Source: https://www.sec.gov/Archives/edgar/data/1546296/000121465914002277/ex10_16.htm
Timestamp: 2019-08-19 08:08:29
Document Index: 3909948

Matched Legal Cases: ['§5', '§3', '§2', '§6', '§3', '§3', '§3', '§3', '§2', '§3', '§3', '§3', '§5', '§3', '§7', '§7', '§6', '§6', '§3']

EX-10.16 2 ex10_16.htm EXHIBIT 10.16 Unassociated Document
CAREERIMP, INC.,
Payment of Total Cash Consideration
This Asset Purchase Agreement (this “Agreement”) is entered into as of June 14, 2013, by and among CAREERIMP, INC., a Delaware corporation (“Target”), and Ayan Kishore, individually, as a principal stockholder of Target (“Target Stockholder” and, collectively, jointly and severally with Target, “Sellers”), and PROFESSIONAL DIVERSITY NETWORK, INC., a Delaware corporation (“Buyer”). Buyer and Sellers are each individually referred to herein as a “Party” and collectively as the “Parties.”
A. Target engages in the business of, among other things, developing career guidance tools for jobseekers.
C. Target Stockholder owns a majority of the outstanding shares of capital stock of Target.
“Accounts Payable” means all accounts payable of Target whether arising prior to, on or after the Closing.
“Accrued Expenses” means all accrued and unpaid expenses of Target whether arising prior to, on or after the Closing, including, without limitation, (x) Liabilities for salaries, wages, bonuses, paid personal, sick and vacation time and other compensation and related payroll Tax Liabilities and (y) Liabilities for Taxes.
“Acquired Assets” means all right, title, and interest in and to all of the assets of Target other than Excluded Assets, including, without limitation, all of its (a) tangible personal property; (b) all of Target’s Intellectual Property, goodwill associated therewith, licenses and sublicenses granted and obtained with respect thereto, and rights thereunder, remedies against infringements thereof (including the right to sue and recover for prior infringements), and rights to protection of interests therein under the laws of all jurisdictions (except that the Domain IP shall not be an Acquired Asset); (c) agreements and contracts (including, purchase orders, quotations, bids and sales orders, other similar arrangements, and rights thereunder) set forth on Schedule 1(a); (d) those insurance policies (and rights thereunder) which do not constitute Excluded Assets, if any; (e) claims (and benefits to the extent they arise therefrom) with respect to insurance policies (regardless of whether such insurance policies constitute Excluded Assets) to the extent such claims relate in any way to the Acquired Assets or Assumed Liabilities; (f) claims, deposits, prepayments, refunds, causes of action, choses in action, rights of recovery, rights of set-off, and rights of recoupment; (g) franchises, approvals, permits, licenses, orders, registrations, certificates, variances, and similar rights obtained from governments and governmental agencies; and (h) books, records, ledgers, files, documents, correspondence, lists, plats, architectural plans, drawings, and specifications, creative materials, advertising and promotional materials, studies, reports, and other printed or written.
“Additional Purchase Price” means $200,000.
“Assumed Liabilities” means all obligations of Target under the agreements, contracts, leases, licenses, and other arrangements entered into in the Ordinary Course of Business which are assigned to Buyer pursuant to this Agreement, but only to the extent referred to and included in the definition of Acquired Assets and included on Schedule 1(b), either (i) to furnish goods, services, and other non-Cash benefits to another party after the Closing or (ii) to pay for goods, services, and other non-Cash benefits that another party will furnish to it after the Closing.
“Cause” means, as determined by the Company in its sole discretion, the occurrence of any one of the following on the part of Ayan Kishore: (i) conviction of or a plea of nolo contendre to a felony or an act of moral turpitude which interferes with the performance of his duties and responsibilities as an employee of Buyer or affects or reflects on Buyer in a negative manner; (ii) attempted or actual theft, fraud or embezzlement of money or tangible or intangible assets or property of Buyer or its employees or customers, suppliers or vendors; (iii) gross negligence or willful misconduct in respect of the performance of his duties and responsibilities as an employee of Buyer; (iv) breach of his fiduciary duties as an officer of Buyer; (v) his willful failure to perform his duties and responsibilities within the scope of his employment as SVP, Operations and Technology (other as a result of his death or disability), which such failure continues or is repeated following fifteen (15) days’ written notice from Buyer thereof; (vi) violation of any lawful express direction from the Board of Directors of Buyer or any officer of Buyer to whom he reports, relating to his duties and responsibilities within the scope of his employment with Buyer as SVP, Operations and Technology, which such violation (if susceptible to cure) continues or is repeated following fifteen (15) days’ written notice from Buyer thereof; (vi) breach of §5(f) or (g) of this Agreement, or of any material term, covenant, representation or warranty contained in any other agreement between Buyer and Ayan Kishore, which such breach (if susceptible to cure) remains uncured or is repeated following fifteen (15) days’ written notice from Buyer thereof.
“Domain” means the domain name app.ly and the apply.app.ly subdomain.
“Domain IP” means all trademarks, service marks, trade dress, logos, slogans, trade names, corporate names, URLs, and Internet domain names associated with the Domain, all goodwill of the business associated therewith, all rights thereunder, all remedies against infringements thereof (including the right to sue and recover for prior infringements), and all rights to protection of interests therein under the laws of all jurisdictions.
“Employee Benefit Plan” means any “employee benefit plan” (as such term is defined in ERISA §3(3)) and any executive compensation, bonus, stock purchase, stock option, severance plan, salary continuation, vacation, sick leave, fringe benefit, incentive, insurance arrangement , or similar material plan or arrangement for one or more employees which is not subject to ERISA.
“Excluded Assets” means (a) Cash, (b) judgments, claims (and benefits to the extent they arise therefrom) and litigation against third parties to the extent such claims and litigation are not in any way related to the Acquired Assets or Assumed Liabilities; (c) insurance policies of Target in effect as of the Closing Date and rights in connection therewith (including, without limitation, insurance policies that constitute Employee Welfare Benefit Plans), subject to subsection (f) of the definition of “Acquired Assets” and unless prior to the Closing, Buyer elects, by written notice delivered to Target prior to the Closing Date, to accept assignments of any of such insurance policies; (d) rights in and with respect to assets associated with Employee Benefit, Employee Pension Benefit Plans or Employee Welfare Benefit Plans; (e) rights arising from any refunds due with respect to insurance premium payments to the extent they relate to insurance policies which constitute Excluded Assets; (f) rights arising from deposits and prepaid expenses, if any, with respect to the Excluded Assets; (g) Target’s corporate charter, minute and stock record books, corporate seal, and other documents relating to the organization, maintenance, and existence of Target as a corporation; (h) rights to the refund of any income tax, of any kind, paid by Target or Target Stockholder or any other Stockholder prior to the Closing and all rights to any income tax deposits or payments paid by Target or Target Stockholder or any other Stockholder prior to the Closing relating to the Acquired Assets or Target; (i) any of the rights of Target under this Agreement (or under any side agreement between Target on the one hand and Buyer on the other hand entered into on or after the date of this Agreement); (j) all end-user data and other information collected from end-users by Target prior to April 18, 2011; (k) all accounts, notes, and other receivables with respect to the Acquired Assets; (l) the Domain and the Domain IP and (m) the assets listed on Schedule 1(c) attached hereto.
“Excluded Liabilities” means any and all liabilities or obligations not expressly and specifically included within the definition of Assumed Liabilities, including, without limitation, (a) any liabilities of Target to any stockholder of Target or any Affiliate of Sellers, including, without limitation, the Target Stockholder and the other Stockholders; (b) any liabilities for legal, accounting, audit and investment banking fees, brokerage commissions, and any other expenses incurred by Sellers in connection with the negotiation and preparation of this Agreement or the sale of the Acquired Assets to Buyer hereunder; (c) any liabilities for Taxes; (d) any liability for or related to indebtedness to banks, financial institutions or other persons or entities with respect to borrowed money or otherwise; (e) any liabilities under those agreements, commitments, contracts, insurance policies, leases, licenses, permits, purchase orders, and sales orders which are not assigned to Buyer pursuant to the provisions of this Agreement; (f) product and service warranty liabilities with respect to, and liabilities with respect to returns or allowances and recalls of, products shipped or manufactured or services rendered on or prior to the Closing Date; (g) any liabilities arising out of or in connection with any Employee Benefit Plans, Employee Pension Benefit Plans, or Employee Welfare Benefit Plans; (h) any liabilities under collective bargaining agreements in respect of employees, any Employee Pension Benefit Plan or any Multiemployer Plan (including, without limitation, any so-called “withdrawal liability” under any such plan); (i) any liabilities to employees for salaries, wages (including, without limitation, overtime pay), bonuses, vacation pay and other compensation, including, without limitation, any liabilities to pay bonuses or severance to employees of Sellers whose employment is terminated prior to the Closing Date or in connection with the sale of the Acquired Assets; (j) any liabilities under any federal or state civil rights or similar law, or the WARN Act, resulting from Target’s treatment of its employees, including without limitation Target’s termination of employment of its employees; (k) any liabilities as a result of any grievance proceeding, arbitration, administrative proceeding, or proceedings in any court, based upon any employment actions, inactions or omissions by Target, involving any employees or former employees of Target, or individuals who applied for employment with Target, which relate in any way to decisions to hire or not hire such individuals, decisions to terminate, discharge, lay off promote, demote or transfer such individuals, relating to bargaining obligations or actions taken contrary to any bargaining obligations, and decisions regarding payment of compensation and/or benefits to such individuals (including, without limitation, claims raised under any federal, state or local statute or regulation, common law claims, claims based upon any employment contract, or claims based upon any collective bargaining agreement); (l) any claims against or liabilities for injury to or death of persons or damage to or destruction of property (including, without limitation, any worker’s compensation claim) regardless of when said claim or liability is asserted, including, without limitation, any claim or liability for consequential or punitive damages in connection with the foregoing; (m) any liabilities arising out of or in connection with any violation of a statute or governmental rule, regulation or directive; (n) any liabilities or obligations with respect to, or relating to, any Environmental, Health, and Safety Requirements; (o) any liabilities in connection with or arising out of the transfer or assignment of any agreements, commitments, contracts, leases, licenses or permits (including, without limitation, under any computer software agreement or license); (p) any liabilities for retrospective or similar insurance premium adjustments with respect to insurance policies transferred or assigned to Buyer pursuant to the provisions of this Agreement; (q) any liabilities for or arising in connection with any claims for infringement or misappropriation by Target or any of its Affiliates of any Intellectual Property or trade secrets of any third party, including, without limitation, claims by Lumen View Technology LLC that any Acquired Asset or the Target’s business infringes U.S. Patent No. 8.069,073, (r) Accounts Payable; (s) Accrued Expenses; and/or (t) any liabilities (whether asserted before or after Closing) for or arising in connection with any breach of a representation, warranty, or covenant, or for any claim for indemnification, contained in any agreement, contract, lease, license or permit to the extent that such breach or claim arose out of or by virtue of Sellers’ performance or nonperformance thereunder on or prior to the Closing Date, it being understood that, as between Sellers and Buyer, this subsection shall apply notwithstanding any provisions which may be contained in any form of consent to the assignment of any such agreement or contract, or any novation agreement, which, by its terms, imposes such liabilities upon Buyer and which assignment or novation agreement is accepted by Buyer notwithstanding the presence of such a provision, and that Sellers’ failure to discharge any such liability shall entitle Buyer to indemnification in accordance with the provisions of this Agreement.
“Good Reason” means (i) any permanent transfer of Alan Kishore by Buyer of greater than fifty (50) miles from Ayan Kishore’s primary residence without Ayan Kishore’s prior written consent; (ii) a material breach by Buyer of a material covenant or agreement made in this Agreement; or (iii) a material and adverse change in Ayan Kishore’s current title, pay and/or duties to Buyer without Ayan Kishore’s prior written consent; provided, however, in each case, that such transfer, breach or change continues following fourteen (14) days’ written notice from Ayan Kishore to Buyer thereof, which such notice shall be given no later than fourteen (14) days after Ayan Kishore has knowledge of such transfer, breach or change.
“Intellectual Property” means all of the following in any jurisdiction throughout the world: (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, slogans, trade names, corporate names, URLs, Internet domain names, Web site content and rights in telephone numbers and e-mail accounts and addresses, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith, (d) all mask works and all applications, registrations, and renewals in connection therewith, (e) all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (f) all computer software (including Source Code, executable code, data, databases, and related documentation) and systems, (g) all machine learning techniques (including all related Source Code, documentation and other materials); (h) all natural language processing (including all related Source Code, documentation and other materials); (i) all advertising and promotional materials; (j) all prototypes; (k) all other proprietary rights, and (l) all copies and tangible embodiments thereof (in whatever form or medium).
“Knowledge of Sellers” (or words of like import) means, with respect to a particular matter, the knowledge the Target Stockholder or any officer or director of Target has or should have after due and diligent investigation.
“Material Adverse Effect” or “Material Adverse Change” means any effect or change that would be (or could reasonably be expected to be) materially adverse to the business, assets, condition (financial or otherwise), operating results, operations, or business prospects of Target, individually or taken as a whole, or to the ability of Target to consummate timely the transactions contemplated hereby (regardless of whether or not such adverse effect or change can be or has been cured at any time or whether Buyer has knowledge of such effect or change on the date hereof).
“Purchase Price” means the sum of the Closing Cash Payment and, only to the extent payable under §2(c), the Additional Purchase Price.
“Stockholder” means all of the beneficial and record owners of shares of Target’s capital stock.
“Target’s Indemnification Cap” has the meaning set forth in §6(f).
“Target Stockholder” has the meaning set forth in the preface.
(c) Payment of Consideration. In consideration for the Acquired Assets, Buyer shall pay to Target at the Closing an aggregate amount equal to the Closing Cash Payment, in cash payable by wire transfer or delivery of other immediately available funds. If and only if Ayan Kishore is employed by Buyer on December 31, 2013, then Buyer shall pay to Target on December 31, 2013 the Additional Purchase Price, in cash payable by wire transfer or delivery of other immediately available funds; provided that, for purposes of this Section 2(c), Ayan Kishore shall also be deemed to have been employed by Buyer on December 31, 2013 in the event that Ayan Kishore’s employment with Buyer was terminated prior to December 31, 2013, by Buyer for other than Cause or by Ayan Kishore for Good Reason.
(d) Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Patzik Frank & Samotny Ltd., in Chicago, Illinois commencing at 10:00 a.m. local time on the date hereof, or at such other time or place or in such other manner, as the Parties shall mutually agree. The date on which the Closing occurs in accordance with the preceding sentence is referred to in this Agreement as the “Closing Date.” The Closing shall be deemed to be effective as of 12:01 a.m. Central Standard Time on the Closing Date.
(A) The Omnibus Bill of Sale and Assignment and other assignments in the forms attached as Exhibits A-1 through A-4, and such other instruments of sale, transfer, conveyance, and assignment as Buyer and its counsel may reasonably request;
(D) A copy of the certificate of incorporation of Target, certified on or soon before the Closing Date by the Secretary of State of the State of Delaware;
(E) A copy of the certificate of good standing of Target issued on or soon before the Closing Date by the Secretary of State (or comparable officer) of the State of Delaware and of each jurisdiction in which it is qualified to do business;
(F) A certificate of the secretary of Target, dated the Closing Date, in form and substance reasonably satisfactory to Buyer, as to: (1) no amendments to the certificate of incorporation of Target since the date specified in subsection (D) above; (2) the bylaws of Target; and (3) the joint unanimous written consent of the board of directors and Stockholders of Target relating to this Agreement and the transactions contemplated hereby;
(G) A written consent from Saad Suhail Salim Al Mukaini Bahwan in form satisfactory to Buyer;
(H) Confirmations of the assignments of the domain names (other than the Domain) from Ayan Kishore, individually, or Coro Center for Civic Leadership, as applicable, to Target with respect to yourcrappyresume.com, jobware.tv and theregionalinternshipcenter.org; and
(I) Any and all other certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby, in form and substance reasonably satisfactory to Buyer.
(A) All authorizations, consents, and approvals of governments and governmental agencies required for Buyer to perform its obligations hereunder; and
(B) Any and all certificates, instruments, and other documents required to effect the transactions contemplated hereby, in form and substance reasonably satisfactory to Target.
(g) Allocation. The Parties agree to allocate the Purchase Price in accordance with the rules under Section 1060 of the Code. Such Purchase Price allocation shall be prepared by Buyer and delivered to Target within ninety (90) days of the Closing. Absent a manifest error in Buyer’s preparation and/or calculation of such allocation, each Seller hereby agrees that he or it shall accept Buyer’s allocation of the Purchase Price. Buyer and Sellers and their Affiliates shall report, act and file Tax Returns (including, but not limited to Internal Revenue Service Form 8594) in all respects and for all purposes consistent with such allocation pursuant to this subsection. Target shall timely and properly prepare, execute, file and deliver all such documents, forms and other information as Buyer may reasonably request to prepare such allocation. Neither Buyer nor Sellers shall take any position (whether in audits, tax returns or otherwise) that is inconsistent with such allocation unless required to do so by applicable law.
§3. Sellers’ Representations and Warranties. Target represents and warrants to Buyer that the statements contained in this §3 are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this §3), except as set forth in the disclosure schedule accompanying this Agreement (the “Disclosure Schedules”). The Disclosure Schedule will be arranged in sections corresponding to the lettered and numbered sections contained in this §3.
(a) Organization of Target. Target is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware. Target is qualified to do business in and is in good standing under the laws of each jurisdiction in which such qualification is required, except where the failure to so qualify does not have a Material Adverse Effect.
(f) Subsidiaries. Target does not have, nor has it ever had, any Subsidiaries.
(g) Financial Statements. Attached hereto as Exhibit C are the following financial statements (collectively the “Financial Statements”): (i) internally prepared balance sheet and statement of income as of and for the fiscal year ended December 31, 2012 (the “Most Recent Fiscal Year End”), for Target; and (ii) internally prepared balance sheet and statement of income (the “Most Recent Financial Statements”) as of and for the three (3) months ended March 31, 2013 (the “Most Recent Fiscal Month End”), for Target. The Financial Statements present fairly the financial condition of Target as of such dates and the results of operations and cash flows of Target for such periods, are correct and complete, and are consistent with the books and records of Target (which books and records are correct and complete); provided, however, that the Most Recent Financial Statements are subject to normal year-end adjustments (which will not be material individually or in the aggregate).
(h) Undisclosed Liabilities. Target does not have any material Liability (and there is no basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against any of them giving rise to any material Liability), except for (i) Liabilities set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) and (ii) Liabilities that have arisen after the Most Recent Fiscal Month End in the Ordinary Course of Business (none of which results from, arises out of, relates to, is in the nature of, or was caused by any breach of contract, breach of warranty, tort, infringement, or violation of law).
(j) Legal Compliance. Target and its Affiliates have complied with all applicable laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder and including the Foreign Corrupt Practices Act, 15 U.S.C. 78dd-1 et seq.) of federal, state, local, and foreign governments (and all agencies thereof), and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been filed or commenced against any of them alleging any failure so to comply.
(iii) Schedule 3(k) of the Disclosure Schedules lists all federal, state, local, and foreign income Tax Returns filed with respect to Target for taxable periods ended on or after December 31, 2010, indicates those Tax Returns that have been audited, and indicates those Tax Returns that currently are the subject of audit. Target has delivered to Buyer correct and complete copies of all income Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by Target since December 31, 2010.
(l) Real Property. Except as set forth on Schedule 3(l) of the Disclosure Schedules, there is no Owned Real Property or Leased Real Property related to Target’s business.
(m) Intellectual Property. (i) Target owns or possesses or has the right to use pursuant to a valid and enforceable written license, sublicense, agreement, or permission all Intellectual Property necessary for the operation of the business of Target as presently conducted. Each item of Intellectual Property owned or used by Target immediately prior to the Closing will be owned or available for use by Buyer on identical terms and conditions immediately subsequent to the Closing hereunder.
(ii) Target nor any of its businesses as presently conducted has or will interfere with, infringe upon, misappropriate, or otherwise come into conflict with, any Intellectual Property rights of third parties; and none of Sellers has ever received any charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or conflict (including any claim that Target must license or refrain from using any Intellectual Property rights of any third party). To the Knowledge of Sellers, no third party has interfered with, infringed upon, misappropriated, or otherwise come into conflict with, any Intellectual Property rights of Target.
(iii) Schedule 3(m)(iii) of the Disclosure Schedules identifies each patent or registration that has been issued to Target with respect to any of its Intellectual Property, identifies each pending patent application or application for registration that Target has made with respect to any of its Intellectual Property, and identifies each license, sublicense, agreement, or other permission that Target has granted to any third party with respect to any of its Intellectual Property (together with any exceptions). Target has delivered to Buyer correct and complete copies of all such patents, registrations, applications, licenses, sublicenses, agreements, and permissions (as amended to date). Schedule 3(m)(iii) of the Disclosure Schedules also identifies each material unregistered trademark, service mark, trade name, corporate name or Internet domain name, computer software item (other than commercially available off-the-shelf software purchased or licensed for less than a total cost of $1,000 in the aggregate) and each material unregistered copyright used by Target in connection with its business. With respect to each item of Intellectual Property required to be identified on Schedule 3(m)(iii) of the Disclosure Schedules:
(iv) Schedule 3(m)(iv) of the Disclosure Schedules identifies each item of Intellectual Property (other than commercially available off-the-shelf software purchased or licensed for less than a total cost of $1,000 in the aggregate) that any third party owns and that Target uses pursuant to license, sublicense, agreement, or permission. Target has delivered to Buyer correct and complete copies of all such licenses, sublicenses, agreements, and permissions (each as amended to date). With respect to each item of Intellectual Property required to be identified on Schedule 3(m)(iv) of the Disclosure Schedules:
(C) no party to the license, sublicense, agreement, or permission is in breach or default, and no event has occurred that with notice or lapse of time would constitute a breach or default or permit termination, modification, or acceleration thereunder;
(G) no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or, to the Knowledge of Sellers, is threatened that challenges the legality, validity, or enforceability of the underlying item of Intellectual Property, and there are no grounds for the same;
(vi) Target has taken all necessary and desirable actions to maintain and protect all of the Intellectual Property of Target and will continue to maintain and protect all of the Intellectual Property of Target prior to Closing so as not to adversely affect the validity or enforceability thereof. The owners of any of the Intellectual Property licensed to Target has taken all necessary and desirable actions to maintain and protect the Intellectual Property covered by such license. Without limiting the foregoing, Target has required (A) each employee or consultant of Target with access to such Intellectual Property and each other Person with access to such Intellectual Property, as necessary, to execute a binding confidentiality agreement and (B) each employee to execute an agreement which includes provisions sufficient to ensure that Target becomes the owner of any Intellectual Property created by such employee within the scope of his or her employment, or in the case of a Person other than an employee from the services such Person performs for Target. Copies or forms of the agreement or agreements referred to in the preceding sentence have been made available to Buyer and, to the Knowledge of Sellers, there has not been a material breach of any such agreement.
(o) Contracts. Schedule 3(o) of the Disclosure Schedules lists all contracts and other agreements (whether written or oral) to which Target is a party, which are in effect as of the date hereof and which are included in the Acquired Assets or otherwise material to Target’s business. Target has delivered to Buyer a correct and complete copy of each written agreement, and a summary of the terms of each oral agreement, listed on Schedule 3(o) of the Disclosure Schedules. With respect to each such agreement: (A) the agreement is legal, valid, binding, enforceable, and in full force and effect, except as enforceability may be limited by bankruptcy, insolvency, liquidation, receivership, moratorium or other similar laws affecting the enforceability of the rights of creditors and general principles of equity, regardless of whether such enforcement is sought in a proceeding in equity or at law; (B) unless such agreement is an Excluded Asset, the agreement will continue to be legal, valid, binding, enforceable, and in full force and effect on the same terms following the consummation of the transactions contemplated hereby (including the assignments and assumptions referred to in §2), except as enforceability may be limited by bankruptcy, insolvency, liquidation, receivership, moratorium or other similar laws affecting the enforceability of the rights of creditors and general principles of equity, regardless of whether such enforcement is sought in a proceeding in equity or at law; (C) no party is in breach or default, and no event has occurred that with notice or lapse of time would constitute a breach or default, or permit termination, modification, or acceleration, under the agreement; and (D) no party has repudiated any provision of the agreement.
(p) Accounts Receivable; Accounts Payable and Accrued Expenses. (i) All accounts receivable of Target are reflected properly on its books and records, are valid receivables that arose in the Ordinary Course of Business subject to no setoffs or counterclaims and are current and collectible and will be collected in accordance with their terms at their recorded amounts, subject only to the reserve for bad debts set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) as adjusted for the passage of time through the Closing Date in accordance with GAAP and the past custom and practice of Target.
(ii) All Accounts Payable and Accrued Expenses are reflected properly on Target’s books and records, are valid payables or accrued expenses incurred in the Ordinary Course of Business and not subject to dispute and are not past due.
(r) Insurance. Except as set forth on Schedule 3(r) of the Disclosure Schedules, Target maintains no insurance policies with respect to its business, directors or officers.
(s) Litigation. Schedule 3(s) of the Disclosure Schedules sets forth each instance within the last five (5) years in which Target (i) was or is subject to any outstanding injunction, judgment, order, decree, ruling, or charge or (ii) was or is a party or, to the Knowledge of Sellers, is threatened in writing to be made a party to any action, suit, grievance, proceeding, hearing, or investigation of, in, or before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator.To the Knowledge of Sellers, there is no reason to believe that any such action, suit, proceeding, hearing, or investigation may be brought or threatened against Target or that there is any basis for the foregoing.
(t) Product and Service Warranty. Each product produced, sold or delivered by, and each service rendered by, Target has been in conformity with all applicable contractual commitments and all express and implied warranties, and Target does not have any material Liability (and, to the Knowledge of Sellers, there is no basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against any of them giving rise to any Liability) for replacement or repair thereof, or provision of additional services in respect thereof, or other damages in connection therewith, subject only to warranty liabilities. Schedule 3(t) of the Disclosure Schedules includes copies of the standard terms and conditions of sale for Target (containing applicable guaranty, warranty, and indemnity provisions). No product produced, sold or delivered by, or service rendered by, Target is subject to any guaranty, warranty, or other indemnity beyond the applicable standard terms and conditions of sale or lease set forth on Schedule 3(t) of the Disclosure Schedules.
(u) Product and Service Liability. Target does not have any material Liability (and, to the Knowledge of Sellers, there is no basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against any of them giving rise to any material Liability) arising out of any injury to individuals or property as a result of the ownership, possession, or use of any product produced, sold or delivered by, or service rendered by, Target.
(i) Except as set forth on Schedule 3(w) of the Disclosure Schedules, neither Target nor any ERISA Affiliate maintains or contributes to, nor has it maintained or contributed to, any “employee pension benefit plans” as defined in Section 3(2) of ERISA, “employee welfare benefit plan” as defined in Section 3(l) of ERISA, or stock bonus, stock option, restricted stock, stock appreciation right, stock purchase, bonus, incentive, deferred compensation, severance, or vacation plans, or any other employee benefit plan, program, policy or arrangement maintained or contributed to by Seller or any of its ERISA Affiliates or to which Seller or any of its ERISA Affiliates, contributes or is obligated to make payments thereunder or otherwise may have any liability (collectively, the “Employee Benefit Plans”).
(ii) Neither Target nor any of its ERISA Affiliates have any liability (including any contingent liability under Section 4204 of ERISA) with respect to any multiemployer plan defined as such in Section 3(37) of ERISA to which contributions are or have been made by Target or any of its ERISA Affiliates or as to which Target or any of its ERISA Affiliates may have liability and that is covered by Title IV of ERISA (“Multiemployer Plan”) covering employees (or former employees) employed in the United States.
(i) Target and its Affiliates have complied and are in compliance, in each case in all material respects, with all Environmental, Health and Safety Requirements in respect of the Acquired Assets and Target’s operation of its business.
(ii) Neither Target nor any of its Affiliates has received any written or oral notice, report or other information regarding any actual or alleged violation of Environmental, Health and Safety Requirements or any Liabilities, including any material investigatory, remedial or corrective obligations, relating to any of them, arising under Environmental, Health and Safety Requirements.
(i) Schedule 3(aa) of the Disclosure Schedules lists (A) the ten (10) largest customers of Target for the most recent fiscal year and sets forth opposite the name of each such customer the dollar amount and percentage of consolidated net sales attributable to such customer; and (B) all customers/clients of Target with respect to whom Target has not fully satisfied its performance obligations.
(ee) Disclosure. The representations and warranties contained in this §3 do not contain any untrue statement of a fact or omit to state any fact necessary in order to make the statements and information contained in this §3 not misleading. Sellers know of no facts that are material to the operation of Target’s business or Buyer’s understanding of the risks inherent in the Target’s business or its operation that have not been disclosed to Buyer.
(c) Certain Assignments. Target will use its best efforts to obtain any third-party consents required in connection with the sale and assignment of the Acquired Assets and the consummation of the transactions required herein, including, without limitation, those referred to in §3(c). Any other provision of this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to transfer or assign, or a transfer or assignment of, any agreement, claim, commitment, contract, lease, license, permit, sales order or purchase order, or any benefit arising thereunder or resulting therefrom, if an attempt at transfer or assignment thereof without the consent required or necessary for such assignment, would constitute a breach thereof or in any way adversely affect the rights of Buyer or Target thereunder. If (i) the required consent to any such transfer or assignment is not obtained, (ii) an attempted transfer or assignment would be ineffective or would adversely affect the rights of Buyer or Target thereunder so that Buyer would not receive substantially all of such rights, (iii) any such agreement or contract is assigned to Buyer pursuant to the provisions hereof and the other contracting party thereafter raises objections to the assignment and refuses to allow Buyer to perform the contract on the terms therein provided, or threatens to terminate the contract or sue for damages, or (iv) a surety company issuing a bond to Target objects to the completion of a sales order or contract included among the Acquired Assets by Buyer, then Buyer and Target shall cooperate in any arrangement Buyer may reasonably request to provide for Buyer the benefits under such agreement or contract. Such cooperation may include, without limitation, and at Buyer’s request shall include, an arrangement to be entered into between Buyer and Target pursuant to which Target shall nominally perform an order or contract, Buyer shall retain the economic benefits or detriments of the order or contract and Target shall perform the order or contract with employees seconded to Target by Buyer (which employees shall be treated as employees of Target during the period of performance) and with inventory, equipment and supplies of Buyer necessary to complete the order or contract transferred from Buyer to Target as required. Nothing contained in this subsection shall be construed as a waiver of any closing condition, nor shall it limit the Liability, if any, of Target pursuant to this Agreement for failing to have disclosed the need for, or failing to have obtained, any consent referred to herein.
(d) Employees. Buyer shall not be obligated to offer employment to any employee of Target; provided that Buyer shall have the right to employ employees of Target as of the Closing Date, on terms and conditions established by Buyer in its sole discretion.
(f) Covenant Not to Compete. As an inducement for Buyer to enter into this Agreement, Target and Target Stockholder each agree that:
(i) with respect to Target, from and after the Closing and continuing for the lesser of five (5) years from the Closing Date or the longest time permitted by applicable law, and, with respect to Target Stockholder, from and after the Closing and continuing for the lesser of two (2) years from the Closing Date or the longest time permitted by applicable law, such Seller shall not do any one or more of the following, directly or indirectly, as an owner, member, partner, shareholder, consultant or (without limitation by the specific enumeration of the foregoing) otherwise:
(C) canvass, solicit, promote or sell any product or service which competes with any of Target’s products or services to any customer or prospective customer of Buyer with respect to Target. For purposes of this §5(f), “customer” means any Person which is or was a customer of Target (or its predecessor) during the twenty-four (24) months preceding the Closing Date. “Prospective customer” means any Person with which any employee of Target (including, without limitation, employees leased by Target) has had contact on behalf of Target during the twenty-four (24) months preceding the Closing date;
(E) take any other action that would interfere with or adversely impact Buyer in the operation of the business as conducted by Target prior to the Closing Date or as anticipated to be conducted by Buyer.
(h) Injunctive Relief. Sellers specifically recognize that any breach of subsections (f) or (g) will cause irreparable injury to Buyer and that actual damages may be difficult to ascertain, and in any event, may be inadequate. Accordingly (and without limiting the availability of legal or equitable, including injunctive, remedies under any other provisions of this Agreement), Sellers agree that in the event of any such breach, Buyer shall be entitled to injunctive relief in addition to such other legal and equitable remedies that may be available. Further, in the event that Sellers have been found to have violated any of the terms of subsections (g) or (h), either after a preliminary injunction hearing or a trial on the merits, Sellers shall pay to Buyer its costs and expenses, including reasonable attorneys’ fees, in enforcing the terms thereof.
(i) Tax Clearance Certificates. Buyer and Target shall cooperate in preparing and filing with the appropriate governmental authorities such forms as may be required in order to obtain a tax clearance certificate or other document absolving Buyer from any responsibility or liability for Target’s income, sales and use taxes. Sellers hereby agree jointly and severally to indemnify and save and hold harmless Buyer and its officers, directors, managers, partners, stockholders, employees, agents, representatives, Affiliates, successors and assigns from and against any and all Adverse Consequences arising out of or resulting from the failure to comply with the bulk sales laws of the State of Pennsylvania, the State of Illinois or such other state as to which such act or equivalent act applies or may apply to the transactions contemplated by this Agreement.
(j) Domain
(a) Purchase Option. For ten (10) years following the Closing, Buyer shall have the option, exercisable at any time in its sole discretion, to purchase all of Target’s right, title and interest in and to the Domain and the Domain IP upon written notice to Target or Target Stockholder and payment of one dollar ($1.00) (the “Purchase Option”). Any purchase agreement necessary to effect the Purchase Option shall be in form and substance satisfactory to the Parties. Target and/or Target Stockholder agrees to assist Buyer is securing and recording the transfer of the Domain and the Domain IP. The transactions contemplated by the Purchase Option shall close within ten (10) days of Target’s or Target Stockholder’s receipt of such notice.
(b) Domain Maintenance. Target and Target Stockholder each agree and covenant, until the closing of the transactions contemplated by the Purchase Option, to (i) maintain exclusive right, title and interest to the Domain and the Domain IP, (ii) maintain registration with respect to the Domain in full force and effect at their expense, and (iii) not to transaction business or display any content on the Domain website (except for a blank web page or the standard temporary web page provided by the Domain’s website’s host, if any).
(k) Further Assurances. The Parties shall execute such further documents, and perform such further acts, as may be necessary to transfer and convey the Acquired Assets to Buyer, on the terms herein contained, and to otherwise comply with the terms of this Agreement and consummate the transaction contemplated hereby.
(i) In the event a Seller breaches (or in the event any third party alleges facts that, if true, would mean a Seller has breached) any of its representations, warranties, and covenants contained in this Agreement (determined without regard to any limitations or qualifications by materiality), or if any of the statements in §3 are untrue (or in the event any third party alleges facts that, if true, would mean that such statements are untrue), and provided that Buyer makes a written claim for indemnification against Sellers pursuant to §7(f), then Target shall be obligated to indemnify Buyer and its officers, directors, managers, partners, stockholders, employees, agents, representatives, Affiliates, successors and assigns (each a “Buyer Indemnitee”), from and against the entirety of any Adverse Consequences such Buyer Indemnitee suffers (including any Adverse Consequences such Buyer Indemnitee suffers after the end of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by the breach (or the alleged breach) or the untruth (or alleged untruth).
(ii) Target shall be obligated to indemnify each Buyer Indemnitee from and against the entirety of any Adverse Consequences such Buyer Indemnitee may suffer resulting from, arising out of, relating to, in the nature of, or caused by (A) any Excluded Liability that becomes a Liability of such Buyer Indemnitee (including under any bulk transfer law of any jurisdiction, under any common law doctrine of de facto merger or successor liability, under Environmental, Health, and Safety Requirements, or otherwise by operation of law) or (B) the operation of Target’s business or the use of the Acquired Assets prior to or on the Closing Date, including, without limitation, Adverse Consequences resulting from the termination by Buyer of any employee hired by Buyer after the Closing.
(i) In the event Buyer breaches any of its representations, warranties, and covenants contained in this Agreement, and provided that Target makes a written claim for indemnification against Buyer pursuant to §7(f), then Buyer shall be obligated to indemnify Target from and against the entirety of any Adverse Consequences Target suffers (including any Adverse Consequences Target suffers after the end of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by the breach (or the alleged breach).
(ii) Buyer agrees to indemnify Target from and against the entirety of any Adverse Consequences suffered resulting from, arising out of, relating to, in the nature of, or caused by any Assumed Liability.
(iv) In the event any of the conditions in §6(d)(ii) is or becomes unsatisfied, however, (A) the Indemnified Party may defend against, and consent to the entry of any judgment on or enter into any settlement with respect to, the Third-Party Claim in any manner it may reasonably deem appropriate (and the Indemnified Party need not consult with, or obtain any consent from, any Indemnifying Party in connection therewith), (B) the Indemnifying Parties shall reimburse the Indemnified Party promptly and periodically for the costs of defending against the Third-Party Claim (including reasonable attorneys’ fees and expenses), and (C) the Indemnifying Parties shall remain responsible for any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third-Party Claim to the fullest extent provided in this §6.
(f) Limitations. Target shall not be obligated to indemnify Buyer hereunder from and against Adverse Consequences resulting from, arising out of, or caused by breaches of the representations and warranties of Sellers contained in this Agreement (other than §§3(a)-(d)) to the extent that the aggregate amount of such Adverse Consequences suffered by Buyer exceeds $400,000 (the “Target’s Indemnification Cap”); provided, however, that the Target’s Indemnification Cap shall not apply to any indemnification obligation of Target arising out of, relating to or resulting from fraud, intentional misconduct, gross negligence, willful infringement of third party Intellectual Property rights or intentional misrepresentation by any Seller.
(g) Right of Setoff. Buyer shall have the right, at its election, to offset any amounts due from a Seller to Buyer against any amounts owed by Buyer to a Seller.
Attn: Ayan Kishore
Attn: Matt Kirmayer
/s/ Ayan Kishore
TARGET STOCKHOLDER: