Asset Purchase
Agreement
by and among
Luxi Group, LLC,
Odimo Incorporated,
And
Ashford.com, Inc.
1
Dated as of April 6, 2007
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT
(the “Agreement”) is
made and entered into as of April 6, 2007, by and among Luxi
Group, LLC, a New York limited liability company (the
“Purchaser”), Odimo Incorporated (“Odimo”),
a Delaware corporation, and Ashford.com, Inc., a Delaware
corporation and wholly-owned subsidiary of Odimo, collectively
referred to herein together with Odimo as the “Seller”)
. Certain capitalized terms used in this Agreement are
defined on Appendix 1 hereto.
RECITALS
WHEREAS , Seller was engaged in several businesses, one
of which consists of an online jewelry, diamond jewelry and watch
retailing business at www.ashford.com (the
“Business”);
WHEREAS , Purchaser desires to purchase from Seller and
Seller desires to sell to Purchaser certain of the assets of, or
related to, the Business on the terms and conditions set forth
herein;
WHEREAS , concurrent with and as a condition to the
execution of this Agreement Purchaser, Seller and the individuals
and entities listed on Exhibit A will enter into
confidentiality and non-competition agreements.
NOW, THEREFORE , in consideration of the foregoing recitals and
the mutual representations, warranties, covenants and promises
contained herein, the adequacy and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
AGREEMENT
ARTICLE 1. THE
TRANSACTION
1.1 Purchased Assets . Subject to the terms and conditions of this
Agreement, at the Closing, Seller hereby sells, transfers, conveys,
assigns and delivers to Purchaser, and Purchaser hereby purchases
from Seller, all of Seller’s right, title and interest in, to
and under the assets, properties, goodwill and rights of Seller
used in the conduct of the Business as set forth on
Schedule 1.1 hereto (collectively, the “Purchased
Assets”).
1.2 Excluded Assets . Other than as provided in Section 1.1,
all other assets of Seller (the “Excluded Assets”)
shall not be included in the Purchased Assets. The Excluded Assets
shall include:
(a) Cash . Cash, cash equivalents,
merchant deposits in transit, deposits with credit card companies
and marketable securities;
(b) Accounts Receivable . Accounts
receivable associated with sales and transactions entered into
prior to the Closing Date.
(c) All Debt . Any intercompany or
intracompany receivable cash balances between Seller and any of its
Affiliates or between any of its Affiliates;
(d) Corporate Documents . Corporate
seals, certificates of incorporation, minute books, stock transfer
records, or other records related to the corporate organization of
Seller;
(e) Insurance Policies . All insurance
policies;
(f) Claims . All claims,
choses-in-action, rights in action, rights to tender claims or
demands to Seller’s insurance companies, rights to any
insurance proceeds, and other similar claims; and
(g) Rights Under Certain Agreements . All
rights under a Transaction Agreement.
1.3 Assumed Liabilities. Purchaser agrees that at the Closing, Purchaser
shall assume those Liabilities of the Seller listed on
Schedule 1.3 hereto (collectively, the “Assumed
Liabilities”).
1.4 Retained Liabilities . Other than the Assumed Liabilities, Purchaser
shall not assume and shall not be liable or responsible for any
Liability of Seller, any direct or indirect subsidiary of Seller
(each, a “Subsidiary”) or any Affiliate of Seller
(collectively, the “Retained Liabilities”) whether
arising before or after the Closing Date. Without limiting the
foregoing, the Retained Liabilities shall include, and Purchaser
shall not be obligated to assume, and does not assume, and hereby
disclaims any of the following Liabilities of Seller, its
Subsidiaries or its Affiliates:
(a) Any Liability attributable to any
assets, properties or Contracts that are not included in the
Purchased Assets;
(b) Any Liability for breaches of any
Contract included in the Purchased Assets on or prior to the
Closing Date or any Liability for payments or amounts due under any
such Contract on or prior to the Closing Date;
(c) Any Liability to GSI Commerce, Inc.
under the Asset Purchase Agreement by and between Seller and
Ashford.com, Inc. dated December 6, 2002;
(d) Any Liability for Taxes attributable to
or imposed upon Seller or its Affiliates for any period, or
attributable to or imposed upon the Purchased Assets on or prior to
the Closing Date, including any Transfer Taxes;
(e) Any Liability for or with respect to
any loan, other indebtedness, or account payable, including any
such Liabilities owed to Affiliates of Seller;
(f) Any Liability arising from accidents,
occurrences, misconduct, negligence, breach of fiduciary duty or
statements made or omitted to be made (including libelous or
defamatory statements) on or prior to the Closing Date, whether or
not covered by workers’ compensation or other forms of
insurance;
(g) Any Liability arising as a result of
any legal or equitable action or judicial or administrative
proceeding initiated at any time, to the extent related to any
action or omission on or prior to the Closing Date, including any
Liability for (i) infringement or misappropriation of any
Intellectual Property Rights or any other rights of any Person
(including any right of privacy or publicity); or
(ii) violations of any Legal Requirements (including federal
and state securities laws);
(h) Any Liability incurred in connection
with the making or performance of this Agreement and the
Transaction;
(i) Any Liability incurred in connection
with a violation of or arising under Environmental Laws or any
other Legal Requirement;
(j) Any Liability for expenses and fees
incurred by Seller incidental to the preparation of the Transaction
Agreements, preparation or delivery of materials or information
requested by Purchaser, and the consummation of the Transaction,
including all broker, counsel and accounting fees and Transfer
Taxes;
(k) Any Liability arising out of
transactions, commitments, infringements, acts or omissions not in
the ordinary course of business;
(l) Any Liability arising out of any Seller
Benefit Plan or contract of insurance for employee group medical,
dental or life insurance plans;
(m) Any Liability for making payments of
any kind to employees and independent contractors (including as a
result of the Transaction, the termination of an employee by
Seller, or other claims arising out of the terms of employment with
Seller) or with respect to payroll taxes;
(n) Any Legal Requirement applicable to
Seller, the Purchased Assets or the Retained Liabilities on or
prior to the Closing Date or any Liability for a violation of such
a Legal Requirement;
(o) Any Liability to any stockholders of
Seller;
(p) Any Liability for credit balances,
credit memos and all other amounts due to dealers, distributors and
customers;
(q) Any Liability related to or arising
from the acquisition of the Business by Seller;
(r) Any Liability associated with the
Federal CAN-SPAM Act or violations of Seller’s privacy
policies associated with collection, retention, use, transfer or
sale of customer information; or
(s) Any costs or expenses incurred in
connection with shutting down, deinstalling and removing equipment
not purchased by Purchaser.
ARTICLE 2. CONSIDERATION FOR
TRANSFER
2.1 Purchase Price and Payment
. Subject to the terms of this
Agreement, as full consideration for the sale, assignment, transfer
and delivery of the Purchased Assets and the execution and delivery
of the Transaction Agreements by Seller to Purchaser, Purchaser is
paying an aggregate purchase price of $400,000 (the
“Purchased Assets Purchase Price”), which price
includes the payment by Purchaser to Seller on March 23, 2007
of a deposit in the amount of $100,000 (the “Deposit
Amount”), payable by wire transfer of immediately available
U.S. funds to Seller of $300,000.
2.2 Allocation of Purchase Price
. As soon as practicable after the
Closing, Purchaser and Seller shall agree to the allocation of the
Purchase Price, as adjusted pursuant to Section 2.1 ,
among the various classes of Purchased Assets (as such classes are
defined for the purposes of Section 1060 of the Code). All
allocations made pursuant to this Section 2.2 shall be
made in accordance with the requirements of Section 1060 of
the Code. None of the parties shall take a position on any Tax
Return (including IRS Form 8594), before any Tax Authority or
in any judicial proceeding that is in any manner inconsistent with
such allocation without the written consent of the other parties to
this Agreement or unless specifically required pursuant to a
determination by an applicable Tax Authority. The parties shall
promptly advise each other of the existence of any tax audit,
controversy or litigation related to any allocation
hereunder.
ARTICLE 3. CLOSING AND CLOSING
DELIVERIES
3.1 Closing; Time and Place
. The closing of the purchase and
sale provided for in this Agreement (the “Closing”)
shall occur at the offices of Fish & Richardson P.C., Citigroup
Center, 52 nd Floor, 153 East 53 rd Street,
New York, New York 10022-4611, at 2:00 P.M. (the “Closing
Time”) on the date of execution of this Agreement or at such
other time or by such other manner, including, but not limited to,
the execution of this Agreement and all accompanying documentation
via facsimile, agreed to by the parties hereto (the “Closing
Date”).
3.2 Deliveries by Seller . On the date hereof, Seller is (i) taking
all reasonable steps necessary to place Purchaser in actual
possession and operating control of the Business and the Purchased
Assets and (ii) delivering the following items, duly executed
by Seller as applicable, all of which shall be in a form and
substance reasonably acceptable to Purchaser and Purchaser’s
counsel:
(a) General Assignment and Bill of Sale .
General Assignment and Bill of Sale covering all of the applicable
Purchased Assets, substantially in the form attached hereto as
Exhibit 3.2(a) (the “General Assignment and Bill
of Sale”);
(b) Intellectual Property Assignment .
Any and all documents necessary to properly record the assignment
to Purchaser of all of Seller’s right, title and interest in
and to the Seller Intellectual Property Rights, including the
intellectual property assignment (the “Intellectual Property
Assignment”) substantially in the form of
Exhibit 3.2(b) attached hereto;
(c) Other Conveyance Instruments . Such
other specific instruments of sale, transfer, conveyance and
assignment as Purchaser may request;
(d) FIRPTA . A FIRPTA Notification
Letter, substantially in the form attached hereto as
Exhibit 3.2(d) (the “FIRPTA Notification
Letter”);
(e) Request for Reconveyance of Deed of
Trust; Payoff and Release Letters . Payoff and release letters
from creditors of Seller, together with UCC-3 termination
statements with respect to any financing statements filed against
the Business or any of the Purchased Assets, terminating all
Encumbrances (including Tax liens) on any of the Purchased
Assets;
(f) Support Agreements . Support
Agreements covering at least 50% of the outstanding shares of
capital stock of Seller, in substantially the form attached as
Exhibit 3.2(f) (the “Support
Agreements”).
(g) Officer’s Certificate . A
Certificate executed on behalf of Seller by its Chief Executive
Officer (the “Officer’s Certificate”), certifying
that (i) all of the representations and warranties of
Purchaser in this Agreement are true and correct in all material
respects (considered collectively and individually) as of the date
of this Agreement (or, to the extent such representations and
warranties speak as of an earlier date, they shall be true and
correct in all material respects as of such earlier date) and
(ii) all of the representations and warranties of Seller in
this Agreement that contain an express materiality qualification
shall have been true and correct in all respects (considered
collectively and individually) as of the date of this
Agreement;
(h) Secretary’s Certificate . A
certificate of the Secretary of the Seller (the
“Secretary’s Certificate”) setting forth a copy
of the resolutions adopted by the Board of Directors of Seller
authorizing and approving the execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby;
(i) Certificates of Good Standing . A
certificate from the Secretary of State of each of Delaware,
Florida and each other jurisdiction where the Business is conducted
as to Seller’s good standing and payment of all applicable
Taxes;
(j) Consents . All Consents required
(i) for the transfer of the Business and the Purchased Assets;
(ii) for the consummation of the Transaction; or (iii) to
prevent a breach or termination of any Material
Contract;
(k) Termination of Licenses . To the
extent there are any licenses, Contracts or rights that grant any
Subsidiary or Affiliate of the Seller the right to use the Seller
Intellectual Property, such licenses, contracts and rights shall be
terminated as of the Closing Date and Seller shall provide
Purchaser executed copied of all termination agreements effecting
such terminations; and
(l) Trademark Settlement . A copy of the
proposed settlement agreement with Federated Department Stores
regarding Seller’s use of the trademarks
“ashford.com” and related logo in the form attached
hereto as Exhibit 3.2(l) (the “Trademark
Settlement Agreement”).
3.3 Deliveries by Purchaser
. At the Closing, Purchaser shall
cause a wire transfer to the Seller’s account, in the amount
of the Purchase Price less the Deposit Amount.
ARTICLE 4. REPRESENTATIONS AND
WARRANTIES OF SELLER
Except as specifically set forth on
Schedule 4 (the “Seller Disclosure
Schedule”) attached to this Agreement (the parts of which are
numbered to correspond to the individual Section numbers of this
Article 4 ), Seller hereby represents and warrants
(without limiting any other representations or warranties made by
Seller in this Agreement or any other Transaction Agreement) to
Purchaser as follows:
4.1 Organization, Good Standing,
Qualification . The
Seller Disclosure Schedule sets forth Seller’s jurisdiction
of organization and each state or other jurisdiction in which
Seller is qualified to do business. Seller (i) is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization; (ii) is
duly qualified to conduct business and is in corporate and tax good
standing under the laws of each jurisdiction in which the nature of
its business (including the Business), the operation of its assets
(including the Purchased Assets) or the ownership or leasing of its
properties (including the Real Property and Personal Property)
requires such qualification; and (iii) has full power and
authority required to own, lease and operate its assets and to
carry on its business (including the Business) as now being
conducted and as presently proposed to be conducted.
4.2 Authority; Binding Nature of
Agreements. Seller has
all requisite power and authority to execute and deliver this
Agreement and all other Transaction Agreements to which it is a
party and to carry out the provisions of this Agreement and the
other Transaction Agreements. The execution, delivery and
performance by Seller of this Agreement and the other Transaction
Agreements have been approved by all requisite action on the part
of Seller. This Agreement has been duly and validly executed and
delivered by Seller. Each of this Agreement and the other
Transaction Agreements constitutes, or upon execution and delivery,
will constitute, the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.
4.3 No Conflicts; Required Consents.
The execution, delivery and
performance of this Agreement or any other Transaction Agreement by
Seller do not and will not (with or without notice or lapse of
time):
(a) conflict with, violate or result in any
breach of (i) any of the provisions of Seller’s
Certificate of Incorporation or bylaws; (ii) any resolutions
adopted by the Board of Directors or stockholders of Seller;
(iii) any of the terms or requirements of any Governmental
Approval held by Seller or any of its employees or that otherwise
relates to the Business or any of the Purchased Assets; or
(iv) any provision of any Material Contract;
(b) give any Governmental Authority or
other Person the right to (i) challenge the Transaction;
(ii) exercise any remedy or obtain any relief under any Legal
Requirement or any Order to which Seller, or any of the Purchased
Assets, is subject; (iii) declare a default of, exercise any
remedy under, accelerate the performance of, cancel, terminate,
modify or receive any payment under any Material Contract; or
(iv) revoke, suspend or modify any Governmental
Approval;
(c) cause Seller or Purchaser to become
subject to, or to become liable for the payment of, any Tax, or
cause any of the Purchased Assets to be reassessed or revalued by
any Tax Authority or other Governmental Authority;
(d) result in the imposition or creation of
any Encumbrance upon or with respect to any of the Purchased
Assets; or
(e) require Seller to obtain any Consent or
make or deliver any filing or notice to a Governmental Authority or
any other Person.
4.4 Subsidiaries . None of the Purchased Assets is owned by any
Subsidiary of Seller or any other Entity and no portion of the
Business is conducted by any Subsidiary of Seller or any other
Entity.
4.5 Transactions with Affiliates
. No Affiliate (a) owns,
directly or indirectly, any debt, equity or other interest in any
Entity with which Seller is affiliated, has a business relationship
or competes other than Affiliates that own less than two percent
(2%) of the issued and outstanding capital stock of a
publicly-traded competitor of Seller; (b) is indebted to
Seller, nor is Seller indebted (or committed to make loans or
extend or guarantee credit) to any Affiliate other than with
respect to any of Seller’s obligations to pay accrued
salaries, reimbursable expenses or other standard employee
benefits; (c) has any direct or indirect interest in any asset
(including the Purchased Assets), property or other right used in
the conduct of or otherwise related to the Business; (d) has
any claim or right against Seller, and no event has occurred, and
no condition or circumstance exists, that might (with or without
notice or lapse of time) directly or indirectly give rise to or
serve as a basis for any claim or right in favor of any Affiliate
against Seller; and (e) is a party to any Material Contract or
has had any direct or indirect interest in, any Material Contract,
transaction or business dealing of any nature involving
Seller.
4.6 Material Contracts .
(a) Schedule 4.6 sets forth an
accurate, correct and complete list of all Contracts associated
with the Business or the Purchased Assets to which any of the
descriptions set forth below may apply (the “Material
Contracts”): (i) Personal Property Leases, Insurance,
Contracts affecting any Seller Intellectual Property or
Seller’s information systems or software, Contracts with
employees or contractors, Seller Benefit Plans and Governmental
Approvals; (ii) Any Contract for capital expenditures or for
the purchase of goods or services in excess of $5,000;
(iii) Any Contract obligating Seller to sell or deliver any
product or service by or through the Business at a price which does
not cover the cost (including labor, materials and production
overhead) plus the customary profit margin associated with such
product or service; (iv) Any Contract involving financing or
borrowing of money, or evidencing indebtedness, any liability for
borrowed money, any obligation for the deferred purchase price of
property in excess of $5,000 or guaranteeing in any way any
Contract in connection with any Person; (v) Any joint venture,
partnership, cooperative arrangement or any other Contract
involving a sharing of profits; (vi) Any advertising or
marketing Contract not terminable without payment or penalty on
five (5) days notice; (vii) Any Contract with respect to
the discharge, storage or removal of effluent, waste or pollutants;
(viii) Any Contract affecting any right, title or interest in
or to Real Property; (ix) Any Contract relating to any license
or royalty arrangement; (x) Any power of attorney, proxy or
similar instrument; (xi) The Charter, Bylaws and other
organizational or constitutive documents of Seller and any Contract
among stockholders of Seller; (xii) Any Contract for the
manufacture, service or maintenance of any product of the Business;
(xiii) Any Contract for the purchase or sale of any assets
other than in the ordinary course of business or for the option or
preferential rights to purchase or sell any assets; (xiv) Any
requirement or output Contract; (xv) Any Contract to indemnify
any Person or to share in or contribute to the liability of any
Person; (xvi) Any Contract for the purchase or sale of foreign
currency or otherwise involving foreign exchange transactions;
(xvii) Any Contract containing covenants not to compete in any
line of business or with any Person in any geographical
area;(xviii) Any Contract related to the acquisition of a
business or the equity of any other Entity; (xix) Any other
Contract which (i) provides for payment or performance by
either party thereto having an aggregate value of $5,000 or more;
(ii) is not terminable without payment or penalty on
five (5) days (or less) notice; or (iii) is between,
inter alia , an Affiliate and Seller; (xx) Any other
Contract that involves future payments, performance of services or
delivery of goods or materials to or by Seller of an aggregate
amount or value in excess of $5,000, on an annual basis, or that
otherwise is material to the Business or prospects of Seller;
(xxi) Any Contract which is material to the Business; and
(xxii) Any proposed arrangement of a type that, if entered
into, would be a Contract described in any of (i) through
(xxi) above.
(b) Seller has delivered to Purchaser
accurate, correct and complete copies of all Material Contracts (or
written summaries of the material terms thereof, if not in
writing), including all amendments, supplements, modifications and
waivers thereof. All nonmaterial contracts of Seller do not, in the
aggregate, represent a material portion of the Liabilities of
Seller.
(c) Each Material Contract is currently
valid and in full force and effect, and is enforceable by Seller in
accordance with its terms.
(d) (i) Seller is not in default, and no
party has notified Seller that it is in default, under any
Contract. No event has occurred, and no circumstance or condition
exists, that might (with or without notice or lapse of time)
(x) result in a violation or breach of any of the provisions
of any Material Contract; (y) give any Person the right to
declare a default or exercise any remedy under any Material
Contract; or (z) give any Person the right to accelerate the
maturity or performance of any Material Contract or to cancel,
terminate or modify any Material Contract or otherwise have a
Material Adverse Effect on Seller in connection with any Material
Contract; and (ii) Seller has not waived any of its rights
under any Material Contract.
(e) Each Person against which Seller has or
may acquire any rights under any Material Contract is
(i) Solvent and (ii) able to satisfy such Person’s
material obligations and liabilities to Seller.
(f) The Material Contracts constitute all
of the Contracts necessary to enable Seller to conduct the Business
in the manner in which such Business is currently being conducted
and in the manner in which such Business is proposed to be
conducted.
4.7 Title; Sufficiency . Seller has good and marketable title to, is
the exclusive legal and equitable owner of, and has the
unrestricted power and right to sell, assign and deliver the
Purchased Assets, including the goodwill of the ongoing and
existing business symbolized by the Purchased Assets or pertinent
thereto, including all rights in any applications or issued
registrations thereof and including the right to sue for past,
present and future infringement thereof. The Purchased Assets are
free and clear of all Encumbrances of any kind or nature, except
(a) restrictions imposed in any Governmental Approval and
(b) Encumbrances disclosed on Schedule 4.7 which
are being removed and released concurrently with the Closing on the
date hereof. Upon Closing, Purchaser will acquire exclusive, good
and marketable title or license to (as the case may be) the
Purchased Assets and no restrictions will exist on
Purchaser’s right to resell, license or sublicense any of the
Purchased Assets or engage in the Business.
4.8 Intellectual Property
.
(a) Schedule 4.8 lists all Seller
Intellectual Property, specifying in each case whether such Seller
Intellectual Property is owned or controlled by or for, licensed
to, or otherwise held by or for the benefit of Seller, including
all Registered Intellectual Property Rights owned by, filed in the
name of or applied for by Seller and used in the Business (the
“Seller Registered Intellectual Property
Rights”).
(b) Each item of Seller Intellectual
Property (i) is valid, subsisting and in full force and
effect, (ii) has not been abandoned or passed into the public
domain and (iii) is free and clear of any
Encumbrances.
(c) The Seller Intellectual Property
constitutes all the Intellectual Property Rights used in and/or
necessary to the conduct of the Business as it is currently
conducted, and as it is currently planned or contemplated to be
conducted by Seller prior to the Closing and by Purchaser following
the Closing.
(d) Each item of Seller Intellectual
Property either (i) is exclusively owned by Seller and was
written and created solely by employees of Seller acting within the
scope of their employment or by third parties, all of which
employees and third parties as works made for hire, have, except as
provided in the U.S. Copyright Act, validly and irrevocably
assigned all of their rights, including Intellectual Property
Rights therein, to Seller, and no third party owns or has any
rights to any such Seller Intellectual Property, or (ii) is
duly and validly licensed to Seller for use in the manner currently
used by Seller in the conduct of the Business and, as it is
currently planned or contemplated to be used by Seller in the
conduct of the Business prior to the Closing and by Purchaser
following the Closing.
(e) In each case in which Seller has
acquired any Intellectual Property Rights from any Person, Seller
has obtained, except as provided in the U.S. Copyright Act, a valid
and enforceable assignment sufficient to irrevocably transfer all
rights in such Intellectual Property Rights (including the right to
seek past and future damages and equitable relief with respect
thereto) to Seller. No Person who has licensed Intellectual
Property Rights to Seller has ownership rights or license rights to
improvements made by Seller in such Intellectual Property Rights.
Seller has not transferred ownership of, or granted any exclusive
license of or right to use, or authorized the retention of any
exclusive rights to use or joint ownership of, any Intellectual
Property Rights that is or was Seller Intellectual Property to any
Person.
(f) There are no facts, circumstances or
information that (i) would render any Seller Intellectual
Property invalid or unenforceable, (ii) would adversely affect
any pending application for any Seller Registered Intellectual
Property Right, or (iii) would adversely affect or impede the
ability of Seller to use any Seller Intellectual Property in the
conduct of the Business as it is currently conducted or as it is
currently planned or contemplated to be conducted by Seller prior
to Closing or by Purchaser following the Closing. Seller has not
misrepresented, or failed to disclose, and has no Knowledge of any
misrepresentation or failure to disclose, any fact or circumstances
in any application for any Seller Registered Intellectual Property
Right that would constitute fraud or a misrepresentation with
respect to such application or that would otherwise affect the
validity or enforceability of any Seller Registered Intellectual
Property Right.
(g) All necessary registration, maintenance
and renewal fees in connection with each item of Seller Registered
Intellectual Property Rights have been paid and all necessary
documents and certificates in connection with such Seller
Registered Intellectual Property Rights have been filed with the
relevant patent, copyright, trademark, domain name registries or
other authorities in the United States or foreign jurisdictions, as
the case may be, for the purposes of maintaining such Seller
Registered Intellectual Property Rights. There are no actions that
must be taken by Seller within one hundred twenty (120) days
following the Closing Date, including the payment of any
registration, maintenance or renewal fees or the filing of any
responses to office actions, documents, applications or
certificates for the purposes of obtaining, maintaining,
perfecting, preserving or renewing any Registered Intellectual
Property Rights. To the maximum extent provided for by, and in
accordance with, applicable laws and regulations or registration
requirements, Seller has recorded in a timely manner each such
assignment of a Registered Intellectual Property Right assigned to
Seller with the relevant governmental authority and domain name
registries, including without limitation the United States Patent
and Trademark Office (the “PTO”), the U.S. Copyright
Office or their respective counterparts in any relevant foreign
jurisdiction, as the case may be.
(h) Seller has taken all necessary action
to maintain and protect (i) the Seller Intellectual Property,
and (ii) the secrecy, confidentiality, value and
Seller’s rights in the Confidential Information and Trade
Secrets of Seller and those provided by any Person to Seller,
including by having and enforcing a policy requiring all current
and former employees, consultants and contractors of Seller to
execute appropriate confidentiality and assignment agreements. All
copies thereof shall be delivered to Purchaser at Closing. Seller
has no Knowledge of any violation or unauthorized disclosure of any
Trade Secret or Confidential Information related to the Business,
the Purchased Assets, or obligations of confidentiality with
respect to such. Only the individuals named in the Seller
Disclosure Schedule, which describes their relationship with
Seller, have had access to such Trade Secrets and Confidential
Information, and each such individual has signed a confidentiality
agreement with respect thereto.
(i) The operation of the Business as it is
currently conducted, or as it is currently planned or contemplated
to be conducted by Seller prior to the Closing, does not and will
not, and will not when operated by Purchaser substantially in the
same manner following the Closing, infringe or misappropriate any
Intellectual Property Rights of any Person, violate any right of
any Person (including any right to privacy or publicity), defame or
libel any Person or constitute unfair competition or trade
practices under the laws of any jurisdiction, and Seller has not
received notice from any Person claiming that such operation
infringes or misappropriates any Intellectual Property Rights of
any Person (including any right of privacy or publicity), or
defames or libels any Person or constitutes unfair competition or
trade practices under the laws of any jurisdiction (nor does Seller
have Knowledge of any basis therefor).
(j) To Seller’s Knowledge, no Person
is violating, infringing or misappropriating any Seller
Intellectual Property Right.
(k) There are no Proceedings before any
Governmental Authority (including before the PTO) anywhere in the
world related to any of the Seller Intellectual Property, including
any Seller Registered Intellectual Property Rights.
(l) No Seller Intellectual Property is
subject to any Proceeding or any outstanding decree, order,
judgment, office action or settlement agreement or stipulation that
restricts in any manner the use, transfer or licensing thereof by
Seller or that may affect the validity, use or enforceability of
such Seller Intellectual Property.
(m) There is no Material Contract affecting
any Seller Intellectual Property under which there is any dispute
regarding the scope of such Material Contract, or performance under
such Material Contract, including with respect to any payments to
be made or received by Seller thereunder.
(n) All Seller Intellectual Property will
be fully transferable, alienable or licensable by Purchaser without
restriction and without payment of any kind to any third party. The
consummation of the Transaction as contemplated hereby will not
result in any loss of, or the diminishment in value of, any Seller
Intellectual Property or the right to use any Seller Intellectual
Property.
(o) Neither this Agreement nor the
Transaction will result in (i) Purchaser granting to any third
party any right to, or with respect to, any Intellectual Property
Right owned by, or licensed to, Purchaser; (ii) Purchaser
being bound by, or subject to, any non-compete or other restriction
on the operation or scope of its businesses, including the
Business; or (iii) Purchaser being obligated to pay any
royalties or other amounts to any third party.
(p) There are no licenses, Contracts or
rights that grant any Subsidiary of the Seller the right to use any
Seller Intellectual Property.
4.9 Suppliers and Affiliates
. Seller has not entered into any
Contract under which Seller is restricted from selling, licensing
or otherwise distributing any of its products to any class of
customers, in any geographic area, during any period of time or in
any segment of the market. There is no purchase commitment which
provides that any supplier will be the exclusive supplier of Seller
or distributor. There is no purchase commitment requiring Seller to
purchase the entire output of a supplier.
4.10 Seller Products and Product
Warranty . All products
manufactured, processed, distributed, shipped or sold by Seller in
the context of operation of the Business and any services rendered
by Seller in the context of operation of the Business have been in
conformity with all applicable contractual commitments and all
expressed or implied warranties. The Seller Disclosure Schedule
sets forth an accurate, correct and complete statement of all
written warranties, warranty policies, service and maintenance
agreements of the Business. No products heretofore manufactured,
processed, distributed, sold, delivered or leased by Seller in the
context of operation of the Business are now subject to any
guarantee, written warranty, claim for product liability, or patent
or other indemnity. All warranties are in conformity with the
labeling and other requirements of the Magnuson-Moss Warranty Act
and other applicable laws.
4.11 Employees and Consultants
.
(a) Employees and Contracts . No employee
of Seller, including but not limited to the individuals listed on
Schedule 4.11 has been granted the right to continued
employment by Seller or to any material compensation following
termination of employment with Seller. Schedule 4.11
lists all employees of Seller, and each such employee’s job
title and annual compensation.
(b) Disputes . There are no claims,
disputes or controversies pending or, to the Knowledge of Seller,
threatened involving any employee or group of employees or
pertaining to any Legal Requirement.
(c) WARN Act . Seller is in full
compliance with the Worker Readjustment and Notification Act (the
“WARN Act”) (29 USC §2101) and similar applicable
state or local laws, including all obligations to promptly and
correctly furnish all notices required to be given thereunder in
connection with any “plant closing” or “mass
layoff” to “affected employees”,
“representatives” and any state dislocated worker unit
and local government officials. No reduction in the notification
period under the WARN Act is being relied upon by Seller. The
Seller Disclosure Schedule sets forth an accurate, correct and
complete list of all employees terminated (except with cause, by
voluntarily departure or by normal retirement), laid off or
subjected to a reduction of more than 50% in hours or work during
the two full calendar months and the partial month preceding this
representation and warranty.
4.12 Seller Benefit Plans
.
(a) Schedule 4.12(a)
identifies each Seller Benefit Plan. Each Seller Benefit Plan has
been maintained in compliance in all material respects with its
terms and with the requirements under applicable law, including but
not limited to ERISA and the Code.
(b) None of the Seller Benefit Plans is a
(i) a Multiemployer Plan, (ii) a Defined Benefit Plan,
(iii) any plan that is subject to Section 412 of the
Code, or (iv) a plan intended to be qualified under
Section 401(a) of the Code; and neither Seller nor any ERISA
Affiliate has at any time within the past six (6) years
contributed to, maintained, or incurred any liability with respect
to any such plan.
(c) No Seller Benefit Plan provides
benefits, including death or medical benefits (whether or not
insured), with respect to employees or former employees of Seller
and its ERISA Affiliates beyond retirement or other termination of
service, other than coverage required by Section 4980B of the
Code and Sections 601 through 608 of ERISA (and, if
applicable, comparable state law).
Nothing contained in any of the Seller Benefit
Plans will obligate Purchaser to provide any benefits to employees,
former employees or beneficiaries of employees or former employees,
or to make any contributions to any plans from and after the
Closing.
4.13 Compliance with Laws
.
(a) Seller is, and at all times has been,
in compliance in all material respects, with each Legal Requirement
that is applicable to Seller or any of Seller’s properties,
assets (including the Purchased Assets), operations or businesses
(including the Business), and no event has occurred, and no
condition or circumstance exists, that might (with or without
notice or lapse of time) constitute, or result directly or
indirectly in, a default under, a breach or violation of, or a
failure comply with, any such Legal Requirement. Seller has not
received any notice from any third party regarding any actual,
alleged or potential violation of any Legal Requirement.
(b) To Seller’s knowledge, no
Governmental Authority has proposed or is considering any Legal
Requirement that may affect Seller, Seller’s properties,
assets (including the Purchased Assets), operations or businesses
(including the Business), or Seller’s rights
thereto.
4.14 SEC Documents, Financial
Statements .
(a) As of their respective filing dates,
each statement, report, registration statement (with the prospectus
in the form filed pursuant to Rule 424(b) of the Securities Act of
1933, as amended (the “ Securities Act ”)),
definitive proxy statement, and other filings filed with the SEC by
Seller since January 1, 2006 (collectively, the “
Seller SEC Documents ”) complied as to form in all
material respects with the requirements of the Securities Exchange
Act of 1934, as amended (the “ Exchange Act ”)
and the Securities Act and each of the Seller SEC Documents was
timely filed and did not contain any untrue statement of material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein, in light
of the circumstances in which they were made, not misleading,
except to the extent corrected, supplemented or superseded by a
subsequently filed Seller SEC Document. To the Seller’s
knowledge, as of the date hereof, none of the Seller SEC Documents
is subject to ongoing SEC review or outstanding SEC
comment.
(b) The financial statements of Seller,
including the notes thereto, included in the Seller SEC Documents
(the “ Seller Financial Statements ”)
(i) were complete and correct as of their respective dates,
(ii) complied as to form in all material respects with
applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto as of their respective
dates; (iii) have been prepared in accordance with GAAP
applied on a basis consistent throughout the periods indicated and
consistent with each other (except as may be indicated in the notes
thereto or, in the case of unaudited statements, included in
Quarterly Reports on Form 10-Q, as permitted by Form 10-Q of the
SEC); and (iv) fairly present the consolidated financial
condition and results of operations of Seller as of the respective
dates and for the respective periods indicated therein (subject, in
the case of unaudited statements, to normal, recurring year-end
adjustments). There has been no change in Seller accounting
policies except as described n the notes to the Seller Financial
Statements. The Seller does not intend to correct or restate, and
there is not any basis to restate, any of the Seller Financial
Statements.
(c) Each of the principal executive officer
and the principal financial officer of Seller (or each former
principal executive officer and each former principal financial
officer of Seller, as applicable) has made all certifications
required by Rule 13a-14 or 15d-14 under the Exchange Act or
Sections 302 and 906 of the Sarbanes-Oxley Act of 2002
(“ SOX ”) and the rules and regulations of the
SEC promulgated thereunder with respect to the Seller SEC
Documents, and the statements contained in such certifications are
true and correct. For purposes of the foregoing sentence,
“principal executive officer” and “principal
financial officer” shall have the meanings given to such
terms in SOX. Neither Seller nor any of its Subsidiaries has
outstanding, or has arranged any outstanding, “extensions of
credit” to directors or executive officers within the meaning
of Section 402 of SOX.
(d) Neither Seller nor any of its
Subsidiaries is a party to, or has any commitment to become a party
to, any joint venture, off-balance sheet partnership or any similar
contract or arrangement (including any contract or arrangement
relating to any transaction or relationship between or among Seller
and any of its Subsidiaries, on the one hand, and any
unconsolidated affiliate, including any structured finance, special
purpose or limited purpose entity or Person, on the other hand or
any “off-balance sheet arrangements” (as defined in
Item 303(a) of Regulation S-K of the SEC)).
(e) Seller maintains a system of internal
accounting controls sufficient to provide reasonable assurance
that: (i) transactions are executed in accordance with
management’s general or specific authorizations;
(ii) transactions a
