{"id":43298,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/asset-purchase-agreement-k2-design-inc-and-24-7-media-inc.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"asset-purchase-agreement-k2-design-inc-and-24-7-media-inc","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/asset-purchase-agreement-k2-design-inc-and-24-7-media-inc.html","title":{"rendered":"Asset Purchase Agreement &#8211; K2 Design Inc. and 24\/7 Media Inc."},"content":{"rendered":"<pre>                            ASSET PURCHASE AGREEMENT\n\n\n                                     between\n\n\n                                K2 DESIGN, INC.,\n                                     Seller\n\n\n                                       and\n\n\n                                24\/7 MEDIA, INC.,\n                                    Purchaser\n\n\n\n\n\n                            Dated as of June 1, 1998\n\n\n\n\n                                                                  EXECUTION COPY\n\n                  ASSET PURCHASE AGREEMENT (this 'Agreement') dated as of June\n            1, 1998, among K2 DESIGN, INC., a Delaware corporation ('Seller'),\n            and 24\/7 MEDIA, INC., a Delaware corporation ('Purchaser').\n\n\n      This Agreement sets forth the terms and conditions upon which Seller is\nselling and Purchaser is purchasing all of the assets (other than Excluded\nAssets, as defined below) and certain liabilities of Seller's CLIQNOW! division.\n\n      Accordingly, in consideration of the premises and the representations,\nwarranties and agreements herein contained, the parties hereto agree as follows:\n\n\n                                    ARTICLE I\n\n                                   DEFINITIONS\n\n            The following definitions shall apply for purposes of this Agreement\n(such definitions to be equally applicable to both the singular and plural forms\nof the terms defined):\n\n      1.1   'Business' means (i) media selling across web site advertising\nnetworks; and (ii) the provision of promotion, marketing and sales services and\nother ancillary activities relating to and provided in connection with the\nforegoing.\n\n      1.2   'Certificate of Designations' means the certificate of designations\nwith respect to Series B Convertible Redeemable Preferred Stock of Purchaser in\nthe form attached hereto as Exhibit 1.2.\n\n      1.3   'Contracts' means those agreements listed on Schedule 1.3.\n\n      1.4   'Deferred Purchase Price' means $150,000.\n\n      1.5   'Encumbrances' means, to the extent applicable, all claims, liens\n(including liens for taxes), mortgages, security interests, leases, options,\nrights of first refusal or first offer, easements or other similar encumbrances.\n\n      1.6   'Intellectual Property' means the trade names listed on Schedule\n1.6, and all registered trademarks and goodwill associated therewith.\n\n      1.7   'Knowledge', 'to Seller's Knowledge' and variations thereof shall\nmean that which is actually known by an executive officer of Seller and with no\nrequirement of due inquiry or that\n\n\n\n\nsuch officers 'should have known.'\n\n      1.8   'Leased Premises' shall mean that portion of office space located at\n30 Broad Street, New York, New York presently utilized by the Transferred\nEmployees.\n\n      1.9   'Material Adverse Change' or 'Material Adverse Effect' means, when\nused with respect to Seller or Purchaser, as the case may be, any change or\neffect that is or, so far as can be reasonably determined, is likely to be\nmaterially adverse to the assets, properties, condition (financial or\notherwise), business (including, without limitation, the Business) or results of\noperations of Seller or Purchaser, as the case may be, taken as a whole.\n\n      1.10  'Permitted Encumbrances' means Encumbrances that (a) are liens for\ntaxes not yet due and payable, (b) do not, individually or in the aggregate,\nmaterially detract from the value of the assets to which they attach, (c) are\nmechanics', carriers', materialmen's, landlords', workers' or other similar\nliens incurred in the ordinary course of business or (d) relate to assets owned\nby customers or third parties that are used by the Company in its operations.\n\n      1.11  'Post-Closing Financial Statements' means (i) audited financial\nstatements (balance sheets, statements of income and statements of cash flows)\nfor the Business for the year ended December 31, 1997, prepared by Seller's\nregular independent auditors, and accompanied by an unqualified opinion of such\nauditors, and (ii) unaudited balance sheet as of March 31, 1998 and unaudited\nstatement of income for the three months ended March 31, 1998.\n\n      1.12  'Registration Rights Agreement' means the registration rights\nagreement dated the date hereof and in the form attached hereto as Exhibit 1.12.\n\n      1.13  'Royalty Rights' means all of Seller's right, title and interest in\nand to any revenue derived from or arising out of the Business, including\nroyalties and similar payments, whether or not earned or payable on the date\nhereof.\n\n      1.14  'Seller's Accounts Estimate' means $295,267, as adjusted pursuant to\nSections 1.15 and 1.16 hereof.\n\n      1.15  'Seller's Accounts Payable' means the accounts payable of Seller\nrelating to the Business as of the date hereof, as listed on Schedule 1.15,\nwhich Schedule may be amended within 30 days from the date hereof (with\ncorresponding adjustments being made to the Seller's Accounts Estimate).\n\n      1.16  'Seller's Accounts Receivable' means the accounts receivable of\nSeller relating to the Business as of the date hereof as listed on Schedule\n1.16, which Schedule may be amended within 30 days from the date hereof (with\ncorresponding adjustments being made to the Seller's Accounts Estimate).\n\n\n                                       2\n\n\n\n      1.17  'Transaction Documents' means, collectively, this Agreement, the\nCertificate of Designations, the Employment Agreements and the Registration\nRights Agreement.\n\n      1.18  'Transferred Employees' means the individuals listed on Schedule\n1.18.\n\n\n                                   ARTICLE II\n\n                               THE ASSET PURCHASE\n\n            2.1   The Asset Purchase. (a) Upon the terms and subject to the\nconditions of this Agreement, Seller hereby sells, conveys, assigns, transfers\nand delivers to Purchaser free and clear of all Encumbrances (other than\nPermitted Encumbrances and except as expressly provided herein), and Purchaser\nhereby purchases from Seller, the Business and all the assets, properties and\nrights owned or leased by Seller and constituting the Business (the 'Purchased\nAssets'), including without limitation:\n\n                  (i)    all of Seller's right, title and interest in and to the\n                         Contracts, to the extent assignable;\n\n                  (ii)   Seller's Accounts Receivable;\n\n                  (iii)  all customer lists, sales data, brochures, catalogs,\n                         mailing lists, art work, photographs and advertising\n                         material that are used in the Business, whether in\n                         electronic form or otherwise;\n\n                  (iv)   all of Seller's interest in governmental permits,\n                         licenses, registrations, certificates, consents, orders\n                         and approvals necessary for the continued operation of\n                         the Business;\n\n                  (v)    all trade secrets, Royalty Rights, work notes, market\n                         studies, consultant's reports and similar property,\n                         tangible or intangible, used in the Business;\n\n                  (vi)   copies of all records of Seller material to the\n                         operation of the Business, including property, tax and\n                         marketing records and copies of personnel records of\n                         Transferred Employees;\n\n                  (vii)  all right, title and interest in and to the goodwill\n                         incident to the Business;\n\n                  (viii) all prepaid expenses of, or for the benefit of, the\n                         Business;\n\n\n                                       3\n\n\n\n                  (ix)   subject to any license agreements regarding such\n                         software, all software resident on computers used in\n                         the Business (other than any software not useful in the\n                         Business);\n\n                  (x)    all computers used in the Business, including all\n                         laptop computers currently used by a Transferred\n                         Employee; and\n\n                  (xi)   all other assets material to the operation of the\n                         Business (including without limitation all causes of\n                         action, contract rights and warranty and product\n                         liability claims, whether or not in litigation on the\n                         date hereof).\n\n            (b)   The following assets (collectively, the 'Excluded Assets')\nshall be excluded from this Agreement, and shall not be assigned or transferred\nto Purchaser:\n\n                  (i)    any right, title or interest in the names 'K2' and 'K2\n                         Design' and any variants thereof containing 'K2' and\n                         any related logos, trademarks, trade names or service\n                         marks incorporating such names, except as otherwise\n                         specifically transferred to Purchaser by Seller;\n\n                  (ii)   cash and cash equivalents and similar type investments;\n\n                  (iii)  leases and contracts, other than those set forth on\n                         Schedule 1.3 or otherwise specifically transferred\n                         pursuant to the terms hereof;\n\n                  (iv)   assets constituting any pension funds or segregated\n                         funds for the benefit of Transferred Employees;\n\n                  (v)    corporate minute books and stock books;\n\n                  (vi)   except as otherwise provided herein, all of Seller's\n                         assets not associated with the Business;\n\n                  (vii)  trade show booths; and\n\n                  (viii) all other furniture, fixtures and equipment.\n\n\n                                       4\n\n\n\n            2.2   Purchase Price.\n\n            (a)   In consideration of the transfer to Purchaser of the Assets\nand of the assignment of the Intellectual Property, Purchaser agrees to deliver\nto Seller or its designees the following: (i) $850,000 on the date hereof, by\nwire transfer of immediately available funds, (ii) the Deferred Purchase Price\n(subject to the terms of Section 2.2(b)), (iii) 3,000 shares of the Purchaser's\nSeries B Convertible Redeemable Preferred Stock, par value $.01 per share (the\n'Shares'), and (iv) the Seller's Accounts Estimate, on the date hereof. The\namount of cash and Shares set forth in items (i) through (iv), above, as\nadjusted pursuant to the terms hereof, is referred to herein as the 'Purchase\nPrice'.\n\n            (b)   If the Post-Closing Financial Statements are delivered to\nPurchaser within forty-five days after the date hereof, then Purchaser shall pay\nto Seller the Deferred Purchase Price within three days after the date of such\ndelivery. Seller acknowledges that the Deferred Purchase Price shall not be\npayable if the Post-Closing Financial Statements are not delivered on or before\nsuch date.\n\n            2.3   Purchase Price Adjustments\n\n            (a)   Schedule 2.3 sets forth a list of Seller's customers relating\nto the Business as of April 30, 1998 (the 'Existing Customers') together with a\ntrue and complete list of the gross revenues of Seller derived from the Business\nfrom the Existing Customers and booked on the accounts of Seller during the four\nmonth period ended April 30, 1998 (in the aggregate and on a customer by\ncustomer basis). In addition, Schedule 2.3 (as amended through June 30, 1998)\nsets forth a list of customers ('New Customers') that have entered or will enter\ninto contracts with Seller and\/or Purchaser relating to the Business in May or\nJune, 1998 (excluding renewals).\n\n            (b)   On or before November 1, 1998 Purchaser shall deliver to\nSeller a notice (the 'Customer Notice') which shall include (i) a list of\nExisting Customers that were parties to website agreements with Purchaser as of\nSeptember 1, 1998 and had not as of such date provided written notice of intent\nto terminate such website agreement, (the 'Retained Customers') and (ii) the\ngross revenue generated from New Customers during the four months ending\nSeptember 30, 1998 (the 'New Customer Revenue').\n\n            (c)   The Customer Notice shall include the following calculations:\n\n                  (i)   the sum of the revenue percentages set forth on Schedule\n                        2.3 for Retained Customers;\n\n                  (ii)  the New Customer Revenue, expressed as a percentage of\n                        Seller's gross revenue attributable to the Business for\n                        the four months ended April 30, 1998; and\n\n                  (iii) the sum of the percentages determined pursuant to (i)\n                        and (ii), above (such percentage, the 'Retained Customer\n                        Factor').\n\n\n                                       5\n\n\n\n            (d)   The Purchase Price shall be reduced (the 'Purchase Price\nReduction') if at all, according to the following chart:\n\n\n\n            Retained Customer Factor             Purchase Price Reduction\n            ------------------------             ------------------------\n                                              \n            greater than 70%                                     0\n            greater than 60% and less than\n            or equal to 70%                               $200,000\n            greater than 50% and less than\n            original or equal to 60%                      $400,000\n            50%                                           $600,000\n            less than 50%                        $600,000 plus $40,000 times the\n                                                 number of percentage points by\n                                                 which 50% exceeds the Retained\n                                                 Customer Factor\n\n\n            (e)   Notwithstanding anything to the contrary in this Section 2.3,\nif Purchaser's gross revenue from Existing Customers and New Customers exceeds\n$500,000 for the three months ended September 30, 1998, the Purchase Price\nReduction shall be zero. Purchaser agrees to use its best efforts to retain\nExisting Customers and New Customers through September 30, 1998 and to keep all\nwebsite and advertising relationships intact through September 30, 1998 and\nthereby avoid a Purchase Price Reduction.\n\n            (f)   The Purchase Price Reduction shall be payable in cash or in\nshares of Purchaser's capital stock, at the option of Seller. If all or a\nportion of the Purchase Price Reduction is payable in Shares prior to the\nPurchaser's initial public offering, the Shares shall be valued at $1,000 per\nshare. If all or a portion of the Purchase Price Reduction is payable after the\nPurchaser's initial public offering, the Purchaser's common stock shall be\nvalued at the higher of (i) the price to the underwriters of the common stock in\nthe initial public offering or (ii) the average of the closing price per share\non the Nasdaq National Market for the five trading days immediately preceding\nOctober 1, 1998.\n\n            (g)   Purchaser agrees to use commercially reasonable efforts to\ncollect Seller's Accounts Receivable prior to November 1, 1998. On or before\nNovember 1, 1998, Purchaser shall prepare and deliver to Seller a notice (the\n'Accounts Notice' and, together with the Customer Notice, a 'Notice') setting\nforth the amount of Seller's Accounts Receivable collected by Purchaser between\nthe date hereof and November 1, 1998 (such amount, the 'Post-Closing\nCollections'). If the Post-Closing Collections are less than Seller's Accounts\nEstimate, Seller shall, within 15 days after receipt of the Accounts Notice or\nresolution of any dispute pursuant to Section 2.3(h), pay to Purchaser an amount\nequal to such shortfall.\n\n            (h)   During the 30-day period following Seller's receipt of a\nNotice, Seller and its\n\n\n                                       6\n\n\n\nindependent auditors will be permitted to review Purchaser's documentation\nrelating to such Notice (and Purchaser and its representatives will provide\nreasonable cooperation in such review). Such Notice shall become final and\nbinding upon the parties on the thirtieth day following receipt thereof by\nSeller unless Seller gives written notice of any disagreement ('Notice of\nDisagreement') to Purchaser prior to such date. The Notice of Disagreement (if\nany) shall specify in reasonable and sufficient detail the nature of any\ndisagreement so asserted. If a Notice of Disagreement is received by Purchaser\nin a timely manner, then the Notice (as revised in accordance with clause (x) or\n(y) below) shall become final and binding upon the parties on the earlier of (x)\nthe date the parties hereto resolve in writing any differences they have with\nrespect to any matter specified in the Notice of Disagreement or (y) the date\nany disputed matters are finally resolved in writing by the Arbitrator (as\ndefined below). During the 30-day period following the delivery of a Notice of\nDisagreement, Seller and Purchaser shall seek in good faith to resolve in\nwriting any differences which they may have with respect to any matter specified\nin the Notice of Disagreement. If, at the end of such 30- day period, Seller and\nPurchaser have not reached agreement on such matters, the matters which remain\nin dispute shall be submitted to an arbitrator jointly selected by the parties\n(the 'Arbitrator') for review and resolution in accordance with the commercial\narbitration rules of the American Arbitration Association in New York City. The\nArbitrator shall render a decision resolving the matters in dispute within 30\ndays following their submission to the Arbitrator. The fees of the Arbitrator\nshall be borne by the non-prevailing party.\n\n            2.4   Assumption of Liabilities; Employee Matters (a) General\nLimitation on Assumption of Liabilities. Except for Permitted Encumbrances and\nas otherwise provided in this Section 2.4, Seller shall transfer the Purchased\nAssets to Purchaser free and clear of all Encumbrances, and Purchaser shall not,\nby virtue of its purchase of the Purchased Assets, assume or become responsible\nfor any liabilities or obligations of Seller.\n\n            (b)   Assumed Liabilities and Obligations. Purchaser hereby acquires\nthe Purchased Assets subject only to, and shall undertake, assume, perform and\notherwise pay, satisfy and discharge, and hold Seller harmless from, the\nliabilities and obligations set forth therein or relating thereto and, in either\ncase, arising after the date hereof.\n\n            (c)   Offer of Employment. Purchaser shall offer employment as of\nthe date hereof to all of the Transferred Employees. Purchaser shall keep on its\npayroll all Transferred Employees who accept Purchaser's offer of employment\nexcept for those Transferred Employees who may resign or be terminated for\ncause, for at least 90 days after the Closing Date.\n\n            (d)   Vacation Liability. Purchaser shall assume liability as of the\ndate hereof for the vacation entitlement that each Transferred Employee who\nbecomes an employee of Purchaser has accrued and is listed in Schedule 2.4.\nPurchaser shall pay each Transferred Employee's wages or salary during such\nvacation entitlement from Purchaser, when taken.\n\n            (e)   Other Employee Benefits. Seller agrees that, with respect to\nclaims for workers' compensation arising out of events occurring prior to the\ndate hereof and all claims under\n\n\n                                       7\n\n\n\nSeller's employee benefit programs by, or in respect of, persons employed by\nSeller arising out of events occurring prior to the date hereof, regardless of\nwhether such employment had terminated and regardless of whether such employee\nis employed by Purchaser, whether reported or unreported as of the date hereof,\nand whether insured or uninsured (including, but not limited to, workers'\ncompensation, life insurance, medical and disability programs), Seller shall, at\nits own expense, honor, or cause its insurance carriers, if any, to honor, such\nclaims in accordance with the terms and conditions of such programs or\napplicable workers' compensation statutes, including any construction of such\nterms or conditions ultimately made by any court or administrative body having\njurisdiction thereover. Without limiting the scope of the preceding sentence,\nSeller and its affiliates shall be responsible for any and all claims and\nliabilities arising out of or relating to (i) Seller's employment of the\nTransferred Employees or any former employees of Seller, (ii) the termination by\nSeller of the employment of any such Transferred Employee, former employee,\nconsultant or other agent of Seller, and (iii) the provision by Seller of any\nemployee benefits to such Transferred Employees, former employees, retirees,\ndisabled employees, or agents of Seller (and their beneficiaries and eligible\ndependents) attributable to their employment with, or their participation in any\nplans or programs maintained or contributed to by, Seller or any of its\naffiliates. Purchaser shall assume liability for all workers' compensation\nclaims for industrial injuries and illnesses, and any and all claims and\nliabilities, occurring after the Closing Date in respect to the Transferred\nEmployees. Each Transferred Employee shall be eligible to participate in\nPurchaser's benefit plans, subject to any limits or exclusions imposed by the\napplicable insurance company, such as exclusions for pre-existing conditions.\n\n            2.5   Intellectual Property. Seller hereby assigns to Purchaser the\nIntellectual Property and agrees to execute any additional forms or agreements\nnecessary to effect the foregoing.\n\n            2.6   Escrow of Shares. Seller hereby directs Purchaser to deliver\nthe Shares to Proskauer Rose LLP, as escrow agent, to be held and disbursed in\naccordance with the terms of an escrow agreement to be agreed by such firm and\nthe parties hereto.\n\n            2.7   Further Assurances. From and after the date here of, upon\nwritten request from Purchaser, Seller shall execute, acknowledge and deliver\nall such further acts, assurances, deeds, assignments, transfers, conveyances\nand other instruments and papers as may reasonably be required to sell, assign,\ntransfer, vest, convey and deliver full right, title and interest in, and\npossession of, the Purchased Assets to Purchaser and to otherwise consummate the\ntransactions contemplated hereby.\n\n\n                                       8\n\n\n\n                                   ARTICLE III\n\n                    REPRESENTATIONS AND WARRANTIES OF SELLER\n\n            Seller represents and warrants to Purchaser as follows:\n\n            3.1.  Organization. Seller is a corporation duly organized, validly\nexisting and in good standing under the laws of the jurisdiction of its\norganization.\n\n            3.2.  Authority. Seller has the full corporate power and authority\nto execute and deliver the Transaction Documents to which it is a party and to\nconsummate the transactions contemplated hereby and thereby. All corporate acts\nand other proceedings required to be taken by or on the part of Seller to\nauthorize such execution, delivery and consummation have been duly and properly\ntaken. The Transaction Documents have been duly executed and delivered by Seller\nand constitute legal, valid and binding obligations of Seller enforceable\nagainst Seller in accordance with their respective terms. The execution and\ndelivery by Seller of the Transaction Documents and the consummation of the\ntransactions contemplated hereby and thereby will not violate any applicable\nlaw, or conflict with, result in any breach of, constitute a default (or an\nevent which with notice or lapse of time or both would become a default) under,\nor result in the creation of an Encumbrance on any of the properties or assets\nof Seller pursuant to, the corporate charter or by-laws of Seller or any\nindenture, mortgage, lease, agreement or other instrument to which Seller is a\nparty or by which its properties or assets are bound. No material approval,\nauthorization, consent or other order or action of or filing with any person,\nentity or court, administrative agency or other governmental body in the United\nStates of America is required for the execution and delivery by Seller of the\nTransaction Documents to which it is a party or the consummation by Seller of\nthe transactions contemplated hereby or thereby.\n\n            3.3.  Financial Statements. To its Knowledge, Seller does not have\nany contingent or undisclosed obligations or liabilities relating to the\nBusiness which would be required in accordance with GAAP to be reflected in a\ncurrently prepared balance sheet, other than obligations or liabilities (i) that\nare disclosed in this Agreement or the Schedules hereto, or(ii) that are not\nmaterial to the financial condition of the Business.\n\n            3.4.  Retention of Customers. Except as set forth on Schedule 3.4,\nto its Knowledge, Seller does not know of anything that might reasonably\nindicate that any of the entities listed on Schedule 2.3 intends to cease\ndealing with (or decline to deal with) the Purchaser, nor has any information\nbeen brought to the attention of the Seller that might reasonably lead it to\nbelieve any such customer intends to materially alter the amount of such\npurchases or the extent of dealings with Purchaser (as compared to purchases and\ndealings with Seller as of the date hereof).\n\n            3.5.  Intangible Property Rights. Schedule 3.5 lists all the\ntrademarks, trade names, trade secrets and other intangible property rights,\nincluding all registered trademarks and goodwill associated therewith, used in\nconnection with the Business (the 'Intangible Property Rights').\n\n\n                                       9\n\n\n\nExcept as otherwise disclosed in Schedule 3.5, (i) the Seller, to its Knowledge,\nvalidly owns the Intangible Property Rights free and clear of all Encumbrances\nother than Permitted Encumbrances and (ii) no action, claim, suit or proceeding\nhas been brought against the Seller or, to the Knowledge of Seller, has been\nthreatened against the Seller with respect to any material Intangible Property\nRights.\n\n            3.6.  Litigation. Except as disclosed in Schedule 3.6, Seller is not\nsubject to any judgment, order, writ, injunction or decree of any court or any\nFederal, state, local or other governmental department, commission, board,\nbureau, agency or instrumentality, domestic or foreign, or any arbitrator that\nmaterially affects the operation of the Business.\n\n            3.7.  Contracts. To Seller's Knowledge, Schedule 1.3 sets forth a\nlist of all executory contracts of the Business. Except as disclosed in Schedule\n1.3, to Seller's Knowledge, each of the Contracts listed in Schedule 1.3 is\nvalid and in full force and effect, each party to each such Contract has\nperformed all material obligations required to be performed by it thereunder,\nand no other party to any such Contract has taken the position that such\nContract is not enforceable against any such other parties by Seller.\n\n            3.8.  Benefit Plans. Purchaser shall not have liability under any\nBenefit Plans, with respect to any employees of Seller or their beneficiaries.\n'Benefit Plans' shall mean all material 'employee pension benefit plans' (as\ndefined in Section 3(2) of the Employee Retirement Income Security Act of 1974,\nas amended ('ERISA')), 'employee welfare benefit plans' (as defined in Section\n3(1) of ERISA), and any other material employee fringe benefit plans maintained,\nor contributed to, by the Company.\n\n            3.9.  Accuracy. To Seller's Knowledge, the required disclosures made\nin this Agreement and the schedules attached hereto are complete and accurate in\nall material respects, and the scheduled disclosures do not contain any untrue\nstatement of a material fact or omit to state any material fact necessary to\nmake the statements or facts contained therein, in light of the circumstances\nunder which they were made, not misleading.\n\n            3.10. Securities Act of 1933. The Shares purchased by Seller\npursuant to this Agreement are being acquired for investment only and not with a\nview to any public distribution thereof, and Seller will not offer to sell or\notherwise dispose of the Shares so acquired by it in violation of the Securities\nAct of 1933.\n\n\n                                       10\n\n\n\n                                   ARTICLE IV\n\n                   REPRESENTATIONS AND WARRANTIES OF PURCHASER\n\n            Purchaser represents and warrants to Seller as follows:\n\n            4.1.  Organization. Purchaser is a corporation duly organized,\nvalidly existing and in good standing under the laws of the jurisdiction of its\norganization.\n\n            4.2.  Authority. Purchaser has the full corporate power and\nauthority to execute and deliver the Transaction Documents and to consummate the\ntransactions contemplated hereby and thereby. All corporate acts and other\nproceedings required to be taken by or on the part of Purchaser to authorize\nsuch execution, delivery and consummation have been duly and properly taken. The\nTransaction Documents have been duly executed and delivered by Purchaser and\nconstitute legal, valid and binding obligations of Purchaser enforceable against\nPurchaser in accordance with their respective terms. The execution and delivery\nby Purchaser of the Transaction Documents and the consummation of the\ntransactions contemplated hereby and thereby will not violate any law, or\nconflict with, result in any breach of, constitute a default (or an event which\nwith notice or lapse of time or both would become a default) under, or result in\nthe creation of an Encumbrance on any of the properties or assets of Purchaser\npursuant to, the corporate charter or by-laws of Purchaser or any indenture,\nmortgage, lease, agreement or other instrument to which Purchaser is a party or\nby which its properties or assets are bound. No material approval,\nauthorization, consent or other order or action of or filing with any person,\nentity or court, administrative agency or other governmental body in the United\nStates of America is required for the execution and delivery by Purchaser of the\nTransaction Documents or the consummation by Purchaser of the transactions\ncontemplated hereby or thereby.\n\n            4.3   Capital Stock of the Company. The authorized capital stock of\nthe Company consists of (i) 100,000,000 shares of Common Stock, par value $.01\nper share (the 'Common Stock'), and (ii) 30,000,000 shares of preferred stock,\npar value $.01 per share, of which 13,621,507 have been designated as Series A\nConvertible Voting Preferred Stock (the 'Series A Preferred Stock') and, after\ngiving effect to the Certificate of Designations, 3,000 of which have been\ndesignated Series B Convertible Redeemable Preferred Stock (the 'Series B\nPreferred Stock'). On the date hereof, 31,301,804 shares of Common Stock are\noutstanding, 13,621,507 shares of the Series A Preferred Stock are outstanding\nand 3,000 shares of the Series B Preferred Stock will be outstanding pursuant to\nthis Agreement. In addition, on the date hereof, there are outstanding\n6,344,224, 6,344,224 and 3,121,212 Class A, Class B and Class C Warrants,\nrespectively, to purchase Common Stock of the Company. All of the outstanding\nshares are duly authorized, validly issued and outstanding, fully paid and\nnon-assessable. The Shares have not been and will not be issued in violation of,\nand are not subject to, any preemptive or subscription rights, other than such\nrights that have been waived by the holders thereof.\n\n            4.4.  No Legal Proceedings. Except as disclosed in Schedule 4.4,\nthere is no action,\n\n\n                                       11\n\n\n\nsuit, investigation, order, judgment or proceeding pending or, to the knowledge\nof Purchaser, threatened against or affecting Purchaser that, individually or\nwhen aggregated with one or more other actions, suits, orders, judgments or\nproceedings, has or might reasonably be expected to have a material adverse\neffect on Purchaser's ability to perform any of its obligations hereunder or\nunder any of the Transaction Documents.\n\n            4.5   Certificate of Designations. The Certificate of Designations\nhas been duly filed with the Secretary of State of the State of Delaware. The\ncertificate of incorporation of Purchaser has been duly amended by the filing of\nthe Certificate of Designations.\n\n            4.6   Brokers. No broker, investment banker or other person is\nentitled to any broker's, finder's or similar fee or commission in connection\nwith the transactions contemplated by this Agreement based upon arrangements\nmade by or on behalf of Purchaser.\n\n            4.7   Accuracy. To Purchaser's knowledge, the required disclosures\nmade in this Agreement and the schedules attached hereto are complete and\naccurate in all material respects, and the scheduled disclosures do not contain\nany untrue statement of a material fact or omit to state any material fact\nnecessary to make the statements or facts contained therein, in light of the\ncircumstances under which they were made, not misleading.\n\n            4.8   Registration Statement. Purchaser's draft S-1 registration\nstatement dated June 2, 1998, a copy of which has been delivered to Seller,\ncomplies as to form in all material respects with the requirements of the\nSecurities Act of 1933 and all applicable rules and regulations thereunder, and\ndoes not contain any false or misleading statement of a material fact or omit to\nstate any material fact required to be stated therein or necessary in order to\nmake the statements made therein not misleading.\n\n\n                                    ARTICLE V\n\n                        FURTHER COVENANTS AND AGREEMENTS\n\n            5.1.  Security Arrangements. To secure Seller's obligations under\nSections 2.3(d) and (f) hereof until the Purchase Price Reduction is paid in\nfull or is finally determined to be zero, Seller shall (i) not dispose of its\nShares of Series B Preferred Stock or (ii) retain the proceeds from the sale of\nsuch Shares in escrow pursuant to an escrow agreement acceptable to Purchaser.\n\n            5.2.  Access; Information; Confidentiality. (a) Each party,\ncovenants and agrees, and shall cause each of its officers, employees,\nattorneys, accountants and other authorized representatives, to treat all\ninformation obtained or developed by them concerning the other party in strict\nconfidence. Each party also covenants and agrees to comply with all other\nconfidentiality undertakings heretofore agreed to between Purchaser and Seller\nor their representatives relating to the parties or the transactions\ncontemplated by this Agreement.\n\n\n                                       12\n\n\n\n                  (b)   If at any time it is necessary that a party be furnished\nwith additional information, documents or records relating to the Purchased\nAssets or the Business in order properly to prepare or support its tax returns\nor other documents or reports required to be filed with governmental authorities\nor any securities exchanges or otherwise for any purpose in connection with the\nperformance or discharge by the parties of their obligations hereunder, and such\ninformation, documents or records are in the possession or control of the other\nparty, such other party agrees to use all reasonable efforts to furnish or make\navailable such information, documents or records (or copies thereof).\n\n            5.3.  Financial Statements. Seller covenants and agrees to prepare\nand deliver the Post-Closing Financial Statements.\n\n            5.4.  Fees and Expenses. Each party shall bear its own expenses\nincurred in connection with the transactions contemplated hereby, except that\nPurchaser shall reimburse Seller for up to $45,000 of Seller's reasonable fees\nand expenses incurred in connection with the transactions contemplated hereby\nand the preparation of the Post-Closing Financial Statements within 30 days\nafter receipt of the Post-Closing Financial Statements.\n\n            5.5.  Accounts Receivable. Seller agrees to promptly remit to\nPurchaser the amount of any payments received by Seller relating to Seller's\nAccounts Receivable.\n\n            5.6.  Indemnification. (a) Each of Seller and Purchaser shall\nindemnify and hold the other harmless against and in respect of all actions,\nsuits, demands, judgments, costs and expenses (including reasonable attorneys'\nfees) (collectively, 'Damages') relating to any misrepresentation, breach of any\nrepresentation or warranty or non-fulfillment of any agreement on the part of\nsuch party in any Transaction Document.\n\n                  (b)   Purchaser shall indemnify and hold Seller harmless in\nrespect of Damages relating to the Transferred Employees and the Business, in\neach case arising on or after the date hereof. Seller shall indemnify and hold\nPurchaser harmless in respect of Damages relating to the Transferred Employees\nand the Business, in each case arising prior to the date hereof.\n\n                  (c)   The indemnification provided for in this Section 5.6\nshall terminate and be of no further force and effect one year from the date\nhereof, except as to any representation or warranty as to which a written notice\nof claim for indemnification has been given to the indemnifying party prior to\nthe expiration of such one-year period. Neither party shall be liable pursuant\nto this Section for any amounts which in the aggregate exceed the Purchase\nPrice.\n\n            5.7.  Public Announcements. Unless otherwise required by law or the\nrules and regulations of the Securities and Exchange Commission, none of the\nparties shall issue any press release or make any public statement with respect\nto this Agreement and the transaction contemplated hereby except for the agreed\nupon press release to be issued by the parties on the date\n\n\n                                       13\n\n\n\nhereof.\n\n            5.8.  Sales and Transfer Taxes. Seller shall pay all sales, use,\nexcise and\/or transfer taxes due with respect to the Business, provided that any\nproperty taxes relating to the Leased Premises shall be prorated between the\nparties based on their respective periods of occupancy during the applicable\ntaxing period.\n\n            5.9.  Noncompetition Agreement of Seller. For a period of five years\nfollowing the date hereof, Seller shall not, directly or indirectly, as\nprincipal, investor, or in any similar capacity (i) engage in the Business\nanywhere in the world, (ii) own, manage, operate or control, or participate in\nthe ownership, management, operation or control of, any business which directly\nor indirectly competes with the Business anywhere in the world, or (iii) with\nrespect to the Business interfere with, disrupt or attempt to disrupt any\npresent or prospective relationship, contractual or otherwise, between Purchaser\nand any of its licensors, licensees, clients, customers, suppliers, employees or\nother related parties, or employ, solicit or induce for hire any Transferred\nEmployee, or any of the employees, agents, consultants or advisors of Purchaser\nor any employee who has left the employment of Purchaser within six months of\nthe termination of said employee's employment with Purchaser, provided that\nnothing herein shall preclude Seller from beneficially owning less than five\npercent of the stock of any publicly traded company or merging with any other\nentity.\n\n            5.10. Non-Solicitation Agreement of Purchaser. For a period of five\nyears following the date hereof, Purchaser shall not employ, solicit or induce\nfor employment, directly or indirectly, any employees of Seller or any\nindividual who has left the employment of Seller during the preceding six\nmonths.\n\n            5.11. Cross-Referrals. (a) Purchaser agrees to direct to Seller any\ninquiries received by Purchaser within two years after the date hereof regarding\nweb site development services. In addition, Purchaser will provide Seller with\nthe opportunity to bid for the enhancement of Purchaser's web site, provided\nthat Purchaser retains the right in its sole discretion to select any party (or\nno party) to perform such services.\n\n            (b)   Seller agrees to direct to Purchaser any inquiries received by\nSeller within two years after the date hereof regarding the Business.\n\n            5.12. Use of Leased Premises. Seller agrees to permit Purchaser to\nuse the Leased Premises for a period not to exceed four (4) months, commencing\non the date hereof. Purchaser agrees to reimburse Seller at the rate of $10,000\nper month during the period of Purchaser's occupancy thereof, such amount to be\ndeemed to include rent, taxes and insurance (which Seller agrees to maintain at\nits current levels).\n\n            5.13. Post-Closing Financial Statements. When delivered, the\nPost-Closing Financial Statements will have been prepared in accordance with\ngenerally accepted accounting principles, consistently applied ('GAAP'), and\nwill constitute fair and reasonable presentations of\n\n\n                                       14\n\n\n\nthe financial position and results of operations of the Business, in all\nmaterial respects, as of the dates and for the periods set forth therein.\n\n\n                                   ARTICLE VI\n\n                               GENERAL PROVISIONS\n\n            6.1   Notices. All notices and other communications hereunder shall\nbe in writing and shall be deemed given if delivered personally, sent by\novernight courier or telecopied (with a confirmatory copy sent by overnight\ncourier) to the parties at the following addresses (or at such other address for\na party as shall be specified by like notice):\n\n      (a)   If to Purchaser, to:\n\n            24\/7 Media, Inc.\n            1250 Broadway\n            New York, NY 10001\n            Attention:  David J. Moore\n            Title:  Chief Executive Officer\n            Facsimile: (212) 760-7144\n            Telephone: (212) 629-7173\n\n            with a copy to:\n\n            Roberts, Sheridan &amp; Kotel,\n            a professional corporation\n            Tower 49\n            12 East 49th Street, 30th Floor\n            New York, NY  10017\n            Attention: L. Kevin Sheridan, Esq.\n            Facsimile: (212) 299-8686\n            Telephone: (212) 299-8600\n\n\n      (b)   If to Seller:\n\n            K2 Design, Inc.\n            30 Broad Street, 16th Floor\n            New York, NY 10004\n            Attention:  Robert Burke\n            Title:  Chief Operating Officer\n            Facsimile: (212) 301-8801\n\n\n                                       15\n\n\n\n            Telephone: (212) 301-8800\n\n            with a copy to:\n\n            Proskauer Rose LLP\n            1585 Broadway\n            New York, NY  10036\n            Attention: Neil Belloff, Esq.\n            Facsimile: (212) 969-2900\n            Telephone: (212) 969-3000\n\n            6.2   Interpretation. When a reference is made in this Agreement of\na Section, such reference shall be to a Section of this Agreement unless\notherwise indicated, and the words 'hereof,' 'herein' and 'hereunder' and\nsimilar terms refer to this Agreement as a whole and not to any particular\nprovision of this Agreement, unless the context otherwise requires. The table of\ncontents and headings contained in this Agreement are for reference purposes\nonly and shall not affect in any way the meaning or interpretation of this\nAgreement. Whenever the words 'include,' 'includes' or 'including' are used in\nthis Agreement, they shall be deemed to be followed by the words 'without\nlimitation.'\n\n            6.3   Counterparts. This Agreement may be executed in counterparts,\nall of which shall be considered one and the same agreement and shall become\neffective when one or more counterparts have been signed by each of the parties\nand delivered to the other parties.\n\n            6.4   Entire Agreement; No Third-Party Beneficiaries. This\nAgreement, including the documents and instruments referred to herein, (i)\nunderstandings, both written and oral, among the parties with respect to the\nsubject matter hereof and (ii) is not intended to confer upon any person other\nthan the parties any rights or remedies hereunder.\n\n            6.5   Governing Law. This Agreement shall be governed by, and\nconstrued in accordance with, the laws of the State of New York, regardless of\nthe laws that might otherwise govern under applicable principles of conflicts of\nlaws thereof.\n\n            6.6   Assignment. Neither this Agreement nor any of the rights,\ninterests or obligations hereunder shall be assigned by any of the parties\nwithout the prior written consent of the other parties. Subject to the preceding\nsentence, this Agreement shall be binding upon, inure to the befit of, and be\nenforceable by, the parties and their respective successors and assigns.\n\n            6.7   Severability. If any term or other provision of this Agreement\nis invalid, illegal or incapable of being enforced by any rule of law, or public\npolicy, all other conditions and provisions of this agreement shall nevertheless\nremain in full force and effect so long as the economic or legal substance of\nthe transactions contemplated hereby are not affected in any manner materially\nadverse to any party. Upon such determination that any term or other provision\nis invalid,\n\n\n                                       16\n\n\n\nillegal or incapable of being enforced, the parties shall negotiate in good\nfaith to modify this Agreement so as to effect the original intent of the\nparties as closely as possible in a mutually acceptable manner in order that the\ntransactions be consummated as originally contemplated to the fullest extent\npossible.\n\n            6.8   Enforcement of this Agreement. The parties agree that\nirreparable damage would occur in the event that any of the provisions of this\nAgreement were not performed in accordance with their specific terms or were\notherwise breached. It is accordingly agreed that the parties shall be entitled\nto an injunction or injunctions to prevent breaches of this Agreement and to\nenforce specifically the terms and provisions hereof in any court of the United\nStates or any state having jurisdiction, this being in addition to any other\nremedy to which they are entitled at law or in equity.\n\n            6.9   Consent to Jurisdiction. In the event that any legal\nproceedings are commenced in any court with respect to any matter arising under\nthis Agreement, the parties hereto specifically consent and agree that the\ncourts of the State of New York and\/or the Federal Courts located in the State\nof New York shall have jurisdiction over each of the parties hereto and over the\nsubject matter of any such proceedings, and the venue of any such action shall\nbe in New York County, New York and\/or the U.S. District Court for the Southern\nDistrict of New York.\n\n\n            IN WITNESS WHEREOF, Purchaser and Seller have executed this\nAgreement as of the date first written above.\n\n\n                                       K2 DESIGN, INC.\n\n\n\n                                       By:\n                                          --------------------------------\n                                          Name:\n                                          Title:\n\n\n\n                                       24\/7 MEDIA, INC.\n\n\n\n                                       By:\n                                          --------------------------------\n                                          Name:\n                                          Title:\n\n                                       17\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6536],"corporate_contracts_industries":[9503],"corporate_contracts_types":[9623,9622],"class_list":["post-43298","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-247-media-inc","corporate_contracts_industries-services__advertising","corporate_contracts_types-planning__asset","corporate_contracts_types-planning"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43298","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43298"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43298"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43298"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43298"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}