EXHIBIT
10.1
ASSET PURCHASE
AGREEMENT
AMONG
HOUSERAISING, INC.,
LEARNBYTES, LLC,
AND
GRANT
NEERINGS
Dated: August 1,
2005
ASSET PURCHASE
AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement")
is made and entered into as of this 1 st day of August,
2005, by and among HOUSERAISING, INC., a North Carolina corporation
(“Purchaser”), LEARNBYTES, LLC, a North Carolina
limited liability corporation (“Seller”), and Grant
Neerings, citizen and resident of Mecklenburg County, North
Carolina, and the sole member of Seller (the “Managing
Member”).
Whereas
Purchaser, Seller and Managing Member entered into an Agreement,
dated November 1, 2004, for Purchaser to purchase all of
Seller’s assets (including all intellectual property
developed by and for Seller and all other tangible and intangible
assets of the company) from Managing Member in exchange for cash
and cash equivalents and restricted stock, and the parties wish to
now revise the terms of that agreement to reflect an asset purchase
as documented in this Asset Purchase Agreement;
WHEREAS, Seller is engaged in the Learning
System Design and Implementation business (the
“Business”) in Mecklenburg County, North Carolina;
and
WHEREAS, the
Managing Member is the sole owner of the outstanding membership
interests of the Seller; and
WHEREAS, Purchaser desires to purchase all of
the assets of Seller which are used or useful in the Business;
and
Whereas Purchaser has also agreed to establish
5-year consulting agreements with the Managing Member, John Wolff
and Chris Gagliardo by issuing cash, cash equivalents in restricted
stock, and/or S-8 shares and warrants in exchange for services to
be rendered going forward;
WHEREAS, the parties contemplate that there will
be a simultaneous signing of this Agreement and Closing
hereunder.
NOW, THEREFORE, in consideration of the mutual
benefits to be derived and the representations and warranties,
conditions and promises contained in this Agreement, and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound, and
that this agreement as described herein will supercede in its
entirety the Agreement of November 1, 2004 (the acquisition of
assets described herein being referred to as
“HouseRaising’s Acquisition of LearnBytes”) and
that such previous contract and any and all other agreements (in
writing, verbally agreed upon or implied) will become null and
void, the parties agree as follows:
ARTICLE I
GENERAL
SECTION
1.01
Agreement to Purchase and
Sell
(a) Upon the terms and subject to the conditions of
this Agreement, Seller agrees to sell, convey, transfer, assign and
deliver to Purchaser, and Purchaser agrees to purchase from Seller,
all of the assets, properties, business, franchises, goodwill and
rights of every kind and character, tangible or intangible, owned
or leased by Seller (collectively, the “Assets”),
including, without limitation, those assets listed on Exhibit A
hereto.
(b) Without limiting the generality of the
foregoing, the Assets shall consist of all assets of Seller,
including, without limitation, the following:
(1) Customer Lists . All customer lists, sales records, credit data
and other information relating to customers of Seller.
(2) Customer Contracts . All right, title and interest of Seller in,
to and under all existing contracts and agreements, written and
verbal, with customers of Seller (the “Customer
Contracts").
(3) Equipment . All of the equipment, machinery, tools,
appliances and all other tangible personal property of every kind
and description owned by Seller (the "Equipment").
(4) Licenses, Franchises and Permits
. All right, title and interest of
Seller in, to and under all licenses, franchises, permits,
authorizations, certificates, approvals, registrations and other
governmental authorizations (collectively, the "Operating
Authorities") owned or possessed by Seller and relating to the
Business or all or any of the Assets.
(5) Intangible Assets . All right, title and interest of Seller in,
to and under all trademarks, service marks, trade names, patents,
know-how, general business development and all goodwill associated
with the Business in connection with which any intellectual
property is used (including any and all work performed in
development of System C) (the "Intangible Assets").
(6) Business Name . Any trade names or other assumed names under
which Seller operates, and all right, title and interest in and to
the name “LearnBytes, LLC, including a perpetual exclusive
license to use such name in interstate commerce for no
consideration other than that provided in this
Agreement.
(7) Goodwill . The goodwill and going concern value of the
Business.
(8) Books and Records . Copies of Seller’s books, records and
papers of whatever nature and wherever located that relate to the
Business or the Assets or which are required or necessary in order
for Purchaser to conduct the Business from and after the date of
this Agreement in the manner in which it is presently being
conducted (the "Records").
(9) Computers and Software . All right, title and interest of Seller in
computer equipment and hardware, if any, together with all software
and intellectual property used by Seller with such computer
equipment and hardware, if any.
(10) Other Property . All other or additional privileges, rights,
interest, properties and assets of Seller of every kind and
description and wherever located that are used or intended for use
in connection with, or that are necessary to the continued conduct
of, the Business as presently being conducted, including
assignments of leases, assignments of employment agreements,
conveyance of all real estate, assignments of employee relations
and assignments of employment benefits.
SECTION
1.02
Purchase
Price.
The aggregate purchase price (the "Purchase
Price") for the Business shall be equal to 500,000 shares of
restricted HRAI common stock, payable by delivery by the
Purchaser’s transfer agent, as soon as practicable following
the Closing. All certificates for shares issued to the Seller will
contain a restrictive legend under the Securities Act of 1933, as
amended, and shall have the registration rights set forth in the
Registration Rights Agreement attached hereto as Exhibit
B.
It is also
understood that the restricted shares to be issued to the Seller
will be subject to complete forfeit by the Seller in the event that
the Managing Member does not remain a full-time consultant or
employed with Purchaser for a one-year period of time from the date
of issuance of the restricted shares, and the Managing Member, on
behalf of the Seller, expressly agrees to such forfeiture. In
addition, it is also understood that such restricted shares will be
subject to forfeiture by the Seller for the number of shares noted
below in the event the noted personnel from LearnBytes were to not
fulfill their consulting agreement to or be employed by the
Purchaser, unless such non-fulfillment was caused by Purchaser not
compensating consultants on a timely basis. To this end, in the
event John Wolff or Chris Gagliardo were to not remain a full-time
consultant with or be employed by the Purchaser for a one-year
period of time from the date of issuance of the restricted shares
to Seller, then Seller will forfeit 100,000 of the shares paid as
part of the Purchase Price for the Business. Further, in the event
Geoffrey Ely were to not remain a full-time consultant with or be
employed by the Purchaser for a one-year period of time from the
date of issuance of the restricted shares to Seller, then Seller
will forfeit 50,000 of the shares paid as part of the Purchase
Price for the Business. In no event, shall the Seller have to
forfeit more then the total restricted shares provided as part of
this Agreement for the reasons noted above. These provisions will
also be documented and agreed upon by Managing Member on behalf of
the Seller in his individual capacity as part of his consulting
agreement with Purchaser referenced in Section 4.01.
SECTION 1.03
Assumption of
Liabilities.
As additional
consideration for the purchase of the Assets, Purchaser shall
assume and discharge in cash or cash equivalents a total of $6,490
in accounts payable of the Seller and will collect a total of
$5,260 in accounts receivable of the Seller. Any amounts in excess
of the amounts shown will remain the obligation of Seller or
Managing Member.
SECTION 1.04
Indemnification by
Seller.
(a) Purchaser does not assume or agree to pay,
perform or discharge, and shall not be responsible for, any other
liabilities or obligations of Seller, whether accrued, absolute,
contingent or otherwise.
(b) Seller and Managing Member agree that they
shall remain solely responsible for, and they hereby indemnify and
agree to hold Purchaser harmless from, any and all liabilities and
obligations of the Seller that were incurred by Seller prior to
closing, whether accrued, absolute, contingent or
otherwise..
SECTION 1.05
Instruments of Transfer;
Further Assurances.
Concurrently with the execution and delivery of
this Agreement and the Closing hereunder, Seller and Purchaser
shall execute and deliver to each other a completed Deed of General
Conveyance, Transfer and Assignment, in the form attached as
Exhibit C hereto ("General Conveyance, Transfer and
Assignment").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER AND
MANAGING MEMBER
Seller and the Managing Member, jointly and
severally, represent and warrant to Purchaser as
follows:
SECTION 2.01
Due
Organization.
Seller is a limited liability company duly
organized and validly existing and in good standing under the laws
of the State of North Carolina and is duly licensed and authorized
or qualified to carry on its business in the places and in the
manner as now conducted except where the failure to be so
authorized or qualified would not have a material adverse effect on
the business, operations, properties, assets, condition (financial
or other), results of operations or prospects of Seller. The
membership records and minute books of Seller that have been made
available to Purchaser are correct and complete.
SECTION 2.02
Authorization;
Non-Contravention; Approvals.
Seller has the full legal right, power and
authority to enter into this Agreement and to consummate the sale
of the Business and the other transactions contemplated hereby. The
execution, delivery and performance of this Agreement have been
approved by the Managing Member of Seller. No additional corporate
proceedings on the part of Seller are necessary to authorize the
execution and delivery of this Agreement and the consummation by
Seller of the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by Seller, and,
assuming the due authorization, execution and delivery hereof by
Purchaser, constitutes a valid and binding agreement of Seller,
enforceable against Seller in accordance with its terms.
Managing Member
has the full legal right, power and authority to enter into this
Agreement and to consummate the sale of the Business and the other
transactions contemplated hereby. The execution, delivery and
performance of this Agreement have been approved by the Managing
Member. This Agreement has been duly and validly executed and
delivered by Managing Member, and constitutes a valid and binding
agreement of Managing Member, enforceable against Managing Member
in accordance with its terms.
The execution and delivery of this Agreement by
Seller does not, and the consummation by Seller of the transactions
contemplated hereby will not, violate, conflict with or result in a
breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the Assets under any of
the terms, conditions or provisions of (i) the organizational
documents of Seller, (ii) any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or
license of any court or governmental authority applicable to Seller
or any of its properties or assets, or (iii) any agreement, note,
bond, mortgage, indenture, deed of trust, license, franchise,
permit, concession, lease or other instrument, obligation or
agreement of any kind to which Seller is now a party or by which
Seller or any of its properties or assets may be bound or affected,
excluding from the foregoing clauses (ii) and (iii) such
violations, conflicts, breaches, defaults, terminations,
accelerations or creations of liens, security interests, charges or
encumbrances that would not, in the aggregate, have a material
adverse effect on the business, operations, properties, assets,
condition (financial or other), results of operations or prospects
of Seller. No declaration, filing or registration with, or notice
to, or authorization, consent or approval of, any governmental or
regulatory body or authority is necessary for the execution and
delivery of this Agreement by Seller or the consummation by Seller
of the transactions contemplated hereby, other than such
declarations, filings, registrations, notices, authorizations,
consents or approvals which, if not made or obtained, as the case
may be, would not, in the aggregate, have a material adverse effect
on the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of Seller.
None of the customer contracts or other material agreements to
which Seller is a party requires notice to, or the consent or
approval of, any governmental agency or other third party to any of
the transactions contemplated hereby to remain in full force and
effect following the transactions contemplated hereby.
SECTION 2.03
Capitalization.
All of the issued and outstanding membership
interests of Seller's Membership Capital are owned beneficially and
of record by the Managing Member.
SECTION 2.04
Subsidiaries.
Seller does not presently own, of record or
beneficially, or control, directly or indirectly, any capital
stock, securities convertible into or exchangeable for capital
stock or any other equity interest in any corporation, association
or business entity. Seller is not, directly or indirectly, a
participant in any joint venture, partnership or other
non-corporate entity.
SECTION 2.05
Income Tax
Returns.
Seller has delivered to Purchaser complete and
correct copies of the federal income tax returns of the Seller for
the tax years December 31, 2003 and December 31, 2004 (the
“Tax Returns”). If there are no such returns because of
the treatment of the company as a limited liability company, then
no such returns need be delivered. Said returns fairly present in
all material respects the financial position of the Seller at and
as of the periods indicated. There has been no material change in
the financial condition of the Seller since the date of the most
recent Tax Return.
SECTION 2.06
Liabilities and
Obligations.
Seller has delivered to Purchaser an accurate
list of all liabilities of Seller. Since the date of that list,
Seller has not incurred any liabilities of any kind, character or
description, whether accrued, absolute, secured or unsecured,
contingent or otherwise, other than liabilities incurred in the
ordinary course of business. Other than as noted earlier in this
document, Seller and Managing Member will be responsible for any
and all outstanding debt, including past due interest, with respect
to any obligations due and outstanding upon completion of
merger.
Seller has delivered to Purchaser an accurate
list of all real and personal property of Seller and all other
tangible assets of Seller with a value in excess of $30. All fixed
assets used by Seller that are material to the operation of
Seller's business are either owned by Seller or leased. All such
leases are in full force and effect and constitute valid and
binding agreements of the parties thereto in accordance with their
respective terms.
Seller has good and marketable title to the
tangible and intangible personal property and the real property
comprising the Assets, subject to no mortgage, pledge, lien, claim,
conditional sales agreement, encumbrance or charge unless
previously disclosed to Purchaser. The sale of the Assets hereunder
will transfer to Purchaser good and marketable title to the Assets
subject to no mortgage, pledge, lien, claim, conditional sales
agreement, encumbrance or charge, except as previously disclosed to
Purchaser.
SECTION 2.08
Material
Contracts.
Except as previously disclosed to Purchaser,
Seller has complied with all material commitments and obligations
pertaining to it under its material contracts, and is not in
default under any such contracts, no notice of default has been
received by Seller and Seller is aware of no basis
therefore.
The licenses, operating authorizations,
franchises, permits and other governmental authorizations
previously disclosed by Seller to Purchaser are valid, and Seller
has not received any notice that any governmental authority intends
to cancel, terminate or not renew any such license, operating
authorization, franchise, permit or other governmental
authorization. Seller holds all licenses, operating authorizations,
franchises, permits and other governmental authorizations, the
absence of any of which could have a material adverse effect on the
business, operations, properties, assets, condition (financial or
other), results of operations or prospects of Seller. Seller has
conducted and is conducting the Business in substantial compliance
with the requirements, standards, criteria and conditions set forth
in its licenses, operating authorizations, franchises, permits and
other governmental authorizations as well as the applicable orders,
approvals and variances related thereto, and is not in violation of
any of the foregoing except for any violations that would not have
a material adverse effect on the business, operations, properties,
assets, condition (financial or otherwise), results of operations
or prospects of Seller. Except as specifically disclosed to
Purchaser, the transactions contemplated by this Agreement will not
result in a default under or a breach or violation of, or adversely
affect the rights and benefits afforded to Seller by, any such
material licenses, operating authorizations, franchises, permits
and other government authorizations.
The insurance policies held by Seller, if any,
provide adequate coverage against the risks involved in Seller's
businesses. Such policies, if any, are currently in full force and
effect.
SECTION 2.11
Litigation and Compliance
with Law.
Except as previously disclosed to Purchaser,
there are no claims, actions, suits or proceedings, pending or
threatened, against or affecting Seller, at law or in equity, or
before or by any governmental department, commission, board,
bureau, agency or instrumentality having jurisdiction over Seller.
No notice of any claim, action, suit or proceeding, whether pending
or threatened, has been received by Seller, and there is no basis
therefore. Seller has conducted for the past five years and does
conduct its business in compliance with all laws, regulations,
writs, injunctions, decrees and orders applicable to Seller or its
assets.
For purposes of this Agreement, the term "Taxes"
shall mean all taxes, charges, fees, levies or other assessments
including, without limitation, income, gross receipts, excise,
property, sales, withholding, social security, unemployment,
occupation, use, service, service use, license, payroll, franchise,
transfer and recording taxes, fees and charges, imposed by any
government or subdivision or agency thereof, whether computed on a
separate, consolidated, unitary, combined or any other basis; and
such term shall include any interest, fines, penalties or
additional amounts attributable to or imposed with respect to any
such taxes, charges, fees, levies or other assessments. Seller has
timely filed all requisite tax returns for all fiscal periods ended
on or before the date of this Agreement, and has duly paid in full
or made adequate provision for the payment of all Taxes for all
periods ending at or prior to the date of this
Agreement.
SECTION 2.13
Absence of
Changes.
Since December 31, 2004, Seller has conducted
its operations in the ordinary course of business and, except as
set forth on Exhibit D, there has not been:
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any material
adverse change in the business, operations, properties, condition
(financial or other), assets, liabilities (contingent or
otherwise), income or business of Seller;
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any damage,
destruction or loss (whether or not covered by insurance)
materially adversely affecting the properties or business of
Seller;
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any change in
the authorized capital stock of Seller or in its securities
outstanding or any change in the Seller’s ownership interests
or any grant of any options, warrants, calls, conversion rights or
commitments or the declaration or payment of any dividend or other
distribution, as may be appropriate to the ownership structure of
the company;
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any increase in
the compensation payable or to become payable by Seller to any of
its officers, directors, stockholders, employees, consultants or
agents, except for ordinary and customary bonuses and salary
increases for employees in accordance with past
practice;
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any work
interruptions, labor grievances or claims filed, or any proposed
law, regulation or event or condition of any character materially
adversely affecting the business or future prospects of
Seller;
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any sale or
transfer, or any agreement to sell or transfer, any material
assets, properties or rights of Seller to any person;
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any
cancellation, or agreement to cancel, any indebtedness or other
obligation owing to Seller;
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any increase in
Seller's indebtedness, other than accounts payable incurred in the
ordinary course of business;
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any plan,
agreement or arrangement granting any preferential rights to
purchase or acquire any interest in any of the assets, property or
rights of Seller or requiring consent of any party to the transfer
and assignment of any such assets, property or rights;
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any purchase or
acquisition of, or agreement, plan or arrangement to purchase or
acquire, any property, rights or assets outside of the ordinary
course of Seller's businesses;
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any waiver of
any material rights or claims of Seller;
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any material
breach, amendment or termination of any material contract,
agreement, license, permit or other right to which Seller is a
party; or
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any transaction
by Seller outside the ordinary course of business.
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SECTION 2.14
Intangible
Property.
Seller has previously disclosed to Purchaser or
its management an accurate list of all patents, patent
applications, trademarks, service marks, trade names, copyrights,
and other intellectual property or proprietary property rights
owned or used by Seller. Seller owns or possesses sufficient legal
rights to use all of such items without conflict with or
infringement of the rights of others.
Seller has fully provided Purchaser or its
management with all the information that Purchaser has requested in
analyzing whether to consummate the purchase of the Business.
Neither of the information so provided nor any representation or
warranty of the Sellers contained in this Agreement contains any
untrue statement or omits to state a material fact necessary in
order to make the statements herein or therein, to the best of the
Sellers knowledge, in light of the circumstances under which they
were made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
PURCHASER
Purchaser represents and warrants to Seller and
the Managing Member as follows:
SECTION 3.01
Authorization;
Approvals.
Purchaser has the full legal right, power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and
validly authorized, and executed and delivered by Purchaser, and,
assuming the due execution and delivery by Seller, constitutes a
valid and binding agreement of Purchaser, enforceable against
Purchaser in accordance with its terms.
No declaration, filing or registration with, or
notice to, or authorization, consent or approval of, any
governmental or regulatory body or authority is necessary for the
execution and delivery of this Agreement by Purchaser or the
consummation by Purchaser of the transactions contemplated hereby,
other than such declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not made or
obtained, as the case may be, would not, in the aggregate, have a
material adverse effect on the business, operations, properties,
assets, condition (financial or other), results of operations or
prospects of the Purchaser.
While both parties will make every effort to
ensure that this transaction will be a tax free exchange between
the Purchaser and Seller, Purchaser can make no representations or
assurances that this will be achieved and there will be no
obligations on Purchaser in the event the IRS determines that the
transaction is taxable to Seller or Managing Member.
ARTICLE IV
POST-CLOSING COVENANTS
The parties to this Agreement further covenant
and agree as follows:
SECTION 4.01
Managing Member’
Agreement to Consult.
Purchaser will pay the fees, expenses and
disbursements of Purchaser and its agents, representatives,
financial advisors, accountants and counsel incurred in connection
with the execution, delivery and performance of this Agreement and
any amendments thereto. Seller will pay the fees, expenses and
disbursements of Seller and their respective agents,
representatives, financial advisors, accountants and counsel
incurred in connection with the execution, delivery and performance
of this Agreement and any amendments hereto.
ARTICLE V
THE CLOSING
SECTION 5.01
The
Closing
The Closing of the transactions contemplated by
this Agreement (the “Closing”) shall take place at the
offices of HouseRaising, Inc., 4801 E. Independence Blvd., Suite
201, Charlotte, NC 28212 on the 12 TH day of August,
2005 at 10:00 a.m, or at such other place and time as may be agreed
upon by the parties. The signing of this Agreement and the Closing
shall be simultaneous, and a transfer of HRAI shares shall be
initiated in the amount of 500,000 shares in the name of the
Seller, against delivery of a Deed of General Conveyance, Transfer
and Assignment for the Assets and an executed copy of this
Agreement and the Exhibits thereto by the Seller and Managing
Member to the Purchaser. The effective date of the closing will be
retroactive to January 1, 2005.
ARTICLE VI
INDEMNIFICATION
Seller, Managing Member and Purchaser each make
the following covenants:
SECTION 6.01
General Indemnification by
Seller and Managing Member.
In addition to the indemnification covenants set
forth in Section 1.04 of this Agreement, Seller and Managing
Member, jointly and severally, covenant and agree that they will
indemnify, defend, protect and hold harmless Purchaser and its
employees, agents, representatives and affiliates, at all times
from and after the date of this Agreement until the Expiration Date
(as defined in Section 7.06), from and against all claims, damages,
actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses (including specifically, but without limitation,
reasonable attorneys' fees and expenses of investigation) incurred
by any of such indemnified persons as a result of or arising from
(i) any breach of the representations and warranties of Seller or
Managing Member set forth herein or in the Schedules or
certificates delivered in connection herewith, or (ii) any breach
or nonfulfillment of any covenant or agreement on the part of
Seller or Managing Member under this Agreement.
SECTION 6.02
General Indemnification by
Purchaser.
Purchaser covenants and agrees that it will
indemnify, defend, protect and hold harmless the Seller and
Managing Member, at all times from and after the date of this
Agreement until the Expiration Date from and against all claims,
damages, actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of
investigation) incurred by Seller or Managing Member as a result of
or arising from (i) any breach of the representations and
warranties of Purchaser set forth herein or in the Schedules or
certificates attached hereto, or (ii) any breach or nonfulfillment
of any covenant or agreement on the part of Purchaser under this
Agreement.
SECTION 6.03
Third Person
Claims.
Promptly after any party hereto (hereinafter the
"Indemnified Party") has received notice of or has knowledge of any
claim by a person not a party to this Agreement ("Third Person"),
of the commencement of any action or proceeding by a Third Person,
the Indemnified Party shall give to the party obligated to provide
indemnification pursuant to Section 1.04, 6.01 or 6.02 hereof
(hereinafter the "Indemnifying Party") written notice of such claim
or the commencement of such action or proceeding. Such notice shall
state the nature and the basis of such claim and a reasonable
estimate of the amount thereof. The Indemnifying Party shall have
the right to defend and settle, at its own expense and by its own
counsel, any such matter so long as the Indemnifying Party pursues
the same diligently and in good faith. If the Indemnifying Party
undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified
Party shall cooperate with the Indemnifying Party and its counsel
in the defense thereof and in any settlement thereof. Such
cooperation shall include, but shall not be limited to, furnishing
the Indemnifying Party with any books, records and other
information reasonably requested by the Indemnifying Party and in
the Indemnified Party's possession or control. All Indemnified
Parties shall use the same counsel, which shall be the counsel
selected by Indemnifying Party, provided that if counsel to the
Indemnifying Party shall have a conflict of interest that prevents
such counsel from representing the Indemnified Party, the
Indemnified Party shall have the right to participate in such
matter through counsel of its own choosing and the Indemnifying
Party will reimburse the Indemnified Party for the expenses of its
counsel. After the Indemnifying Party has notified the Indemnified
Party of its intention to undertake to defend or settle any such
asserted liability, and for so long as the Indemnifying Party
diligently pursues such defense, the Indemnifying Party shall not
be liable for any additional legal expenses incurred by the
Indemnified Party in connection with any defense or settlement of
such asserted liability. If the Indemnifying Party desires to
accept a final and complete settlement of any such Third Person
claim and the Indemnified Party refuses to consent to such
settlement, then the Indemnifying Party's liability under this
Section with respect to such Third Person claim shall be limited to
the amount so offered in settlement by said Third Person and the
Indemnified Party shall reimburse the Indemnifying Party for any
additional costs of defense which it subsequently incurs with
respect to such claim and all additional costs of settlement or
judgment. If the Indemnifying Party does not undertake to defend
such matter to which the Indemnified Party is entitled to
indemnification hereunder, or fails diligently to pursue such
defense, the Indemnified Party may undertake such defense through
counsel of its choice, at the cost and expense of the Indemnifying
Party, and
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