to Final Working Capital than Buyer’s calculation thereof, (2) by Seller if the reverse is true and (3) otherwise equally by Buyer and Seller. However, initially, any retainer charged by the Accounting Referee shall be paid 50% by Buyer and 50% by Seller.

(iv) All determinations made by the Accounting Referee shall be final, conclusive and binding on the Parties, and the Closing Working Capital, as modified by the determination of the Accounting Referee, shall be deemed to be the Final Working Capital.

(g) Cooperation . With respect to Section 2.8(f), the Accounting Referee shall be requested to complete its engagement within seventy-five (75) days of being retained. Notwithstanding any unresolved dispute pending between Buyer and Seller pursuant to Section 2.8(e) regarding the Closing Working Capital, to the extent that Buyer and Seller agree on portions of the Closing Working Capital, such that some amount is known to be owed from one party to the other, Seller and Buyer agree to pay, pursuant to Section 2.8(a), without reservation or delay, any amounts that are not the subject of a good faith dispute pursuant to Section 2.8(e).

(h) Time of Payment . Any payment pursuant to this Section 2.8 (other than the payments at Closing regarding Estimated Working Capital) shall be made at a mutually

 

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convenient time and place (i) within 30 days after Buyer’s delivery of the documents referred to in Section 2.8(c) if no notice of disagreement with respect to the Closing Working Capital is delivered by Seller or (ii) if a notice of disagreement with respect to the Closing Working Capital is so delivered then within ten (10) days after the earlier of (A) agreement between Seller and Buyer pursuant to Section 2.8(e) with respect to the Closing Working Capital and (B) delivery of the calculation of the Closing Working Capital by the Accounting Referee pursuant to Section 2.8(e). Any amount owed under this Section 2.8 not timely paid on the due date as determined pursuant to this Section 2.8 shall bear interest from the date such payment was due until paid at an annual rate of fifteen percent (15%) per annum.

(i) Method of Payment . Any payments pursuant to this Section 2.8 shall be made by delivery by Seller, or Buyer, as the case may be, via wire transfer of immediately available funds to Buyer or Seller, as the case may be, or by causing such payments to be credited to such account of Seller or Buyer as may be designated by Seller or Buyer.

2.9 Earn-Out Payments .

(a) Earn-Out Determination .

(i) After each Earn-Out Period, but in no event later than ninety (90) days after each such Earn-Out Period, Buyer shall deliver to Seller a written statement setting forth the proposed calculation of EBITDA for such Earn-Out Period (the “ Proposed EBITDA ”); and

(ii) If Seller disagrees in any respect with Buyer’s calculation of the Proposed EBITDA, Seller shall deliver a dispute notice (the “ Dispute Notice ”) to Buyer within sixty (60) days of receiving the Proposed EBITDA for the applicable Earn-Out Period.

(iii) If Seller does not deliver a Dispute Notice to Buyer within sixty (60) days of receiving the Proposed EBITDA for the applicable Earn-Out Period, then the Proposed EBITDA for such Earn-Out Period shall be the EBITDA for the applicable Earn-Out Period.

(iv) If Seller does deliver a Dispute Notice to Buyer (which Dispute Notice must set forth, in reasonable detail, (x) the items and amounts in dispute and an alternative amount for each such disputed item and (y) a calculation by Seller of the EBITDA for such Earn Out Period) within such 60-day period commencing on the date that Seller receives the Proposed EBITDA from Buyer, Buyer and Seller will use reasonable efforts to resolve the dispute during the 30-day period commencing on the date Buyer receives the Dispute Notice from Seller.

(v) The only basis on which Seller may dispute any matter in the Proposed EBITDA are: (1) the inaccuracy of such matter, whether factually or numerically, (2) the Proposed EBITDA, or any element thereof, or both, are not prepared as provided in this Agreement, or (3) a breach by Buyer of any other provision of this Section 2.9, including Schedule 2.9.

 

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(vi) If Buyer and Seller do not obtain a final resolution within the 30-day period commencing on the date Buyer receives a Dispute Notice from Seller, then the items in dispute shall be submitted immediately to the Accounting Referee. Buyer and Seller shall jointly instruct the Accounting Referee that it (1) shall act as experts in accounting, and not as arbitrators, to resolve, in accordance with GAAP and this Agreement, only the matters specified in any timely delivered a Dispute Notice that remain in dispute, (2) shall adjust the calculation of Proposed EBITDA for such Earn-Out Period based thereon to reflect such resolution, (3) may not determine an amount of EBITDA for such Earn-Out Period in excess of that claimed by Seller or less than that claimed by Buyer, and (4) shall deliver to Buyer and Seller a written decision of its calculation of EBITDA as promptly as practicable and, in any event, within seventy-five (75) days following the submission of the matters that remain in dispute to the Accounting Referee for resolution. Each Party agrees to execute, if requested by the Accounting Referee, a reasonable engagement letter. The cost of such review and decision by the Accounting Referee (including any retainer) shall be borne (x) by Buyer if Seller’s calculation of Proposed EBITDA for such Earn-Out Period is closer to the EBITDA for such Earn-Out Period than Buyer’s calculation of the Proposed EBITDA, or (y) by Seller if the reverse is true. However, initially, any retainer charged by the Accounting Referee shall be paid 50% by Buyer and 50% by Seller. All determinations made by the Accounting Referee shall be final, conclusive and binding on the Parties, and the EBITDA for such Earn-Out Period, as modified by the determination of the Accounting Referee, shall be deemed to be the EBITDA for such Earn-Out Period.

(vii) Subject to Section 7.6, within five (5) days after final determination of EBITDA for such Earn-Out Period pursuant to Sections 2.9(a)(iii) and 2.9(a)(vi), as applicable, Buyer shall deliver to Seller the payment by wire transfer in immediately available funds of the Earn-Out Payment calculated based on the EBITDA calculation for such Earn-Out Period (determined pursuant to Sections 2.9(a)(iii) or 2.9(a)(vi)).

(viii) Buyer shall make the following records and information available to Seller and its representatives during normal business hours at any time during and following the Earn-Out Periods, including, without limitation, for the review by Seller of, and the resolution of any objections with respect to, the Proposed EBITDA or in connection with the preparation of the Dispute Notice: (A) financial and business records regarding the calculation of EBITDA, (B) financial information regarding the monthly income and commission listings from each vendor and monthly expense reports, and (C) other operating information that in the reasonable judgment of Buyer is necessary for Seller to understand the calculation of EBITDA and the performance of the Business. Seller shall not disclose or make use of any such information other than to the extent necessary to review the calculation of Proposed EBITDA and enforce its rights under this Agreement and such information shall be deemed “confidential information” and subject to the terms of Section 5.2.

(ix) During the Earn-Out Periods, Buyer shall provide Seller with the following regarding the Business: (1) monthly financial statements, (2) monthly payroll reports; (3) continuous access to on-line reports for the purpose of tracking page views, clicks, applications, and approvals; and (4) access to Buyer prepared reports detailing SEM and SEO metrics. Seller shall not disclose or make use of any such information other than needed to track the performance of the Business and to enforce Seller’s rights under Section 2.9 and such information shall be subject to the terms of Section 5.2.

 

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(b) Additional Earn-Out Provisions . The provisions of Schedule 2.9 are incorporated herein.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

Except as set forth in the disclosure schedules dated as of the date of this Agreement and delivered herewith to Buyer, Seller and Shareholder together, jointly and severally, hereby represent and warrant to Buyer that:

3.1 Corporate Existence and Power . Seller is a corporation duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization, and has all corporate powers and all governmental licenses, authorizations, consents and approvals required to carry on the Business as now conducted. Seller has heretofore delivered to Buyer true and complete copies of the By-laws and Articles of Incorporation of Seller as currently in effect.

3.2 Authorization; Qualification .

(a) Seller Authorization . The execution, delivery and performance by Seller of this Agreement and each of the Ancillary Agreements to which Seller is a party, and the consummation by Seller of the transactions contemplated hereby and thereby are within Seller’s corporate powers and have been duly authorized by all necessary corporate action on the part of Seller. Each of this Agreement and each Ancillary Agreement to which Seller is a party has been duly executed and delivered by Seller and constitutes a valid and binding agreement of Seller enforceable in accordance with its terms.

(b) Qualification . Seller is duly qualified to do business in each jurisdiction listed on Schedule 3.2(b) , and Seller is not required to be qualified in any other jurisdiction, except where the failure to be so qualified would not have a Material Adverse Effect.

(c) Shareholder Authorization . Each of this Agreement and each Ancillary Agreement to which Shareholder is a party has been duly executed and delivered by Shareholder and constitutes a valid and binding agreement of Shareholder, enforceable in accordance with its terms.

3.3 Governmental Authorization; Consents .

(a) No Required Action . The execution, delivery and performance by Seller of this Agreement and each of the Ancillary Agreements to which Seller is a party require no action by or in respect of, or filing with, any Governmental Body.

(b) No Required Consents . Except as set