Exhibit 2.1
ASSET PURCHASE AGREEMENT
Agreement made as of March 16, 1999 by and between DURO Communications,
Inc., a Delaware corporation ("Buyer"), CrossRoads Access Corporation, a
Mississippi corporation ("Seller"), and Xxxxxx X. Xxxx and Xxxxxxxxx Xxxxxxx, as
management shareholders of the Seller (collectively the "Management
Shareholders").
WHEREAS, subject to the terms and conditions hereof, Seller desires to
sell, transfer and assign to Buyer, and Buyer desires to purchase from Seller,
all of the properties, rights and assets used or useful in connection with the
Internet service business of Seller (the "Business").
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
SECTION 1. PURCHASE AND SALE OF ASSETS.
1.1 Sale of Assets. Upon the terms and subject to the conditions set forth
in this Agreement, and the performance by the parties hereto of their respective
obligations hereunder, Seller agrees to sell, assign, transfer and deliver to
Buyer, and Buyer agrees to purchase from Seller, all of Seller's right, title
and interest in and to all of the properties, assets and business of the
Business of every kind and description, tangible and intangible, real, personal
or mixed, and wherever located, but excluding the Excluded Assets (as defined in
Section 1.2 below), including, without limitation, the following:
(a) Equipment. All free standing kiosks, servers, routers, modems,
computers, electronic devices, test equipment and all other fixed assets,
equipment, furniture, fixtures, leasehold improvements, parts, accessories,
inventory, office materials, software, supplies and other tangible personal
property of every kind and description owned by Seller and used or held for use
in connection with the Business, all as set forth on Schedule 1.1(a) attached
hereto (collectively, "Equipment");
(b) Contracts. All of the rights of Seller under and interest of
Seller in and to all contracts relating to the Business (other than the Excluded
Contracts (as defined below)), including, without limitation, original contracts
for the provision of Internet connectivity, dedicated service, web-hosting,
web-domain, dial-up services, web-development and Internet commerce, all of
Seller's insurance contracts, all leases with respect to real property and all
co-location agreements, a true, correct and complete list of which contracts is
attached hereto as Schedule 1.1(b) (collectively, the "Contracts");
(c) Intellectual Property. All of Seller's Intellectual Property (as
defined in Section 2.20), as set forth on Schedule 1.1(c) attached hereto;
(d) Licenses and Authorizations. All rights associated with the
licenses, permits, easements, registrations, domains and authorizations issued
or granted to Seller by any governmental authority with respect to the operation
of the Business, including, without limitation, those licenses and
authorizations listed on Schedule 1.1(d) attached hereto, and all applications
therefor, together with any renewals, extensions, or modifications thereof and
additions thereto;
(e) Current Assets; Accounts Receivable. All current assets of
Seller, excluding cash, and all accounts receivable of Seller incurred in the
ordinary course of business and such accounts receivable as are included on
Seller's balance sheet, as determined in accordance with generally accepted
accounting principles ("GAAP"), consistently applied (collectively, the "Assumed
Current Assets"). A complete list of such accounts receivable is attached hereto
as Schedule 1.1(e) ("Accounts Receivable");
(f) Goodwill. All of the goodwill of Seller in, and the going
concern value of, the Business, and all of the business and customer lists,
proprietary information, and trade secrets related to the Business;
(g) Records. All of Seller's customer logs, location files and
records, employee records, and other business files and records, in each case
relating to the Business; and
(h) Bank Accounts. All of Seller's bank accounts as set forth in
Schedule 2.19 ("Banking Relations").
The assets, properties and business of Seller being sold to and purchased
by Buyer under this Section 1.1 are referred to herein collectively as the
"Assets." Buyer warrants that Buyer is not relying upon any statement or
communication (whether same be promise, guaranty, representation, warranty or
otherwise) in consummating this transaction other than as specifically contained
in writing herein.
1.2 Excluded Assets. There shall be excluded from the Assets and retained
by Seller, to the extent in existence on the Closing Date, the following assets
(the "Excluded Assets"):
(a) Other Assets. All other assets of Seller which are not used or
held for use in connection with the Business or otherwise necessary to the
operation of the Business now or after the Closing Date and which are set forth
on Schedule 1.2(a) attached hereto;
(b) Excluded Contracts. All of Seller's right, title and interest
in, to and under the Contracts listed on Schedule 1.2(b) attached hereto (the
"Excluded Contracts");
(c) Insurance. The cash surrender value of Seller's contracts of
insurance and all insurance proceeds of settlement and insurance claims made by
Seller on or before the Closing Date as set forth on Schedule 1.2(c) attached
hereto;
2
(d) Tax Items. All claims, rights and interest in and to any refunds
for federal, state or local Taxes (as defined below) for periods prior to the
Closing Date as set forth on Schedule 1.2(d) attached hereto;
(e) Corporate Records. All of Seller's corporate and other
organizational records; and
(f) Cash. All of Seller's cash on hand or in bank accounts.
1.3 Assumed Liabilities; Excluded Liabilities; Employees.
(a) Assumed Liabilities. Buyer shall, on and as of the Closing Date,
accept and assume, and shall become and be fully liable and responsible for, and
other than as expressly set forth herein Seller shall have no further liability
or responsibility for or with respect to, (i) liabilities and obligations
arising out of events occurring on and after the Closing Date related to Buyer's
ownership of the Assets and Buyer's operation of the Business after the Closing
Date; (ii) those current liabilities and accrued expenses of Seller as of the
Closing Date consisting of (A) accounts payable arising in the ordinary course
of business and (B) unearned revenues (the "Assumed Current Liabilities and
Accrued Expenses" and (iii) all obligations and liabilities of Seller which are
to be performed after the Closing Date arising under the Contracts, including,
without limitation, Seller's obligations to Subscribers (as defined in Section
2.16) under such Contracts for (A) Subscriber deposits held by Seller as of the
Closing Date in the amount for which Buyer receives a credit pursuant to Section
1.6(a) below, (B) Subscriber advance payments held by Seller as of the Closing
Date for services to be rendered in connection with the Business in the amount
for which Buyer receives a credit pursuant to Section 1.6(a) below, and (C) the
delivery of Internet connectivity service to Subscribers (whether pursuant to a
Contract or otherwise) after the Closing Date ((i), (ii) and (iii) together, the
"Assumed Liabilities"). The assumption of the Assumed Liabilities by Buyer
hereunder shall not enlarge any rights of third parties under contracts or
arrangements with Buyer or Seller or any of their respective affiliates or
subsidiaries. No parties other than Buyer and Seller shall have any rights under
this Agreement.
(b) Excluded Liabilities. It is expressly understood that, except
for the Assumed Liabilities, Buyer shall not assume, pay or be liable for any
liability or obligation of Seller of any kind or nature at any time existing or
asserted, whether, known, unknown, fixed, contingent or otherwise, not
specifically assumed herein by Buyer, including, without limitation, any
liability or obligation relating to, resulting from or arising out of (i) the
Excluded Assets, including, without limitation, the Excluded Contracts, (ii) the
employees of the Business, including, without limitation, any obligation to
provide any amounts due to the employees under any pension, profit sharing or
similar plan, any bonus or other compensation plan, or related to vacation or
other similar employee benefits, or arising as a result of the transactions
contemplated hereby or (iii) any fact existing or event occurring prior to the
Closing Date or relating to the operation of the Business prior to the Closing
Date. The
3
liabilities which are not assumed by Buyer under this Agreement are hereinafter
sometimes referred to as the "Excluded Liabilities."
(c) Employees, Wages and Benefits.
(i) Seller shall terminate all of its employees effective as
of the Closing Date and Buyer shall not assume or have any obligations or
liabilities with respect to such employees or such terminations except as
provided in Section 7.3 with respect to the Management Shareholders,
including, without limitation, any severance obligation. Seller
acknowledges and agrees that Buyer has the right to interview and discuss
employment terms and issues with such employees prior to and after the
Closing.
(ii) Buyer specifically reserves the right, on or after the
Closing Date, to employ or reject any of Seller's employees or other
applicants in its sole and absolute discretion; provided that Buyer shall
provide to Seller a list of employees to whom Buyer intends to offer
employment at the Closing. Except as set forth in Section 7.3, nothing in
this Agreement shall be construed as a commitment or obligation of Buyer
to accept for employment, or otherwise continue the employment of, any of
Seller's employees, and no employee shall be a third-party beneficiary of
this Agreement.
(iii) Seller shall pay all wages, salaries, commissions, and
the cost of all fringe benefits provided to its employees which shall have
become due for work performed as of and through the day preceding the
Closing Date, and Seller shall collect and pay all Taxes in respect of
such wages, salaries, commissions and benefits.
(iv) Seller acknowledges and agrees that Buyer shall not
acquire any rights or interests of Seller in, or assume or have any
obligations or liabilities of Seller under, any benefit plans maintained
by, or for the benefit of any employees of Seller prior to the Closing
Date, including, without limitation, obligations for severance or vacation
accrued but not taken as of the Closing Date.
1.4 The Closing. The transactions contemplated by this Agreement shall
take place at a closing (the "Closing") to be held at 10:00 a.m., local time, at
the offices of Xxxxxxx, Procter & Xxxx LLP, on the date of this Agreement or at
such other time and place as shall be mutually agreed upon in writing by Buyer
and Seller (the "Closing Date").
1.5 Purchase Price. In consideration of the sale by Seller to Buyer of the
Assets, and subject to the assumption by Buyer of the Assumed Liabilities and
satisfaction of the conditions contained herein, Buyer shall pay at the Closing
an amount (as adjusted in accordance with Section 1.6 below, the "Purchase
Price") equal to $1,000,000 as follows:
(a) Buyer shall deliver the sum of $900,000 minus the sum of the
Debt Repayment Amount as set forth in Schedule 1.5(a) (the "Debt Repayment
Amount") and the
4
Estimated Adjustment (as such term is hereinafter defined) to Seller by bank
cashier's check or bank wire transfer pursuant to payment instructions delivered
by Seller to Buyer at the Closing; and
(b) Buyer shall deposit the sum of $100,000 (the "Escrow Deposit")
with Boston Safe Deposit and Trust Company as Escrow Agent under the Escrow
Agreement in the form attached hereto as Exhibit A (the "Escrow Agreement"). The
Escrow Deposit shall be held, administered and distributed in accordance with
the terms of the Escrow Agreement, and shall be Buyer's remedy for any
Disconnects (as defined in the Escrow Agreement) post-Closing and for any
indemnification claims made pursuant to Section 10 hereof.
(c) Buyer shall deliver the Debt Repayment Amount to Deposit
Guaranty National Bank by bank wire transfer pursuant to payment instructions
delivered by Seller to Buyer at the Closing.
1.6 Adjustments to Purchase Price.
(a) The Purchase Price shall be adjusted dollar for dollar by the
amount, if any, by which the Working Capital of the Seller as of the Closing
Date (the "Closing Working Capital") differs from the Seller's Working Capital
as of October 31, 1998 (the "Working Capital Adjustment Amount"). If the
Seller's Working Capital as of the Closing Date exceeds the Seller's Working
Capital as of October 31, 1998 the Aggregate Purchase Price shall be increased
by an amount (an "Excess") equal to the Working Capital Adjustment Amount. If
the Seller's Working Capital as of the Closing Date is less than the Seller's
Working Capital as of October 31, 1998, the Aggregate Purchase Price shall be
decreased by an amount (a "Deficiency") equal to the Working Capital Adjustment
Amount. For purposes of this Agreement, "Working Capital" shall mean the
Seller's Assumed Current Assets minus its Assumed Current Liabilities and
Accrued Expenses.
(b) The Purchase Price shall be decreased, on a dollar for dollar
basis, by the Revenues Adjustment Amount in the event Recurring Revenues for the
month ending February 28, 1999 are less than $70,000 (the "Target Revenues").
For purposes hereof, the term "Revenues Adjustment Amount" shall equal the
product obtained by multiplying (i) $1,100 by (ii) the quotient obtained by
dividing (X) the Annualized Recurring Revenues Deficiency, by (Y) one thousand
dollars ($1,000). For purposes hereof, "Recurring Revenues" shall mean revenues
of Seller from recurring sources, calculated by multiplying the number of
Subscribers as of February 28, 1999 by the average monthly rate in effect for
such Subscribers, by type, excluding one-time set-up fees and other ancillary
charges. For purposes hereof, the term "Annualized Recurring Revenues
Deficiency" shall equal the product of (i) the difference between (A) the Target
Revenues and (B) Recurring Revenues, multiplied by (ii) twelve (12).
(c) (i) Buyer and Seller shall prepare a statement to be attached
hereto as Schedule 1.6(c) (the "Estimated Adjustment Statement") which
sets forth (x)
5
the Company's estimated Working Capital and the amount of any estimated
Deficiency or Excess, as the case may be, as of the Closing Date (the
"Estimated Working Capital Adjustment") and (y) the estimated Revenues
Adjustment Amount (the "Estimated Revenues Adjustment"). The sum of the
Estimated Working Capital Adjustment and the Estimated Revenues Adjustment
shall be hereinafter referred to as the "Estimated Adjustment." The
Purchase Price payable at the Closing shall be increased on a
dollar-for-dollar basis to the extent of any positive Estimated Adjustment
or decreased on a dollar-for-dollar basis to the extent of any negative
Estimated Adjustment, as the case may be, set forth on such Estimated
Adjustment Statement.
(ii) No later than sixty (60) days following the Closing,
Buyer shall prepare and deliver to Seller a statement (the "Final
Adjustment Statement") setting forth the actual Working Capital and the
amount of any actual Deficiency or Excess, as the case may be, as well as
any other changes to the Estimated Adjustment, as of the Closing Date.
Subject to Section 1.6(b)(iii) below, within ten (10) days following the
delivery of such Final Adjustment Statement to Seller, Buyer or Seller, as
the case may be, shall pay to the other party, by wire transfer of
immediately available funds, the difference between the Estimated
Adjustment, as shown on the Estimated Adjustment Statement, and the actual
adjustment, as shown on the Final Adjustment Statement.
(iii) In the event Seller objects to the Final Adjustment
Statement, Seller shall notify Buyer in writing of such objection within
the ten (10) day period following the delivery thereof, stating in such
written objection the reasons therefor and setting forth the Seller's
calculation of Seller's actual Working Capital at the Closing. Upon
receipt by Buyer of such written objection, the parties shall attempt to
resolve the disagreement concerning the Final Adjustment Statement through
negotiation. Notwithstanding any other dispute resolution procedure
provided for in this Agreement, if Buyer and Seller cannot resolve such
disagreement concerning the Final Adjustment Statement within thirty (30)
days following the end of the foregoing 10-day period, the parties shall
submit the matter for resolution to a nationally recognized firm of
independent certified public accountants not affiliated with either party,
with the costs thereof to be shared equally by the parties. Such
accounting firm shall deliver a statement setting forth its own
calculation of the final adjustment to the parties within thirty (30) days
of the submission of the matter to such firm. Any payment shown to be due
by a party on the statement of such accounting firm shall be paid to the
other party promptly but in no event later than five (5) days following
the delivery of such statement by such according firm to the parties.
1.7 Purchase Price Allocation. At the Closing, Buyer and Seller shall
agree on the allocation of the Purchase Price as set forth on Schedule 1.7
attached hereto. Such allocation shall be binding upon Buyer and Seller for all
purposes (including financial accounting purposes, financial and regulatory
reporting purposes and tax purposes). Buyer and Seller each further agrees to
file its Federal income tax returns and its other tax returns reflecting such
allocation, Form 8594 and any other reports required by Section 1060 of the
Code.
6
1.8 Records and Contracts. To the extent not previously provided to Buyer,
at the Closing, Seller shall deliver to Buyer all of the Contracts, with such
assignments thereof and consents to assignments as are necessary to assure Buyer
of the full benefit of the same. Seller shall also deliver to Buyer at the
Closing all of Seller's files and records constituting Assets.
1.9 Sales and Transfer Taxes. All sales, transfer, use, recordation,
documentary, stamp, excise taxes, personal property taxes, fees and duties
(including any real estate transfer taxes) under applicable law incurred in
connection with this Agreement or the transactions contemplated thereby will be
borne and paid by Seller, and Seller shall promptly reimburse Buyer for the
payment of any such tax, fee or duty which Buyer is required to make under
applicable law. Ad valorem personal property taxes on the Subject Assets for
calendar year 1999 shall be pro rated at and as of the Closing Date.
1.10 Transfer of Subject Assets. At the Closing, Seller shall deliver or
cause to be delivered to Buyer good and sufficient instruments of transfer
transferring to Buyer title to all of the Assets, together with all required
consents. Such instruments of transfer (a) shall contain appropriate warranties
and covenants which are usual and customary for transferring the type of
property involved under the laws of the jurisdictions applicable to such
transfers, (b) shall be in form and substance reasonably satisfactory to Buyer
and its counsel, (c) shall effectively vest in Buyer good and marketable title
to all of the Assets free and clear of all Liens (as defined in Section 2.8),
and (d) where applicable, shall be accompanied by evidence of the discharge of
all Liens against the Assets.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SELLER AND
MANAGEMENT SHAREHOLDERS.
In order to induce Buyer to enter into this Agreement, Seller and each of
the Management Shareholders, jointly and severally, hereby represent and warrant
to Buyer as follows:
2.1 Organization; Subsidiaries.
(a) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Mississippi. Seller has all
requisite power and authority to conduct its business as it is now conducted or
proposed to be conducted and to own, lease and operate its properties and
assets. The copies of Seller's certificate of incorporation and bylaws each as
amended to date, heretofore delivered to Buyer's counsel are complete and
correct. Seller is not in violation of any term of the certificate of
incorporation and bylaws Seller is duly qualified to do business in the state of
its incorporation, and is not required to be licensed or qualified to conduct
its business or own its property in any other jurisdiction.
(b) Seller has no subsidiaries and does not own any securities
issued by any other business organization or governmental authority, except U.S.
Government securities,
7
bank certificates of deposit and money market accounts acquired as short-term
investments in the ordinary course of its business. Seller does not own or have
any direct or indirect interest in or control over any corporation, partnership,
joint venture or entity of any kind.
2.2 Required Action. All actions and proceedings necessary to be taken by
or on the part of Seller in connection with the transactions contemplated by
this Agreement have been duly and validly taken, and this Agreement and each
other agreement, document and instrument to be executed and delivered by or on
behalf of Seller pursuant to, or as contemplated by, this Agreement
(collectively, the "Seller Documents") has been duly and validly authorized,
executed and delivered by Seller and no other action on the part of Seller or
its officers, directors or shareholders is required in connection therewith.
Each of Seller and the Management Shareholders have full right, authority, power
and capacity to execute and deliver this Agreement and each other Seller
Document and to carry out the transactions contemplated hereby and thereby. This
Agreement and each other Seller Document constitutes, or when executed and
delivered will constitute, the legal, valid and binding obligation of each of
Seller and the Management Shareholders enforceable in accordance with its
respective terms.
2.3 No Conflicts.
(a) The execution, delivery and performance by Seller of this
Agreement and each other Seller Document does not and will not (i) violate any
provision of the certificate of incorporation and bylaws of Seller, in each case
as amended to date, (ii) constitute a violation of, or conflict with or result
in any breach of, acceleration of any obligation under, right of termination
under, or default under, any agreement or instrument to which Seller is a party
or by which Seller or the Assets is bound, (iii) violate any judgment, decree,
order, statute, rule or regulation applicable to Seller or the Assets, (iv)
require Seller to obtain any approval, consent or waiver of, or to make any
filing with, any person or entity (governmental or otherwise) that has not been
obtained or made or (v) result in the creation or imposition of any Lien on any
of the Assets.
(b) The execution, delivery and performance by each of the
Management Shareholders of this Agreement and each other Seller Document does
not and will not (i) constitute a violation of, or conflict with or result in
any breach of, acceleration of any obligation under, right of termination under,
or default under, any agreement or instrument to which any or all of the
Management Shareholders are a party or by which any or all of the Management
Shareholders are bound, (ii) violate any judgment, decree, order, statute, rule
or regulation applicable to the Management Shareholders, (iii) require the
Management Shareholders to obtain any approval, consent or waiver of, or to make
any filing with, any person or entity (governmental or otherwise) that has not
been obtained or made, or (iv) result in the creation or imposition of any Lien
on any of the Assets.
8
2.4 Taxes.
(a) Seller has paid or caused to be paid all federal, state, local,
foreign and other taxes, including, without limitation, income taxes, estimated
taxes, alternative minimum taxes, excise taxes, sales taxes, use taxes,
value-added taxes, gross receipts taxes, franchise taxes, capital stock taxes,
employment and payroll-related taxes, withholding taxes, stamp taxes, transfer
taxes, windfall profit taxes, environmental taxes and property taxes, whether or
not measured in whole or in part by net income, and all deficiencies, or other
additions to tax, interest, fines and penalties owed by it (collectively,
"Taxes"), required to be paid by it through the date hereof whether disputed or
not, provided that all ad valorem personal property taxes on the Subject Assets
for calendar year 1999 shall be pro rated between Buyer and Seller at and as of
the Closing Date.
(b) Seller has in accordance with applicable law filed all federal,
state, local and foreign tax returns required to be filed by it through the date
hereof, and all such returns correctly and accurately set forth the amount of
any Taxes relating to the applicable period. A list of all federal, state, local
and foreign income tax returns filed with respect to Seller for taxable periods
ended on or after December 31, 1993, is set forth in Schedule 2.4 attached
hereto. Seller has delivered to Buyer correct and complete copies of all
federal, state, local and foreign income tax returns listed on said schedule,
and of all examination reports and statements of deficiencies assessed against
or agreed to by Seller with respect to said returns.
(c) Neither the Internal Revenue Service nor any other governmental
authority is now asserting or, to the knowledge of Seller or the Management
Shareholders, threatening to assert against Seller any deficiency or claim for
additional Taxes. To the knowledge of Seller and the Management Shareholders, no
claim has ever been made by an authority in a jurisdiction where Seller does not
file reports and returns that Seller is or may be subject to taxation by that
jurisdiction. There are no security interests on any of the Assets of Seller
that arose in connection with any failure (or alleged failure) to pay any Taxes.
Seller has never entered into a closing agreement pursuant to Section 7121 of
the Internal Revenue Code of 1986, as amended (the "Code")
(d) There has not been any audit of any tax return filed by Seller,
no audit of any tax return of Seller is in progress, and Seller has not been
notified by any tax authority that any such audit is contemplated or pending. No
extension of time with respect to any date on which a tax return was or is to be
filed by Seller is in force, and no waiver or agreement by Seller is in force
for the extension of time for the assessment or payment of any Taxes.
(e) Seller has never been (and has never had any liability for
unpaid Taxes because it once was) a member of an "affiliated group" (as defined
in Section 1504(a) of the Code). Seller has never filed, and has never been
required to file, a consolidated, combined or unitary tax return with any other
entity. Seller does not own and has never owned a direct or indirect interest in
any trust, partnership, corporation or other entity and therefore Buyer is not
acquiring from Seller an interest in any entity. Seller is not a party to any
tax sharing agreement.
9
(f) Seller is not a "foreign person" within the meaning of Section
1445 of the Code and Treasury Regulations Section 1.1445-2.
(g) For purposes of this Agreement, all references to Sections of
the Code shall include any predecessor provisions to such Sections and any
similar provisions of federal, state, local or foreign law.
2.5 Compliance with Laws. Seller's operation of the Business and the
Assets is in compliance in all material respects with all applicable statutes,
ordinances, orders, rules and regulations promulgated by any federal, state,
municipal or other governmental authority (including the Federal Communications
Commission), and Seller has not received notice of a violation or alleged
violation of any such statute, ordinance, order, rule or regulation.
2.6 Insurance. The physical properties and tangible Assets are insured to
the extent disclosed in Schedule 2.6 attached hereto, and all insurance policies
and arrangements of Seller in effect as of the date hereof are disclosed in said
Schedule. Said insurance policies and arrangements are in full force and effect,
all premiums with respect thereto are currently paid, and Seller is in
compliance in all material respects with the terms thereof. Said insurance is
customary for the business engaged in by Seller and is sufficient for compliance
by Seller with all requirements of law and all agreements and leases to which
Seller is a party.
2.7 Contracts. The Contracts constitute all leases, contracts and
arrangements, whether oral or written, under which Seller is bound or to which
Seller is a party which relate to the Business or Assets. Schedule 1.1(b)
attached hereto contains a true, correct and complete list of all Contracts.
With respect to each oral agreement or understanding involving the Business,
Seller has provided a written summary of the material terms of each such
agreement or understanding on Schedule 1.1(b). Each Contract is valid, in full
force and effect and binding upon Seller and the other parties thereto in
accordance with its terms. Neither Seller nor, to the knowledge of Seller and
the Management Shareholders, any other party is in default under or in arrears
in the performance, payment or satisfaction of any agreement or condition on its
part to be performed or satisfied under any Contract, nor does any condition
exist that with notice or lapse of time or both would constitute such a default,
and no waiver or indulgence has been granted by any party under any Contract.
Seller has not received notice of, and each of Seller and the Management
Shareholders have no knowledge of, any fact which would result in a termination,
repudiation or breach of any Contract. Seller has provided Buyer with true and
complete copies of all of such Contracts, other than with respect to the oral
agreements or understandings described on Schedule 1.1(b).
2.8 Title. Seller has good and marketable title to all of the Assets free
and clear of all mortgages, pledges, security interests, charges, liens,
restrictions and encumbrances of any kind (collectively, "Liens") whatsoever.
Upon the sale, assignment, transfer and delivery of the Assets to Buyer
hereunder and under the Seller Documents, there will be vested in Buyer good,
marketable and indefeasible title to the Assets, free and clear of all Liens.
The Assets include all of the assets and properties (i) held for use by Seller
to conduct the Business as
10
presently conducted and (ii) necessary or useful for Buyer to operate the
Business in the same manner as such business is currently operated by Seller.
All of the tangible Assets are in reasonably good repair, have been well
maintained and are in good operating condition and will not require any material
modifications or repairs to allow Buyer to operate the business of Seller after
the Closing, ordinary wear and tear excepted. Seller has delivered complete and
true copies of all real property leases (the "Leases") set forth on Schedule
1.1(b). Seller holds good, clear, marketable, valid and enforceable leasehold
interest in the real property subject to the Leases (the "Leased Real
Property"), subject only to the right of reversion of the landlord or lessor
under the Leases, free and clear of all other prior or subordinate interests,
including, without limitation, mortgages, deeds of trust, ground leases, leases,
subleases, assessments, tenancies, claims, covenants, conditions, restrictions,
easements, judgments or other encumbrances or matters affecting title, and free
of encroachments onto or off of the leased real property. There are no material
defects in the physical condition of any improvements constituting a part of the
Leased Real Property, including, without limitation, structural elements,
mechanical systems, roofs or parking and loading areas, and all of such
improvements are in good operating condition and repair, have been well
maintained. All water, sewer, gas, electric, telephone, drainage and other
utilities required by law or necessary for the current or planned operation of
the Leased Real Property have been installed and connected pursuant to valid
permits, and are sufficient to service the Leased Real Property. Seller does not
hold or own a fee interest in any real property.
2.9 No Litigation. Seller is not now involved in nor, to the knowledge of
Seller and the Management Shareholders, is Seller threatened to be involved in
any litigation or legal or other proceedings related to or affecting the
Business or any Asset (including any Intellectual Property) or which would
prevent or hinder the consummation of the transactions contemplated by this
Agreement. Seller has not been operating the Business under, and the Business is
not subject to, any order, injunction or decree of any court of federal, state,
municipal or other governmental department, commission, board, agency or
instrumentality.
2.10 Employees; Labor Matters. Seller employs approximately five (5)
full-time employees and three (3) part-time employees and generally enjoys good
employer-employee relationships. Seller shall provide to Buyer a list of the
employees of Seller in connection with the Business at the Closing, including
the name, date of hire and wages of such employees. Seller is not delinquent in
payments to any of its employees for any wages, salaries, commissions, bonuses
or other direct compensation for any services performed for it to the date
hereof or amounts required to be reimbursed to such employees. Upon termination
of the employment of any of said employees, neither Seller nor Buyer will by
reason of the transactions contemplated hereby or anything done prior to the
Closing be liable to any of said employees for so-called "severance pay" or any
other payments, except as set forth in Schedule 2.10 attached hereto. Seller
does not have any policy, practice, plan or program of paying severance pay or
any form of severance compensation in connection with the termination of
employment, except as set forth in said Schedule. Seller is in compliance in all
material respects with all applicable laws and regulations respecting labor,
employment, fair employment practices, work place safety and health, terms and
conditions of employment, and wages and hours. There are no charges of
employment discrimination or unfair labor
11
practices, nor are there any strikes, slowdowns, stoppages of work, or any other
concerted interference with normal operations existing, pending or, to the
knowledge of Seller and the Management Shareholders, threatened against or
involving Seller. No question concerning representation exists respecting any
group of employees of Seller. No collective bargaining agreement is in effect or
is currently being or is about to be negotiated by Seller. Seller has received
no information to indicate that any of its employment policies or practices is
currently being audited or investigated by any federal, state or local
government agency. Seller is, and at all times since November 6, 1986 has been,
in compliance with the requirements of the Immigration Reform Control Act of
1986.
2.11 Financial Statements. Attached hereto as Schedule 2.11 are copies of
the balance sheet of Seller as at October 31, 1998 (the "Base Balance Sheet")
and the statements of income and expense of Seller for the ten months ended
October 31, 1998 (collectively the "Financial Statements"). The Financial
Statements have been prepared in accordance with generally accepted accounting
principles applied consistently during the periods covered thereby (except for
the absence of footnotes with respect to unaudited financials), are complete and
correct and present fairly and accurately the financial condition of the
Business at the dates of said statements and the results of operations of the
Business for the periods covered thereby. As of the date of the Base Balance
Sheet (the "Base Balance Sheet Date"), Seller had no material liabilities or
obligations of any kind with respect to the Business, whether accrued,
contingent or otherwise, that are not disclosed and adequately reserved against
on the Base Balance Sheet. As of the date hereof and at the Closing, Seller had
and will have no material liabilities or obligations of any kind with respect to
the Business, whether accrued, contingent or otherwise, that are not disclosed
and adequately reserved against on the Base Balance Sheet.
2.12 Business Since the Base Balance Sheet Date. Since the Base Balance
Sheet Date:
(a) there has been no material adverse change in the Business or in
the Assets, operations or financial condition of the Business;
(b) the Business has, in all material respects, been conducted in
the ordinary course of business and in substantially the same manner as it was
conducted before the date of the Base Balance Sheet Date;
(c) there has not been any material obligation or liability
(contingent or other) incurred by Seller with respect to the Business, whether
or not incurred in the ordinary course of business;
(d) there has not been any purchase, sale or other disposition, or
any agreement or other arrangement, oral or written, for the purchase, sale or
other disposition, of any material properties or assets of the Business, whether
or not in the ordinary course of business;
12
(e) there has not been any mortgage, encumbrance or lien placed on
any of the Assets, nor any payment or discharge of a material lien or liability
of Seller which was not reflected on the Base Balance Sheet;
(f) there has not been any damage, destruction or loss, whether or
not covered by insurance, adversely affecting the Business or Assets;
(g) there has not been any change in Seller's pricing, marketing,
customer service, billing, operational or promotional activities in any material
way from that which Seller was providing these activities directly prior to the
Base Balance Sheet Date; and
(h) there has not been any agreement or understanding, whether in
writing or otherwise, for Seller to take any of the actions specified above.
2.13 Licenses. As of the date of this Agreement, Seller is the holder of
all licenses, permits and authorizations with respect to the Business (the
"Authorizations"). The Authorizations constitute all of the licenses, permits
and authorizations required for operation of the Business as now operated. All
of the Authorizations are in full force and effect and no licenses, permits or
authorizations of any governmental department or agency are required for the
operation of the Business which have not been duly obtained. As of the date
hereof, there is not pending or, to the knowledge of Seller and the Management
Shareholders, threatened any action by or before any governmental agency to
revoke, cancel, rescind or modify any of the Authorizations, and there is not
now issued or outstanding or, to the knowledge of Seller and the Management
Shareholders, pending or threatened any order to show cause, notice of
violation, notice of apparent liability, or notice of forfeiture or complaint
against Seller with respect to the Business.
2.14 Approvals; Consents. Except as set forth on Schedule 2.14 attached
hereto, no approval, consent, authorization or exemption from or filing with any
person or entity not a party to this Agreement is required to be obtained or
made by Seller in connection with the execution and delivery of this Agreement
and the Seller Documents and the consummation of the transactions contemplated
hereby and thereby. Except as set forth in Schedule 2.14, all of the approvals,
consents and authorizations listed on Schedule 2.14 shall be obtained by Seller
at or prior to the Closing.
2.15 Customers and Suppliers. To Seller's knowledge, there are no
threatened claims or controversies with any customer or suppliers material to
the Assets or the Business.
2.16 Subscribers. Schedule 2.16(a) attached hereto sets forth, as of the
date hereof, the subscribers of the Business as listed by class, type and
billing plan. For purposes of this Agreement, the terms "Subscriber" shall mean
any active subscriber to Internet services offered by Seller in the Business who
has subscribed to a service for at least one month and has paid at least one
xxxx, including, without limitation, any person who receives dial-up Internet
access through the Business (a "Dial-up Subscriber"), any person who receives
dedicated Internet access from Seller offering higher data transmission rates
than available
13
from dial-up access (a "Dedicated Subscriber"), and any person with a web page
or domain name on Seller's server and to whom Seller provides Internet access (a
"Web-hosting/Domain-hosting Subscriber"); provided, however, that "Subscriber"
shall not include any person who is (i) more than thirty (30) days delinquent in
payment of such person's xxxx for such services provided by the Business and
(ii) any person receiving complimentary Internet services or Internet services
at a promotional discounted rate. Set forth on Schedule 2.16(b) attached hereto
is a listing of all such accounts which receive complimentary Internet services
or Internet services at a promotional discounted rate. Set forth on Schedule
2.16(c) attached hereto is Seller's policy and practice with respect to the
disconnection of Subscribers, with which Seller has, except as set forth on
Schedule on Schedule 2.16(c), at all times since its inception, complied in all
material respects.
2.17 Brokers. Seller has not retained any broker or finder or other person
who would have any valid claim against any of the parties to this Agreement for
a commission or brokerage fee in connection with this Agreement or the
transactions contemplated hereby.
2.18 Collectibility of Accounts Receivable. All of the Accounts Receivable
of Seller are or will be as of the Closing Date bona fide, valid and enforceable
claims, subject to no setoff or counterclaim and Seller has no actual notice
that any of the accounts receivable are uncollectible in accordance with their
terms. Seller has no accounts or loans receivable from any person, firm or
corporation which is affiliated with Seller or from any director, officer or
employee of Seller, or from any of their respective spouses or family members.
2.19 Banking Relations. All of the arrangements which Seller has with any
banking institution and which will be assigned to Buyer under Section 1.1(h) are
completely and accurately described in Schedule 2.19 attached hereto, indicating
with respect to each of such arrangements the type of arrangement maintained
(such as checking account, borrowing arrangements, safe deposit box, etc.) and
the person or persons authorized in respect thereof.
2.20 Intellectual Property.
14
(a) Set forth on Schedule 2.20 attached hereto are all computer
programs and related documentation sold, marketed, licensed and distributed by
Seller (the "Products"). All of the Intellectual Property of Seller is set forth
on Schedule 2.20 attached hereto. For purposes hereof, the term "Intellectual
Property" includes: (i) all patents, patent applications, patent rights, and
inventions and discoveries and invention disclosures (whether or not patented)
(collectively, "Patents"); (ii) Seller's rights to the names "CrossRoads
Access," "xxx.xxxxxxxxx.xxx," "xxx0.xxxxxxxxx.xxx" and
"http//xxxxxxx.xxxxxxxxx.xxx," all trade names, trade dress, logos, packaging
design, slogans, any and all Internet domain names used or useful in the
business of Seller, registered and unregistered trademarks and service marks and
applications (collectively, "Marks"); (iii) all copyrights in both published and
unpublished works, including, without limitation, all compilations, databases
and computer programs, and all copyright registrations and applications, and all
derivatives, translations, adaptations and combinations of the above
(collectively, "Copyrights"), (iv) all know-how, trade secrets, confidential or
proprietary information, customer lists, IP addresses, research in progress,
algorithms, data, designs, processes, formulae, drawings, schematics,
blueprints, flow charts, models, prototypes, techniques, Beta testing procedures
and Beta testing results (collectively, "Trade Secrets"); (v) Seller's web-sites
(including the domain names "xxx.xxxxxxxxx.xxx," "xxx0.xxxxxxxxx.xxx,"
"http//xxxxxxx.xxxxxxxxx.xxx" and any other similar domain names); (vi) all
goodwill, franchises, licenses, permits, consents, approvals, technical
information, telephone numbers, and claims of infringement against third parties
(the "Rights"); and (vii) all contracts relating to the Products and the
Intellectual Property to which Seller is a party or is bound, including, without
limitation, all nondisclosure and/or confidentiality agreements entered into by
persons in connection with disclosures by Seller (collectively,"Assigned
Contracts").
(b) Except as described in Schedule 2.20, Seller has exclusive
ownership of, and has good, valid and marketable title to, all of the
Intellectual Property, free and clear of any Liens, and has the right to use all
of the Intellectual Property without payment to any third party. Seller's rights
in all of such Intellectual Property are freely transferable. There are no
claims or demands pending or, to the knowledge of Seller and the Management
Shareholders, threatened of any other person pertaining to any of such
Intellectual Property and no proceedings have been instituted, or are pending
or, to the knowledge of Seller and the Management Shareholders, threatened
against Seller and/or its officers, employees and consultants which challenge
the validity and enforceability of Seller's rights in respect of the
Intellectual Property. The Intellectual Property constitutes all of the assets
of Seller used in designing, creating and developing the Products, and represent
all of such Intellectual Property necessary for the operation of Seller's
Business as currently conducted.
All former and current employees, consultants and contractors of Seller
have executed written instruments with Seller that assign to Seller all rights
to any inventions, improvements, discoveries, or information relating to the
business of Seller. No employee, consultant or contractor of Seller has entered
into any agreement that restricts or limits in any way the scope or type of work
in which the employee, consultant or contractor may be engaged or requires the
employee, consultant or contractor to transfer, assign, or disclose information
concerning his work to anyone other than Seller.
15
(c) Schedule 2.20 sets forth a complete and accurate list and
summary description of all of Seller's Patents. All of the issued Patents are
currently in compliance with formal legal requirements (including without
limitation payment of filing, examination and maintenance fees and proofs of
working or use), are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within ninety (90) days after
the Closing Date. In each case where a Patent is held by Seller by assignment,
the assignment has been duly recorded with the U.S. Patent and Trademark Office
and all other jurisdictions of registration. No Patent has been or is now
involved in any interference, reissue, re- examination or opposition proceeding.
To the knowledge of Seller and the Management Shareholders, there is no
potentially interfering Patent of any third party. All products made, used or
sold under the Patents have been marked with the proper patent notice.
(d) Schedule 2.20 sets forth a complete and accurate list and
summary description of all of Seller's Marks. All Marks that have been
registered with the United States Patent and Trademark Office and/or any other
jurisdiction are currently in compliance with formal legal requirements
(including, without limitation, the timely post-registration filing of
affidavits of use and incontestability and renewal applications), are valid and
enforceable, and are not subject to any maintenance fees or taxes or actions
falling due within ninety (90) days after the Closing Date. In each case where a
Trademark is held by Seller by assignment, the assignment has been duly recorded
with the U.S. Patent and Trademark Office and all other jurisdictions of
registration. No Xxxx has been or is now involved in any opposition,
invalidation or cancellation proceeding and, to the knowledge of Seller and the
Management Shareholders, no such action is threatened with respect to any of the
Marks. All products and materials containing a Xxxx xxxx the proper notice where
permitted by law.
(e) Schedule 2.20 sets forth a complete and accurate list and
summary description of all of Seller's Copyrights. All the Copyrights have been
registered with the United States Copyright Office and are currently in
compliance with formal legal requirements, are valid and enforceable, and are
not subject to any fees or taxes or actions falling due within ninety (90) days
after the Closing Date. In each case where a Copyright is held by Seller by
assignment, the assignment has been duly recorded with the U.S. Copyright Office
and all other jurisdictions of registration. None of the source or object code,
algorithms, or structure included in the Products is copied from, based upon, or
derived from any other source or object code, algorithm or structure in
violation of the rights of any third party. Any substantial similarity of the
Products to any computer program owned by any third party did not result from
the Products being copied from, based upon, or derived from any such computer
software program in violation of the rights of any third party. All copies of
works encompassed by the Copyrights have been marked with the proper copyright
notice.
(f) Seller has taken all reasonable security measures (including,
without limitation, entering into appropriate confidentiality and non-disclosure
agreements with all officers, directors, employees, consultants and contractors
of Seller and any other persons with access to the Trade Secrets) to protect the
secrecy, confidentiality and value of all Trade Secrets. To the knowledge of
Seller and the Management Shareholders, there has not been
16
any breach by any party to any such confidentiality or non-disclosure agreement.
The Trade Secrets have not been disclosed by Seller to any person or entity
other than employees or contractors of Seller who had a need to know and use the
Trade Secrets in the course of their employment or contract performance. Except
as set forth on Schedule 2.20, (i) Seller has not directly or indirectly granted
any rights or interests in the source code of the Products, and (ii) since
Seller developed the source code of the Products, Seller has not provided,
licensed or disclosed the source code of the Products to any person or entity.
Seller has the right to use, free and clear of claims of third parties, all
Trade Secrets. To the knowledge of Seller and the Management Shareholders, there
is not any assertion that the use by Seller of any Trade Secret violates the
rights of any third party.
(g) Seller has the exclusive right to use, license, distribute,
transfer and bring infringement actions with respect to the Intellectual
Property. Seller has not licensed or granted to anyone rights of any nature to
use any of its Intellectual Property and is not obligated to and does not pay
royalties or other fees to anyone for its ownership, use, license or transfer of
any of its Intellectual Property.
(h) All licenses or other agreements under which Seller is granted
rights by others in Intellectual Property are listed in Schedule 2.20. All such
licenses or other agreements are in full force and effect, to the knowledge of
Seller and the Management Shareholders there is no material default by any party
thereto, and all of the rights of Seller thereunder are freely assignable. True
and complete copies of all such licenses or other agreements, and any amendments
thereto, have been provided to Buyer, and Seller has no reason to believe that
the licensors under the licenses and other agreements under which Seller is
granted rights and has granted rights to others do not have and did not have all
requisite power and authority to grant the rights purported to be conferred
thereby.
(i) All licenses or other agreements under which Seller has granted
rights to others in Intellectual Property are listed in Schedule 2.20. All such
licenses or other agreements are in full force and effect, and to the knowledge
of Seller and the Management Shareholders there is no material default by any
party thereto. True and complete copies of all such licenses or other
agreements, and any amendments thereto, have been provided to Buyer.
(j) The Products perform in accordance with their published
specifications and documentation and as Seller has warranted to its customers.
Seller has reviewed the areas within its businesses and operations which could
be adversely affected by, and has developed a program to address on a timely
basis, the "Year 2000 Problem" (i.e., the risk that applications used by Seller
or its suppliers and/or providers may be unable to recognize and properly
perform date-sensitive functions involving certain dates prior to and any date
after December 31, 1999). Seller and the Management Shareholders reasonably
believe that the "Year 2000 Problem" will not have any material adverse effect
on the business or operations of Seller.
17
2.21 Absence of Restrictions. Seller has not entered into any other
agreement or arrangement with any other party with respect to the sale, transfer
or any other disposition or encumbrance of the Business or the Assets, in whole
or in part.
2.22 Transactions with Interested Persons. Except as set forth in Schedule
2.22 hereto, neither Seller, nor any shareholder, officer, supervisory employee
or director of Seller or, to the knowledge of Seller or the Management
Shareholders, any of their respective spouses or family members owns directly or
indirectly on an individual or joint basis any material interest in, or serves
as an officer or director or in another similar capacity of, any competitor or
supplier of Seller, or any organization which has a material contract or
arrangement with Seller.
2.23 Employee Benefit Programs.
(a) Schedule 2.23 sets forth a list of every Employee Program that
has been maintained by the Seller or an Affiliate at any time during the
six-year period ending on the Closing Date. Each Employee Program which has ever
been maintained by the Seller or an Affiliate and which has been intended to
qualify under Section 401(a) or 501(c)(9) of the Internal Revenue Code of 1986,
as amended (the "Code") has received a favorable determination or approval
letter from the Internal Revenue Service ("IRS") regarding its qualification
under such section and has, in fact, been qualified under the applicable section
of the Code from the effective date of such Employee Program through and
including the Closing Date (or, if earlier, the date that all of such Employee
Program's assets were distributed). No event or omission has occurred which
would cause any such Employee Program to lose its qualification or otherwise
fail to satisfy the relevant requirements to provide tax-favored benefits under
the applicable Code Section (including without limitation Code Sections 105,
125, 401(a) and 501(c)(9)). With respect to any Employee Program ever maintained
by the Seller or any Affiliate, there has been no (i) "prohibited transaction,"
as defined in Section 406 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") or Code Section 4975, or (ii) failure to comply with
any provision of ERISA, other applicable law, or any agreement which, in the
case of either of (i) or (ii), could subject the Seller or any Affiliate to
liability either directly or indirectly (including, without limitation, through
any obligation of indemnification or contribution) for any damages, penalties,
or taxes, or any other loss or expense. All payments and/or contributions
required to have been made (under the provisions of any agreements or other
governing documents or applicable law) with respect to all Employee Programs
ever maintained by the Seller or any Affiliate, for all periods prior to the
Closing Date, either have been made or have been accrued (and all such unpaid
but accrued amounts are described on Schedule 2.23). Each Employee Program ever
maintained by the Seller or an Affiliate has complied with the applicable
notification and other applicable requirements of the Consolidated Omnibus
Budget Reconciliation Act of 1985.
(b) Neither the Seller nor any Affiliate (A) has ever maintained any
Employee Program which has been subject to title IV of ERISA or Code Section
412, including, but not limited to, any Multiemployer Plan (as defined in
Section 3(37) of ERISA)
18
or (B) has ever provided health care or any other non-pension benefits to any
employees after their employment is terminated (other than as required by part 6
of subtitle B of title I of ERISA) or has ever promised to provide such
post-termination benefits.
(c) For purposes of this section:
(i) "Employee Program" means all employee benefit plans within
the meaning of ERISA Section 3(3) as well as all other employee benefit
plans, agreements and arrangements of any kind.
(ii) An entity "maintains" an Employee Program if such entity
sponsors, contributes to, or provides benefits under or through such
Employee Program, or has any obligation (by agreement or under applicable
law) to contribute to or provide benefits under or through such Employee
Program, or if such Employee Program provides benefits to or otherwise
covers employees of such entity (or their spouses, dependents, or
beneficiaries).
(iii) An entity is an "Affiliate" of the Seller if it would
have ever been considered a single employer with the Seller under ERISA
Section 4001(b) or part of the same "controlled group" as the Seller for
purposes of ERISA Section 302(d)(8)(C).
2.24 Environmental Matters.
(a) Except as set forth in Schedule 2.24, (i) Seller has not
generated, transported, used, stored, treated, disposed of, or managed any
Hazardous Waste (as defined below) at any time; (ii) no Hazardous Material (as
defined below) has ever been or is threatened to be spilled, released, or
disposed of at any site associated with a structure presently or formerly owned,
operated, leased, or used by Seller, or has ever been located in the soil or
groundwater at any such site; (iii) no Hazardous Material has ever been
transported from any site associated with a structure presently or formerly
owned, operated, leased, or used by Seller for treatment, storage, or disposal
at any other place; (iv) Seller does not presently own, operate, lease, or use,
and has not previously owned, operated, leased, or used any site associated with
a structure on which underground storage tanks are or were located; and (v) no
lien has ever been imposed by any governmental agency on any property, facility,
machinery, or equipment owned, operated, leased, or used by either Seller in
connection with the presence of any Hazardous Material.
(b) Except as set forth in Schedule 2.24, (i) Seller does not have
any liability under, nor has it ever violated, any Environmental Law (as defined
below); (ii) Seller, nor any property associated with a structure owned,
operated, leased, or used by Seller, nor facilities or operations thereon are
presently not in compliance with all applicable Environmental Laws; (iii) Seller
has not entered into or been subject to any judgment, consent decree, compliance
order, or administrative order with respect to any environmental or health and
safety matter or received any request for information, notice, demand letter,
19
administrative inquiry, or formal or informal complaint or claim with respect to
any environmental or health and safety matter or the enforcement of any
Environmental Law; and (iv) neither Seller nor any Management Stockholder has
any knowledge or reason to know that any of the items enumerated in clause (iii)
of this subsection will be forthcoming.
(c) For purposes of this Agreement, (i) "Hazardous Material" shall
mean and include any hazardous waste, hazardous material, hazardous substance,
petroleum product, oil, toxic substance, pollutant, contaminant, or other
substance which may pose a threat to the environment or to human health or
safety, as defined or regulated under any Environmental Law; (ii) "Hazardous
Waste" shall mean and include any hazardous waste as defined or regulated under
any Environmental Law; and (iii) "Environmental Law" shall mean any
environmental or health and safety-related law, regulation, rule, ordinance, or
By-law at the foreign, federal, state, or local level, whether existing as of
the date hereof, previously enforced, or subsequently enacted.
2.25 Disclosure. The representations, warranties and statements contained
in this Agreement and in the certificates, exhibits and schedules delivered by
Seller and the Management Shareholders to Buyer pursuant to this Agreement do
not contain any untrue statement of a material fact, and, when taken together,
do not omit to state a material fact required to be stated therein or necessary
in order to make such representations, warranties or statements not misleading
in light of the circumstances under which they were made. There are no facts
known to Seller or the Management Shareholders which presently or may in the
future have a material adverse affect on the Business, properties, Assets,
prospects, operations or (financial or other) condition of Seller which has not
been specifically disclosed herein or in a Schedule furnished herewith, other
than general economic conditions affecting the Internet services industry
generally.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF BUYER.
As a material inducement to Seller entering into this Agreement, Buyer
hereby represents and warrants to Seller as follows:
3.1 Organization. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Buyer has all
requisite power and authority to conduct its business as it is now conducted and
to own, lease and operate its properties and assets.
3.2 Required Action; Authority. All actions and proceedings necessary to
be taken by or on the part of Buyer in connection with the transactions
contemplated by this Agreement have been duly and validly taken, and this
Agreement and each other agreement, document and instrument to be executed and
delivered by or on behalf of Buyer pursuant to, or as contemplated by, this
Agreement (collectively, the "Buyer Documents") has been duly and validly
authorized, executed and delivered by Buyer. Buyer has full right, authority,
power
20
and capacity to execute and deliver this Agreement and each other Buyer Document
and to carry out the transactions contemplated hereby and thereby. This
Agreement and each other Buyer Document constitutes, or when executed and
delivered will constitute, the legal, valid and binding obligations of Buyer
enforceable in accordance with its respective terms.
3.3 No Conflicts. The execution, delivery and performance by Buyer of this
Agreement and each other Buyer Document does not and will not (a) violate any
provision of the Certificate of Incorporation or bylaws of Buyer, as amended to
date, (b) constitute a violation of, or conflict with or result in any breach
of, acceleration of any obligation under, right of termination under, or default
under, any agreement or instrument to which Buyer is a party or by which it is
bound, (c) violate any judgment, decree, order, statute, rule or regulation
applicable to Buyer, (d) require Buyer to obtain any approval, consent or waiver
of, or to make any filing with, any person or entity (governmental or otherwise)
that has not been obtained or made. The officers who execute this Agreement and
the other Buyer Documents contemplated hereby on behalf of Buyer have and shall
have all requisite power to do so in the name of and on behalf of Buyer.
3.4 Brokers. Buyer has not retained any broker or finder or other person
who would have any valid claim against any of the parties to this Agreement for
a commission or brokerage fee in connection with this Agreement or the
transactions contemplated hereby.
SECTION 4. COVENANTS OF SELLER.
Seller covenants and agrees that, from the date hereof until consummation
of the transactions contemplated hereby at the Closing, Seller shall:
4.1 Confidentiality. Seller agrees that it and its representatives will
hold in strict confidence, and will not use, any confidential or proprietary
data or information obtained from Buyer with respect to its business or
financial condition except for the purpose of evaluating, negotiating and
completing the transactions contemplated hereby. Information generally known in
Buyer's industry or which has been disclosed to Seller by third parties which
have a right to do so shall not be deemed confidential or proprietary
information for purposes of this Agreement. If the transactions contemplated by
this Agreement are not consummated, Seller will return, and cause its respective
officers, directors, agents and representatives to return, to Buyer (or certify
that they have destroyed) all copies of such data and information made available
to Seller (and its officers, directors, agents and representatives) in
connection with the transaction.
4.2 Use of Trade Names. After the Closing Date, neither Seller, nor any
person controlling, controlled by or under common control with Seller will for
any reason, directly or indirectly, for itself or any other person, (a) use the
names "CrossRoads Access," "xxxxxxxxx.xxx," "xxx0.xxxxxxxxx.xxx,"
"http//xxxxxxx.xxxxxxxxx.xxx," or any other Internet domain name used or useful
in the business of Seller, or any other or (b) use or
21
disclose any trade secrets, confidential information, know-how, proprietary
information or other intellectual property of Seller transferred pursuant to
this Agreement.
4.3 Post-Closing Transitional Matters. For a period of ninety (90) days
following the Closing, Seller shall provide, without additional cost to Buyer,
such assistance as is reasonably requested by Buyer in order to effect an
orderly transition in the ownership and operation of the Assets; provided,
however, such post-Closing assistance shall not, in any event, exceed ten (10)
hours per week.
4.4 Collection of Assets. Subsequent to the Closing, Buyer shall have the
right and authority to collect all receivables and other items transferred and
assigned to Buyer by Seller hereunder and to endorse with the name of Seller any
checks received on account of such receivables or other items, and Seller agrees
that it will promptly transfer or deliver to Buyer from time to time, any cash
or other property that such Seller may receive with respect to any claims,
contracts, licenses, leases, commitments, sales orders, purchase orders,
receivables of any character or any other items included in the Subject Assets.
4.5 Payment of Obligations. Seller shall pay all of the Excluded
Liabilities in the ordinary course of business as they become due.
4.6 Further Assurances. Seller, from time to time after the Closing at the
request of Buyer and without further consideration, shall execute and deliver
further instruments of transfer and assignment and take such other action as
Buyer may reasonably require to more effectively transfer and assign to, and
vest in, Buyer the Assets free and clear of all Liens (as defined in Section
2.8). Any such documents must be acceptable to Seller's counsel and not seek to
enlarge any responsibility, obligation, or otherwise, of Seller arising
hereunder.
4.7 Change of Name Filing. Seller shall file, within five (5) business
days after the Closing Date, an amendment to its certificate of incorporation
and any other required documentation necessary to effect a change of Seller's
name.
SECTION 5. COVENANTS OF BUYER.
Buyer covenants and agrees that, from the date hereof until consummation
of the transactions contemplated hereby at the Closing, Buyer shall:
5.1 Confidentiality. Buyer agrees that it and its representatives will
hold in strict confidence, and will not use, any confidential or proprietary
data or information obtained from Seller with respect to its business or
financial condition except for the purpose of evaluating, negotiating and
completing the transactions contemplated hereby. Information generally known in
Seller's industry or which has been disclosed to Buyer by third parties which
have a right to do so shall not be deemed confidential or proprietary
information for purposes of this Agreement. If the transactions contemplated by
this Agreement are not consummated, Buyer will return, and cause its respective
officers, directors, agents and representatives to return, to
22
Seller (or certify that they have destroyed) all copies of such data and
information made available to Buyer (and its officers, directors, agents and
representatives) in connection with the transaction.
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATION OF BUYER.
Buyer's obligation to consummate the transactions contemplated by this
Agreement is subject to the satisfaction, on or prior to the Closing Date, of
each of the following conditions, unless otherwise waived by Buyer in writing:
6.1 Performance of Agreements and Deliveries. Seller shall have performed
in all material respects all of its covenants, agreements and obligations under
this Agreement which are to be performed or complied with by Seller prior to or
upon the Closing Date and shall have delivered all documents and items required
to be delivered at or prior to the Closing, including, without limitation:
(a) A certificate, dated the Closing Date, from the President of
Seller to the effect that the conditions set forth in Sections 6.1, 6.2 and 6.7
have been satisfied;
(b) A certificate, dated the Closing Date, from Seller's Secretary
as to the certificate of incorporation, bylaws, authority and the incumbency of
all officers executing the Seller Documents on behalf of Seller;
(c) A certified copy of Seller's certificate of incorporation from
the Secretary of State of the State of Mississippi;
(d) A certificate of good standing from the Secretary of State of
the State of Mississippi; and
(e) Such other certificates and instruments reasonably requested by
Buyer and acceptable to Seller's counsel
6.2 Asset Transfer. Seller shall have delivered to Buyer the following
instruments of transfer and assignment in accordance with the provisions hereof,
transferring to Buyer all of Seller's right, title and interest in and to the
Assets, free and clear of all Liens:
(a) A Xxxx of Sale in the form attached hereto as Exhibit B;
(b) An Assignment and Assumption Agreement in the form attached
hereto as Exhibit C;
(c) An Assignment of Internet Domain Name in the form attached
hereto as Exhibit D; and
23
(d) Such other instruments of transfer reasonably requested by Buyer
and acceptable to Seller's counsel.
6.3 Assignment of Contracts and Authorizations; Approvals. All Contracts
shall have been duly and validly assigned to Buyer by Seller, and all consents
and approvals required in connection with the consummation of the transactions
contemplated hereby under any Contract or Authorization or otherwise shall have
been obtained in form and substance satisfactory to Buyer and without conditions
materially and adversely affecting Buyer and which do not require Buyer to pay
money to any party to any such Contract or Authorization in excess of amounts
required to be so paid pursuant to the terms and conditions thereof. All such
Contracts and Authorizations shall remain in full force and effect and shall not
have been amended, modified or repudiated in any material respect by either
party thereto. Neither Seller nor, to the knowledge of Seller and the Management
Shareholders, the other party thereto, shall have breached or defaulted under
any Contract or Authorization. Seller shall not have received notice of or have
knowledge of any fact which could result in the termination, repudiation or
breach of any Contract or Authorization.
6.4 Escrow Agreement. Seller shall have executed and delivered to Buyer
the Escrow Agreement.
6.5 Non-competition Agreement. Seller and the Management Shareholders
shall have executed and delivered to Buyer a Non-competition Agreement in
substantially the form attached hereto as Exhibit E.
6.6 Release of Liens. Seller shall have obtained and delivered to Buyer at
or prior to the Closing instruments (including payoff letters, bills of sale and
UCC-3 termination statements) releasing any and all Liens on the Assets.
6.7 Subscribers. Seller shall have delivered to Buyer at least 3950
Dial-up Subscribers, one (1) Dedicated Subscriber and fifteen (15)
Web-hosting/Domain-hosting Subscribers, and Seller shall have furnished Buyer
with a certificate, dated as of the Closing Date, to that effect.
6.8 Opinion of Seller's Counsel. Buyer shall have received the opinion or
opinions of Xxxxxxxx, McNutt, Threadgill, Xxxxx & Xxxx, P.A., counsel for
Seller, dated the Closing Date, substantially in the form of Exhibit F attached
hereto.
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATION OF SELLER.
The obligation of Seller to consummate the transactions contemplated by
this Agreement is subject to the satisfaction, on or prior to the Closing Date,
of the following conditions, unless waived by Seller in writing:
24
7.1 Performance of Agreement and Deliveries. Buyer shall have performed in
all material respects all of its covenants, agreements and obligations under
this Agreement which are to be performed or complied with by Buyer prior to or
upon the Closing Date and shall have delivered all documents and items required
to be delivered at or prior to the Closing, including, without limitation:
(a) A certificate, dated the Closing Date, from the President of
Buyer to the effect that the conditions set forth in Sections 7.1 and 7.2 have
been satisfied;
(b) A certificate, dated the Closing Date, from Buyer's Secretary as
to the Certificate of Incorporation, bylaws, authority and the incumbency of all
officers executing the Buyer Documents on behalf of Buyer;
(c) A certified copy of Buyer's Certificate of Incorporation from
the Secretary of State of the State of Delaware; and
(d) A certificate of good standing from the Secretary of State of
the State of Delaware.
7.2 Escrow Agreement. Buyer shall have executed and delivered to Seller
the Escrow Agreement.
7.3 Employment Agreements. Buyer and each of the Management Shareholders
shall have entered into an Employment Agreement in substantially the form of
Exhibit G attached hereto.
SECTION 8. SURVIVAL.
8.1 Survival of Warranties. Each of the representations, warranties,
agreements, covenants and obligations herein or in any schedule, exhibit,
certificate or financial statement delivered by any party to the other party
incident to the transactions contemplated hereby are material, shall be deemed
to have been relied upon by the other party and shall survive the Closing
regardless of any investigation and shall not merge in the performance of any
obligation by either party hereto.
SECTION 9. INDEMNIFICATION.
9.1 Indemnification by Seller and the Management Shareholders.
25
(a) Seller and each of the Management Shareholders hereby agrees,
jointly and severally, to indemnify and hold harmless Buyer, its affiliates and
its and their respective directors, officers, stockholders, partners, members,
employees, and agents (individually, a "Buyer Indemnified Party" and
collectively, "Buyer Indemnified Parties"), against and in respect of all
losses, liabilities, obligations, damages, deficiencies, actions, suits,
proceedings, demands, assessments, orders, judgments, costs and expenses
(including the reasonable fees, disbursements and expenses of attorneys and
consultants) of any kind or nature whatsoever, but net of the proceeds from any
insurance policies or other third party reimbursement for such loss, to the
extent sustained, suffered or incurred by or made against any Buyer Indemnified
Party, to the extent based upon, arising out of or in connection with: (i) any
breach of any representation or warranty made by Seller and the Management
Shareholders in this Agreement or in any schedule, exhibit, certificate,
agreement or other instrument delivered pursuant to this Agreement; (ii) any
breach of any covenant or agreement made by Seller or the Management
Shareholders in this Agreement or in any schedule, exhibit, certificate,
financial statement, agreement or other instrument delivered pursuant to this
Agreement; (iii) any claim made by any person or entity which relates to the
operation of the Assets or the Business which arises in connection with or on
the basis of events, acts, omissions, conditions or any other state of facts
occurring on or existing before the Closing Date; and (iv) any claim which
arises in connection with any liability or obligation of Seller other than the
Assumed Liabilities.
9.2 Indemnification by Buyer. Buyer agrees to indemnify and hold harmless
Seller and its officers, directors, managers, members, employees and agents
(individually, a "Seller Indemnified Party" and collectively, "Seller
Indemnified Parties") at all times against and in respect of all losses,
liabilities, obligations, damages, deficiencies, actions, suits, proceedings,
demands, assessments, orders, judgments, costs and expenses (including the
reasonable fees, disbursements and expenses of attorneys and consultants), of
any kind or nature whatsoever, to the extent sustained, suffered or incurred by
or made against any Seller Indemnified Party, to the extent based upon, arising
out of or in connection with: (A) any breach of any representation or warranty
made by Buyer in this Agreement or in any schedule, exhibit, certificate,
agreement or other instrument delivered pursuant to this Agreement; (B) any
breach of any covenant or agreement made by Buyer in this Agreement or in any
schedule, exhibit, certificate, agreement or other instrument delivered pursuant
to this Agreement; (C) any claim made against Seller which relates to, results
from or arises out of Buyer's operation of the Assets or the Business from and
after the Closing Date; and (D) the Assumed Liabilities.
26
9.3 Notice; Defense of Claims.
(a) Notice of Claims. Promptly after receipt by an indemnified party
of notice of any claim, liability or expense to which the indemnification
obligations hereunder would apply, the indemnified party shall give notice
thereof in writing to the indemnifying party, but the omission to so notify the
indemnifying party promptly will not relieve the indemnifying party from any
liability except to the extent that the indemnifying party shall have been
prejudiced as a result of the failure or delay in giving such notice. Such
notice shall state the information then available regarding the amount and
nature of such claim, liability or expense and shall specify the provision or
provisions of this Agreement under which the liability or obligation is
asserted.
(b) Third Party Claims. With respect to third party claims, if
within twenty (20) days after receiving the notice described in clause (a) above
the indemnifying party gives (i) written notice to the indemnified party stating
that (A) it would be liable under the provisions hereof for indemnity in the
amount of such claim if such claim were successful and (B) that it disputes and
intends to defend against such claim, liability or expense at its own cost and
expense and (ii) provides reasonable assurance to the indemnified party that
such claim will be promptly paid in full if required, then counsel for the
defense shall be selected by the indemnifying party (subject to the consent of
the indemnified party which consent shall not be unreasonably withheld) and the
indemnified party shall not be required to make any payment with respect to such
claim, liability or expense as long as the indemnifying party is conducting a
good faith and diligent defense at its own expense; provided, however, that the
assumption of defense of any such matters by the indemnifying party shall relate
solely to the claim, liability or expense that is subject or potentially subject
to indemnification. The indemnifying party shall have the right, with the
consent of the indemnified party, which consent shall not be unreasonably
withheld, to settle all indemnifiable matters related to claims by third parties
which are susceptible to being settled provided the indemnifying parties'
obligation to indemnify the indemnified party therefor will be fully satisfied.
The indemnifying party shall keep the indemnified party apprised of the status
of the claim, liability or expense and any resulting suit, proceeding or
enforcement action, shall furnish the indemnified party with all documents and
information that the indemnified party shall reasonably request and shall
consult with the indemnified party prior to acting on major matters, including
settlement discussions. Notwithstanding anything herein stated, the indemnified
party shall at all times have the right to fully participate in such defense at
its own expense directly or through counsel; provided, however, if the named
parties to the action or proceeding include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate under applicable standards of professional conduct, the expense
of separate counsel for the indemnified party shall be paid by the indemnifying
party. If no such notice of intent to dispute and defend is given by the
indemnifying party, or if such diligent good faith defense is not being or
ceases to be conducted, the indemnified party shall, at the expense of the
indemnifying party, undertake the defense of (with counsel selected by the
indemnified party), and shall have the right to compromise or settle (exercising
reasonable business judgment), such claim, liability or expense. If such claim,
liability or expense is one
27
that by its nature cannot be defended solely by the indemnifying party, then the
indemnified party shall make available all information and assistance that the
indemnifying party may reasonably request and shall cooperate with the
indemnifying party in such defense.
(c) Non-Third Party Claims. With respect to non-third party claims,
if within twenty (20) days after receiving the notice described in clause (a)
above the indemnifying party does not give written notice to the indemnified
party that it contests such indemnity, the amount of indemnity payable for such
claim shall be as set forth in the indemnified party's notice. If the
indemnifying party provides written notice to the indemnified party within such
20-day period that it contests such indemnity, the parties shall attempt in good
faith to reach an agreement with regard thereto within thirty (30) days of
delivery of the indemnifying party's notice. If the parties cannot reach
agreement within such 30-day period, the matter may be submitted by either party
for binding arbitration in accordance with the provisions of Section 11.10
hereof.
9.4 Claims Against Escrow Deposit. In the event that any Buyer Indemnified
Party sustains or incurs damages, liabilities, losses, taxes, fines, penalties,
costs or expenses, including, without limitation, attorneys fees, for which it
is entitled to indemnification from Seller or the Management Shareholders under
this Agreement, in addition to all other rights or remedies that Buyer may have
(including the right to collect directly from Seller or the Management
Shareholders), such Buyer Indemnified Party shall be entitled to receive in cash
from the Escrow Deposit an amount equal to the damages, liabilities, losses,
taxes, fines, penalties, costs and expenses, including, without limitation,
attorneys fees, sustained or incurred by such Buyer Indemnified Party. In order
to receive payment from the Escrow Deposit such Buyer Indemnified Party shall
first deliver to Seller a written claim for damages arising under or by virtue
of this Agreement specifying the nature of the claim and the type and amount of
damages, liabilities, losses, taxes, fines, penalties, costs and expenses
sustained or incurred by such Buyer Indemnified Party. Within thirty (30)
calendar days of receiving a claim against the Escrow Deposit from or on behalf
of any Buyer Indemnified Party, Seller shall provide a written response to such
Buyer Indemnified Party with a copy to the Escrow Agent, which either accepts or
rejects all or any portion of such Buyer Indemnified Party's claim, the amount
accepted by Seller shall be paid to such Buyer Indemnified Party from the Escrow
Deposit by the Escrow Agent within ten (10) calendar days of the Escrow Agent's
receipt of Seller's acceptance of such Buyer Indemnified Party's claim. If
Seller rejects any portion of such Buyer Indemnified Party's claim, Seller's
written response shall specify the specific reason(s) for the rejection and the
amount, if any, of such Buyer Indemnified Party's claim which is accepted. The
amount of any claim rejected by Seller shall be retained in escrow and
distributed by the Escrow Agent only as directed by a written settlement
agreement signed by both Seller and such Buyer Indemnified Party or in
accordance with an award rendered by an arbitrator(s) in accordance with Section
11.11 of this Agreement.
28
SECTION 10. NOTICES.
All notices and other communications required to be given hereunder, or
which may be given pursuant or relative to the provisions hereof, shall be in
writing and shall be deemed to have been given when delivered in hand or mailed,
postage prepaid, by first class United States mail, certified return receipt
requested as follows:
If to Seller: CrossRoads Access Corporation
------------ 000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xx. Xxxxxxxxx Xxxxxxx
With a copy to: Xxxxxxxx, McNutt, Threadgill, Xxxxx &
Xxxx, P.A.
000 Xxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Xx.
If to Buyer: DURO Communications, Inc.
----------- 000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxx X Xxxxxxx XX
With a copy to: Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxx, P.C.
SECTION 11. MISCELLANEOUS.
11.1 Assignability; Binding Effect. This Agreement shall not be assignable
by Buyer or Seller except with the written consent of the other, except that
Buyer may assign its rights hereunder either (a) to any affiliate of Buyer or
its owners, (b) as a result of any merger, reorganization or other
consolidation, or (c) in connection with the granting of a security interest to
its senior lender. This Agreement shall be binding upon and shall inure to the
benefit of, the parties hereto and their respective successors, and assigns.
11.2 Headings. The subject headings used in this Agreement are included
for purposes of convenience only and shall not affect the construction or
interpretation of any of its provisions.
11.3 Amendments; Waivers. This Agreement may not be amended or modified,
nor may compliance with any condition or covenant set forth herein be waived,
except by a writing
29
duly and validly executed by Buyer and Seller or, in the case of a waiver, the
party waiving compliance. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any such right, power or privilege, or
any single or partial exercise of any such right, power or privilege, preclude
any further exercise thereof or the exercise of any other such right, power or
privilege.
11.4 Bulk Sales Law. Buyer hereby waives compliance by Seller of any
applicable bulk sales law and Seller agrees, to make full and timely payment
when due of all amounts owed by such Seller to its creditors. Seller agrees to
indemnify and hold Buyer harmless from, and reimburse Buyer for, any loss, cost,
expense, liability or damage (including reasonable counsel fees and
disbursements and expenses) which Buyer may suffer or incur by virtue of the
non-compliance by Seller with such laws.
11.5 Entire Agreement. This Agreement, together with the schedules and
exhibits hereto, constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes and cancels any and all
prior or contemporaneous arrangements, understandings and agreements between
them relating to the subject matter hereof.
11.6 Severability. In the event that any provision or any portion of any
provision of this Agreement shall be held to be void or unenforceable, then the
remaining provisions of this Agreement (and the remaining portion of any
provision held to be void or unenforceable in part only) shall continue in full
force and effect.
11.7 Governing Law. This Agreement and the transactions contemplated
hereby shall be governed and construed by and enforced in accordance with the
laws of the State of Mississippi, without regard to conflict of laws principles.
11.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which shall
constitute the same instrument.
11.9 Expenses. Each party shall pay its own expenses incident to the
negotiation, preparation and performance of this Agreement and the transactions
contemplated hereby, including all fees and expenses of its counsel and
accountants for all activities of such counsel and accountants undertaken
pursuant to this Agreement, whether or not the transactions contemplated hereby
are consummated.
11.10 Remedies. It is specifically understood and agreed that certain
breaches of this Agreement will result in irreparable injury to the parties
hereto, that the remedies available to the parties at law alone will be an
inadequate remedy for such breach, and that, in addition to any other legal or
equitable remedies which the parties may have, a party may enforce its rights by
an action for specific performance and the parties expressly waive the defense
that a remedy in damages will be adequate.
30
11.11 Dispute Resolution. Any dispute arising out of or relating to this
Agreement or the breach, termination or validity hereof shall be finally settled
solely and exclusively by arbitration conducted expeditiously in accordance with
the CPR Institute for Dispute Resolution Rules for Nonadministered Arbitration
of Business Disputes (the "CPR Rules"). The CPR Institute for Dispute Resolution
shall appoint a neutral advisor from its National CPR Panel. The arbitration
shall be governed by the United States Arbitration Act, 9 U.S.C. ss.1-16, and
judgment upon the award rendered by the arbitrators may be entered by any court
having jurisdiction thereof. The place of arbitration shall be Boston,
Massachusetts.
Such proceedings shall be administered by the neutral advisor in
accordance with the CPR Rules as he/she deems appropriate, however, such
proceedings shall be guided by the following agreed upon procedures:
(a) Mandatory exchange of all relevant documents, to be accomplished
within forty-five (45) days of the initiation of the procedure;
(b) No other discovery;
(c) Hearings before the neutral advisor which shall consist of a
summary presentation by each side of not more than three hours; such hearings to
take place in one or two days at a maximum; and
(d) Decision to be rendered not later than ten (10) days following
such hearings.
Each of the parties hereto (a) hereby unconditionally and irrevocably
submits to the jurisdiction of any United States District Court of competent
jurisdiction located in the State of Massachusetts for the purpose of enforcing
the award or decision in any such proceeding and (b) hereby waives, and agrees
not to assert in any civil action to enforce the award, any claim that it is not
subject personally to the jurisdiction of the above-named court, that its
property is exempt or immune from attachment or execution, that the civil action
is brought in an inconvenient forum, that the venue of the civil action is
improper or that this Agreement or the subject matter hereof may not be enforced
in or by such court, and (c) hereby waives and agrees not to seek any review by
any court of any other jurisdiction which may be called upon to grant an
enforcement of the judgment of any such court. Each of the parties hereto hereby
consents to service of process by registered mail at the address to which
notices are to be given. Each of the parties hereto agrees that its submission
to jurisdiction and its consent to service of process by mail is made for the
express benefit of the other parties hereto. Final judgment against any party
hereto in any such action, suit or proceeding may be enforced in other
jurisdictions by suit, action or proceeding on the judgment, or in any other
manner provided by or pursuant to the laws of such other jurisdiction; provided,
however, that any party may at its option bring suit, or institute other
judicial proceedings, in any state or federal court of the United States or of
any country or place where the other parties or their assets, may be found.
31
Notwithstanding the foregoing, the parties may enforce their rights under
this Agreement in accordance with Section 11.10.
11.12 Third Party Rights. This Agreement is for the benefit of the parties
hereto and is not entered into for the benefit of, and shall not be construed to
confer any benefit upon, any other party or entity.
32
IN WITNESS WHEREOF, Seller, Management Shareholders and Buyer have caused
this Asset Purchase Agreement to be executed as of the date first above written.
SELLER:
CROSSROADS ACCESS CORPORATION
By: /s/ Xxxxxxxxx Xxxxxxx
----------------------------
Name: Xxxxxxxxx Xxxxxxx
Title: Vice President
MANAGEMENT SHAREHOLDERS:
/s/ Xxxxxx X. Xxxx
-------------------------------
Xxxxxx X. Xxxx
/s/ Xxxxxxxxx Xxxxxxx
-------------------------------
Xxxxxxxxx Xxxxxxx
BUYER:
DURO COMMUNICATIONS, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Name: Xxxxx X. Xxxxxx
Title: President
LIST OF EXHIBITS AND SCHEDULES
SCHEDULES
Exhibit A - Form of Escrow Agreement
Exhibit B - Form of Xxxx of Sale
Exhibit C - Form of Assignment and Assumption Agreement
Exhibit D - Form of Assignment of Internet Domain Name
Exhibit E - Form of Non-competition Agreement
Exhibit F - Form of Opinion of Seller's Counsel
Exhibit G - Form of Employment Agreement
Schedule 1.1(a) Equipment
Schedule 1.1(b) Contracts
Schedule 1.1(c) Intellectual Property
Schedule 1.1(d) Licenses and Authorizations
Schedule 1.1(e) Accounts Receivable
Schedule 1.2(a) Excluded Assets
Schedule 1.2(b) Excluded Contracts
Schedule 1.2(c) Insurance Exclusions
Schedule 1.2(d) Excluded Tax Items
Schedule 1.5(a) Debt Repayment Amount
Schedule 1.6(c) Estimated Adjustment Statement
Schedule 1.7 Allocation of Purchase Price
Schedule 2.4 Taxes
Schedule 2.6 Insurance
Schedule 2.10 Employees; Labor Matters
Schedule 2.11 Financial Statements
Schedule 2.14 Approvals; Consents
Schedule 2.16(a)Subscribers
Schedule 2.16(b)Complimentary Accounts
Schedule 2.16(c)Disconnection Policy
Schedule 2.19 Banking Relations
Schedule 2.20 Intellectual Property
Schedule 2.22 Affiliated Transactions
Schedule 2.23 Employee Benefits
Schedule 2.24 Environmental Matters
