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EXHIBIT 2.1
EXECUTION COPY
ASSET PURCHASE
AGREEMENT
between
INFOSPACE, INC.
and
MOTRICITY, INC.
Dated as of October 15,
2007
TABLE OF
CONTENTS
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ARTICLE I DEFINITIONS AND RULES OF
CONSTRUCTION
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1 |
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1.1 |
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Definitions
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1 |
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1.2 |
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Rules of Construction
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1 |
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ARTICLE II SALE OF ASSETS AND ASSUMPTION
OF LIABILITIES
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2 |
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2.1 |
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Asset Purchase
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2 |
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2.2 |
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Assumption by Purchaser of Certain Liabilities; Retention by
Seller of Remaining Liabilities
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2 |
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2.3 |
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Transfer of Purchased Assets, Transferred Business Intellectual
Property Rights and Assumed Liabilities
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5 |
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2.4 |
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Approvals and Consents; Novation
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6 |
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2.5 |
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Novation and Assignment
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8 |
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2.6 |
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Consents for Real Property Assignments and Subleases
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9 |
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ARTICLE III PURCHASE PRICE AND
ADJUSTMENTS
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10 |
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3.1 |
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Purchase Price
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10 |
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3.2 |
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Payment of Purchase Price
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10 |
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3.3 |
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Working Capital Amount; Reimbursement
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10 |
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3.4 |
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Allocation of Purchase Price
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12 |
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ARTICLE IV REPRESENTATIONS AND
WARRANTIES OF SELLER
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13 |
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4.1 |
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Corporate Existence
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13 |
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4.2 |
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Corporate Authority
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13 |
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4.3 |
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Governmental Approvals and Consents
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14 |
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4.4 |
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Properties and Assets
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15 |
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4.5 |
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Contracts
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16 |
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4.6 |
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Litigation
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18 |
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4.7 |
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Intellectual Property Rights
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18 |
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4.8 |
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Finders; Brokers
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20 |
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4.9 |
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Tax Matters
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20 |
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4.10 |
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Employment and Benefits
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21 |
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4.11 |
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Compliance with Laws
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22 |
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4.12 |
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Environmental Matters
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22 |
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4.13 |
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Financial Information
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22 |
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4.14 |
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Netherlands Subsidiary Shares
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23 |
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4.15 |
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Customers
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23 |
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4.16 |
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Suppliers
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24 |
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4.17 |
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Absence of Changes
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24 |
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4.18 |
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Restrictions on Business Activities
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25 |
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4.19 |
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Sufficiency of Assets
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25 |
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4.20 |
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Condition of Purchased Assets
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26 |
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TABLE OF
CONTENTS
(Continued)
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4.21 |
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Accounts Receivable
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26 |
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4.22 |
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Labor and Employment Matters
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26 |
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4.23 |
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Insurance
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26 |
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4.24 |
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Absence of Sensitive Payments; Suitability
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27 |
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4.25 |
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Affiliated Transactions
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27 |
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4.26 |
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No Other Representations or Warranties
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27 |
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ARTICLE V REPRESENTATIONS OF
PURCHASER
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28 |
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5.1 |
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Corporate Existence
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28 |
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5.2 |
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Corporate Authority
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28 |
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5.3 |
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Governmental Approvals and Consents
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29 |
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5.4 |
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Financial Capacity
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29 |
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5.5 |
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Finders; Brokers
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30 |
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5.6 |
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Purchase for Investment
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30 |
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5.7 |
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No Other Representations or Warranties
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31 |
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ARTICLE VI AGREEMENTS OF PURCHASER AND
SELLER
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31 |
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6.1 |
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Operation of the Business
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31 |
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6.2 |
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Investigation of Business; Confidentiality
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34 |
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6.3 |
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Reasonable Best Efforts; No Inconsistent Action
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35 |
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6.4 |
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Public Disclosures
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37 |
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6.5 |
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Access to Records and Personnel
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37 |
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6.6 |
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Employee Relations and Benefits
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38 |
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6.7 |
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Non-U.S. Employees
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40 |
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6.8 |
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Post-Closing Arrangements
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42 |
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6.9 |
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Non-Solicitation
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43 |
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6.10 |
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Intellectual Property License Agreement
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44 |
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6.11 |
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Insurance Matters
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44 |
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6.12 |
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Tax Matters
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44 |
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6.13 |
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Notice of Breaches
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47 |
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6.14 |
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Mail Handling
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47 |
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6.15 |
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Interim Financial Statements
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48 |
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6.16 |
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Business Financial Statements
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48 |
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6.17 |
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Netherlands Subsidiary Directorships
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49 |
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6.18 |
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Purchase Funds Escrow Agreements
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50 |
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6.19 |
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Closing of Series I Preferred Stock Financing
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50 |
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6.20 |
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Additional Transactions
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50 |
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ARTICLE VII CONDITIONS TO
CLOSING
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51 |
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7.1 |
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Conditions Precedent to Obligations of Purchaser and
Seller
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51 |
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7.2 |
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Conditions Precedent to Obligation of Seller
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51 |
-ii-
TABLE OF
CONTENTS
(Continued)
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7.3 |
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Conditions Precedent to Obligation of Purchaser
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52 |
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ARTICLE VIII CLOSING
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54 |
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8.1 |
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Closing Date
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54 |
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8.2 |
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Purchaser Obligations
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54 |
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8.3 |
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Seller Obligations
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54 |
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ARTICLE IX INDEMNIFICATION
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55 |
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9.1 |
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Indemnification
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55 |
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9.2 |
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Certain Limitations and Term; Indemnification Buyout
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56 |
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9.3 |
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Procedures for Third-Party Claims and Excluded
Liabilities
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58 |
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9.4 |
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Certain Procedures
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61 |
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9.5 |
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Remedies Exclusive
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62 |
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9.6 |
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Mitigation and Insurance
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62 |
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ARTICLE X TERMINATION
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63 |
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10.1 |
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Termination Events
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63 |
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10.2 |
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Effect of Termination
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63 |
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ARTICLE XI MISCELLANEOUS AGREEMENTS OF
THE PARTIES
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64 |
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11.1 |
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Dispute Resolution
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64 |
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11.2 |
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Notices
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65 |
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11.3 |
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Bulk Transfers
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66 |
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11.4 |
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Severability
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66 |
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11.5 |
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Further Assurances; Further Cooperation
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66 |
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11.6 |
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Counterparts
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66 |
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11.7 |
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Expenses
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66 |
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11.8 |
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Non-Assignability
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67 |
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11.9 |
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Amendment; Waiver
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67 |
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11.10 |
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Specific Performance
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67 |
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11.11 |
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Third Parties
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67 |
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11.12 |
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Governing Law
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67 |
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11.13 |
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Consent to Jurisdiction; Waiver of Jury Trial
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68 |
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11.14 |
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Entire Agreement
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68 |
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11.15 |
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Responsibility for Subsidiary Breach
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68 |
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11.16 |
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Section Headings; Table of Contents
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69 |
-iii-
LIST OF
EXHIBITS
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| Exhibit A |
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Bill of
Sale |
| Exhibit B |
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Assignment and Assumption Agreement |
| Exhibit C |
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Transferred Business Intellectual Property Rights
Assignment |
| Exhibit D |
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Transition Services Agreement |
| Exhibit E-1 |
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Lease
Assignments |
| Exhibit E-2 |
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Real
Property Sublease |
| Exhibit F |
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Hosting
and Co-Location Services Agreement |
| Exhibit G |
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Intellectual Property License Agreement |
| Exhibit H |
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Assumed
Contracts |
| Exhibit I |
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Excluded
Assets |
| Exhibit I-1 |
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Other
Excluded Assets |
| Exhibit J |
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Purchased
Assets |
| Exhibit J-1 |
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Other
Purchased Assets |
| Exhibit K |
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Post-Execution Contracts |
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| Annex 1 |
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Investor
Escrow Agreements |
| Annex 2 |
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Koala
Escrow Agreement |
| Annex 3 |
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Purchaser
Escrow Agreement |
-iv-
ASSET PURCHASE
AGREEMENT
This Asset Purchase Agreement
is dated as of October 15, 2007 (the “ Agreement
”), between InfoSpace, Inc., a Delaware corporation (“
Seller ”), and Motricity, Inc., a Delaware corporation
(“ Purchaser ”).
W I T N E S S E T
H:
WHEREAS , Seller and
certain Subsidiaries of Seller are engaged in, among other things,
the Business; and
WHEREAS , Purchaser,
through itself and one or more of its Subsidiaries, desires to
purchase and assume, and Seller, through itself and one or more of
its Subsidiaries, desires to sell, transfer and assign certain of
the assets and liabilities related to the operation of
Seller’s mobile data infrastructure business, as it is
currently conducted, which includes the delivery of (i) mobile
private-label software products, consulting and management services
to mobile operator customers for the provisioning of portal,
storefront, search and messaging solutions for mobile devices, and
(ii) mobile media content products, including ringtones, news
and information, graphics and games, to mobile devices used by
subscribers of mobile operator customers and certain other
specified customers (collectively, the “ Business
”), to Purchaser, on the terms and subject to the conditions
specified in this Agreement.
NOW, THEREFORE , for
good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF
CONSTRUCTION
1.1 Definitions
.
Unless otherwise provided
herein, capitalized terms used in this Agreement have the meanings
ascribed to them by definition in this Agreement or in
Annex A .
1.2 Rules of
Construction .
(a) This Agreement shall be
construed without regard to any presumption or rule requiring
construction or interpretation against the party drafting or
causing any instrument to be drafted.
(b) Whenever the words
“include”, “including”, or
“includes” appear in this Agreement, they shall be read
to be followed by the words “without limitation” or
words having similar import.
-1-
(c) When a reference is made
in this Agreement to an Article, Section, Annex, Exhibit, Schedule,
clause or subclause, such reference shall be to an Article,
Section, Annex, Exhibit, Schedule, clause or subclause of this
Agreement.
(d) The words
“hereof,” “herein” and
“hereunder” and words of similar import, when used in
this Agreement, refer to this Agreement as a whole and not to any
particular provision of this Agreement.
(e) The definitions contained
in this Agreement are applicable to the singular as well as the
plural forms of such terms. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of names and
pronouns shall include the plural and vice versa.
(f) Any reference herein to
“dollars” or “$” shall mean United States
dollars.
ARTICLE II
SALE OF ASSETS AND ASSUMPTION
OF LIABILITIES
2.1 Asset Purchase
.
(a) On the terms and subject
to the conditions set forth in this Agreement, at the Closing,
Seller shall, and shall cause each of the Other Sellers, as
appropriate, to, sell, assign, transfer, convey and deliver to
Purchaser and/or its Designees, and Purchaser shall or shall cause
one or more of its Designees to purchase, acquire and accept from
Seller and the Other Sellers, as appropriate, all of Seller’s
and the Other Sellers’ respective right, title and interest
in and to the Purchased Assets, free and clear of all Liens (other
than Permitted Liens).
(b) On the terms and subject
to the conditions set forth in this Agreement, at the Closing,
Seller shall, and shall cause each of the Other Sellers, as
appropriate, to, sell, assign, transfer, convey and deliver to
Purchaser and/or its Designees, and Purchaser shall, or shall cause
one or more of its Designees to, purchase, acquire and accept from
Seller and the Other Sellers, as appropriate, the Transferred
Business Intellectual Property Rights, including the right to
pursue past damages based on third-party infringement of the
Transferred Business Intellectual Property Rights, subject to the
terms of any preexisting non-exclusive licenses granted to third
parties in the ordinary course of business concerning such
Transferred Business Intellectual Property Rights.
2.2 Assumption by
Purchaser of Certain Liabilities; Retention by Seller of Remaining
Liabilities .
(a) On the terms and subject
to the conditions set forth in this Agreement, at the Closing,
Purchaser or one of its Designees shall assume and agree to pay,
perform and discharge
-2-
when due the following liabilities,
obligations, guarantees (including lease guarantees), damages,
losses, debts, claims, demands, judgments or settlements of any
nature or kind, whether known or unknown, fixed, accrued, absolute
or contingent, liquidated or unliquidated, matured or unmatured,
(collectively, “ Liabilities ”), of Seller and
the Other Sellers (the “ Assumed Liabilities
”):
(i) all Liabilities of Seller
and its Subsidiaries arising on, prior to or after the Closing Date
under the Assumed Contracts, including liabilities to suppliers
thereunder, but excluding any Liabilities with respect to any
Proceedings arising out of such Assumed Contracts prior to the
Closing Date;
(ii) any Liabilities arising
on or after the Closing Date for any infringement or alleged
infringement by Purchaser or any Subsidiary of Purchaser of
(i) the rights of any other Person relating to Technology or
Intellectual Property Rights, or (ii) any right of any other
Person relating to Technology or Intellectual Property Rights
pursuant to any license, sublicense or agreement;
(iii) all Liabilities of
Seller and its Subsidiaries in respect of the Products to the
extent that such Products were provided, developed and/or sold on
or after the Closing Date, including Liabilities for refunds,
adjustments, allowances, repairs, and warranty and other claims
arising on or after the Closing Date;
(iv) except as expressly
provided herein, all Liabilities of Seller and its Subsidiaries
relating to any Transferred Employee arising out of events or
occurrences on or after the Closing Date, including severance for
any terminations of Transferred Employees by Purchaser or Seller on
or after the Closing Date, in each case in accordance with
Purchaser’s covenants in Section 6.6(a)(v);
(v) all Business
Environmental Liabilities to the extent arising from facts or
circumstances caused or occurring as a result of the conduct of the
Business on or after the Closing Date;
(vi) except as expressly
provided herein, all Liabilities in respect of Taxes to the extent
based upon the operation of the Business by Purchaser on or after
the Closing Date;
(vii) except as expressly
provided herein, all other Liabilities arising out of or relating
to or incurred in connection with the operation of the Business, on
or after the Closing Date by Purchaser (including the use of any of
the Business Intellectual Property Rights or Licensed Business
Intellectual Property Rights by Purchaser, its Designees or
permissible licensees and any condition arising on or after the
Closing Date with respect to the Purchased Assets); and
(viii) all Liabilities set
forth on the Final Closing Statement of Working Capital.
Notwithstanding anything to
the contrary above, the Assumed Liabilities shall not include
(i) any Liability of Seller or any Other Seller for Taxes
(except as provided in Section 6.12(a)),
(ii) any
-3-
Liability of the Netherlands Subsidiary
for Taxes for any taxable period ending prior to the Closing Date
and the portion of any Straddle Period ending on the Closing Date,
(iii) any Liability of Seller or any Other Seller for the
Taxes of any other Person as a transferee or successor, by
contract, or otherwise, or (iv) any Liability of the
Netherlands Subsidiary for the Taxes of any other Person as
transferee or successor, by contract or otherwise, for any taxable
period ending prior to the Closing Date and the portion of any
Straddle Period ending on the Closing Date.
Nothing set forth in this
Section 2.2(a) is intended or shall be construed to derogate
any of the representations or warranties set forth in this
Agreement.
(b) Neither Purchaser nor any
of its Designees shall be obligated to assume, pay, perform,
discharge or be responsible for any Liabilities of Seller or any
Subsidiary thereof other than (i) the Assumed Liabilities and
(ii) as otherwise expressly set forth herein (collectively,
the “ Excluded Liabilities ”). Without limiting
the generality of the foregoing, the Excluded Liabilities shall
include:
(i) any Liability of Seller
or any Subsidiary thereof to the extent arising out of or relating
to the operation, use or operation of (x) any Retained
Business or any discontinued operation of Seller or any of its
Subsidiaries as of the Closing, or (y) any Excluded
Asset;
(ii) except as otherwise
expressly provided for herein, all Liabilities to or in respect of
any employees of Seller or any Subsidiary thereof other than
Transferred Employees;
(iii) any Liabilities
relating to or at any time arising under or in connection with any
Seller Plan, Seller International Plan, “employee benefit
plan” (as defined in Section 3(3) of ERISA), or any
other benefit plan, program, agreement or arrangement at any time
maintained, sponsored or contributed or required to be contributed
to by Seller or any of its Affiliates, or with respect to which
Seller or any of its Affiliates has any Liability, and any
Liabilities arising out of, relating to or incurred in connection
with the employment or service by, or termination from employment
or service with, Seller or any of its Affiliates of any Person
(including any Transferred Employee), including any and all
Liabilities pertaining to any salary or wages, vacation pay,
bonuses or any other type of compensation or benefits, other than
the Assumed Liabilities described in Section 2.2(a)(iv) and
Section 2.2(a)(viii);
(iv) any Liability arising
out of any Proceeding commenced on or prior to the
Closing;
(v) notwithstanding the
actual accounting treatment thereof as a reduction to accounts
receivable or as a Liability, any reduction to the revenue
recognized or receivables collectable after the Closing with
respect to the Business that results from Purchaser having to
provide a credit, offset or other similar adjustment to a customer
due to a service level violation (or other like event preventing
Seller or any Other Seller from providing services to a customer of
the Business) occurring on or prior to the Closing;
(vi) any Liability of Seller
or any Subsidiary thereof to any of its stockholders (in their
capacity as stockholders);
-4-
(vii) any Liability
(x) for indebtedness for borrowed money, (y) pursuant to
capital leases, or (z) pursuant to a guarantee of indebtedness
of any other Person for borrowed money;
(viii) all Business
Environmental Liabilities to the extent arising from facts or
circumstances caused or occurring as a result of the conduct of the
Business prior to the Closing Date; and
(ix) all Liabilities for any
legal, accounting, investment banking, brokerage or similar fees or
expenses incurred by Seller or any Subsidiary thereof in connection
with, resulting from or attributable to the transactions
contemplated by this Agreement.
2.3 Transfer of Purchased
Assets, Transferred Business Intellectual Property Rights and
Assumed Liabilities .
(a) The Purchased Assets and
the Transferred Business Intellectual Property Rights shall be
sold, conveyed, transferred, assigned and delivered, and the
Assumed Liabilities shall be assumed, pursuant to transfer and
assumption agreements and such other instruments in such form as
may be necessary or appropriate to effect a conveyance of the
Purchased Assets and an assumption of the Assumed Liabilities in
the jurisdictions in which such transfers are to be made in each
case in a mutually agreeable form. Such transfer and assumption
agreements and other instruments shall include a bill of sale in
the form attached hereto as Exhibit A (the “
Bill of Sale ”), an assignment and assumption
agreement in the form attached hereto as Exhibit B (the
“ Assignment and Assumption Agreement ”), and/or
assignment in the form attached hereto as Exhibit C
(the “ Transferred Business Intellectual Property Rights
Assignment ”), with only such deviations therefrom as are
required by local Law and, where necessary, such other agreements
as may be necessary or appropriate to effect the purchase and
assignment of the Purchased Assets, Transferred Business
Intellectual Property Rights and Assumed Liabilities (collectively,
the “ Ancillary Agreements ”), and shall be
executed no later than at or as of the Closing by Seller and all
Other Sellers, as appropriate, and Purchaser and/or one or more of
its Designees, as appropriate.
(b) Notwithstanding the
foregoing and unless otherwise stated in the Transition Services
Agreement, the Intellectual Property License Agreement, the Hosting
and Co-Location Services Agreement or any agreements to effect the
transfer of the Real Property:
(i) Purchaser and Seller will
cooperate reasonably and in good faith and provide reasonable
assistance to the other party to prepare the Purchased Assets for
relocation and relocate the Purchased Assets from Seller’s or
its Subsidiaries’ facilities at which such Purchased Assets
are then located (each a “ Seller Facility
”);
(ii) Purchaser and Seller
will cooperate reasonably and in good faith and provide reasonable
assistance to the other party to prepare the Excluded Assets for
relocation and relocate the Excluded Assets from Purchaser’s
or its Subsidiaries’ facilities at which such Excluded Assets
are then located (each a “ Purchaser Facility
”);
-5-
(iii) Purchaser and Seller
will cooperate reasonably and in good faith and provide reasonable
assistance to the other party (A) in connection with the
planning and implementation of the transfer of the Purchased Assets
and Excluded Assets, as appropriate, and (B) on all data
transfer, delivery, transmission and reformatting activities
reasonably necessary to convey the Purchased Assets and the
Transferred Business Intellectual Property Rights;
(iv) With respect to costs
incurred in connection with third parties, Seller will be
responsible for performing and bearing the cost of separating
shared applications and data related to the Business and its and
its Subsidiaries other business, including obtaining and paying for
required “base” hardware and licenses associated with
such separation (but not any per-user, per-seat, periodic recurring
or similar fees), provided that any such costs paid by
Seller shall be deemed to be Consent Payment Amounts;
(v) Each party hereto will
reimburse the other party for all damages to the such other
party’s facility caused by the party hereto’s removal,
detachment, disconnection or transportation of the Purchased Assets
or Excluded Assets, as appropriate;
(vi) Until all of the
Purchased Assets are removed from a Seller Facility and all of the
Excluded Assets are removed from a Purchaser Facility, Purchaser
and Seller will cooperate reasonably and in good faith and provide
reasonable assistance to the other party so that Purchaser and its
authorized agents or representatives or Seller and its authorized
agents or representatives, respectively, upon prior notice, will
have reasonable access to the Seller Facility or the Purchaser
Facility, as appropriate, to the extent necessary to disconnect,
detach, remove, package and crate the Purchased Assets or Excluded
Assets, respectively, for transport; and
(vii) except as otherwise set
forth in this Section 2.3(b), each party will bear its own
costs and expenses in cooperating and providing assistance, or
taking such other actions as are necessary, contemplated by this
Section 2.3(b).
2.4 Approvals and
Consents; Novation .
(a) Notwithstanding anything
to the contrary contained in this Agreement and subject to the last
proviso of this sentence and the provisions of Sections 2.5
and 2.6, to the extent that the sale, conveyance, transfer,
assignment or delivery or attempted sale, conveyance, transfer,
assignment or delivery to Purchaser or any of its Designees of any
Purchased Asset (or any asset that would otherwise be a Purchased
Asset hereunder) (i) would result in a violation of any
applicable Law, (ii) would require any licenses, certificates,
permits, approvals, clearances, expirations or terminations of
applicable waiting periods, authorizations, qualifications or
orders of any Governmental Authority (each a “
Governmental Consent ”), (iii) would require any
approvals, waivers, licenses or consents of any third party (each a
“ Third Party Consent ,” and, together with
Governmental Consents, “ Consents ”), or
(iv) would require any notices to any Governmental Authority
or any third party, and such Consents shall not have been obtained
or notices given prior to the Closing, this Agreement shall not
constitute a sale, conveyance, transfer, assignment or delivery, or
an attempted sale, conveyance, transfer, assignment or delivery
thereof if any of the foregoing would constitute a
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breach of applicable Law or the rights
of any such Governmental Authority or third party; provided
, however , that the Closing shall occur notwithstanding the
foregoing without any adjustment to the Purchase Price on account
of such required authorization; provided , further ,
however , that this Section 2.4 (other than the
immediately following sentences, to which the Required Consents
shall apply) shall not (x) be applicable to any Required
Consents, other than with respect to any Required Consent which is
waived as a condition to Closing or (y) be construed to
derogate any of the representations or warranties set forth in
Section 4.2(b) or Section 4.5(b). Prior to the Closing,
and, as necessary, following the Closing, the parties shall use
commercially reasonable efforts, and shall cooperate with each
other, to obtain promptly (A) such Consents and deliver such
notices (including identifying such Consents or notices and
consulting with each other regarding such Consents or notices) and
(B) the enterprise software license agreement with Microsoft
Corporation referred to in the definition of Consent Payment
Amount; provided , however , that Seller shall be
responsible for, and shall control any negotiations with third
parties regarding any such Consents; provided ,
further , however , that (I) neither party shall
agree to the payment of any Consent Payment Amounts without the
consent of the other party, such consent not to be unreasonably
withheld, delayed or conditioned, and (II) Seller shall not agree
to any modification to the terms of any Contract for purposes of
obtaining a Consent or agree to any material term in such
enterprise software license agreement in any such case without the
prior consent to Purchaser, such consent not to be unreasonably
withheld, delayed or conditioned. Pending or in the absence of such
Consents or notices, Seller shall, and shall cause any Other Seller
to, hold such Purchased Assets for the use and benefit, insofar as
reasonably possible, of Purchaser or any of its Designees. The
parties shall cooperate with each other to enter into mutually
agreeable and lawful arrangements designed to provide to Purchaser
or its Designee with the costs and benefits of the use of such
Purchased Asset and to Seller or any Other Seller the benefits,
including any indemnities, that they would have obtained had the
Purchased Asset been conveyed to Purchaser or its Designee at the
Closing. Once such Consent is obtained or notice is delivered,
Seller shall or shall cause the Other Sellers to sell, assign,
transfer, convey and license such Purchased Asset to Purchaser or
its Designee for no additional consideration. Purchaser and Seller
shall equally share any applicable Transfer Taxes in connection
with such sale, assignment, transfer, conveyance or license in
accordance with Section 6.12(a)(i). To the extent that any
Purchased Asset cannot be provided to Purchaser or its Designee
following the Closing pursuant to this Section 2.4, Purchaser
and Seller shall use commercially reasonable efforts to enter into
such arrangements (including subleasing, sublicensing or
subcontracting) to provide to the parties the economic (taking into
account Tax costs and benefits) and, to the extent permitted under
applicable Law, operational equivalent of obtaining such Consent or
delivering such notice and the performance by Purchaser or its
Designee of its obligations thereunder. Subject to the terms above,
to the extent permitted under applicable Law, Seller and the Other
Sellers shall hold in trust for and pay to Purchaser or its
Designee promptly upon receipt thereof, such Purchased Assets and
all income, proceeds and other monies (net of all reasonable
incremental costs associated with the retention and maintenance of
the Purchased Assets (“ Maintenance Costs ”))
received by Seller or any Other Seller to the extent related to its
use of any such Purchased Asset in connection with the arrangements
under this Section 2.4. Notwithstanding the foregoing, Seller
shall have no obligation whatsoever to retain any portion of the
Business, other than any individual asset or Contract (but only
until such time as the transfer thereof may be effected in
accordance with this Agreement), in
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order to obtain any such Consents or
waivers referred to in this Section 2.4 or elsewhere in this
Agreement. Nothing in this Section 2.4 shall require any
waiver of any conditions to the conditions to the consummation of
the transactions contemplated hereby set forth in Article
VII.
(b) Seller and Purchaser
shall equally share the cost of all Consent Payment Amounts for all
amounts up to and not in excess of the Consent Payment Threshold
Amount, and Seller shall be responsible for, and shall reimburse
Purchaser for all Consent Payment Amounts incurred or paid by
Purchaser in excess of the Pro Rata Threshold Amount. Without
derogating the intent of the foregoing sentence, until the
forty-fifth (45th) calendar day following the Closing
Date, Seller shall make any payments that are Consent Payment
Amounts and be reimbursed by Purchaser following such forty-fifth
(45 th
) calendar day as set
forth in this Section 2.4(b). On the forty-fifth
(45th) calendar day following the Closing Date, and at
such additional dates thereafter as reasonably requested by a
party, Seller and Purchaser shall: (i) prepare and deliver to
the other party a statement showing the total Consent Payment
Amounts paid or incurred by such party as of the date thereof (each
a “ Consent Payment Statement ”); and
(ii) make available to the other party and its representatives
all relevant receipts and records relating to such Consent Payment
Statement. The parties shall then add the amounts set forth on the
Consent Payment Statement prepared by Seller and the Consent
Payment Statement prepared by Purchaser (the “ Aggregate
Consent Payment Amount ”). To the extent that the
Aggregate Consent Payment Amount is less than or equal to the
Consent Payment Threshold Amount, the parties shall divide
(x) the Aggregate Consent Payment Amount by (y) two (the
“ Pro Rata Consent Payment Amount ”), and the
party that has shown a lower Consent Payment Amount on its Consent
Payment Statement shall promptly pay to the other party the
difference between (1) the Pro Rata Consent Payment Amount and
(2) the Consent Payment Amount set forth on such party’s
Consent Payment Statement (to the extent such amounts have not been
previously paid or reimbursed). To the extent that the Aggregate
Consent Payment Amount is in excess of the Consent Payment
Threshold Amount, then Seller shall reimburse to Purchaser all
Consent Payment Amounts incurred or paid by Purchaser in excess of
the Pro Rata Threshold Amount.
2.5 Novation and
Assignment .
Without limiting the
generality of Section 2.4 or any other provision hereof, each
party hereto, at the request of the other party, shall, and shall
cause any Subsidiary thereof to, use commercially reasonable
efforts to obtain, or to cause to be obtained, any Consent,
substitution, or amendment required to novate any Contract
requiring a novation pursuant to such Contract or local Law that
constitutes part of the Purchased Assets or the Assumed Liabilities
or to obtain in writing the unconditional release of such third
party to such arrangements, so that, Purchaser and/or its Designees
will be solely responsible for performance of Assumed Liabilities
under such Contracts. If and when any such Consent or waiver shall
be obtained or such agreement, lease, license or other rights or
obligations shall otherwise become assignable or able to be
novated, Seller or such Subsidiary shall thereafter assign, or
cause to be assigned, all its rights, obligations and other
liabilities thereunder to Purchaser or its Designee without receipt
of further consideration (other than Maintenance Costs), and
Purchaser or its Designee shall, without the payment of any further
consideration (other than Maintenance Costs), assume such rights
and obligations.
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2.6 Consents for Real
Property Assignments and Subleases . Without limiting the
generality of Section 2.4 or any other provision
hereof:
(a) Promptly following
execution of this Agreement, Seller or such Other Seller, as
applicable, shall contact the Landlords of the Assigned Real
Property and the Subleased Real Property and seek each
Landlord’s Consent (which, for purposes of this
Section 2.6, shall be deemed to include providing a substitute
for that certain underlease between Aleri Limited and InfoSpace
Investments Ltd., dated February 17, 2006, with the Landlord
thereunder) to the applicable Lease assignments or subleases.
Seller or such Other Seller, as applicable, shall use commercially
reasonable efforts to obtain such Consents, but shall not be
required to commence judicial proceedings for a declaration that a
required Landlord Consent has been unreasonably withheld or
delayed. In connection with the foregoing, Seller or such Other
Seller, as applicable, shall have the right to pay any additional
consideration payable prior to the Closing or provide any
additional security or guarantees to the Landlords at its sole cost
and expense and at Seller’s or Other Seller’s sole
option; provided , however , that neither Seller nor
such Other Seller shall agree to any amendment or modification to
the terms of the Lease with respect to the Assigned Real Property
and the Subleased Real Property that will have a material and
adverse effect on the terms of such Lease on or after the Closing
without Purchaser’s prior written consent.
(b) Purchaser and its
Designees shall use commercially reasonable efforts to cooperate
with Seller or such Other Seller, as applicable, in attempting to
obtain the Consents contemplated by Section 2.6(a), including
(i) providing financial statements, references and substitute
security and/or guarantees as may be reasonably requested by the
relevant Landlords, (ii) entering into any amendments to the
Leases of the Assigned Real Property as may be reasonably requested
by the relevant Landlords or (iii) entering into direct Leases
of the Assigned Real Property and, if possible, the property that
is the subject of the Real Property Subleases with the relevant
Landlords, if requested by such Landlords. Any additional
consideration paid by Seller in order to obtain a Consent from any
such Landlord shall be deemed to be a Consent Payment Amount.
Neither Purchaser nor any of its Designees shall communicate
directly with any of Seller’s or any Other Seller’s
Landlords without the prior consent of Seller or such Other Seller,
as applicable.
(c) If, despite the efforts
of the parties as set forth above, a Landlord of an Assigned Real
Property or Subleased Real Property fails to consent to the
applicable Lease assignment or sublease prior to the Closing Date,
Purchaser or one of its Designees shall be entitled to occupy the
relevant Assigned Real Property or Subleased Real Property as a
licensee upon the terms and conditions contained in the
Seller’s, or Other Seller’s, Lease of such Assigned
Real Property or the terms of the relevant sublease, as applicable.
Such license shall not be revocable due to the relevant
Landlord’s failure to consent, unless (A) the relevant
Landlord formally, unconditionally refuses to consent or
(B) an enforcement action or forfeiture by the relevant
Landlord due to Purchaser’s or one of its Designee’s
occupation of such Real Property cannot, in the reasonable opinion
of Seller, be avoided other than by requiring Purchaser or one of
its Designees to immediately vacate the relevant Real Property. In
either such event, Seller or such Other Seller, as applicable, may
terminate the license by delivering written notice to Purchaser,
and Purchaser or its Designee shall vacate the relevant Real
Property as promptly as commercially practicable after a
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notice served by Seller. Neither
Purchaser nor any of its Designees shall be entitled to make any
claim or demand against, or obtain reimbursement from, Seller or
any Other Seller with respect to any costs, losses, claims,
liabilities or damages incurred by Purchaser or any of its
Designees as a consequence of being obliged to vacate a Real
Property or in obtaining alternative premises, including, without
limitation, any enforcement action which a Landlord may take
against Purchaser or any of its Designees.
ARTICLE III
PURCHASE PRICE AND
ADJUSTMENTS
3.1 Purchase Price
.
The purchase price in respect
of the transactions contemplated hereby shall be an amount in cash
equal to One Hundred and Thirty-Five Million dollars and no cents
($135,000,000)(the “ Purchase Price ”), which
comprises the total purchase price to be paid for the Purchased
Assets, Transferred Business Intellectual Property Rights and
Assumed Liabilities in each respective jurisdiction as provided in
the Allocation Schedule. The amounts payable in respect of
transactions contemplated hereby shall be further adjusted as
contemplated by Section 3.3.
3.2 Payment of Purchase
Price .
On the Closing Date,
Purchaser shall pay for itself (where it is acting as Purchaser)
and on behalf of its Designees to Seller for its own account and
otherwise as agent for each of the relevant Other Sellers the
Purchase Price. Without modifying Section 9.2(i), such amount
shall be payable in United States dollars in immediately available
federal funds to such bank account or accounts as shall be
designated in writing by Seller no later than the second Business
Day prior to the Closing.
3.3 Working Capital
Amount; Reimbursement .
(a) At least five
(5) Business Days prior to the Closing Date, Seller shall
prepare and deliver to Purchaser a statement (the “
Estimate Statement ”) setting forth the Estimated
Working Capital Amount. The Estimate Statement shall contain a
level of detail sufficient to identify the components used to
calculate the Estimated Working Capital Amount and shall be
prepared in good faith by Seller in accordance with the accounting
principles, procedures and assumptions set forth in
Section 4.13 of the Disclosure Letter. To the extent that the
Estimated Working Capital Amount is less than zero, Seller shall
pay to Purchaser at Closing the amount by which the Estimated
Working Capital Amount is less than zero (the “ Working
Capital Deficiency Adjustment ”).
(b) As promptly as
practicable following the Closing, but in no event later than
ninety (90) calendar days following the Closing Date,
Seller shall: (i) prepare and deliver to Purchaser a statement
(x) showing the Working Capital Amount as calculated by Seller
and (y) the total Consent Payment Amounts incurred by any
party as of the date thereof (the “ Closing Statement of
Working Capital ”); and (ii) make available to
Purchaser and its representatives all relevant books and records
relating to the Closing Statement of Working Capital. Purchaser
shall provide Seller and its
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representatives with reasonable access,
during normal business hours, to the facilities, personnel and
accounting records of the Business acquired by Purchaser or its
Designee, to the extent reasonably necessary to permit Seller to
prepare the Closing Statement of Working Capital.
(c) During the 45-day period
following Purchaser’s receipt of the Closing Statement of
Working Capital (the “ Review Period ”),
Purchaser and its representatives, including its independent
auditors, shall be afforded the opportunity to review the Closing
Statement of Working Capital and the calculations related thereto.
Seller or any Subsidiary thereof shall provide reasonable
assistance, including reasonable access to information concerning
the Business that is retained by Seller and its Subsidiaries
following the Closing, to Purchaser its Designees or any
representatives, including its independent auditors, in connection
with such review.
(d) If Purchaser disputes the
Closing Statement of Working Capital or any calculation related
thereto (other than the accounting principles, procedures,
assumptions and estimates set forth in Section 4.13 of the
Disclosure Letter, which Purchaser shall not be permitted to
dispute), Purchaser shall deliver to Seller, prior to the
expiration of the Review Period, a proposed adjustment notice
(“ Proposed Adjustment Notice ”), which shall
contain, in reasonable detail, the items of dispute and the
adjustment it recommends making to the Closing Statement of Working
Capital to address such disputes, to the extent reasonably
available. If the Proposed Adjustment Notice is not delivered to
Seller prior to the expiration of the Review Period, the Closing
Statement of Working Capital shall become final, binding and
conclusive on all parties.
(e) If a Proposed Adjustment
Notice is delivered within the Review Period, Purchaser and Seller
shall negotiate in good faith to resolve such dispute for a 30-day
period commencing on the date such notice is received by Seller. If
Purchaser and Seller subsequently resolve such dispute during such
30-day period, Purchaser and Seller shall document such resolution
in writing and the Closing Statement of Working Capital, as
modified, if applicable, by such writing, shall be final, binding
and conclusive on all parties. If Purchaser and Seller cannot
resolve such dispute within such 30 day period, Purchaser and
Seller shall retain Ernst & Young LLP to act as the
arbitrator (the “ Arbitrator ”) of such dispute;
provided , however , that if either party shall
reasonably discover a conflict of interest associated with the
Arbitrator, the parties shall retain a mutually agreeable
alternative nationally-recognized accounting firm without such a
conflict of interest to act as the Arbitrator. Any arbitration
shall be conducted in New Castle County, Delaware, and such
proceedings shall be in English. The parties hereto shall instruct
the Arbitrator to act promptly to resolve any dispute in accordance
with the terms of this Agreement. In resolving any disputed items,
the Arbitrator may not assign a value to any disputed item greater
than the greatest value for such disputed item claimed by any party
or less than the lowest value for such disputed item claimed by any
party. The parties shall use reasonable best efforts to have the
Arbitrator issue its written decision within 30 days after the
appointment of such Arbitrator, which decision shall be final,
binding and conclusive on both Purchaser and Seller. The resolution
of the Arbitrator with respect to any such dispute shall be final,
binding and conclusive on all parties. The final, binding and
conclusive Closing Statement of Working Capital (x) as deemed
accepted by Purchaser, (y) as modified by any writing among
Purchaser and Seller, if applicable, and/or (z) as modified,
if applicable, by the written decision of the Arbitrator shall be
the “ Final Closing Statement of Working Capital
”. Purchaser and
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Seller shall cooperate with the
Arbitrator in connection with this Section 3.3(e). Without
limiting the generality of the foregoing, Purchaser and Seller
shall each provide promptly, or cause to be provided promptly, to
the Arbitrator all information, and to make available at the
arbitration proceeding all personnel, as are reasonably necessary
to permit the Arbitrator to resolve any disputes pursuant to this
Section 3.3(e). The expenses of the Arbitrator in resolving
any disputes under this Section 3.3(e) shall be borne equally
by Purchaser and Seller.
(f) Within five
(5) Business Days of the determination of the Final Closing
Statement of Working Capital:
(i) if the Working Capital
Amount specified in the Final Closing Statement of Working Capital
is less than zero, Seller shall pay to Purchaser the amount to
which the Working Capital Amount specified in the Final Closing
Statement of Working Capital is less than zero; and
(ii) if (A) there has
been a Working Capital Deficiency Adjustment; and (B) the
Working Capital Amount set forth on the Final Closing Statement of
Working Capital is greater than the Estimated Working Capital
Amount, then the amount of the Working Capital Deficiency
Adjustment shall be added to the Working Capital Amount specified
in the Final Closing Statement of Working Capital, and, if the sum
of (x) the Working Capital Deficiency Adjustment amount plus
(y) the Working Capital Amount specified in the Final Closing
Statement of Working Capital, is greater than zero (such amount in
excess of zero the “ Deficiency Reimbursement Amount
”), Purchaser shall pay to Seller the Deficiency
Reimbursement Amount; provided , however , that in no
event shall the Deficiency Reimbursement Amount exceed the lesser
of (1) the amount by which the Working Capital Amount
specified in the Final Closing Statement of Working Capital is
greater than zero, and (2) amount of the Working Capital
Deficiency Adjustment.
3.4 Allocation of Purchase
Price .
Purchaser and Seller shall
agree on an allocation of the Purchase Price (and all other
capitalized costs) among the Purchased Assets and the Transferred
Business Intellectual Property Rights in accordance with
(i) the pro forma allocation schedule attached hereto as
Schedule 3.4 and (ii) Code Section 1060 and the U.S.
Treasury Income Tax Regulations promulgated thereunder (and any
similar provision of state, local or foreign law, as appropriate)
(the “ Allocation Schedule ”) within ninety
(90) days of the Closing Date. If Purchaser and Seller are
unable to agree on the final Allocation Schedule within ninety
(90) days after the Closing Date, the parties shall submit
such dispute to the Arbitrator, following the administrative
procedures set forth Section 3.3(d), and the Arbitrator shall
resolve the allocation of the consideration to any items with
respect to which there is a dispute between the parties. In the
absence of manifest error, the determination of the Allocation
Schedule by the Arbitrator shall be final and binding on all
parties and shall not be subject to contest. Seller and Purchaser
and their Affiliates shall report, act and file Tax Returns
(including, but not limited to, IRS Form 8594) in all respects and
for all purposes consistent with the Allocation Schedule. Neither
Seller nor Purchaser shall take any position (whether in audits,
Tax Returns or otherwise) that is inconsistent with the Allocation
Schedule unless required to do so by applicable
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Law. Each of the parties agrees that
they shall promptly advise each other regarding the existence of
any Tax audit, controversy or litigation related to the Allocation
Schedule. Notwithstanding the foregoing, nothing contained herein
shall prevent Purchaser or Seller from settling any proposed
deficiency or adjustment assessed against it by any Governmental
Authority based upon or arising out of the Allocation Schedule, and
neither Purchaser nor Seller shall be required to litigate before
any court any such proposed deficiency or adjustment by any
Governmental Authority challenging the Allocation
Schedule.
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF SELLER
Seller represents and
warrants to Purchaser, subject to the disclosures and exceptions
set forth in the disclosure letter delivered by Seller to Purchaser
on the date hereof and attached hereto (the “ Disclosure
Letter ”), as follows:
4.1 Corporate
Existence .
(a) Seller is duly organized,
validly existing and in good standing under the Laws of its
jurisdiction of organization. Seller is duly qualified to conduct
business and is in good standing under the Laws of each
jurisdiction in which the nature of its businesses or the ownership
or leasing of its properties requires such qualification, except
for those jurisdictions in which the failure to be so qualified or
in good standing has not had and would not reasonably be expected,
individually or in the aggregate, to have a Seller Material Adverse
Effect. Seller has the requisite corporate, partnership or similar
power and authority to carry on the Business as the same is now
being conducted. Seller is not in default under or in violation of
any provision of its corporate charter or by-laws.
(b) Each Other Seller is duly
organized, validly existing and in good standing (to the extent
such concept is recognized under applicable Law) under the Laws of
its jurisdiction of organization. Each Other Seller is duly
qualified to conduct business and, where applicable, is in good
standing under the Laws of each jurisdiction in which the nature of
its businesses or the ownership or leasing of its properties
requires such qualification, except for those jurisdictions in
which the failure to be so qualified or in good standing has not
had and would not reasonably be expected, individually or in the
aggregate, to have a Seller Material Adverse Effect. Each Other
Seller has the requisite corporate, partnership or similar power
and authority to carry on the Business as the same is now being
conducted by such Other Seller. Each Other Seller is not in default
under or in violation of any provision of its corporate charter or
by-laws.
4.2 Corporate
Authority .
(a) This Agreement and the
other agreements, instruments and documents to be executed and
delivered in connection herewith including the Ancillary
Agreements, the Intellectual Property License Agreement, the Real
Property Agreements, the Transition Services Agreement and the
Hosting and Co-Location Services Agreement (collectively with this
Agreement, the “ Transaction
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Documents ”) to which any
of Seller or Other Seller entering into the other Transaction
Documents) are (or may become) a party and the consummation of the
transactions contemplated hereby and thereby (i) have been
duly authorized by Seller, including Seller’s Board of
Directors, and no other corporate proceedings on the part of Seller
and no stockholder votes are necessary to authorize this Agreement
or the other Transaction Documents or to consummate the
transactions contemplated hereby or thereby, and (ii) will be
duly authorized by each applicable Other Seller by all requisite
corporate, partnership or other action prior to the Closing. Seller
has, and in the case of the Other Sellers will have at or prior to
the Closing, full power and authority to execute and deliver, as
the case may be, this Agreement and the other Transaction Documents
to which it is a party and to perform its obligations hereunder or
thereunder. This Agreement and the Transaction Documents have been
duly executed and delivered by Seller, and, solely as it relates to
the Other Sellers and the other Transaction Documents will be duly
executed and delivered by any Other Seller as necessary. This
Agreement constitutes, and the other Transaction Documents when so
executed and delivered will constitute, a valid and legally binding
obligation of Seller and/or any Other Sellers, enforceable against
it or them, as the case may be, in accordance with its terms,
except as enforceability may be affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
Laws relating to or affecting creditors’ rights generally,
general equitable principles (whether considered in a proceeding in
equity or at law) and the implied covenant of good faith and fair
dealing.
(b) Except (i) for
required filings under the HSR Act, and any other applicable Laws
or regulations relating to antitrust or competition (collectively,
“ Antitrust Regulations ”) and (ii) if
determined to be necessary by Seller, the filing of this Agreement
with the Securities and Exchange Commission (the “ SEC
”), the execution and delivery of this Agreement and the
other Transaction Documents by Seller and/or each of the Other
Sellers and the consummation by Seller and each of the Other
Sellers of the transactions contemplated hereby and thereby do not
and will not (A) violate or conflict with any provision of the
respective certificate of incorporation or by-laws or similar
organizational documents of Seller or any Other Seller,
(B) result in any violation or breach or constitute any
default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancellation or
acceleration of any obligation or a loss of a benefit under, or
result in the creation of any Lien (other than a Permitted Lien)
under, any Assumed Contract to which Seller or any Other Seller is
a party or to which any of their assets are subject, or
(C) violate, conflict with or result in any breach under any
provision of any Law applicable to Seller or any Other Seller or
any of their respective properties or assets, except, in the case
of clauses (B) and (C), to the extent that any such breach,
default, termination, cancellation, acceleration, loss, Lien,
violation, conflict, breach or loss would not reasonably be
expected, individually or in the aggregate, to result in a Seller
Material Adverse Effect.
4.3 Governmental Approvals
and Consents .
Except for any requirements
under any Antitrust Regulations, no Consent, order, or license
from, notice to or registration, declaration or filing with, any
United States or foreign, federal, state, provincial, municipal or
local government agency, court of competent jurisdiction,
administrative agency or commission or other governmental or
regulatory authority or instrumentality
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(“ Governmental Authority
”), is required on the part of Seller or any Other Seller in
connection with the execution, delivery or performance of this
Agreement or any of the other Transaction Documents or the
consummation of the transactions contemplated hereby and thereby,
except for such Consents, orders, licenses, filings or notices
which have been or will be obtained as of the Closing Date and
remain in full force and effect and those with respect to which the
failure to have been so obtained or to remain in full force and
effect would not reasonably be expected, individually or in the
aggregate, to result in a Seller Material Adverse
Effect.
4.4 Properties and
Assets .
(a) Seller or one or more of
the Other Sellers has, and at the Closing will have and convey,
good and valid title to the Purchased Assets, free and clear of all
Liens, except (i) Liens for taxes, assessments and other
governmental charges not yet due and payable or, if due,
(A) not delinquent or (B) being contested in good faith
by appropriate proceedings, (ii) mechanics’,
workmen’s, repairmen’s, warehousemen’s,
carriers’ or other similar Liens, including all statutory
Liens, arising or incurred in the ordinary course of business for
amounts which are not due and payable, (iii) equipment leases
with third parties entered into in the ordinary course of business,
which, in the aggregate, are not material in amount,
(iv) Liens against the underlying interests of the real
property landlord or owner of any Business Facility (except to the
extent caused by Seller or any Other Seller), and (v) Liens
that do not materially affect the value or use of the underlying
Purchased Asset (collectively, “ Permitted Liens
”).
(b) Neither Seller nor any of
the Other Sellers possess or otherwise hold any Owned Real
Property.
(c) Section 4.4(c) of
the Disclosure Letter contains a true and complete list of all
Leases of real properties that are current Business Facilities,
including a notation of those Leases to be assigned to Purchaser or
its Designees in accordance with Section 6.8(b)(i) (“
Assigned Real Property ”), and that Lease related to
Subleased Real Property, as appropriate, and sets forth the address
for the Assigned Real Property or Subleased Real Property governed
thereby. True and complete copies of each Lease relating to each
Assigned Real Property have been delivered, or made available, to
Purchaser prior to the date hereof. Except as set forth in
Section 4.4(c) of the Disclosure Letter, with respect to each
of such Leases: (i) such Lease is legal, valid, binding,
enforceable and in full force and effect, except as enforceability
may be affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar Laws relating to or
affecting creditors’ rights generally, general equitable
principles (whether considered in a proceeding in equity or at law)
and the implied covenant of good faith and fair dealing;
Seller’s or the Other Seller’s possession and quiet
enjoyment of the Real Property under such Lease has not been
materially disturbed, and to Seller’s knowledge, there are no
material disputes with respect to such Lease; (ii) neither
Seller, any Other Seller, nor, to Seller’s knowledge, any
other party to the Lease is in material default under such Lease,
and to Seller’s knowledge, no event has occurred or
circumstance exists which, after the giving of notice, the lapse of
time, or otherwise, would constitute such a material default, or
permit the termination, material modification or acceleration of
rent under such Lease; (iii) no security deposit or portion
thereof deposited with respect such Lease has been applied in
respect of a breach or default
-15-
under such Lease which has not been
redeposited in full; (iv) neither Seller nor any Other Seller
currently owes any brokerage or finder’s fees with respect to
such Lease; (v) neither Seller nor any Other Seller has
subleased, licensed or otherwise granted any Person the right to
use or occupy such Real Property or any portion thereof (other than
as set forth in the Real Property Agreements); and
(vi) neither Seller nor any Other Seller has collaterally
assigned or granted any other security interest in such Lease or
any interest therein.
(d) Section 4.4(d) of
the Disclosure Letter contains a list of all real property to which
Seller or any Other Seller is a party to a Lease, of which a
portion will be subleased to Purchaser or its Designees on the
Closing Date in accordance with Section 6.8(b)(ii) (the
“ Subleased Real Property ”) and a description
of the portion thereof to be subleased to Purchaser or its
Designees. For the purposes of this Agreement, the Assigned Real
Property and the Subleased Real Property shall hereinafter be
referred to together as the “ Real Property
.”
4.5 Contracts
.
(a) Section 4.5(a) of
the Disclosure Letter lists all the following Assumed Contracts
(any Contract set forth or required to be set forth on
Section 4.5(a) of the Disclosure Letter, collectively, the
“ Assumed Material Contracts ”):
(i) any Contract
(x) with any of the customers listed on Section 4.15 of
the Disclosure Letter or (y) which (together with all other
material Contracts with any such customer) accounted for in excess
of $1 million of revenues in the most recent completed fiscal
year;
(ii) any Contract
(x) with the suppliers listed on Section 4.16 of the
Disclosure Letter or (y) which (together with all other
material Contracts with such any supplier) accounted for in excess
of $1 million of expenditures in the most recent completed fiscal
year;
(iii) any Contract involving
any agency, marketing, licensing or sales arrangement relating to
the Business involving payments (or guarantees of minimum payments
or usage), other than Contracts listed under Section 4.5(a)(i)
or Section 4.5(a)(ii), in excess of $250,000 in the most
recent completed fiscal year;
(iv) any Contract concerning
the establishment or operation of a partnership, joint venture or
limited liability company;
(v) any Contract for the
disposition of a material portion of the assets or business of
Seller or any Other Seller related to the Business (other than
sales of products in the ordinary course of business) or any
agreement related to the Business for the acquisition of the assets
or business of any other entity (other than purchases of inventory
or components in the ordinary course of business) that would be
Purchased Assets hereunder if held by Seller or any Other Seller as
of the Closing;
-16-
(vi) any Contract concerning
noncompetition (other than noncompetition agreements entered into
with Transferred Employees in the ordinary course of business) or
restricting the operation of the Business in any geographic region
or businesses, product or service;
(vii) any (A) employment
agreement (other than “at will” employment agreements)
or consulting agreement with any Transferred Employee, other than
Non-U.S. Employees, providing for fixed annual cash compensation in
excess of $100,000 or any material severance or change-in-control
or similar payment or benefit, or (B) collective bargaining
agreement;
(viii) any settlement,
conciliation or similar agreement with any Governmental Authority
or any other Person, or pursuant to which any Seller or any Other
Seller would reasonably be expected to be required after the date
hereof to pay consideration in excess of $250,000 or that would
reasonably be expected to restrict the operation of the Business
from and after the Closing ;
(ix) all material Transferred
Business Intellectual Property Licenses (other than licenses for
generally commercially available software and other licenses where
total fees for which are less than $10,000);
(x) any Contract under which
the consequences of a default or termination or expiration without
renewal would reasonably be expected to have a Seller Material
Adverse Effect;
(xi) any information
technology agreement or similar Contract material to the operation
of the Business’ data centers, including (A) the primary
connectivity, bandwidth and/or telecommunications agreement for
each data center, (B) the primary agreement relating to
back-up and disaster recovery services for each data center,
(C) the primary agreement for hardware maintenance and support
for each data center, and (D) the primary agreement for
software maintenance and support for each data center;
(xii) any Contract which
contains any provisions requiring Seller or any Other Seller to
indemnify any other party (excluding indemnities contained in
agreements for the purchase, sale, distribution or license of
products or leases of real property entered into in the ordinary
course of business for which, to the Company’s knowledge,
there are not expected to be material Liabilities
thereunder);
(xiii) any Contract for the
acquisition or disposition of any business containing any profit
sharing arrangements or “earn-out”
arrangements;
(xiv) any Contract providing
for or relating to indebtedness for borrowed money or material
guarantees of any Liability of any Person other than Seller or any
Other Seller;
(xv) any personal property
leases which involves payment or the provision of services to or
from Seller or any Other Seller of in excess of $100,000 in any
year; and
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(xvi) any other Contract the
performance of which involves payment or the provision of services
to or from Seller or any Other Seller of in excess of $1,000,000 in
any year, excluding any Leases for Real Property.
(b) Seller has made available
to Purchaser true and complete copies of all Assumed Material
Contracts, including any amendments thereto, and, as of the
Closing, all Assumed Contracts entered into from and after the date
hereof that would be Assumed Material Contracts if entered into on
or prior to the execution hereof (which shall also are deemed
“Assumed Material Contracts” solely for purposes of
this Section 4.5(b)). All Assumed Material Contracts are valid
and binding with respect to Seller or any Other Seller and, to the
knowledge of Seller, each other party thereto. Each Assumed
Material Contract is assignable to Purchaser and/or its Designees
without the consent or approval of any party (except as set forth
in Section 4.5(b) of the Disclosure Letter) and will continue
to be legal, valid, binding and enforceable against Seller or any
Other Seller party thereto and, to the knowledge of Seller, all
other parties thereto immediately following the Closing in
accordance with the terms thereof as in effect immediately prior to
the Closing except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar Laws
relating to or affecting the enforcement of creditors’ rights
generally, by general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at law)
or by the implied covenant of good faith and fair dealing. Neither
Seller or any Other Seller nor, to the knowledge of Seller, any
other party, is in breach or violation of, or default under, any
such Assumed Material Contract, and no event has occurred, is
pending or, to the knowledge of Seller, is threatened, which, after
the giving of notice, with lapse of time, or otherwise, would
constitute a material breach or default under such Assumed Material
Contract.
(c) Notwithstanding the
foregoing, this Section 4.5 shall not apply to Real Property
(which is covered by Section 4.4).
4.6 Litigation
.
Neither Seller nor any Other
Seller, nor any of their respective properties or assets, is
subject to any order, judgment, stipulation, injunction, decree or
agreement with any Governmental Authority, which would prevent or
materially interfere with or delay the consummation of the
transactions contemplated by the Transaction Documents. No
Proceeding is pending or, to the knowledge of Seller, threatened
against Seller or any Other Seller, or any of their respective
properties or assets, which would prevent or materially interfere
with or delay the consummation of the transactions contemplated by
the Transaction Documents. Except as disclosed in Section 4.6
of the Disclosure Letter, there are no material Proceedings pending
or, to the knowledge of Seller, threatened against Seller or any
Other Sellers in respect of the Business or the Purchased
Assets.
4.7 Intellectual Property
Rights .
(a) Section 4.7(a) of
the Disclosure Letter sets forth a true and complete list of all
material Business Intellectual Property Licenses (other than
licenses for generally commercially available software and other
licenses where the total fees for which are less than $10,000),
indicating
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which are Transferred Business
Intellectual Property Licenses and which are Excluded Business
Intellectual Property Licenses.
(b) Seller or an Other Seller
is the sole and exclusive owner of all Transferred Business
Intellectual Property Rights free and clear of any Liens (excluding
non-exclusive outbound licenses in the ordinary course of
business); except that this Section 4.7(b) is not a
representation or warranty (and does not expand any other
representation or warranty) regarding the infringement,
misappropriation, or violation of the Intellectual Property Rights
of any Third Party.
(c) Section 4.7(c) of
the Disclosure Letter contains a true, complete and accurate list
of (i) the Transferred Trademarks, (ii) the Transferred
Patents, (iii) the Transferred Internet Properties, and
(iv) registered Copyrights and Database Rights included in the
Transferred Business Intellectual Property Rights, including, in
each case, where applicable, the application number, registration
number, filing date, date of issuance, assignee of record and
country of origin.
(d) There are no royalties,
fees, annuities or other payments payable to any third person by
reason of (i) Seller’s or any Other Seller’s
ownership, development, use, license, sale or disposition of any
Transferred Business Intellectual Property Rights, or
(ii) Seller’s or any Other Seller’s licensing of
the Licensed Business Intellectual Property Rights to Purchaser or
its subsidiaries under the Intellectual Property License Agreement,
and no such royalties, fees, annuities, or other payments payable
to any third party will arise directly as a result of the
transactions contemplated by this Agreement, in each case other
than fees and annuities paid to governmental or quasi-governmental
bodies or registration entities (e.g., Internet domain name
registration services) in the ordinary course of business to secure
and maintain such Transferred Business Intellectual Property
Rights.
(e) No proceedings have been
instituted or are pending against Seller or any Other Seller or, to
the knowledge of Seller, threatened, which challenge the rights of
Seller or any of the Other Sellers with respect to the Business
Technology, Licensed Business Intellectual Property Rights, or
Transferred Business Intellectual Property Rights.
(f) (i) None of the
Transferred Business Technology or Transferred Business
Intellectual Property Rights are subject to any outstanding
judgment, decree, order, writ, award, injunction or determination
of an arbitrator or court or other Governmental Authority affecting
the rights of Seller or any of the Other Sellers with respect
thereto, and (ii) none of the Transferred Business
Intellectual Property Licenses are subject to any outstanding
judgment, decree, order, writ, award, injunction or determination
of an arbitrator or court or other Governmental Authority to which
Seller or any Other Seller is a party which affects the rights of
Seller or any of the Other Sellers with respect thereto.
(g) To the knowledge of
Seller, neither Seller nor any Other Seller has, in connection with
the Business, infringed (whether directly, as a contributory
infringer, or through inducement), misappropriated or violated the
Intellectual Property Rights of any third party.
-19-
(h) Neither Seller nor any
Other Seller has received any notice alleging that Seller’s
or any Other Seller’s use of the Business Technology or
operation of the Business infringes (whether directly, as a
contributory infringer, or through inducement), misappropriates or
violates any Intellectual Property Right owned or enforceable by
any third party. Section 4.7(h) of the Disclosure Letter lists
any written third party complaint, claim or notice, or threat of
any of the foregoing (including any notification that a license
under any patent is or may be required), received by Seller or any
Other Seller alleging any such infringement, violation or
misappropriation and any request or demand for indemnification or
defense received by Seller or any Other Seller from any reseller,
distributor, customer, user or any other third party in relation to
the Business or any Product; and Seller has provided to the
Purchaser true and complete copies of all such written complaints,
claims, notices, requests, demands or threats.
(i) To the knowledge of
Seller, there is no unauthorized use, disclosure or infringement of
any Transferred Business Intellectual Property Right or Licensed
Business Intellectual Property Right by any third party, including
by any employee or former employee of Seller or an Other Seller,
which would be reasonably likely to result in a Seller Material
Adverse Effect. Seller has provided to Purchaser true and complete
copies of all written correspondence, complaints, claims or notices
sent by Seller or an Other Seller to a third party, as of the date
of the Agreement, concerning the infringement, violation or
misappropriation of any Transferred Business Intellectual Property
Rights or Licensed Business Intellectual Property
Rights.
(j) To the knowledge of
Seller, no third party (including any present or former employee or
consultant) is in violation of any written agreement relating to
confidentiality.
4.8 Finders; Brokers
. Neither Seller nor any Other Seller has employed any finder
or broker in connection with the transactions contemplated by the
Transaction Documents who would have a valid claim for a fee or
commission in connection with the transactions contemplated by the
Transaction Documents for which Purchaser or any of its Affiliates
would have any liability.
4.9 Tax Matters
.
(a) The Netherlands
Subsidiary has timely filed all material Tax Returns that it was
required to file. All such material Tax Returns were correct and
complete in all respects and were prepared in substantial
compliance with all applicable laws and regulations. All Taxes owed
by the Netherlands Subsidiary have been paid. The Netherlands
Subsidiary is currently not the beneficiary of any extension of
time within which to file any Tax Return. No claim has ever been
made by an authority in a jurisdiction where the Netherlands
Subsidiary does not file Tax Returns that the Netherlands
Subsidiary is or may be subject to taxation by that jurisdiction.
Notwithstanding anything contained herein to the contrary, Seller
makes no representation or warranty regarding the amount or
availability of any net operating loss carryforwards or any similar
Tax attribute of the Netherlands Subsidiary as of the Closing Date,
or the ability of Purchaser to utilize any such attributes in a
taxable period or portion thereof commencing after the Closing
Date.
-20-
(b) The Netherlands
Subsidiary has withheld and paid all Taxes required to have been
withheld and paid in connection with any amounts paid or owing to
any employee, independent contractor, creditor, stockholder, or
other third party, and all Tax withholding reporting statements
required with respect thereto have been properly completed and
timely filed.
(c) Seller, each Other Seller
and the Netherlands Subsidiary are not currently engaged and have
not been engaged during the three year period ending on the Closing
Date, in any material disputes with any Governmental Authority with
respect to Taxes attributable to the Purchased Assets or
Transferred Business Intellectual Property Rights. No Governmental
Authority has proposed to make or has made any material adjustment
with respect to Taxes attributable to the Purchased Assets or
Transferred Business Intellectual Property Rights, and none of the
Purchased Assets is “tax-exempt use property” within
the meaning of Section 168(h) of the Code.(d) There is no
material liability for any unpaid Taxes in respect of the Purchased
Assets or Transferred Business Intellectual Property
Rights.
(e) The Netherlands
Subsidiary is not a party to any Tax allocation or sharing
agreement. The Netherlands Subsidiary has no liability for the
Taxes of any other Person under any provision of U.S. or foreign
law, as a transferee or successor, by contract, or
otherwise.
4.10 Employment and
Benefits .
(a) Section 4.10(a) of
the Disclosure Letter sets forth a list of each material Seller
Plan and each material Seller International Plan as of the date of
this Agreement.
(b) With respect to each
material Seller Plan and each material Seller International Plan,
Seller has provided or made available to Purchaser true and
complete copies of the material Seller Plans and material Seller
International Plans.
(c) The Seller Plans and
Seller International Plans are in compliance in all material
respects with all applicable requirements of ERISA, the Code, and
other applicable Laws and have been administered in material
accordance with their terms and such Laws, except where the failure
to so comply has not had and should not reasonably be expected to
have a Seller Material Adverse Effect.
(d) There are no pending or,
to the knowledge of Seller, threatened Proceedings (other than
routine claims for benefits) with respect to any Seller Plans that
would reasonably be expected to result in material liability to the
Seller or any of its Affiliates.
(e) Neither Seller nor any
Subsidiary or any other person or entity under common control with
Seller or any of its Subsidiaries within the meaning of
Section 414(b), (c), (m) or (o) of the Code and the
regulations issued thereunder maintains, sponsors, contributes to
or has any Liability under or with respect to any
(i) “employee pension benefit plan,” within the
meaning of Section 3(2) of ERISA, which is subject to Title IV
of ERISA or Section 412 of the Code, (ii) multiemployer
plan, as defined in Section 3(37) of ERISA,
(iii) “multiple employer plan” as defined in
Section 210 of ERISA or Section 413(c) of the Code, or
(iv) “multiple employer welfare
-21-
arrangement” as defined in
Section 3(40) of ERISA, in each case with respect to which
Purchaser or any of its Affiliates could be subject to any
Liability.
4.11 Compliance with
Laws .
The Business is and has been
conducted by Seller and its Subsidiaries in compliance with the
Laws applicable thereto, except for such violations or failures so
to comply, if any, that would not reasonably be expected to have a
material adverse effect on the Business. No investigation or review
by any Governmental Authority with respect to the operation of the
Business, or any of its assets or employees (in their capacity as
employees of the Business), is or during the preceding two
(2) years has been pending or, to the knowledge of Seller,
threatened. Seller and its Subsidiaries each have and have had, and
are and have been in compliance with, all permits, licenses,
registrations, certificates, franchises, variances, exemptions,
orders and other governmental authorizations, consents and
approvals (collectively, “ Permits ”) necessary
to conduct the Business as presently conducted, except for such
Permits, the absence of which would not reasonably be expected to
have a Seller Material Adverse Effect.
4.12 Environmental
Matters .
Except as would not
reasonably be expected to result in a Seller Material Adverse
Effect: (a) Seller and each Other Seller in respect of the
Business, the Business Facilities, the Hazardous Materials
Activities and the Purchased Assets are and have at all times been
in compliance with all Environmental Laws, including the possession
of, and the compliance with, all Permits required under
Environmental Laws; (b) there has not been any Release,
disposal or arrangement for disposal of, or any exposure to,
Hazardous Materials at or from any of the Business Facilities or
otherwise in connection with the operation of the Business in
violation of Environmental Laws or in a manner that could give rise
to liability under any Environmental Laws; (c) Seller has not
received any Environmental Claim relating to the Business or the
Business Facilities; and (d) Seller has delivered to
Purchaser, or has otherwise made available to Purchaser or its
counsel, copies of all material environmental reports, studies,
assessments, audits, sampling data, correspondence alleging any
violation of Environmental Laws and other Environmental Claims in
their possession relating to the Purchased Assets and the
Business.
4.13 Financial
Information .
(a) Section 4.13 of the
Disclosure Letter sets forth (i) the unaudited pro forma
balance sheet of the Business as of July 31, 2007 (the “
Interim Balance Sheet ”), and unaudited pro forma
profit and loss statement for the Business for the seven months
ended July 31, 2007 (the “ Interim Profit and Loss
Statement ,” and, together with the Interim Balance
Sheet, the “ Interim Business Financial Statements
”), and (ii) the unaudited statement of operations for
the Mobile Business segment for the years ended December 31,
2006 and 2005 (the “ Statement of Operations ,”
and, together with the Interim Business Financial Statements, the
“ Financial Statements ”), and in each case,
such Financial Statements have been prepared subject to the basis
of presentation footnote(s) included on Section 4.13 of the
Disclosure Letter. Unless otherwise set forth on Section 4.13
of the
-22-
Disclosure Letter, and subject to the
basis of presentation included thereon with respect to the
Financial Statements: (i) the Interim Balance Sheet has been
derived from the unaudited consolidated financial statements of
Seller and its Subsidiaries as of July 31, 2007, (ii) the
Interim Profit and Loss Statement and the Statement of Operations
have been derived from the unaudited consolidated financial
statements of Seller and its Subsidiaries for the seven months
ended July 31, 2007, and for the years ended December 31,
2006, and 2005, respectively, and (iii) the Financial
Statements fairly present, in all material respects, the pro forma
financial condition and pro forma operating results of the Business
as of and for the periods covered thereby in accordance with GAAP
(except as disclosed in Section 4.13 of the Disclosure Letter)
and the accounting principles, procedures, assumptions and
estimates set forth in Section 4.13 of the Disclosure Letter
and consistent with the books and records of Seller and its
Subsidiaries.
(b) Neither Seller nor any
Other Seller has any Liability with respect to the Business, except
for (i) liabilities reflected in the Interim Business
Financial Statements, (ii) liabilities which have arisen since
July 31, 2007 in the ordinary course of business,
(iii) contractual and other liabilities incurred in the
ordinary course of business which are not required by GAAP to be
reflected on a balance sheet and (iv) the Excluded
Liabilities, all of which liabilities listed in clauses
(ii) and (iii) have not had and would not reasonably be
expected, individually or in the aggregate, to have a Seller
Material Adverse Effect.
4.14 Netherlands
Subsidiary Shares . The number and class of the Netherlands
Subsidiary Shares is set forth in Section 4.14 of the
Disclosure Letter of the Disclosure Letter. All of the Netherlands
Subsidiary Shares are and at all times during the preceding three
(3) years have been held of record and owned beneficially by
Seller free and clear of any Liens (other than Permitted Liens).
All of the issued and outstanding Netherlands Subsidiary Shares of
the Netherlands Subsidiary have been duly authorized and are
validly issued, fully paid and non-assessable. There are no
outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights or other
Contracts that would require the Netherlands Subsidiary to issue,
sell, or otherwise cause to become outstanding any of its capital
stock or other equity interests. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation
or similar rights with respect to any of the Netherlands
Subsidiary. Neither Seller nor any of its Subsidiaries is a party
to any option, warrant, purchase right or other Contract (other
than this Agreement) that would require Seller or any of its
Subsidiaries to sell, transfer, or otherwise dispose of the
Netherlands Subsidiary Shares or any other capital stock or other
equity interests of the Netherlands Subsidiary. Neither Seller nor
any of its Subsidiaries is a party to any voting trust, proxy, or
other agreement or understanding with respect to the voting of any
capital stock or other equity interests of the Netherlands
Subsidiary.
4.15 Customers
.
Section 4.15 of the
Disclosure Letter sets forth the top five (5) customers of the
Business by revenue during the seven (7) month period ended
July 31, 2007. (a) Neither Seller nor any Other Seller
has received written notification that any such customer of the
Business has threatened to terminate, fail to renew or materially
and adversely change its relationship with Seller or any
Other
-23-
Seller, as applicable (including with
respect to the terms or quantity of business such customer does
with Seller or any Other Seller, as applicable), nor (b) to
the knowledge of Seller, does any such customer intend to
terminate, fail to renew or materially and adversely change its
relationship with Seller or any Other Seller, as applicable
(including with respect to the terms or quantity of business such
customer does with Seller or any Other Seller, as applicable), in
each case with respect to the Business.
4.16 Suppliers
.
Section 4.16 of the
Disclosure Letter sets forth the material suppliers to the Business
for the seven (7) month period ended July 31, 2007.
(a) Neither Seller nor any Other Seller has received written
notification that any such supplier of the Business has threatened
to terminate, fail to renew or materially and adversely change its
relationship with Seller or any Other Seller, as applicable
(including with respect to the terms or quantity of business such
supplier does with Seller or any Other Seller, as applicable), nor
(b) to the knowledge of Seller, does any such supplier intend
to terminate, fail to renew or materially and adversely change its
relationship with Seller or any Other Seller, as applicable
(including with respect to the terms or quantity of business such
supplier does with Seller or any Other Seller, as applicable), in
each case with respect to the Business.
4.17 Absence of
Changes .
Except as otherwise disclosed
in this Agreement or the exhibits or schedules hereto,
(x) from December 31, 2006 and through the date hereof,
Seller and its Subsidiaries have conducted the Business in the
ordinary course consistent with past practices, and (y) from
December 31, 2006 and through the date hereof, there has not
occurred any Seller Material Adverse Effect. Without limiting the
generality of the foregoing, from December 31, 2006 and
through the date hereof, Seller and its Subsidiaries have not, with
respect to the Business, the Purchased Assets (or any asset, which
if held by Seller or any Other Seller as of the Closing would be a
Purchased Asset) or the Assumed Liabilities:
(a) sold, assigned, pledged,
hypothecated or otherwise transferred any assets, properties or
rights except those which, when taken together with all assets,
properties or rights disposed of, are immaterial to the Business
taken as a whole;
(b) terminated or materially
amended, or been in any material breach under, any Assumed Material
Contract (or any contract, which if held by Seller or any Other
Seller as of the Closing would be an Assumed Material
Contract);
(c) suffered any material
damage, destruction or other casualty loss (whether or not covered
by insurance);
(d) incurred any Lien, other
than Permitted Liens, upon any of the assets, rights or properties
of the Business;
-24-
(e) changed any accounting
methods or practices followed by or applicable to Seller or the
Subsidiaries (other than such as have been required by applicable
law or GAAP) related to the Business, the Purchased Assets or the
Assumed Liabilities;
(f) disposed of or failed to
keep in effect any rights in, to or for the use of any material
Permit (including any pending application therefor) of the
Business;
(g) cancelled, modified or
waived any material debts or material claims held by Seller or any
Other Seller or any waiver of any other rights of Seller or any
Other Seller;
(h) disposed of or failed to
keep in effect any rights in, to or for the use of any of material
Intellectual Property Rights;
(i) except for salary,
bonuses and incentive compensation in the ordinary course of
business consistent with past practices, (i) increased the
compensation payable or to become payable by Seller or Other Seller
to any Transferred Employee or (ii) increased any employee
benefit plan, payment or arrangement for any Transferred Employee;
or
(j) entered into an agreement
to do any of the foregoing.
4.18 Restrictions on
Business Activities .
There is no Contract,
agreement or commitment to which Seller or any Other Seller is a
party limiting in any material respect the right of Seller or any
Other Seller to engage in any material line of business or to
compete with any Person, in each case which would apply to the
activities of Purchaser after the Closing with respect to the
Business.
4.19 Sufficiency of
Assets .
The Purchased Assets, the
Transferred Business Intellectual Property Rights, the Transferred
Business Technology, the Licensed Business Intellectual Property
Rights, the Licensed Business Technology, the Assigned Real
Property, the Subleased Real Property, and the services and
benefits provided under the Transition Services Agreement,
(a) constitute all the assets, properties and rights necessary
to conduct the Business after the Closing in all material respects
as currently conducted, and (b) include all of the assets and
properties (other than assets and properties that, individually and
in the aggregate, are immaterial) (x) held by Seller or any
Other Seller and used with respect to the Business as currently
conducted, or (y) included in the Balance Sheet (other than,
with respect to clauses (x) and (y) above, supplies and
inventory used, sold or disposed of in the ordinary course of
business and restocked in accordance with past practice).
Notwithstanding the foregoing, this Section 4.19 shall not be
deemed a representation or warranty regarding non-infringement,
validity or enforceability of Intellectual Property
Rights.
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4.20 Condition of
Purchased Assets .
The tangible Purchased Assets
that are material to the Business are free from material defects,
have been maintained in accordance with normal industry practice,
are in good operating condition and repair (subject to normal wear
and tear) and are suitable for the purposes for which they
presently are used. The other tangible Purchased Assets are free
from material defects, have been maintained in accordance with
normal industry practice, are in good operating condition and
repair (subject to normal wear and tear) and are suitable for the
purposes for which they presently are used except as individually
or in the aggregate is not material to the Business.
4.21 Accounts
Receivable .
All accounts receivable
reflected on the Interim Balance Sheet as of July 31, 2007 or
as set forth on the Final Closing Statement of Working Capital (net
of allowances for doubtful accounts as reflected thereon) are valid
receivables arising in the ordinary course of business and are
current and, to the knowledge of the Seller, collectible at the
aggregate recorded amount therefore as shown on the Balance Sheet
(net of allowances for doubtful accounts as reflected thereon).
Except as set forth in Section 4.21 of the Disclosure Letter,
no Person has any Lien on such receivables or any part thereof, and
no agreement for deduction, free goods, discount or other deferred
price or quantity adjustment has been made with respect to any such
receivables.
4.22 Labor and Employment
Matters .
Except as disclosed in
Section 4.22(a) of the Disclosure Letter, with respect to
Business: (i) there is no collective bargaining agreement or a
union which represents Seller’s employees; (ii) to the
knowledge of Seller, no management-level Transferred Employee has
any present intention to terminate their employment; (iii) no
labor organization has filed any representation petition or made
any written or oral demand for recognition; (iv) to the
knowledge of Seller, no union organizing or decertification efforts
are underway or threatened and no other question concerning
representation exists; (v) during the past five
(5) years, no labor strike, work stoppage, slowdown, or other
material labor dispute has occurred, and none is underway or, to
the knowledge of Seller, threatened; (vi) there is no workers
compensation liability outside the ordinary course of business;
(vii) there is no material employment-related charge,
complaint, grievance, investigation, audit or inquiry pending or
threatened in any forum, relating to an alleged violation or breach
by Seller or any of its Subsidiaries (or any of their respective
officers or directors) of any Law or Contract. Section 4.22(b)
of the Disclosure Letter contains a true and correct description of
all severance and change-in-control or other similar benefits that
may become payable to any Transferred Employee as of the Closing
which are not the sole responsibility of Seller and the Other
Sellers (it being understood that acceleration of equity awards are
the sole responsibility of Seller).
4.23 Insurance
.
Section 4.23 of the
Disclosure Letter sets forth a list of each insurance policy
providing for liability exposure (including policies providing
property, casualty, liability and workers’
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compensation coverage and bond and
surety arrangements) to which Seller is currently a party, a named
insured or otherwise the beneficiary of coverage (“
Insurance Policies ”). All Insurance Policies are in
full force and effect. Since January 1, 2005, Seller has paid
all premiums due thereunder, and no notice (whether oral or
written) of cancellation of any such coverage has been received by
Seller.
4.24 Absence of Sensitive
Payments; Suitability .
(a) None of Seller or any
Other Seller, nor to Seller’s knowledge, any of their
respective officers, directors or senior level employees with
responsibilities relating to the Business, acting alone or
together, has performed any of the following acts: (i) the
making of any contribution, payment, remuneration, gift or other
form of economic benefit (a “ Payment ”) to or
for the private use of any governmental official, employee or agent
where the Payment or the purpose of the Payment was illegal under
the Laws of the U.S. or any foreign jurisdiction or the
jurisdiction in which such Payment was made, or (ii) the
establishment or maintenance of any unrecorded fund, asset or
liability for any purpose or the making of any false or artificial
entries on its books.
(b) None of Seller or any
Other Seller, nor to Seller’s knowledge, any of their
respective officers, directors or senior level employees with
responsibilities relating to the Business, acting alone or
together: (i) has ever been indicted for or convicted of any
felony or any crime involving fraud or misrepresentation;
(ii) is subject to any outstanding judgment, order, writ,
injunction, stipulation, ruling, decree or award barring,
suspending or otherwise limiting the right of Seller or any Other
Seller or such person to engage in any activity conducted as part
of the business of Seller or any Other Seller as currently
conducted; or (iii) to Seller’s knowledge, has ever been
denied any Permit affecting Seller’s or any Other
Seller’s or such person’s ability to conduct any
activity conducted as part of the business of Seller or any Other
Seller.
4.25 Affiliated
Transactions .
There are no transactions, or
series of related transactions, agreements, arrangements or
understandings, nor are there any currently proposed transactions,
or series of related transactions, related to Business or the
Purchased Assets that would be required to be disclosed by Seller
under Item 404 of Regulation S-K promulgated under the
Securities Act or would be required to be disclosed by Seller
thereunder if the individual listed on Section 4.25 of the
Disclosure Letter was and is an executive officer of
Seller.
4.26 No Other
Representations or Warranties .
Except for the
representations and warranties contained in this Agreement,
Purchaser acknowledges that none of Seller, the Other Sellers, the
other Subsidiaries or Affiliates of Seller nor any other Person
makes any other express or implied representation or warranty with
respect to the Business, the Purchased Assets, the Transferred
Business Intellectual Property Rights, the Assumed Liabilities or
otherwise, including as to (a) the physical condition or
usefulness for a particular purpose of the real or tangible
personal property included in the Purchased Assets, (b) the
use of the
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Purchased Assets and Transferred
Business Intellectual Property Rights and the operation of the
Business by Purchaser or any of its Designees after the Closing in
any manner other than as used and operated by Seller or the Other
Sellers, or (c) the probable success or profitability of the
ownership, use or operation of the Business by Purchaser or any of
its Designees after the Closing.
ARTICLE V
REPRESENTATIONS OF
PURCHASER
Purchaser represents and
warrants to Seller as follows:
5.1 Corporate
Existence .
Purchaser and each Designee
is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization. Purchaser and each
Designee is duly qualified to conduct business and is in good
standing under the Laws of each jurisdiction in which the nature of
its businesses or the ownership or leasing of its properties
requires such qualification, except for those jurisdictions in
which the failure to be so qualified or in good standing has not
had and would not reasonably be expected, individually or in the
aggregate, to have a Purchaser Material Adverse Effect. Purchaser
and each Designee have the requisite corporate power and authority
to own, lease and operate the Purchased Assets and the Transferred
Business Intellectual Property Rights and assume the Assumed
Liabilities, and to carry on the Business in substantially the same
manner as the same is now being conducted by Seller and the Other
Sellers. Neither Purchaser nor any Designee is in default under or
in violation of any provision of its corporate charter or
by-laws.
5.2 Corporate
Authority .
(a) This Agreement and the
other Transaction Documents to which Purchaser and the Designees
are a party and the consummation of the transactions contemplated
hereby and thereby involving such Person (i) have been duly
authorized by Purchaser’s Board of Directors and, other than
the delivery of notice to stockholders of Purchaser pursuant to
Section 228 of the Delaware General Corporation Law with
respect to certain matters authorized by stockholders of Purchaser
by written consent in connection with the transactions contemplated
hereby, no other corporate proceedings on the part of Purchaser are
necessary to authorize this Agreement or the other Transaction
Documents or to consummate the transactions contemplated hereby or
thereby, and (ii) will be duly authorized by each applicable
Designee by all requisite corporate, partnership or other action
prior to the Closing. Purchaser and each Designee has full power
and authority to execute and deliver, as the case may be, this
Agreement and the Transaction Documents to which it is a party and
to perform its obligations hereunder or thereunder. This Agreement
has been duly executed and delivered by Purchaser, and the other
Transaction Documents will be duly executed and delivered by
Purchaser and any Designee party thereto, and this Agreement
constitutes, and the other Transaction Documents when so executed
and delivered will constitute, a valid and legally binding
obligation of Purchaser and each of its Designees party thereto,
enforceable against it or them, as the case may be, in accordance
with its terms except as enforceability may be affected by
bankruptcy, insolvency, fraudulent conveyance,
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reorganization, moratorium and other
similar Laws relating to or affecting creditors’ rights
generally, general equitable principles (whether considered in a
proceeding in equity or at Law) and the implied covenant of good
faith and fair dealing.
(b) Except for the required
filings under the applicable Antitrust Regulations, the execution
and delivery of this Agreement and the other Transaction Documents
by Purchaser and the Designees and the consummation by Purchaser
and the Designees of the transactions contemplated hereby and
thereby do not and will not (A) violate or conflict with any
provision of the respective certificate of incorporation or by-laws
or similar organizational documents of Purchaser or any of its
Designees, (B) result in any violation or breach or constitute
any default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of a material benefit
under, or result in the creation of any Lien under any material
contract, indenture, mortgage, lease, note or other agreement or
instrument to which Purchaser or any of its Designees is subject or
is a party, or (C) violate, conflict with or result in any
breach under any provision of any Law applicable to Purchaser or
any of its Designees or any of their respective properties or
assets, except, in the case of clauses (B) and (C), to the
extent that any such breach, default, termination, cancellation,
acceleration, Lien, violation, conflict, breach or loss would not
reasonably be expected, individually or in the aggregate, to result
in a Purchaser Material Adverse Effect.
5.3 Governmental Approvals
and Consents .
Neither Purchaser nor any of
its Designees is subject to any order, judgment, decree,
stipulation, injunction or agreement with any Governmental
Authority which would prevent or materially interfere with or delay
the consummation of the transactions contemplated by the
Transaction Documents or would be reasonably likely to have a
Purchaser Material Adverse Effect. No claim, action, suit,
proceeding or investigation is pending or, to the knowledge of
Purchaser, threatened against Purchaser or any of its Designees
which would prevent or materially interfere with or delay the
consummation of the transactions contemplated by the Transaction
Documents. Except for any requirements under any Antitrust
Regulations, no Consent, approval, order or authorization of,
license or permit from, notice to or registration, declaration or
filing with, any Governmental Authority, is required on the part of
Purchaser or any of its Designees in connection with the execution,
delivery or performance of this Agreement or any of the other
Transaction Documents or the consummation of the transactions
contemplated hereby and thereby except for such Consents,
approvals, orders or authorizations of, licenses or permits,
filings or notices which have been obtained or will be obtained as
of the Closing Date and remain in full force and effect and those
with respect to which the failure to have been so obtained or to
remain in full force and effect would not reasonably be expected,
individually or in the aggregate, to result in a Purchaser Material
Adverse Effect.
5.4 Financial Capacity
.
Purchaser and certain
investors have duly executed and delivered that certain Series I
Preferred Stock Purchase Agreement, dated October 12, 2007
(the “ Stock Purchase Agreement ”),
by
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and among Purchaser, certain of its
Affiliates, and the investors that are parties thereto (the “
Investors ”), and concurrently with the entering into
of the Stock Purchase Agreement, (i) the Investors (other than
Koala Holdings Limited Partnership, a Delaware limited partnership
(“ Koala ”)) have deposited cash into an escrow
account pursuant to one or more definitive escrow agreements
between such Investors and Boult, Cummings, Conners &
Cummings, PLC, as escrow agent, which escrow agreements are
attached hereto as Annex 1 (the “ Investor Escrow
Agreements ”), (ii) Koala has deposited cash into an
escrow account pursuant to a definitive escrow agreement by and
between Koala, Purchaser and U.S. Bank National Association, a
national banking association, as escrow agent, which escrow
agreement is attached hereto as Annex 2 (the “
Koala Escrow Agreement ”), and (iii) Purchaser
has deposited cash into an escrow account pursuant to a definitive
escrow agreement by and between Purchaser and Boult, Cummings,
Conners & Cummings, PLC, as escrow agent, which escrow
agreement is attached hereto as Annex 3 (the “
Purchaser Escrow Agreement ”) (such deposited cash by
the Investors and Purchaser, the “ Purchase Escrow
Funds ,” and the Investor Escrow Agreements, the Koala
Escrow Agreement and the Purchaser Escrow Agreement, collectively,
the “ Purchase Funds Escrow Agreements ”). Each
of the Purchase Funds Escrow Agreements have been duly executed and
delivered by all of the parties to such agreements. Purchaser has
delivered to Seller on or prior to the date hereof a true and
correct, fully executed copy of the Stock Purchase Agreement and
the Purchase Funds Escrow Agreements, and such agreements have not
been amended or modified (except, from and after the date hereof,
to add additional parties who are investing additional equity funds
in Purchaser) and are in full force and effect. The Purchase Escrow
Funds are in the aggregate at least equal to the Purchase Price.
The proceeds from the transactions contemplated by the Stock
Purchase Agreement and the cash of Purchaser held as part of the
Purchase Escrow Funds are sufficient to enable Purchaser to
consummate the transactions contemplated hereby.
5.5 Finders; Brokers
.
Neither Purchaser nor any
Designee has employed any finder or broker in connection with the
transactions contemplated by the Transaction Documents who would
have a valid claim for a fee or commission in connection with the
transactions contemplated by the Transaction Documents for which
Seller or any of its Subsidiaries would have any
liability.
5.6 Purchase for
Investment .
With respect to the
Netherlands Subsidiary Shares, Purchaser and its Designees are
aware that such Netherlands Subsidiary Shares were not registered
under the Securities Act, or any other applicable securities Laws,
and were issued pursuant to exemptions therefrom. Purchaser or the
Designee thereof is purchasing the Netherlands Subsidiary Shares
solely for investment, with no present intention to distribute the
Netherlands Subsidiary Shares to any Person.
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5.7 No Other
Representations or Warranties .
Except for the
representations and warranties contained in this Agreement, none of
Purchaser, the Subsidiaries or Affiliates of Purchaser nor any
other Person makes any other express or implied representation or
warranty on behalf of Purchaser.
ARTICLE VI
AGREEMENTS OF PURCHASER AND
SELLER
6.1 Operation of the
Business .
Except as required by this
Agreement or as disclosed in Section 6.1 of the Disclosure
Letter, Seller covenants that, in respect of the Business (it being
understood that nothing in this Section 6.1 shall in any way
limit Seller’s or any of its Subsidiaries’ operation of
the Retained Business except to the extent related to the Business
or Seller’s other obligations hereunder), until the Closing
it will, and it will cause the Other Sellers to, (x) operate,
invest in and conduct the Business in all material respects in the
ordinary course, and (y) use commercially reasonable efforts
to continue, in a manner consistent with the past practice of the
Business, to keep available the services of their respective
employees, to pay accounts payable, to comply with Law and Permits,
to maintain and preserve intact the Business in all material
respects and to maintain in all material respects the ordinary and
customary relationships of the Business with its suppliers,
customers, licensees, licensors, consultants and others having
business relationships with it with a view toward preserving for
Purchaser and its Designees after the Closing Date the Business,
the Purchased Assets and the goodwill associated therewith. Except
as otherwise contemplated by this Agreement or as disclosed in
Section 6.1 of the Disclosure Letter, without limiting the
generality of the foregoing, Seller shall not, and shall cause the
Other Sellers not to, without the prior written approval of
Purchaser (which approval shall not be unreasonably withheld or
delayed), take any of the following actions with respect to the
Business:
(a) transfer, sell, lease,
license or otherwise convey or dispose of, or subject to any Lien,
any of the Purchased Assets or Transferred Business Intellectual
Property Rights or any asset or Intellectual Property Right which,
if held by Seller or any Other Seller as of the Closing would be a
Purchased Asset or Transferred Business Intellectual Property
Right, respectively, other than (i) sales of inventory in the
ordinary course of business, (ii) other transfers, leases,
licenses and dispositions made in the ordinary course of business,
or (iii) Permitted Liens;
(b) directly or indirectly,
through any officer, director or agent, solicit inquiries or
proposals that constitute, or are intended to lead to a proposal or
offer from, provide any confidential information to, enter into any
agreement, understanding or arrangement with, or initiate any
discussions or negotiations or coop
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