Asset Purchase Agreement - InPhonic Inc. and Reason Inc.
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
this 3rd day of January 2002 (the "Effective Date") by and between INPHONIC,
INC., a Delaware corporation ("Buyer") and REASON, INC., a Delaware corporation
("Seller").
Recitals
WHEREAS, Seller desires to transfer to Buyer at the Closing (as
hereinafter defined), and Buyer desires to acquire from Seller certain of
Seller's assets, as more fully described herein, upon and subject to the terms
and conditions contained in this Agreement.
WHEREAS, it is intended by the parties that the transaction qualify as
a tax-free reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
Agreement
Now, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants contained herein, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller,
intending to be legally bound, hereby agree as set forth below.
ARTICLE 1
DEFINITIONS
Definitions. In addition to the terms defined elsewhere herein, when
used herein, the following capitalized terms shall have the meanings indicated:
"Act of Bankruptcy" when used in reference to any Person, shall mean
the occurrence of any of the following with respect to such Person: (a) such
Person shall have made an assignment of all or substantially all of its assets
for the benefit of his or its creditors; (b) such Person shall have filed a
voluntary petition in bankruptcy; (c) such Person shall have been adjudicated
bankrupt or insolvent; (d) such Person shall have filed any petition or answer
seeking for himself or itself any reorganization, liquidation, dissolution or
similar relief; (e) such Person shall have sought or consented to, or acquiesced
in, the appointment of any trustee, receiver, or liquidator of such Person of
all or substantially all of the properties of such Person; or (f) sixty (60)
days shall have elapsed after the commencement of an action against such Person
seeking reorganization, arrangement, liquidation, dissolution or similar relief
without such action having been dismissed.
"Affiliate" when used in reference to any Person, shall mean any
Person that, directly or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with the Person in
question.
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"Applicable Law(s)" shall mean any applicable federal, state, local or
foreign law, ordinance, order, regulation, rule or requirement of any
governmental or quasi-governmental agency, instrumentality, board, commission,
bureau or other authority having jurisdiction.
"Assets" shall mean (i) all right, title and interest of Seller in and
to the assets, real property, personal property, equipment, intellectual
property, software and other property of Seller set forth on Exhibit I attached
hereto (collectively, the "Inventory"), (ii) all transferable net operating
losses, capitalized expenses and research and development costs of Seller which
may benefit the Buyer, (iii) assets, real property, personal property,
equipment, intellectual property software and other property of Seller created
in the ordinary course of business between November 30, 2001 and the Closing
Date including the November 2001 receivables due from AT&T Broadband to Seller,
which shall be collected by Seller as a condition of Closing.
"Material Adverse Effect" shall mean any material adverse change or
any development involving a prospective material adverse change in or affecting
the general affairs, business, prospects, management, financial position,
stockholders' equity or results of operations of a Person, taken as a whole.
"Net Working Capital" shall mean current assets minus current
liabilities of Seller as defined by U.S. Generally Accepted Accounting
Principles, provided that for purposes of this definition, current liabilities
shall not include the current portion of Seller's obligations to Silicon Valley
Bank or obligations in connection with that certain Note and Warrant Purchase
Agreement between the Company and certain of its stockholders.
"Person" shall mean any individual, corporation, partnership, joint
venture, limited liability company, unincorporated association, trust or other
legal entity.
"Preferred Documents" shall mean Buyer's amended and restated
certificate of incorporation, voting agreement, investor rights agreement, right
of first refusal and co-sale agreement and any other agreement relating to the
terms, restrictions or rights of the Preferred Stock.
"Transferred Names" shall have the meaning set forth in Exhibit 7 to
this Agreement.
ARTICLE 11
SALE AND TRANSFER OF ASSETS AND ASSUMPTION OF CERTAIN
LIABILITES
2.1 Transfer of Assets. Except as otherwise herein expressly set
forth, Seller hereby agrees that at the Closing provided for in Section 4.1
hereof (the "Closing"), Seller shall sell, assign, transfer, convey and deliver
to Buyer all of Seller's right, title and interest in and to the Assets.
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2.2 Excluded Assets. Seller and Buyer understand and agree that the
sale, assignment, transfer, conveyance and delivery specified in Section 2.1
hereof shall not include any assets, rights or property of Seller other than
those expressly included in the definition of Assets.
2.3 Assumed Obligations. Buyer agrees that at the Closing, Buyer
shall assume those contracts, agreements, leases, covenants, obligations and
liabilities on the list attached hereto as Exhibit 2 (collectively, the "Assumed
Liabilities"). As of the Closing Date, Seller, as soon as reasonably practicable
thereafter, will terminate any and all of Seller's other contracts, leases,
licenses and agreements and Seller shall remain liable for any and all of its
liabilities or encumbrances not specifically assumed by Buyer pursuant to this
Section 2.3, including but not limited to:
(a) liens and encumbrances to which the Assets are subject, or
would have been subject to, immediately prior to Closing;
(b) any liability or obligation relating to taxes of Seller,
including any interest or penalties related thereto;
(c) any warranty or performance liability claims relating to the
assets which arose prior to the Closing; and
(d) any liability or obligation of the Seller, absolute or
contingent, known or unknown not expressly agreed to be assumed
pursuant to this Agreement.
ARTICLE III
CONSIDERATION
3.1 Assumption of Certain Liabilities, Stock Issuance and Stock
Restriction Agreement. In full and complete payment for the Assets, Buyer agrees
to (i) the assumption of the Assumed Liabilities pursuant to Section 2.3 hereof,
(ii) issue to the Seller One million Eight hundred Five thousand and Nine
(1,805,009) shares of common stock of the Buyer, priced at $2.93294916 per
share, issued in the name of and paid to Seller, subject to the terms and
conditions of the Stock Restriction Agreement attached hereto as Exhibit 3 to
this Agreement and Section 3.2 herein (the "Common Stock"); and (iii) issue to
the Seller Two hundred Eighty thousand Six hundred and Four (280,604) shares of
Series D-3 Preferred Stock of Buyer, priced at $2.93294916 per share, issued in
the name of and paid to Seller, pursuant to the terms and conditions of a
separate Stock Purchase Agreement, attached as Exhibit 4 to this Agreement and
incorporated herein by this reference (the "Preferred Stock") (the Common Stock
and the Preferred Stock are collectively the "InPhonic Stock"); provided,
however, that the amount of InPhonic Stock to be issued to Seller shall be
subject to adjustment as follows: (a) in the event that Net Working Capital is a
positive amount on the Closing Date, the amount of Common
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Stock delivered to the Seller shall be increased accordingly on a dollar for
dollar basis; (b) in the event that Net Working Capital is a negative amount on
the Closing Date, the amount of Common Stock delivered to the Seller shall be
decreased accordingly on a dollar for dollar basis; and (c) in the event any
cash is included in the Assets on the Closing Date, the amount of Preferred
Stock shall be increased accordingly on a dollar for dollar basis and the amount
of Common Stock shall be reduced on a dollar for dollar basis in an equal
amount.
3.2 Escrow. The Parties agree that Three hundred Sixty-One thousand
and One (361,001) shares of Common Stock and Fifty-Six thousand One hundred and
Twenty (56,120) shares of the Preferred Stock of the Buyer, provided in part
payment for the Assets pursuant to Section 3.1 of this Agreement, shall be held
pursuant to an Escrow Agreement in an escrow account by Piper Marbury Rudnick &
Wolfe LLP (the "Escrow Agreement") until the earlier of (i) the inspection and
acceptance of the Assets by the Buyer, pursuant to the terms of the Escrow
Agreement attached hereto as Exhibit 5 or (ii) ninety (90) days from the
Effective Date of this Agreement, unless a Claim Notice, as defined under the
Escrow Agreement, has been provided to the Escrow Agent; provided, in such
event, the shares held in Escrow shall be distributed pursuant to the Escrow
Agreement.
ARTICLE IV
CLOSING AND CONDITIONS OF CLOSING
4.1 Closing. The Closing shall occur upon the later of (i) the
close of business on January 7, 2002 or (ii) as soon thereafter as practicable
following the satisfaction or waiver of all of the Conditions to Closing set
forth in Section 4.2 of this Agreement (the "Closing Date").
4.2 Conditions to Closing. The obligation of Seller to sell the
Assets and Buyer to purchase the Assets is subject to the satisfaction of the
following conditions precedent at or prior to the Closing (unless waived in
writing by the Parties prior to Closing or by the act of Closing):
(a) Documents. Buyer shall have received each of the following
items:
(i) This Agreement, duly executed by Seller;
(ii) Any amendment, consent or waiver from any Person
necessary to fully give binding effect to this
Agreement, including but not limited to consents
to the assignment of contracts and leases, duly
executed by Seller and such Persons (the
"Consents") (each party hereto acknowledges that
this condition is for the benefit of both Buyer
and Seller);
(iii) The Bill of Sale in substantially the form
attached hereto as Exhibit 6, duly executed by
Seller;
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(iv) Such certificates, documents of title and other
instruments of conveyance and transfer, if any,
as shall be effective to vest in Buyer good and
marketable title in and to the Assets free and
clear of all encumbrances, including, by way of
example but not limitation, the Trademark/Domain
Assignment Agreement, as attached as Exhibit 7;
(v) an Officer's Certificate in substantially the
form attached hereto as Exhibit 8, duly executed
by an officer of Seller;
(vi) Copies of invention assignment agreements,
executed by each of Seller's employees, in
substantially the form attached hereto as Exhibit
9;
(vii) Audited financial statements of Seller as of and
for the fiscal year ended December 31, 2000;
(viii) The Escrow Agreement in substantially the form
attached hereto as Exhibit 5, duly executed by
Seller;
(ix) The Stock Restriction Agreement, duly executed by
Seller in substantially the form attached hereto
as Exhibit 3;
(x) The Stock Purchase Agreement in substantially the
form attached hereto as Exhibit 4, duly executed
by Seller; and
(xi) Copies of each of the Preferred Documents in
substantially the form attached as Exhibits C, D
and E to the Stock Purchase Agreement, duly
executed by Seller as applicable.
(xii) A consent signed by Seller stating that Seller
covenants that it will forever waive any rights
under any non-competition, nondisclosure,
non-solicitation or similar provisions it has
against Buyer under any employment, non-compete
or other arrangements with any of the Seller's
former employees.
(xiii) An Employment Agreement by and between the Buyer
and Chris Hotz in the form attached hereto.
(ix) The collection by Buyer of the November 2001
receivables from AT&T Broadband.
Seller shall have received each of the following items:
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(i) This Agreement, duly executed by Buyer;
(ii) The Certificate of Assumption in substantially
the form attached hereto as Exhibit I0, duly
executed by Buyer;
(iii) The Stock Restriction Agreement in substantially
the form attached hereto as Exhibit 3, duly
executed by Buyer;
(iv) The Stock Purchase Agreement in substantially the
form attached hereto as Exhibit 4, duly executed
by Buyer;
(v) Copies of each of the Preferred Documents in
substantially the forms attached as Exhibits C. D
and E to the Stock Purchase Agreement, duly
executed by Buyer as applicable.
(vi) An Officer's Certificate, in substantially the
form attached hereto as Exhibit 11, duly executed
by an officer of Buyer;
(vii) The Escrow Agreement in substantially the form
attached hereto as Exhibit 5, duly executed by
Buyer; and
(viii) The InPhonic Stock.
(b) Employees. Seller and Buyer understand and agree that Seller
shall terminate the employment of all of its employees as of or prior to the
Closing Date. Before or promptly upon the execution of this Agreement, Buyer
may, at its option, offer employment to any of the terminated employees and
shall have sole responsibility for the negotiation of employment agreements with
such employees.
(c) Approval. Seller shall have received the approval of both its
board of directors and its shareholders authorizing the consummation of the
transactions contemplated by this Agreement and the acceptance of the
restrictions outlined in the Stock Restriction Agreement (each party hereto
acknowledges that this condition is for the benefit of both Buyer and Seller).
(d) Material Adverse Effect. Prior to the Closing Date, Buyer shall
not have experienced a Material Adverse Effect and Seller shall not have
experienced a Material Adverse Effect relating to the Assets. In addition,
neither Buyer nor Seller shall have experienced a Material Adverse Effect
relating to their ability to perform their respective obligations under this
Agreement.
(e) Litigation. On the Closing Date, there shall be no lawsuits
pending against either party hereto seeking to enjoin, prohibit, restrain or
otherwise prevent the transaction contemplated by this Agreement.
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(f) Other Documents. Seller shall have provided or executed such
other documents relating to the transactions contemplated by this Agreement as
Buyer may reasonably request.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth on the schedule of exceptions attached hereto as
Exhibit 12 (the "Schedule of Exceptions"), Seller represents and warrants to
Buyer as of the date hereof (which representations and warranties shall survive
the execution and delivery of this Agreement and the transfer of the Assets as
set forth in Section 9.4), as set forth below:
5.1 Qualification. Seller represents that it is duly qualified to
conduct business as it is currently being conducted and is in good standing as a
foreign corporation in all jurisdictions in which the nature of its business or
location of its owned and leased property and assets requires such
qualification, except where failure to be so qualified would not have a Material
Adverse Effect.
5.2 Litigation. There are no outstanding orders, judgments, writs,
injunctions or decrees of any court, Government Authority or arbitration or
mediation panel or tribunal against or affecting the Assets.
5.3 Non-Contravention. Seller is not in breach of, default under,
or in violation of any Applicable Law, decree or order that may cause a Material
Adverse Effect relating to the Assets and Seller is not, in breach of, default
under, or in violation of any deed, lease, loan agreement, commitment, bond,
note, deed of trust, restrictive covenant, license, indenture, contract or other
agreement, instrument or obligation to which it is a party or by which it is
bound or to which any of its assets is subject that may cause a Material Adverse
Effect on the Assets.
5.4 Title. Seller has good, complete, indefeasible and marketable
title to, and ownership of, all of the Assets, free and clear of all liens,
defects, claims, security interests and encumbrances.
5.5 Taxes. Seller has timely filed with the appropriate taxing
authorities, including but not limited to the Internal Revenue Service of the
United States and the Department of Revenue of the State of Colorado, the tax
returns that it was required to file. Seller shall be directly responsible for
payment of the December 31, 2001 audit of the financial records of Seller and
any of Seller's costs related to Seller's tax filings for the tax year ended
December 31, 2001; provided, further, Buyer shall have the right to review such
tax filings prior to actual filing with the appropriate tax authorities.
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5.6 Subsidiaries. Seller has no subsidiaries, Affiliates,
partnerships nor any other commonly controlled or related entities, other than
its stockholder and their Affiliates.
5.7 Intellectual Property. To its knowledge, Seller owns, or
possesses adequate rights to use, all intellectual property (including but not
limited to software, source code (including all parts thereof), any patents,
trademarks, and copyrights) as presently being used in and necessary for the
substantially similar continued conduct of its business and neither Seller nor
any of its officers have received any notice of conflict with, or infringement
of, the asserted rights of others with respect to any such intellectual
property, and neither Seller nor any of its officers knows of any reasonable
basis therefore; provided, further any software (other than commercially
available software or content licensed to Seller via a contract that is part of
the Assets), and all parts thereof, is the original work of Seller and any
parties that participated in the preparation of the software, or any part
thereof, did so only for hire as employees of Seller and never had and do not
have any rights, title or interests in the Software or nay part thereof.
5.8 Legal Compliance. To its knowledge, Seller (i) is not in
violation of any Applicable Law that would apply to it or to its business, the
violation of which would -cause a Material Adverse Effect on the Assets (ii)
Seller is not in violation of any applicable environmental, securities or
employee benefits law, which violation would cause a Material Adverse Effect on
the Assets, and (iii) neither Seller nor, to the knowledge of Seller, any of
Seller's agents, contractors or employees has been notified of any action, suit,
proceeding or investigation which calls into question compliance by Seller with
Applicable Law.
5.9 Licenses. Simultaneously with the Closing, Seller shall have
acquired good title or all necessary rights to all of the licenses, permits,
approval and authorizations needed to transfer the Assets to Seller in
compliance with all Applicable Laws.
5.10 Undisclosed Liabilities. The Seller does not have any
liabilities (whether known or unknown, whether absolute or contingent, whether
liquidated or unliquidated and whether due or to become due), except for (a)
liabilities that are accrued for or reserved against in the November 30, 2001
balance sheet, attached as Exhibit 13 to this Agreement and (b) contractual or
statutory liabilities incurred in the ordinary course of business which are not
required by U.S. Generally Accepted Accounting Principles to be reflected on a
balance sheet. There are no outstanding loans due or deferred compensation from
Seller to any employee of Seller.
5.11 Assets. The tangible assets included among the Assets are in
good operating condition (subject to normal wear and tear) and are suitable for
the purposes for which they are used in Seller's business.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
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Buyer represents and warrants to Seller as of the date hereof (which
representations and warranties shall survive the execution and delivery of this
Agreement and the transfer of the Assets as set forth in Section 9.4) as set
forth below:
6.1 Qualification. Buyer represents that it is duly qualified to
conduct business as it is currently being conducted and is in good standing as a
foreign corporation in all jurisdictions in which the nature of its business or
location of its owned and leased property and assets requires such qualification
except where failure to be so qualified would not have a Material Adverse
Effect.
6.2 Litigation. There are no outstanding orders, judgments, writs,
injunctions or decrees of any court, Government Authority or arbitration or
mediation panel or tribunal against or involving Buyer likely to have a Material
Adverse Effect.
6.3 Non-Contravention. Buyer is not in breach of, default under, or
in violation of any Applicable Law, decree or order that may cause a Material
Adverse Effect, and Buyer is not in breach of, default under, or in violation of
any deed, lease, loan agreement, commitment, bond, note, deed of trust,
restrictive covenant, license, indenture, contract or other agreement,
instrument or obligation to which it is a party or by which it is bound or to
which any of its respective assets is subject that may cause a Material Adverse
Effect.
6.4 Legal Compliance. To its knowledge, (i) Buyer is not in
violation of any Applicable Law that would apply to it or to its business, the
violation of which would cause a Material Adverse Effect, (ii) Buyer is not in
violation of any applicable environmental, securities or employee benefits law,
which violation would cause a Material Adverse Effect, and (iii) neither Buyer
nor, to the knowledge of Buyer, any of Buyer's agents, contractors or employees
has been notified of any action, suit, proceeding or investigation which calls
into question compliance by Buyer.
6.5 Shares and Corporate Documents. All of the InPhonic Shares to
be issued hereunder have been duly authorized and when issued will be valid and
legally issued shares of the common stock and Series D-3 Preferred Stock of
Buyer, fully paid and nonassessable, free and clear of all liens or
encumbrances, and not in violation of any preemptive or similar rights or any
securities laws. Prior to the Effective Date, Buyer has delivered to Seller a
true, correct, and complete copy of the current certificate of incorporation and
bylaws of Buyer. All common stock issued to Seller shall be subject to the terms
of the Stock Restriction Agreement.
ARTICLE VII
MUTUAL REPRESENTATIONS AND WARRANTIES
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Each party hereto represents and warrants to the other party as of the
date hereof (which representations and warranties shall survive the execution
and delivery of this Agreement and the transfer of the Assets) as set forth
below:
7.1 Organization; Good-Standing.
(a) Seller is a corporation duly formed, validly organized and in
good standing in the State of Delaware. All of Seller's documents related to its
status as a corporation are in full force and effect as of the date hereof.
(b) Buyer is a corporation duly formed, validly organized and in
good standing in the State of Delaware. All of Buyer's documents related to its
status as a corporation are in full force and effect as of the date hereof.
7.2 No Untrue Statements or Material Omissions. Each party hereto
represents to the other party hereto, on its own respective behalf, that no
statement made herein or in any Exhibit or schedule attached hereto contains any
untrue statement of material fact or omits to state a material fact necessary to
make the statement not misleading in any material respects.
7.3 No Default. Each party hereto represents to the other party, on
its own respective behalf, that neither the execution and delivery of this
Agreement nor the performance by such party of its respective obligations
hereunder will cause any such breach, default or violation or will require the
consent or approval of any court or governmental authority, except as expressly
contemplated by the terms of this Agreement.
7.4 Power and Authority. Each party hereto represents to the other
party, on its own respective behalf, that (i) it has full power and authority to
enter into this Agreement any other related documents, to incur the obligations
as contemplated hereby, and to carry out the provisions of this Agreement; and
(ii) it has taken all action necessary for the execution and delivery of this
Agreement and each of the other related documents and for the performance of
each of its obligations hereunder and thereunder, as evidenced by corporate
resolution(s) or other authorization.
7.5 Enforceability. Each party hereto represents to the other
party, on its own behalf, that upon execution and delivery by each of the
parties hereto, this Agreement and any other related document shall be the
legal, valid and binding obligations of such party and shall be enforceable
against such party in accordance with their respective terms.
ARTICLE VIII
TERMINATION OF AGREEMENT
This Agreement may be terminated at any time prior to the Closing:
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(a) By written agreement of Buyer and Seller.
(b) By Buyer, upon ten (IO) days' prior written notice to Seller if
(i) there has been a material violation or breach by Seller of
any of the agreements, representations or warranties (except to
the extent that Seller has made exception thereto in the
Schedule of Exceptions attached hereto) contained in this
Agreement, or (ii) if any of the conditions set forth in
Section 4.2 have not been materially satisfied prior to January
30, 2002, and either (i) or (ii) have not been waived in
writing by Buyer or cured within such ten-day period.
(c) By Seller, upon ten (IO) days' prior written notice to Buyer if
(i) there has been a material violation or breach by Buyer of
any of the agreements, representations or warranties contained
in this Agreement, or (ii) if any of the conditions set forth
in Section 4.2 have not been materially satisfied prior to
January 30, 2002, and either or (ii) have not been waived in
writing by Seller or cured within such ten-day period.
(d) By either party hereto if the transactions contemplated by this
Agreement shall not have been consununated on or before 12:00
p.m. January 30, 2002.
(e) By either party hereto if the other makes an assignment for the
benefit of creditors, files a voluntary petition in bankruptcy
or seeks or consents to any reorganization or similar relief
under any present or future bankruptcy act or similar law, or
is adjudicated a bankrupt or insolvent, or if a third party
commences any bankruptcy, insolvency, reorganization or similar
proceeding involving the other.
ARTICLE IX
MISCELLANEOUS
9.1 Non-Waiver. No course of dealing between the parties or any
failure or delay on the part of either party in exercising any rights or
remedies hereunder shall operate as a waiver of any rights or remedies of either
party under this or any other applicable instrument. No single or part;.al
exercise of any rights or remedies hereunder shall operate as a waiver or
preclude the exercise of any other rights or remedies hereunder.
9.2 Indemnification.
(a) Seller. Seller hereby agrees to defend, indemnify and hold
harmless Buyer against any and all actions, suits, proceedings, claims, demands,
judgments, costs and expenses directly related to or arising from (i) the breach
of a representation or warranty by Seller herein or
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the documents delivered at Closing or (ii) any liabilities of Seller not assumed
by Buyer at Closing.
(b) Buyer. Buyer hereby agrees to defend, indemnify and hold
harmless Seller against any and all actions, suits, proceedings, claims,
demands, judgments, costs and expenses directly related to or arising from (i)
the breach of a representation or warranty by Seller herein or the documents
delivered at Closing or (ii) any of the Assumed Liabilities.
(c) Procedure. The indemnified party shall promptly notify the
indemnifying party in writing of any claim, demand, action or proceeding for
which indemnification will be sought under Sections 9.2(a) or 9.2(b), and, if
such claim, demand, action or proceeding is a third party claim, demand, action
or proceeding, the indemnifying party will have the right at its expense to
assume the defense thereof using counsel reasonably acceptable to the
indemnified party. The indemnified party shall have the right to participate, at
its own expense, with respect to any such third party claim, demand, action or
proceeding. In connection with any such third party claim, demand, action or
proceeding, Buyer and Seller shall cooperate with each other and provide each
other with access to relevant books and records in their possession related to
such claim. No such third party claim, demand, action or proceeding shall be
settled without the prior written consent of the indemnified party, which
consent shall not be unreasonably withheld. If a fmn written offer is made to
settle any such third party claim, demand, action or proceeding, which offer
does not involve any injunctive or non-monetary relief against the indemnified
party, and the indemnifying party proposes to accept such settlement and the
indemnified party refuses to consent to such settlement, then: (i) the
indemnifying party shall be excused from, and the indemnified party shall be
solely responsible for, all further defense of such third party claim, demand,
action or proceeding; and (ii) the maximum liability of the indemnifying party
relating to such third party claim, demand, action or proceeding shall be the
amount of the proposed settlement if the amount thereafter recovered from the
indenuiified party on such third party claim, demand, action or proceeding is
greater than the amount of the proposed settlement. In the event that Buyer or
Seller shall fail to make such commercially reasonable efforts to mitigate or
resolve any claim or liability, then notwithstanding anything else to the
contrary herein, the other party shall not be required to indemnify any person
for any Losses that could reasonably be expected to have been avoided if Buyer
or Seller, as the case may be, had made such efforts.
9.3 Notices. All notices or communications under this Agreement
shall be to the following addresses (or to such other address as shall at any
time be designated by any party in writing to the other parties):
To Buyer: InPhonic, Inc.
1010 Wisconsin Avenue, NW Suite 250
Washington, DC 20007
Attention: David A. Steinberg, CEO
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With a copy to: Piper Marbury Rudnick & Wolfe LLP
1200 Nineteenth Street NW
Washington, DC 20036-2412
Attention: Ned Martin, Esquire
To Seller: Reason, Inc.
3025 South Parker Road
Suite 800
Aurora, CO 80014
Attention: President
With a copy to: Cooley Godward LLP
380 Interlocken Crescent
Suite 900
Broomfield, CO 80021-8023
Attention: James C.T. Linfield
Notice shall be deemed given three (3) days after deposit in the U.S.
mail, postage prepaid, or one day after deposit with a nationally recognized
overnight delivery service. Rejection or other refusal to accept, or the
inability to deliver because of a changed address of which no notice was given,
shall not affect the effectiveness or the date of delivery for any notice sent
in accordance with the foregoing provisions.
9.4 Binding Agreement; Survival. This Agreement shall inure to the
benefit of, and be binding upon, Seller and Buyer, and their respective
legatees, distributees, estates, executors, administrators, personal
representatives, successors and assigns, and other legal representatives. All
representations, warranties, covenants and agreements by the parties contained
in this Agreement shall survive the Closing for a period of one (1) year from
the Closing Date.
9.5 Entire Agreement; Integration Clause. This Agreement and the
Exhibits hereto set forth the entire agreement and understanding of the parties
hereto with respect to this transaction, and any prior agreements are hereby
merged herein and terminated.
9.6 Brokerage. Each party represents and warrants to the other
party that it has made no arrangement for brokerage commissions, finders' fees
or similar compensation in connection with the transactions contemplated by this
Agreement.
9.7 No Oral Modification or Waivers. The terms herein may not be
modified or waived orally, but only by an instrument in writing signed by the
party against which enforcement of the modification or waiver (as the case may
be) is sought.
9.8 Controlling Law; Venue. This Agreement and each of the other
documents ancillary hereto shall be governed by, and interpreted and construed
in accordance with, the
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internal laws of the State of Delaware (without regard to its conflicts of law
principles). Venue for the adjudication of any claim or dispute arising out of
this Agreement or any of the other ancillary documents shall be proper only in
the state or federal courts of the State of Delaware, and all parties to this
Agreement and its ancillary documents hereby consent to such venue.
9.9 Headings. The headings of this Agreement and each of the other
documents ancillary hereto are inserted for convenience only and shall not be
deemed to constitute a part of this Agreement or such ancillary documents.
9.10 Severability. To the extent any provision herein violates any
applicable law, that provision shall be considered void and the balance of this
Agreement shall remain unchanged and in full force and effect.
9.11 Counterparts. This Agreement may be executed in as many
counterpart copies as may be required. All counterparts shall collectively
constitute a single agreement
9.12 Press Releases and Announcements. No party shall issue any
press release or public disclosure relating to the subject matter of this
Agreement without the prior written approval of the other party; provided,
however, that any party may make any public disclosure it believes in good faith
is required by law or regulation (in which case the disclosing party shall
advise the other party and provide them with a copy of the proposed disclosure
prior to making the disclosure).
9.13 Third Party Beneficiary. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
9.14 Expenses. Each party shall be responsible for its own costs and
expenses (including legal, financial advisory, investment banking and accounting
fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.
9.15 Dissolution. Buyer and Seller hereby agree that from and after
the Closing Date, Seller will not engage in any new business, will promptly
liquidate and dissolve as a corporation, and will distribute to Seller's
shareholders the InPhonic Stock.
9.16 Tax Treatment. Buyer and Seller hereby agree and covenant that
they shall not (before or after the Closing Date and individually or
collectively) take any action and shall not (before or after the Closing) fail
to take any action which action or failure to act would prevent, or would be
reasonably likely to prevent, the transactions contemplated hereby from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
Signatory Page To Follow
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In Witness Whereof, the undersigned have executed and delivered this
Agreement as of the day and year first above written.
INPHONIC, INC. REASON, INC.
/s/ David A. Steinberg /s/ Chris Hotz
____________________________________ _____________________________________
Name: ______________________________ Name: _______________________________
Title: _____________________________ Title: ______________________________