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Asset Purchase Agreement

Asset Purchase Agreement

Asset Purchase Agreement | Document Parties: ARRIS GROUP INC | DIGEO, INC | Vulcan Ventures Inc You are currently viewing:
This Asset Purchase Agreement involves

ARRIS GROUP INC | DIGEO, INC | Vulcan Ventures Inc

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Title: Asset Purchase Agreement
Governing Law: Delaware     Date: 10/2/2009
Industry: Communications Equipment     Law Firm: Troutman Sanders;Fenwick West     Sector: Technology

Asset Purchase Agreement, Parties: arris group inc , digeo  inc , vulcan ventures inc
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Exhibit 2.1

Asset Purchase Agreement

by and between

ARRIS Group, Inc.,

Digeo, Inc.

and

Vulcan Ventures Inc.

September 22, 2009

 


 

Asset Purchase Agreement

     This Asset Purchase Agreement (this “ Agreement ”) is made and entered into as of September 22, 2009 (the “ Agreement Date ”), by and between ARRIS Group, Inc., a Delaware corporation (“ Buyer ”), Digeo, Inc., a Delaware corporation (“ Seller ”) and Vulcan Ventures Inc., a Washington corporation (“ Vulcan ” and, together with Seller, the “ Seller Parties ”).

Recitals

A. The Board of Directors of Seller has determined that it would be advisable and in the best interests of Seller and its stockholders that Buyer purchase from Seller, and Seller sell, transfer and assign (or cause to be sold, transferred and assigned) to Buyer, certain of the assets of Seller, all on the terms set forth herein (the “ Asset Purchase ”), and, in furtherance thereof, has approved the Asset Purchase and the other transactions contemplated by this Agreement.

B. Vulcan is the majority stockholder of Seller and as of the date hereof is entering into the Patent Purchase Agreement (as defined herein) with Buyer for the sale by Vulcan to Buyer of certain patent applications, patents, and/or related foreign patents and applications.

C. The Seller Parties and Buyer desire to make certain representations, warranties, covenants and other agreements in connection with the Asset Purchase as set forth herein.

     NOW, THEREFORE, in consideration of the representations, warranties, covenants and other agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I
PURCHASE AND SALE

     1.1 Certain Definitions . As used in this Agreement, the following terms shall have the meanings indicated below:

          “ Action ” means any claim, action, suit, litigation, arbitration or proceeding by or before any Governmental Entity or arbitrator.

          “ Adverse Consequence ” means all Orders, damages, dues, penalties, fines, costs, amounts paid in settlement, Liabilities, Taxes, interest, Encumbrances, losses, expenses and fees, including all reasonable accounting, consultant and attorneys’ fees and court costs, costs of expert witnesses and other expenses of litigation.

          “ Affiliate ” has the meaning set forth in Rule 145 promulgated under the Securities Act.

          “ Ancillary Agreements ” means all agreements and documents executed in connection with this Agreement and the transactions contemplated hereby, including the Patent Purchase Agreement.

          “ Assigned Patent Rights ” has the meaning set forth in the Patent Purchase Agreement.

          “ Authority ” means any governmental, regulatory or administrative body, agency or authority, any court of judicial authority, any arbitrator or any public, private or industry regulatory authority, in each case, whether foreign, federal, state or local.

 


 

          “ Business ” means the business of Seller and the Seller Subsidiaries relating to media center products, including set-top boxes, interactive program guides and related features, and services, including TV portal services and all design, manufacture, commercialization and promotional efforts related thereto.

          “ Business Day ” means a day (a) other than Saturday or Sunday and (b) on which commercial banks are open for business in Seattle, Washington.

          “ Code ” means the Internal Revenue Code of 1986, as amended.

          “ Contract ” means any written legally binding contract, instrument, commitment, lease, sublease, arrangement, undertaking or other agreement as of the date hereof or as may hereafter be in effect.

          “ Deferred Payment ” means $4,000,000 withheld from the Patent Purchase Price (as defined in the Patent Purchase Agreement).

          “ Digeo Interactive ” means Digeo Interactive, LLC, a Delaware limited liability company.

          “ Employee Benefit Plan ” means any benefit or compensation plan, policy, agreement or arrangement that is an “employee benefit plan” within the meaning of Section 3(3) of ERISA, and any other written or oral plan, policy, agreement or arrangement (whether or not subject to ERISA) involving direct or indirect compensation, including health, dental, vision or life insurance coverage, vacation, loans, fringe benefits, severance benefits, unemployment benefits, change in control plans or agreements, disability benefits, retirement income, deferred compensation, bonuses, stock options, stock ownership or purchase, phantom stock, stock appreciation, stock based or other forms of incentive compensation, bonus or post-retirement compensation or benefits.

          “ Employees ” means all employees of Seller and the Seller Subsidiaries immediately before the Closing.

          “ Encumbrance ” means any lien (statutory or otherwise), pledge, mortgage, easement, encroachment, right of possession, lease, security interest, encumbrance, preference, priority or security agreement of any kind or nature whatsoever (including the interest of a vendor or lessor under any conditional sale, capitalized lease or other title retention agreement) or other restriction on transfer, except for: (i) liens or other imperfections of title that would not be reasonably likely to, individually or in the aggregate, materially impair the value of, or the ability to sell or license, the Purchased Assets; (ii) liens and encumbrances for Taxes, assessments or other government charges not yet due or which are being contested in good faith; (iii) vendor’s liens related to the accounts payable assumed by Buyer pursuant to Section 1.4(i) not exceeding the unpaid purchase price of the encumbered asset; and (iv) non-exclusive licenses and agreements entered into in the ordinary course of business.

          “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

          “ ERISA Affiliate ” means any other entity that, together with Seller or any Seller Subsidiary, is treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.

          “ GAAP ” means generally accepted accounting principles in the United States consistently applied.

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          “ Governmental Entity ” means any national, state, local or foreign government, any court, tribunal, administrative agency, commission or other governmental official, authority or instrumentality, in each case whether domestic or foreign.

          “ Indebtedness ” means all (a) indebtedness for borrowed money or for the deferred purchase price of property or services (including reimbursement and all other obligations with respect to surety bonds, letters of credit and bankers’ acceptances, whether or not matured), including the current portion of such indebtedness, (b) obligations evidenced by notes, bonds, debentures or similar instruments or by letters of credit or similar arrangements relating to Seller or the Seller Subsidiaries, including purchase money obligations or other obligations relating to the deferred purchase price of property (other than trade payables incurred in the ordinary course of business), (c) capital lease obligations, (d) obligations under direct or indirect guaranties in respect of Liabilities of others, (e) obligations in respect of outstanding or unpaid checks or drafts or overdraft obligations and (f) accrued interest, prepayment premiums or penalties related to any of the foregoing.

          “ Intellectual Property Rights ” means worldwide industrial and intellectual property rights and all rights associated therewith, including: all patents and patent applications and all reissues, divisions, renewals, reexaminations, extensions, provisionals, continuations and continuations-in-part thereof and similar or equivalent rights in inventions and discoveries; all inventions (whether patentable or not), discoveries, invention disclosures, improvements, trade secrets, rights in proprietary information, and know how; all trade names, corporate names, fictitious names, brand names, product names, common law trademarks and service marks, trademark and service mark registrations and applications therefor, trade dress, logos, symbols, slogans, internet domain names, and all goodwill associated therewith and/or symbolized thereby; all works of authorship, copyrights, copyright registrations, renewals, and applications therefor; all computer programs, systems, applications, and software, including all source code, object code, firmware, and development tools; all designs, schematics, specifications, manufacturing and other processes, and rights in prototypes and other products; all websites and all designs related thereto; all databases and data collections, including customer and supplier lists, and all rights therein; all moral and economic rights of authors and inventors, however denominated; any similar or equivalent rights to any of the foregoing; and the right to sue for past, present, and future infringement of any or all of the foregoing.

          “ IRS ” means the Internal Revenue Service.

          “ knowledge ” means, with respect to any fact, circumstance, event or other matter in question, the actual knowledge of such fact, circumstance, event or other matter of the executive officers of Seller and the Seller Subsidiaries (with respect to Seller) set forth on Schedule 1.1 (i) hereto and with respect to Vulcan, those individuals set forth on Schedule 1.1(ii) hereto.

          “ Legal Requirements ” means any federal, state, foreign, local, municipal or other law, statute, constitution, principle of common law, Order, resolution, ordinance, code, edict, decree, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Entity, including any Environmental, Health, and Safety Requirement.

          “ Liability ” means any obligation or liability, including any liability for Taxes.

          “ Material Adverse Effect ” means an effect that is or could reasonably be expected to (a) be materially adverse to the assets, liabilities, condition (financial or otherwise), results of operation or the Purchased Assets, taken as a whole, or (b) materially impair or delay the consummation of the transactions contemplated hereby, except to the extent that any such effect results from: (i) changes in

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general economic conditions (provided that such changes do not affect Seller in a substantially disproportionate manner), (ii) changes affecting the industry generally in which Seller operates (provided that such changes do not affect Seller in a substantially disproportionate manner), (iii) acts of God, or acts of war, terrorism, violence or other political events, (iv) changes in applicable laws or accounting principles after the date hereof, (v) any failure by Seller to meet internal projections or forecasts or revenue or earnings predictions for any period ending on or after the date hereof, (vi) the announcement or pendency of the Asset Purchase (including any cancellation of or delays in customer orders, any reduction in sales, any disruption in supplier, distributor, partner or similar relationships), (vii) continued incurred losses or (viii) compliance with the terms of, or the taking of any action required by, this Agreement.

          “ Moxi ” means Moxi Digital, Inc., a California corporation.

          “ Order ” means any decree, order, judgment, writ, award, injunction, stipulation or consent of or by any Governmental Entity.

          “ Permit ” means any franchise, grant, authorization, license, certification, permit, easement, variance, exception, consent, certificate, approval and order of any Governmental Entity.

          “ Person ” means any natural person, company, corporation, limited liability company, general partnership, limited partnership, trust, proprietorship, joint venture, business organization or Governmental Entity.

          “ Post-Closing Taxes ” means any Taxes (other than Transfer Taxes) for any period (or portion thereof) beginning on or after the Closing Date and any portion of a Straddle Tax Period beginning after the Closing Date that relate to, or are incurred with respect to, the Business, a Purchased Asset, an Assumed Liability, or any employee of Buyer (including any Transferred Employee).

          “ Pre-Closing Taxes ” means any Taxes (other than Transfer Taxes) for any period (or portion thereof) ending on or before the Closing Date that relate to, or are incurred with respect to, the Business, a Purchased Asset, an Assumed Liability, or any employee of Seller or any Seller Subsidiary (including any Transferred Employee), whether accrued on, before or after the Closing Date.

          “ Securities Act ” means the Securities Act of 1933, as amended.

          “ Seller Plan ” means each Employee Benefit Plan currently maintained or contributed to by Seller, any Seller Subsidiary or any ERISA Affiliate, or in respect of which Seller, any Seller Subsidiary or any ERISA Affiliate has or may have any Liability, and covering current or former employees, independent contractors, consultants, temporary employees and current or former directors of Seller or any Seller Subsidiary.

          “ Seller Subsidiary ” means each Subsidiary of Seller.

          “ Seller Net Working Capital ” means (A) the sum of Seller’s (i) accounts receivable and (ii) inventory less (B) the sum of (i) Seller’s accounts payable (excluding up to $1,000,000 in accounts payable, which Seller shall be permitted to retain) and (ii) accrued expenses (each, as defined by and determined in accordance with GAAP), in the form set forth on Schedule 1.1 (iii) hereto.

          “ Seller Net Working Capital Certificate ” means a certificate executed by the Chief Executive Officer of the Seller dated as of the Closing Date, certifying the amount of Seller Net Working Capital as of the Closing Date (including (i) an itemized list of each element of the Seller’s accounts

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receivable and inventory, and (ii) an itemized list of each element of the Seller’s accounts payable and accrued expenses).

          “ Straddle Tax Period ” shall mean any Tax period which includes, but does not end on, the Closing Date.

          “ Subsidiary ” of a specified entity means any corporation, association, business entity, partnership, limited liability company or other Person of which the specified entity, either alone or together with one or more Subsidiaries or by one or more other Subsidiaries directly or indirectly owns or controls securities or other interests representing more than fifty percent (50%) of the voting power of such Person.

          “ Tax ” (and, with correlative meaning, “ Taxes ” and “ Taxable ”) means (i) all taxes, charges, fees, duties (including custom duties), levies, or other assessments, including, any net income, alternative or add-on minimum tax, gross income, estimated, net or gross receipts, sales, use, ad valorem, value added, transfer, franchise, capital stock, profits, license, registration, withholding, payroll, social security (or equivalent), employment, unemployment, disability, excise, severance, stamp, capital gains, net or gross proceeds, real property, personal property (whether tangible or intangible), gaming, capital, lease, occupational, equalization, environmental, or other taxes, charges or fees assessed by any Governmental Entity, including any interest, penalties, or additions to tax attributable thereto; and (ii) any liability for the payment of amounts with respect to payments of a type described in clause (i) as a result of being a member of an affiliated, consolidated, combined or unitary group, or as a result of any obligation under any tax sharing arrangement or tax indemnity agreement.

          “ Tax Return ” means any return, statement, report or form (including estimated Tax returns and reports, withholding Tax returns and reports, any schedule or attachment, and information returns and reports) required to be filed or supplied to a third party with respect to Taxes.

          “ Total Consideration ” means the Purchase Price plus the Patent Purchase Price (as defined in the Patent Purchase Agreement).

          “ Transferred Employee ” means any Employee of Seller or a Seller Subsidiary who accepts employment with Buyer and commences such employment at Closing.

     1.2 Purchase and Sale . Upon the terms and subject to the conditions of this Agreement, Buyer agrees to purchase from Seller and the Seller Subsidiaries, and Seller agrees to, and to cause the Seller Subsidiaries to, sell, transfer, convey, assign and deliver to Buyer at the Closing (as defined in Section 1.8 ), free and clear of all Encumbrances, the following assets, rights and properties of Seller and the Seller Subsidiaries, whether tangible or intangible, real, personal or mixed, wherever located, and whether or not carried and reflected on the books of Seller and the Seller Subsidiaries relating to, used or employed in connection with the Business (collectively, the “ Purchased Assets ”):

               (i) the Seller Products;

               (ii) all of the rights to and interest of Seller and each Seller Subsidiary in Intellectual Property Rights, including the Seller Registered Intellectual Property Rights;

               (iii) all rights of Seller and each Seller Subsidiary under those Contracts set forth on Schedule 1.2(iii) (the “ Assigned Contracts ”);

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               (iv) all computers, equipment, furniture and other tangible assets of Seller and the Seller Subsidiaries;

               (v) Seller’s rights to and interest in those patents set forth on Schedule 1.2(v) (the “ IPDN Patents ”);

               (vi) all accounts receivable;

               (vii) except as set forth in Section 1.3(i) and on Schedule 1.3(iii) , all cash and cash equivalents on hand, in banks or in transit and any and all marketable securities;

               (viii) all inventory, consumable supplies, spare parts and repair materials and any and all other inventories of Seller and the Seller Subsidiaries (“ ¤!Inventories ”);

               (ix) the goodwill associated with the Purchased Assets;

               (x) all transferable Permits;

               (xi) all of the right, title and interest of Seller and each Seller Subsidiary in choses in action, claims and causes of action or rights of recovery or set-off of every kind and character, whether mature, contingent or otherwise, whether in tort, contract or otherwise, including under or pursuant to warranties, representations and guarantees made by manufacturers, suppliers, vendor or other Persons, in each case only to the extent they are not related to the Excluded Assets or the Excluded Liabilities; and

               (xii) rights to the names “Digeo” and “Moxi” and all derivatives thereof and all trademarks related thereto.

     1.3 Excluded Assets . For the avoidance of doubt, Seller and the Seller Subsidiaries shall retain and not sell, assign, transfer or deliver, and Buyer shall not purchase, acquire, or have any ownership claim of right in respect of the following assets (collectively, the “ Excluded Assets ”) of Seller and the Seller Subsidiaries:

               (i) (A) $1,000,000 in restricted cash related to the Letter of Credit, dated as of December 5, 2007, as amended, between Digeo Interactive and Unihan Corporation and (B) restricted cash related to the letter of credit issued in connection with the lease between Seller and University Ave. Real, LLC for the property located at 151 University Avenue, Palo Alto, California;

               (ii) all Contracts other than the Assigned Contracts;

               (iii) the rights, assets and properties described in Schedule 1.3(iii) under the heading “Excluded Assets”;

               (iv) Seller and the Seller Subsidiaries’ seals, if any, minute books and corporate record books, the general ledgers and books of original entry, all income Tax Returns and other income Tax records;

               (v) All refunds, rights of recovery and other rights relating to Taxes of the Seller and the Seller Subsidiaries;

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               (vi) All deferred Tax assets or Tax attributes of Seller and the Seller Subsidiaries (including net operating losses);

               (vii) Seller’s rights under this Agreement; and

               (viii) any stock, partnership interest, joint venture interest or other equity interest in any Person.

     1.4 Assumed Liabilities . As additional consideration for the Purchased Assets, Buyer does hereby assume, agree to perform, and in due course pay and discharge, only the following obligations and liabilities of Seller and the Seller Subsidiaries and only to the extent such obligations and liabilities are not overdue or delinquent on the Closing Date without regard to any grace period and without the incurrence of any increase in amounts due (collectively, the “ Assumed Liabilities ”):

               (i) except as set forth in Section 1.5(i) , accounts payable as of the Closing Date as set forth on the Seller Net Working Capital Certificate;

               (ii) accrued expenses as of the Closing Date as set forth on the Seller Net Working Capital Certificate;

               (iii) the liabilities of Seller and the Seller Subsidiaries as set forth on Schedule 1.4(iii) , including accrued vacation of Transferred Employees;

               (iv) the obligations and liabilities of Seller and the Seller Subsidiaries under the Assigned Contracts (but only to the extent such obligations and liabilities relate to contractual rights whose benefits accrue to Buyer from and after the Closing and are not attributable to any breach or default by Seller or any Seller Subsidiary and excluding any liabilities thereunder arising prior to the Closing Date and not expressly assumed hereunder);

               (v) the liabilities identified in Section 1.6 for which Buyer agrees therein to be responsible; and

               (vi) any Post-Closing Taxes or Taxes for which Buyer is liable pursuant to Section 4.7 .

     1.5 Excluded Liabilities . Buyer shall not assume or pay and Seller and the Seller Subsidiaries shall continue to be responsible for all Liabilities of Seller and the Seller Subsidiaries, whether or not relating to the Business, not expressly assumed by Buyer pursuant to Section 1.4 (the “ Excluded Liabilities ”). Specifically, without limiting the foregoing, Buyer shall not assume:

               (i) up to $1,000,000 in accounts payable to be mutually agreed to between Buyer and Seller as of the Closing Date, and to be set forth on the Seller Net Working Capital Certificate;

               (ii) any claim, action, suit or proceeding pending or threatened against Seller or any Seller Subsidiary as of the Closing Date, notwithstanding the disclosure thereof in the Seller Disclosure Letter or otherwise, or any subsequent claim, action, suit or proceeding arising out of or relating to such pending matters, any other similar event occurring on or prior to the Closing Date or resulting from the conduct of the Business by Seller or any Seller Subsidiary on or prior to the Closing Date;

               (iii) any Liability arising out of or relating to the Excluded Assets;

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               (iv) any Pre-Closing Taxes or Taxes for which Seller is liable pursuant to Section 4.7 ;

               (v) any Liability arising from claims, proceedings or causes of action resulting from property damage or personal injuries (including death) caused by inventory sold, products manufactured or services rendered by Seller, any Seller Subsidiary or the Business on or prior to the Closing Date;

               (vi) any Liability arising from product liability claims, with respect to products, materials or services manufactured, sold, performed or shipped by Seller, any Seller Subsidiary or the Business on or prior to the Closing Date;

               (vii) any Liability relating to the violation of or failure to comply with any Legal Requirement in connection with the operation of the Business, or the condition of the Purchased Assets, prior to the Closing;

               (viii) any Liability with respect to deferred salary, salary, wages, severance, bonus, compensation or any other labor or employment Liability of Seller or any Seller Subsidiary, including any Liability of Seller or any Seller Subsidiary with respect to any Seller Plan or other Liability of Seller or any Seller Subsidiary related to ERISA, but excluding any coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“ COBRA ”) or similar state law for qualified “M&A qualified beneficiary,” as more fully set forth in Section 4.10(c) ; and

               (ix) any Indebtedness of Seller or any Seller Subsidiary.

     1.6 Proration of Expenses and Prepaid Amounts.

          (a) The following items that relate to the Purchased Assets shall be prorated as of the Closing Date, with Seller and the Seller Subsidiaries paying and being responsible for and receiving the benefit of such items to the extent they relate to the period ending immediately prior to the Closing and Buyer paying and being responsible for and receiving the benefits of such items to the extent they relate to periods from and after the Closing Date:

               (i) payments and other charges due under the Assigned Contracts;

               (ii) personal property taxes; and

               (iii) periodically recurring governmental fees for Permits transferred to Buyer.

          (b) Within 90 days after the Closing Date, Buyer and the Seller Parties shall give notice to the other of the payment, receipt and allocation of any of the items described in Section 1.6(a) and the Seller Parties shall reimburse Buyer, or Buyer shall reimburse the Seller Parties, as the case may be, the net amount owed to the other. Seller, the Seller Subsidiaries and Buyer shall cooperate and provide each other with all supporting documentation reasonably requested by the other party with respect to the proration required by this Section 1.6 .

          (c) If Buyer or any Seller Party objects in writing to the proration of expenses and prepaid amounts set forth in any notice given pursuant to Section 1.6(b) , the parties shall attempt to resolve the dispute in good faith for twenty (20) Business Days after the other party’s receipt of such objection.

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          (d) If no resolution is reached, the dispute shall be resolved in accordance with the provisions of Section 8.9 .

     1.7 Assignment of Contracts and Rights .

          (a) Anything in this Agreement to the contrary notwithstanding, 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 or waiver of a third party thereto or any third party (including any Authority), would constitute a breach or other contravention thereof, would constitute a violation of any Legal Requirement or Order or in any way adversely affect the rights of Buyer, Seller, or any Seller Subsidiary thereunder. Prior and subsequent to the Closing, Seller and each Seller Subsidiary shall use their commercially reasonable efforts (but without any payment of money by Seller), and Buyer shall cooperate with Seller and each Seller Subsidiary, to obtain any consents or waivers to the sale or assignment of any such Purchased Asset or claim or right or any benefit arising thereunder for the assignment thereof to Buyer. With respect to any Assigned Contract that requires Buyer, as assignee, to accept and agree to be bound by all of the existing terms and conditions of such Assigned Contract, or contains a similar requirement, Buyer shall so accept and agree as required by such Assigned Contract.

          (b) To the extent, and for so long as, any such consents and waivers are not obtained with respect to any Purchased Asset or any claim or right or any benefit arising thereunder or resulting therefrom, this Agreement, to the extent permitted by applicable Legal Requirement, shall constitute an equitable assignment by Seller or a Seller Subsidiary, as the case may be, to Buyer of all of Seller’s or such Seller Subsidiaries’, as the case may be, rights, benefits, title and interest in, to and under such Purchased Asset or any claim or right or any benefit arising thereunder or resulting therefrom and Buyer shall be deemed to be Seller’s or such Seller Subsidiaries’, as the case may be, agent for the purpose of completing, fulfilling and discharging all of Seller’s or such Seller Subsidiaries’, as the case may be, rights and liabilities under such Purchased Asset or any claim or right or any benefit arising thereunder or resulting therefrom arising after the Closing, and Seller or such Seller Subsidiary, as the case may be, shall take all actions necessary to provide to Buyer the benefits of such Purchased Asset or any claim or right or any benefit arising thereunder or resulting therefrom. The Seller Parties shall hold all Buyer Indemnitees harmless from any Adverse Consequences that directly result from Seller’s or such Seller Subsidiaries’ failure to obtain any required consent to assignment of a Purchased Asset or any claim or right or any benefit arising thereunder or resulting therefrom.

          (c) Nothing in this Section 1.7 shall be deemed a waiver by Buyer of its right to have received on or before the Closing an effective assignment of all of the Purchased Assets, nor shall this Section 1.7 be deemed to constitute an agreement to exclude from the Purchased Assets any assets described in the definition of Purchased Assets in Section 1.2 .

     1.8 Closing . The Closing of the transactions contemplated hereby (the “ Closing ”) shall take place at a time and date to be specified by the parties as soon as practicable after the satisfaction or waiver of each of the conditions set forth in Article V (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions), via exchange of signatures by nationally recognized overnight courier, facsimile and/or .pdf. The date on which the Closing actually occurs is herein sometimes referred to as the “ Closing Date .”

     1.9 Purchase Price .

          (a) Purchase Price . In addition to the payment in the amount of $1,500,000 (the “ Deposit Amount ”) made by Buyer to Seller pursuant to that certain Letter of Intent, dated September 4,

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2009, between Buyer and Seller, which Deposit Amount Buyer shall forfeit if the Asset Purchase is not consummated on or before October 19, 2009, on the terms and subject to the conditions set forth in this Agreement, in consideration for the Purchased Assets, Buyer shall pay to Seller by check or wire transfer of immediately available funds an amount equal to $5,000,000 plus the sum of (A) the amount, if any, by which the Seller Net Working Capital as of the Closing Date exceeds the Seller Net Working Capital as of June 30, 2009 as set forth on Schedule 1.1(iii) hereto and (B) the aggregate amount of additional funding provided by Vulcan to Seller between October 1, 2009 and the Closing Date (collectively, the “ Closing Payment ”) (the Closing Payment, together with the Deposit Amount are hereinafter referred to collectively as the “ Purchase Price ”).

          (b) Allocation of Purchase Price . Within 90 days of the Closing Date, Buyer and Seller shall in good faith mutually agree upon a schedule allocating the Purchase Price (and Assumed Liabilities and other relevant items) among the Purchased Assets (the “ Purchase Price Allocation Schedule ”). The Purchase Price Allocation Schedule will be prepared in accordance with the applicable provisions of the Code. Buyer and Seller agree for all Tax reporting purposes to report the transactions in accordance with the Purchase Price Allocation Schedule and to not take any position during the course of any audit or other proceeding inconsistent with such schedule unless required by a determination of the applicable Governmental Entity that is final. Buyer and Seller shall make appropriate adjustments to the Purchase Price Allocation Schedule to reflect changes in the Purchase Price.

     1.10 Title Passage; Delivery of Purchased Assets .

          (a) Title Passage . Upon the Closing, all of the right, title and interest of Seller and the Seller Subsidiaries in and to all of the Purchased Assets shall pass to Buyer; provided , however , that Buyer may elect (by written notice to Seller) to require Seller and the Seller Subsidiaries to convey any of the Purchased Assets to a Subsidiary or Affiliate of Buyer rather than to Buyer, and Seller and the Seller Subsidiaries shall comply with any such election by delivering to Buyer or a Subsidiary or Affiliate of Buyer, as applicable, (i) possession of the Purchased Assets and (ii) proper assignments, conveyances and bills of sale sufficient to convey to Buyer or a Subsidiary or Affiliate of Buyer, as applicable, good and marketable title to all of the Purchased Assets (excluding the IPDN Patents and subject to any underlying Third Party Intellectual Property Rights), free and clear of all Encumbrances.

          (b) Method of Delivery of Assets; Transfer Taxes . The Purchased Assets shall be delivered to Buyer or a Subsidiary or Affiliate of Buyer, as applicable, in the form and to the location to be mutually determined by Seller and Buyer before the Closing Date at Buyer’s cost and expense; provided , that, to the extent practicable, Seller and the Seller Subsidiaries shall deliver all of the Purchased Assets through electronic delivery or in another manner reasonably calculated and legally permitted to minimize or avoid the incurrence of transfer and sales Taxes if such method of delivery does not adversely affect the condition, operability or usefulness of any Purchased Asset. Buyer and Seller will share equally in the payment of all sales, transfer, bulk sales, stamp, income, capital gains, use, purchase, value added, excise, real and personal property or other Taxes associated with the transactions contemplated by this Agreement (collectively, “ Transfer Taxes ”), including those Transfer Taxes imposed on or with respect to Buyer or the Purchased Assets. Buyer and Seller shall share equally in any expenses associated with the filing of all necessary Tax Returns and other documentation with respect to all such Taxes, fees and charges, and, if required by applicable Legal Requirements, Buyer will join Seller in the execution of any such Tax Returns and other documentation.

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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES

     Subject to the disclosures set forth in the disclosure letter of the Seller Parties delivered to Buyer concurrently with the parties’ execution of this Agreement (the “ Seller Disclosure Letter ”), the Seller Parties jointly and severally represent and warrant to Buyer as follows:

     2.1 Organization, Standing and Power . Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Digeo Interactive is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware. Moxi is a corporation duly organized, validly existing and in good standing under the laws of the State of California. Vulcan is a corporation duly organized, validly existing and in good standing under the laws of the State of Washington. Seller and each Seller Subsidiary has all corporate or limited liability company, as applicable, power and authority and all necessary governmental approvals to own, operate and lease their respective properties and to conduct their respective business as currently being conducted and are duly qualified to do business and in good standing in each jurisdiction where the failure to be so qualified or in good standing, individually or in the aggregate with any such other failures, would reasonably be expected to have a Material Adverse Effect.

     2.2 Authority; Noncontravention .

          (a) Each of the Seller Parties and the Seller Subsidiaries has all requisite corporate or limited liability company, as applicable, power and authority to enter into this Agreement or the Ancillary Agreements to which it is a party and to consummate the transactions contemplated by this Agreement and the Ancillary Agreements, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated herein and therein to be consummated by it. The execution and delivery of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements to which a Seller Party or a Seller Subsidiary is a party have been duly authorized and approved by all necessary action on the part of the appropriate Seller Parties and Seller Subsidiaries, and their respective Board of Directors or Managers, as applicable, and stockholders or members, as applicable, and no other action on the part of the Seller Parties, the Seller Subsidiaries or their respective Board of Directors, as applicable, or stockholders or members, as applicable, is required to authorize this Agreement and the Ancillary Agreements to which each is a party or to consummate the transactions contemplated hereby and thereby. This Agreement and the Ancillary Agreements to which the Seller Parties and the Seller Subsidiaries are a party have been or will be validly executed and delivered by the Seller Parties and the Seller Subsidiaries. This Agreement and the Ancillary Agreements to which the Seller Parties and the Seller Subsidiaries are (or will be) a party constitute (or will constitute) valid and binding obligations of the Seller Parties and the Seller Subsidiaries enforceable against the Seller Parties and the Seller Subsidiaries in accordance with their respective terms, subject only to the effect, if any, of (i) applicable bankruptcy and other similar Legal Requirements affecting the rights of creditors generally and (ii) rules of law governing specific performance, injunctive relief and other equitable remedies.

          (b) The execution and delivery by the Seller Parties and the Seller Subsidiaries of this Agreement and the Ancillary Agreements to which each is a party do not, and the consummation of the transactions contemplated hereby and thereby will not, result in the creation of any Encumbrance on any of the Purchased Assets or Assigned Patent Rights. Except as set forth on Schedule 2.2(b) of the Seller Disclosure Letter, the execution and delivery by the Seller Parties and the Seller Subsidiaries of this Agreement and the Ancillary Agreements to which they are a party do not, and the consummation of the transactions contemplated hereby and thereby will not, conflict with, result in any default under or violate, (A) any provision of the Certificate of Incorporation or Bylaws or other governing document of the Seller

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Parties and the Seller Subsidiaries, (B) any material Legal Requirements applicable to the Seller Parties, any Seller Subsidiary or any of the Purchased Assets or Assigned Patent Rights, or (C) require any consent, notice or approval under, result in any breach of, any loss of any benefit under or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to the other party any right of termination, vesting, amendment, acceleration or cancellation, or result in the creation of an Encumbrance on any property or asset of Seller or any Seller Subsidiary pursuant to, any Assigned Contract, except, with respect to clauses (B) and (C) only, that would not reasonably be expected to result in a Material Adverse Effect.

          (c) Except as set forth on Schedule 2.2(c) of the Seller Disclosure Letter, no consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity or any other Person is required by the Seller Parties or any Seller Subsidiary in connection with the execution and delivery of this Agreement or the Ancillary Agreements or the consummation of the transactions contemplated hereby and thereby.

     2.3 Litigation .

          (a) Except as set forth on Schedule 2.3(a) of the Seller Disclosure Letter, there is no private or governmental action, suit, proceeding, claim, arbitration, mediation, investigation, litigation, or inquiry pending or, to the knowledge of Seller, threatened before, with or by any Governmental Entity or other Person against Seller, any Seller Subsidiary or any of the Purchased Assets or Assigned Patent Rights. There is no judgment, decree, injunction, rule, settlement, order or similar written agreement to which Seller, any Seller Subsidiary or any of the Purchased Assets are subject.

          (b) Neither Seller nor any Seller Subsidiary has any present action, suit, proceeding, claim, arbitration, mediation, investigation, litigation, or inquiry against it giving rise to any Liability arising out of any injury to individuals or property as a result of the license, possession or use of any Seller Product.

          (c) There are no actions, suits, arbitrations, mediations, proceedings or claims pending or, to the knowledge of Seller or Vulcan, threatened against Seller, the Seller Subsidiaries or Vulcan that seek to restrain or enjoin the consummation of the transactions contemplated hereby or by the Ancillary Agreements.

          (d) Neither Seller, Vulcan nor any Seller Subsidiary has any action, suit, proceeding, claim, arbitration, mediation, investigation, litigation, or inquiry pending against any other Person with respect to the Purchased Assets or Assigned Patent Rights.

     2.4 Compliance with Laws; Governmental Permits .

          (a) Seller and each Seller Subsidiary has complied with, and is not in violation of, any Legal Requirement with respect to the ownership or operation of the Purchased Assets, except as would not result in a material liability with respect to the Purchased Assets.

          (b) Seller and each Seller Subsidiary has obtained each federal, state, county, local or foreign governmental consent, license, permit, grant, franchise, certification, easement, variance, exception, approval or other authorization of a Governmental Entity pursuant to which Seller and each Seller Subsidiary currently operates any of the Purchased Assets, except as would not result in a material liability with respect to the Purchased Assets (all of the foregoing consents, licenses, permits, grants, franchises, certifications, easements, variances, exceptions, approvals or other authorizations, collectively, the “ Seller Authorizations ”), and all of the Seller Authorizations are valid and in full force and effect.

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Neither Seller nor any Seller Subsidiary has received any written notice from any Governmental Entity regarding any (i) actual or possible material violation of a Legal Requirement or any Seller Authorization or any failure to comply with any term or requirement of any Seller Authorization or (ii) actual or possible revocation, withdrawal, suspension, cancellation, termination or modification of any Seller Authorization. To the knowledge of Seller, there is no threatened revocation, withdrawal, suspension, cancellation, termination or modification of any Seller Authorization.

     2.5 Taxes .

          (a) Seller and each Seller Subsidiary have complied in all material respects with all Legal Requirements relating to Taxes with respect to the Purchased Assets, have properly completed and timely filed all Tax Returns required to be filed by them prior to the Closing Date and have timely paid all Taxes required to be paid by them for which payment is due or for which they could be liable as a result of transferee liability, joint and several liability, contractual liability, or otherwise. All such Tax Returns are true, correct and complete in all material respects. To the extent that the Buyer would have successor liability or a lien would be placed on any of the Purchased Assets, neither Seller nor any Seller Subsidiary has any liability for Taxes in excess of the amount so paid or accruals or reserves so established, in each case, with respect to the Purchased Assets.

          (b) There are no existing Encumbrances for Taxes on any of the Purchased Assets (except for Encumbrances for Taxes that are not yet due and payable).

          (c) Seller and each Seller Subsidiary have (i) withheld all required amounts from payments to their respective employees, agents, contractors, nonresidents, and other third parties and timely remitted such amounts to the proper Governmental Entity in accordance with applicable Legal Requirements; (ii) timely paid all employment Taxes with respect to their respective employees (including all Transferred Employees); and (iii) timely filed all Tax Returns relating to withholding, employment and unemployment Taxes with the appropriate Governmental Entity in accordance with applicable Legal Requirements.

          (d) No portion of the cost of any of the Purchased Assets was financed directly or indirectly from the proceeds of any tax exempt state or local government obligation described in Section 103(a) of the Code. None of the Purchased Assets is tax exempt use property under Section 168(h) of the Code. None of the Purchased Assets constitutes an interest in any arrangement taxed as a corporation or partnership for any income tax purposes.

          (e) Neither Seller nor any Seller Subsidiary has extended any statute of limitations relating to any Taxes for which Buyer could be liable under this Agreement or pursuant to applicable Legal Requirements. With respect to any Taxes relating to the Purchased Assets for which Buyer could be liable under this Agreement or pursuant to applicable Legal Requirements, no audits or other proceedings are ongoing or, to the knowledge of Seller, threatened with respect to any Taxes of Seller or any Seller Subsidiary (including any Pre-Closing Taxes).

     2.6 Intellectual Property .

          (a) As used in this Agreement, the following terms shall have the meanings indicated below:

               (i) “ Seller IP Rights ” means (A) the Intellectual Property Rights included in the Purchased Assets and (B) the Assigned Patent Rights.

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               (ii) “ Seller-Owned IP Rights ” means Seller IP Rights that are owned by a Seller Party, including the Assigned Patent Rights.

               (iii) “ Seller Registered Intellectual Property Rights ” means (A) the United States, international and foreign: (w) patents and patent applications (including provisional applications) (“ Patents ”); (x) registered trademarks, applications to register trademarks, intent-to-use applications, or other registrations or applications related to trademarks (“ Trademarks ”); (y) registered Internet domain names; and (z) registered copyrights and applications for copyright registration; registered or filed in the name of, a Seller Party or any Seller Subsidiary and listed in Schedule 2.6(a)(iii) of the Seller Disclosure Letter, and (B) the Assigned Patent Rights.

               (iv) “ Third Party Intellectual Property Rights ” means any Intellectual Property Rights owned by a third party.

               (v) “ Seller Products ” means all software, products or services that are, as of the Closing Date, designed, produced, marketed, licensed, sold, used, distributed or performed by or on behalf of Seller or any Seller Subsidiary.

               (vi) “ Seller Software ” means all computer software, databases and data collections and all rights thereto, including all enhancements, versions, releases and updates of the foregoing, developed by or for Seller or any Seller Subsidiary as of the Closing. Seller Software includes all source code, object code, firmware, development tools, files, records and data, and all media on which any of the foregoing is recorded.

               (vii) “ Seller Source Code ” means, collectively, any software source code or confidential manufacturing specifications or designs, any material portion or aspect of software source code or confidential manufacturing specifications or designs, or algorithm contained in any software source code or confidential manufacturing specifications or designs, of any Seller-Owned IP Rights or Seller Products.

          (b) Either a Seller Party or a Seller Subsidiary owns and has good and exclusive title to each item of Seller-Owned IP Rights that is material to the Business and each item of Seller Registered Intellectual Property Rights, free and clear of any Encumbrances, that would in the aggregate constitute a Material Adverse Effect. Except as set forth on Schedule 2.6(b) of the Seller Disclosure Schedule, no other royalties or other consideration are payable by either Seller Party or any Seller Subsidiary in connection with its use and enjoyment of Seller-Owned IP Rights.

          (c) Each license, sublicense or other Contract to which a Seller Party or any Seller Subsidiary is a party or by which a Seller Party or any Seller Subsidiary is bound under which any right, title or interest in and/or ownership of any Seller IP Rights, or any prior version thereof (“ Seller License ”), was acquired, is granted by a Seller Party or a Seller Subsidiary to another Person, or is granted by another Person to a Seller Party or a Seller Subsidiary, is a valid and binding obligation of such Seller Party or such Seller Subsidiary and, to the knowledge of Seller and Vulcan, of each other party thereto. To the knowledge of Seller, neither Seller, any Seller Subsidiary nor, any other Person, is in breach or violation of, or default under, any Seller License, and no event has occurred, is pending or is threatened, which, after the giving of notice, with lapse of time, or otherwise, would constitute a breach or default by Seller, any Seller Subsidiary or any other Person under any Seller License that is material to the Business. Except as set forth in Schedule 2.6(c) of the Seller Disclosure Letter, the consummation of the transactions contemplated by this Agreement will neither violate nor result in the breach, modification, cancellation, termination, or suspension of a Seller License.

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          (d) Neither the execution and delivery or effectiveness of this Agreement, nor the Ancillary Agreements, nor the performance of Seller’s obligations hereunder or thereunder, will conflict with or cause, or give rise to a right of, the forfeiture, termination, cancellation, diminution or unenforceability of any Seller IP Rights (that are not Seller-Owned IP Rights) that would have a Material Adverse Effect.

          (e) To the knowledge of the Seller, all Seller-Owned IP Rights are valid, subsisting, and enforceable. There are no claims pending or threatened that challenged the validity or enforceability of any Seller-Owned IP Rights. With respect to Seller Registered Intellectual Property Rights, all registration, maintenance and renewal fees currently due in connection with such Seller Registered Intellectual Property Rights have been paid and all documents, recordations and certificates in connection with such Seller Registered Intellectual Property Rights currently required to be filed have been filed with the relevant patent, copyright, trademark or other authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of prosecuting, maintaining and perfecting such Seller Registered Intellectual Property Rights and recording the applicable Seller Party’s or Seller Subsidiary’s ownership interests therein. With respect to the Patents, Seller Parties and the Seller Subsidiaries have complied with their duty of candor to the United States Patent and Trademark Office and patent offices in all jurisdictions outside the United States in which such Patents have been filed or prosecuted. Seller Registered Intellectual Property Rights have not been obtained through any fraudulent activity or misrepresentation.

          (f) To the knowledge of the Seller, no Intellectual Property Rights of any third party that are material to the Business as currently conducted that is not included in Seller IP Rights are used to make, market, offer for sale, sell, license, or otherwise dispose of Seller Products.

          (g) Other than the Assigned Patent Rights, Vulcan owns no Intellectual Property Rights that are necessary to be used in the Business as currently conducted.

          (h) Within the last year from the Agreement Date, neither the Seller Parties nor any Seller Subsidiary has brought any action, suit or proceeding for infringement, violation, misappropriation, or dilution of any Intellectual Property Rights or breach of any agreement involving Seller IP Rights that would have a Material Adverse Effect.

          (i) Except as set forth in Schedule 2.6(i) of the Seller Disclosure Letter, to the knowledge of Seller, the development, marketing, sale, leasing, licensing or delivery of the Purchased Assets (including Seller Products) as such activities are currently conducted by Seller and the Seller Subsidiaries do not infringe or misappropriate any Third Party Intellectual Property Rights that would have a Material Adverse Effect. Within the last year from the Agreement Date, neither Seller nor any Seller Subsidiary has received any written offer to license (or any other form of written notice of) any Third Party Intellectual Property Rights.

          (j) Except as set forth in Schedule 2.6(j) of the Seller Disclosure Letter, none of the Seller-Owned IP Rights is subject to any proceeding or outstanding order, settlement, agreement or stipulation restricting in any manner the use, transfer, or licensing by Seller, any Seller Subsidiary or Vulcan of any Seller-Owned IP Right.

          (k) Seller and each Seller Subsidiary have taken commercially reasonable steps to protect and preserve the confidentiality of all confidential or non-public information included in the Purchased Assets that are material to the Business as currently conducted, to the extent that Seller or such Seller Subsidiary has elected to maintain such information as a trade secret.

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          (l) All Seller-Owned IP Rights were created by employees or by consultants and contractors of Seller or a Seller Subsidiary, who have created such Seller-Owned IP Rights within the scope of their employment or who have executed confidentiality and assignment of inventions agreement(s), or each author, inventor or developer of such Seller-Owned IP Rights has irrevocably assigned to Seller or a Seller Subsidiary in writing all proprietary rights in such Person’s work with respect to such Seller-Owned IP Rights. No other Person has made any claims to authorship or ownership of any part thereof. None of Seller-Owned IP Rights has been claimed to have been misappropriated from any third party. No current or former employee, independent contractor or consultant of Seller has asserted any continued interest in any Seller-Owned IP Rights.

          (m) No Patents within Seller-Owned IP Rights is currently involved in any interference, reissue, reexamination or opposition proceeding and, to the knowledge of Seller and Vulcan, no such action has been threatened with respect to any such Patents.

          (n) All material Trademarks within Seller-Owned IP Rights that are currently used in the operation of the business of Seller and the Seller Subsidiaries have been in use by Seller or a Seller Subsidiary since the date of their initial use in commerce. To the knowledge of Seller, there has been no prior use of any registered Trademarks owned by Seller or any Seller Subsidiary or other action taken by any third party that would confer upon such third party superior rights in such Trademarks. Seller and the Seller Subsidiaries have taken reasonable steps to prevent infringement of the Trademarks referenced in the first sentence of this Section 2.6(n) . No Trademark within Seller-Owned IP Rights is currently involved in any opposition or cancellation proceeding and no such action has been threatened with respect to any of the Trademarks.

          (o) No registration or use of the domain names included in Seller Registered Intellectual Property Rights has been disturbed or placed “on hold” and neither Sel


 
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