ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "AGREEMENT"), is made and entered into
as of September 1, 2005, by and among All Com USA, Inc., a _______corporation
("SELLER"), UC Hub Group, Inc., a _______ corporation ("PARENT") and American
Fiber Network, Inc., a Delaware corporation ("BUYER").
RECITALS
WHEREAS, Seller is engaged in the business of [Telecom] (the "BUSINESS");
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and
WHEREAS, the Buyer desires to purchase from Seller, and Seller desires to
sell and assign to Buyer certain assets related to the Business on the terms and
conditions set forth in this Agreement
NOW, THEREFORE, in consideration of the facts recited above and the mutual
agreements set forth herein, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Certain Defined Terms. As used in this Agreement, the following
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terms will have the following meanings:
"ACCOUNTS RECEIVABLE" means all accounts receivable of the Seller,
including those receivables that have been written off by the Seller.
"AFFILIATE" means, with respect to any specified person, any other person
that directly or indirectly controls, is controlled by, or is under common
control with, such specified person (where, for purposes of this definition
"control" (including the terms "controlled by" and "under common control with")
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management policies of a person, whether through the
ownership of stock, as an officer, director, trustee or executor, by contract or
otherwise).
"ANCILLARY AGREEMENT" has the meaning set forth in Section 4.2.
"AR SCHEDULE" has the meaning set forth in Section 4.7.
"ASSIGNED CONTRACT" has the meaning set forth in Section 2.2.1.
"ASSUMPTION AGREEMENT" has the meaning set forth in Section 3.2.1.
"ASSUMED LIABILITIES" has the meaning set forth in Section 2.2.1.
"BALANCE SHEET" has the meaning set forth in Section 3.2.2.
"BALANCE SHEET DATE" means August 31, 2005.
"BUSINESS" has the meaning set forth in the recitals.
"BUSINESS CONTRACT" means any Contract related to the Purchased Assets: (a)
to which the Seller is a party; (b) by which the Seller or any of the Purchased
Assets is or may become bound or under which the Seller has, or may become
subject to, any obligation; or (c) under which the Seller has or may acquire any
right or interest.
"BUSINESS RECORDS" means all of Seller's marketing and sales information,
promotional materials, including customer pricing, marketing plans, business
plans, financial and business projections, current and prior customer lists,
customer relationship management and sales tracking software and data and all
other files and records (or applicable portions thereof) pertaining to the
Business.
"CLOSING" shall mean the actions taken on the Closing Date.
"CLOSING DATE BALANCE SHEET" has the meaning set forth in Section 8.2.1.
"CLOSING DATE FINANCIAL STATEMENTS" has the meaning set forth in Section
8.2.1.
"CLOSING DATE" has the meaning specified for such terms in Section 3.1.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended.
"CONFIDENTIAL INFORMATION" has the meaning set forth in Section 6.2.
"CONTRACT" shall mean any written, oral, implied or other agreement,
contract, understanding, arrangement, instrument, note, guaranty, indemnity,
representation, warranty, deed, assignment, power of attorney, certificate,
purchase order, work order, insurance policy, benefit plan, commitment,
covenant, assurance or undertaking of any nature.
"DEFERRED REVENUE" has the meaning commonly understood under United States
generally accepted accounting principles applied on a consistent basis.
"DOCUMENTATION" means, collectively, all programmers' notes or logs, source
code annotations, user guides, manuals, instructions, software architecture
designs, layouts, any know-how, and any other designs, plans, drawings,
documentation or materials that are related in any manner to any Software or any
Intellectual Property Rights, whether in tangible or intangible form pertaining
to the Business.
"ENCUMBRANCE" means any pledge, lien, collateral assignment, security
interest, mortgage, title retention, conditional sale or other security
arrangement, or any charge, adverse claim of title, ownership or right to use,
or any other encumbrance of any kind whatsoever.
"EXCLUDED ASSETS" means any asset or property of Seller not expressly
included among the Purchased Assets, The Buyer is not purchasing any of the
Excluded Assets.
"EXCLUDED LIABILITIES" will mean any and all Liabilities of Seller (whether
now existing or hereafter arising) other than the Assumed Liabilities. By way of
example and not by way of limitation, the Excluded Liabilities that are not
being assumed by the Buyer include, without limitation:
(a) any and all Taxes now or hereafter due and payable by Seller
or any Affiliate of Seller (including without limitation any Taxes that Seller
agrees to pay pursuant to Sections 7.1 and 7.2);
(b) any and all Taxes attributable to any of the Purchased Assets
that arose during any time period or portion thereof ending prior to the
Closing;
(c) any and all Taxes attributable to the Seller whenever such
Taxes arose;
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(d) any and all trade payables incurred or accrued by the Seller
at any time prior to the Closing;
(e) any and all Liabilities with respect to any environmental
damage, or for any disposal, discharge or other use or treatment of any
hazardous or toxic substance, under any and all laws and regulations relating to
the environment or the regulation of any hazardous or toxic substances of any
type;
(f) any and all Liabilities to the Seller's employees or
contractors related to or arising from or with respect to any act or omission of
Seller or arising from or with respect to any event, including without
limitation any Liabilities to any of the Seller's employees for the payment of
any and all wages and commissions or accrued and unused vacation time or for the
reimbursement of any expenses incurred by Seller's employees and any Liabilities
to any of the Seller's contractors for any amounts due to them in connection
with services provided to Seller that arose prior to the Closing;
(g) any and all Liabilities arising from the termination by Seller
of the employment of any current or future employees of Seller or any of its
Affiliates, any other claims brought against Seller arising from Seller's
employment of any person, or arising from any duties or obligations under any
existing or future employee benefit plans of Seller or any of its Affiliates;
(h) any and all present or future obligations or Liabilities of
Seller or any of its Affiliates to existing or future employees of Seller or any
of its Affiliates under ERISA, COBRA, WARN or any severance pay obligations of
Seller or any of its Affiliates;
(i) any and all Liabilities arising from any breach or default by
Seller of any contract, agreement or commitment of Seller (including but not
limited to any breach or default of any of the Assigned Contracts);
(j) any and all Liabilities now or hereafter arising from or with
respect to, the sale or license of any products or services of, by or for
Seller;
(k) any and all Liabilities relating to or arising out of any of
the Excluded Assets; and
any and all inter-company payables incurred by, or owed to, the Business accrued
or arising prior to the Closing.
"INDEMNIFIED PARTY AND INDEMNIFYING PARTY" has the meaning set forth in
10.3.
"INTELLECTUAL PROPERTY RIGHTS" means, collectively, all of the following
intangible worldwide legal rights of the Seller pertaining to the Business,
whether or not filed, perfected, registered or recorded: (i) patents, patent
applications, and patent rights, including any and all continuations,
continuations-in-part, divisions, reissues, reexaminations or extensions
thereof, whether now existing or hereafter filed, issued or acquired; (ii)
rights associated with works of authorship (including audiovisual works),
including copyrights, copyright applications, and copyright registrations, moral
rights, mask work rights, mask work applications and mask work registrations;
(iii) rights relating to the protection of trade secrets and confidential
information; (iv) design rights and industrial property rights; (v) any rights
analogous to those set forth in the
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preceding clauses and any other proprietary rights relating to intangible
property including trademarks, service marks, trademark and service xxxx
registrations and applications therefor, trade names, rights in trade dress and
packaging and all goodwill associated with the same; (vi) rights in customer and
prospect lists, trade secrets, know-how, designs, plans and specifications; and
(vii) all rights to xxx for any past, present or future infringement of any of
the foregoing rights and the right to all income, royalties, damages and
payments now or hereafter due or payable with respect to any of the foregoing
rights, including without limitation damages for past, present or future
infringement, thereof The term "Intellectual Property Rights" does not refer to
tangibles or tangible embodiments of Intellectual Property Rights.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended, and the rulings and regulations promulgated thereunder.
"KNOWLEDGE" or words of similar import means with respect to a party
hereto, with respect to any matter in question, that any of the officers of such
party has actual knowledge of such matter, after reasonable inquiry of such
matter.
"LIABILITIES" means any and all debts, liabilities and obligations, whether
accrued or fixed, absolute or contingent, matured or unmatured, determined or
determinable, known or unknown, including, without limitation, those arising
under any law, action or governmental order and those arising under any
contract, agreement, arrangement, commitment or undertaking.
"LOSS" has the meaning set forth in Section 10.1.
"MATERIAL ADVERSE EFFECT" means, as to Seller, as to the Business or as to
the Purchased Assets, a material adverse effect on the operations, assets,
liabilities, prospects, condition (financial or otherwise), results of
operations, cash flow or the transactions contemplated by this Agreement.
"PERSON" means any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity.
"PURCHASED ASSETS" means all of the Seller's assets, including without
limitation all right, title and interest of Seller in and to the assets used in
connection with the Business by Seller, but excluding the Excluded Assets,
Without limiting the generality of the foregoing, the Purchased Assets shall
include all of Seller's right, title and interest in and to the following:
(a) All cash, cash equivalents, xxxxx cash inventory, bank deposits,
marketable securities and similar investments, bank accounts, lockboxes and
deposits of the Seller relating to the Business;
(b) Documentation of the Business;
(c) the Intellectual Property Rights used in the conduct of the
Business by Seller;
(d) the Accounts Receivable reflected on the Closing Date Balance
Sheet;
(e) the Assigned Contracts;
(f) the Business Records.
(g) the books and records used in the conduct of the Business,
including without limitation, all credit records, billing records, payroll
records, computer records, computer programs, contracts, agreements, operating
manuals, schedules of assets, correspondence, books
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of account, customer lists, files, papers, books and all other public and
confidential business records, whether such records are in hard copy form or are
electronically or magnetically stored;
(h) agreements in favor of Seller that pertain to any network
relationships the Seller may have which are necessary for the conduct of the
Business;
(i) licenses in favor of Seller that are used in or necessary for the
conduct of the Business; and
(j) warranties which Seller has received from third parties with
respect to the Purchased Assets, including, but not limited to, such warranties
as are set forth in any lease agreement, equipment purchase agreement or
consulting agreement, all claims, choses in action, rights of recovery, rights
of set-off, rights to refunds, and similar rights, and the like made by Seller
on its behalf in the conduct of the Business;
XXXX/XXXXX: Any items missing?
"PURCHASE PRICE" has the meaning set forth in Section 2.3.
"PURCHASE INDEMNITIES" has the meaning set forth in Section 10.1.
"REQUIRED CONSENTS" means the authorization, consents, approvals, orders or
filings with or notice to any court, governmental agency, instrumentality or
authority, or another entity or person, necessary for the execution and delivery
of this Agreement and the Ancillary Agreements by Seller or the consummation by
Seller of the transactions contemplated hereby or thereby as listed on Section
4.5 of the Disclosure Schedule.
"SELLER'S CONFIDENTIAL INFORMATION" has the meaning set forth in Section
10.3.
"SELLER'S FINANCIAL STATEMENTS" means (i) the Seller's unaudited balance
sheet, income statement and statement of cash flows each dated as of December
31, 2004 and December 31, 2003, (ii) the Seller's Balance Sheet, dated as of the
Balance Sheet Date and statement of cash flows and income statement each dated
as of August 31, 2005, and (iii) a listing of each customer account with twelve
(12) month revenue numbers for each account.
"SELLER'S INDEMNITEES" has the meaning set forth in Section 10.1.
"TAX" OR "TAXES" means all foreign, federal, state and local taxes of any
kind whatsoever (whether payable directly or by withholding), including but not
limited to sales, use, excise, franchise, ad valorem, property, inventory, value
added and payroll taxes, together with any interest and penalties, additions to
tax or additional amounts with respect thereto, imposed by any taxing authority.
"THIRD-PARTY CLAIM" has the meaning set forth in Section 10.3.
"TRANSACTION TAXES" has the meaning set forth in Section 7.1.
ARTICLE 2
PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES
2.1 AGREEMENT TO SELL AND PURCHASE. Subject to the terms and conditions
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of this Agreement and in reliance on the representations, warranties and
covenants set forth in this Agreement, at the Closing the Buyer shall purchase,
and the Seller will sell, assign, transfer, convey and deliver to the Buyer, the
Purchased Assets, free and clear of all Encumbrances.
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2.2 ASSUMPTION AND EXCLUSION OF LIABILITIES.
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2.2.1 Assumed Liabilities Subject to the terms and conditions of
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this Agreement, at the Closing the Buyer shall assume and pay, perform and
discharge when due those, and only those, obligations and liabilities of Seller
(i) under the Business Contracts listed on Exhibit A attached hereto
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(collectively referred to herein as the "ASSIGNED CONTRACTS"), but only to the
extent that such obligations and liabilities first accrued or arose after the
Closing Date for reasons other than any breach, violation or default by Seller
of the terms of the Assigned Contracts and (ii) those miscellaneous and sundry
liabilities specifically listed on Section 2.2.1 of the Seller Disclosure
Schedule (the obligations and liabilities under (i) and (ii) collectively
referred to herein as the "ASSUMED LIABILITIES").
2.2.2 Excluded Liabilities. As a material consideration and
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inducement to the Buyer to enter into this Agreement, Seller will retain, and
will be solely responsible for paying, performing and discharging when due, and
the Buyer will not assume or otherwise have any responsibility or liability for
any Excluded Liabilities.
2.3 PURCHASE PRICE. The purchase price (the "PURCHASE PRICE") in the
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aggregate for all the Purchased Assets to be paid by the Buyer shall consist of
Three Hundred Thousand Dollars ($300,000) in cash. The Purchase Price shall be
paid as follows: One Hundred Fifty Thousand Dollars ($150,000) shall be
delivered to Seller upon execution of this Agreement (as evidenced by the
Promissory Note and Security Agreement attached hereto as Exhibits "A" and "B"
respectively) and (ii) up to $150,000 shall be delivered to Seller on December
__, 2005, subject to offset as described in Section 9.3.
ARTICLE 3
CLOSING
3.1 TIME AND PLACE. The Closing under this Agreement shall take place
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at the offices of Buyer at 10:00 a.m., local time, on September ___, 2005, after
the satisfaction or waiver of the conditions to Closing set forth in Section 8.1
and 8.2 (or by such other means, including a remote Closing wherein the relevant
documents are delivered by means of facsimile, mail or courier) as Seller and
the Buyer may mutually agree (the "CLOSING DATE").
3.2 DELIVERIES BY SELLER TO THE BUYER. At the Closing, Seller shall
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deliver to the Buyer:
3.2.1 the Assumption Agreement in substantially the form of
Exhibit D attached hereto (the "ASSUMPTION AGREEMENT") dated the Closing Date
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and duly executed by an authorized officer of Seller transferring the Assumed
Liabilities to the Buyer;
3.2.2 a balance sheet, dated as of the Balance Sheet Date (the
"BALANCE SHEET") and the Closing Date Financial Statements;
3.2.3 a certificate, dated the Closing Date and executed on behalf
of Seller by a duly authorized officer of Seller certifying that (i) each of the
representations and warranties of Seller contained in this Agreement is true and
correct, (ii) all covenants and agreements of the Seller to be performed by it
on or prior to the Closing under this Agreement have been performed, (iii) there
will have not been any material adverse change in the Purchased Assets or the
Business
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whether or not resulting from a breach in any representation, warranty or
covenant in this Agreement and (iv) that the Seller's Financial Statements (a)
are in accordance with the books and records of the Seller, (b) fairly present
the financial condition of the Seller at the date therein indicated and the
results of operation for the period therein specified, (c) have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis ("GAAP") with such adjustments as have been discussed
between Parent and Seller, and which are specifically noted in the Seller's
Financial Statements and (d) are kept in a manner and in sufficient detail to
enable the Buyer's outside auditors to conduct an audit;
3.2.4 all Business Records; including but not limited to a copy of
all current bills with any telecommunication service provider servicing the
Business and a "tape" of the most recent months activity;
3.2.5 a certificate of Seller's Secretary (i) attaching copies of
resolutions of the Board of Directors of Seller authorizing and approving the
execution and delivery of the Agreement and Ancillary Agreements by Seller and
the consummation by the Seller of the transactions contemplated hereby and
thereby, (ii) attaching copies of resolutions of the stockholders of Seller
holding the requisite number of shares required under applicable law, to
authorize and approve the execution and delivery of the Agreement and Ancillary
Agreements by Seller and the consummation by the Seller of the transactions
contemplated hereby and thereby and (iii) certifying that the officers of such
Seller executing this Agreement and the Ancillary Agreements have been duly
elected and have the appropriate authority on behalf of Seller to enter into
this Agreement and the Ancillary Agreements;
3.2.6 the Required Consents indicated on Section 4.5 of the Seller
Disclosure Schedule as having been received as of the Closing Date;
3.2.7 all documentation necessary or appropriate to convey all
transferable rights under all Permits issued to Seller by any governmental
agency or authority;
3.2.8 releases from any Third Party having an Encumbrance on any
Purchased Assets or such other evidence of termination of such Encumbrance as is
reasonably acceptable to the Buyer;
3.2.9 the Non-Competition Agreement and Non-Solicitation Agreement
in substantially the form of Exhibit E attached hereto (the "NON-COMPETITION
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AGREEMENT") duly executed by the individuals on Section 3.2.9 of the Seller
Disclosure Schedule;
3.2.10 a certificate executed by a duly authorized officer of
Seller certifying that all payroll Taxes related to the Purchased Assets and the
Business due and payable on or before the Closing Date, and all other Taxes
related to the Purchased Assets and the Business due and payable on or before
the Closing Date, have been paid;
3.3 DELIVERIES BY THE BUYER TO SELLER. At the Closing, the Buyer shall
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deliver to Seller the following:
3.3.1 the Purchase Price, payable in accordance with Section 2.3;
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3.3.2 counterpart of the Assumption Agreement in substantially the
form of Exhibit F, dated the Closing Date and duly executed by an authorized
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officer of the Buyer assuming obligations of Seller under the Assumed
Liabilities arising after the Closing Date;
3.3.3 a certificate, dated the Closing Date and executed by a duly
authorized officer of the Buyer, certifying (i) that the representations and
warranties of the Buyer contained herein are true and correct; and (ii) that all
of the covenants and agreements to be performed by the Buyer on or prior to the
Closing under this Agreement have been performed;
3.3.4 a certificate of the Buyer's Secretary attaching copies of
resolutions of the Board of Directors of the Buyer authorizing and approving the
execution and delivery of this Agreement and the Ancillary Agreements by the
Buyer and the consummation by the Buyer of the transactions contemplated hereby
and thereby;
3.3.5 such other documents and instruments as are reasonably
required to be delivered to Seller by the Buyer in order to effect the
transactions contemplated by this Agreement in accordance with the terms and
conditions hereof;
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT
Seller and Parent hereby, jointly and severally, represent and warrant to
the Buyer that except as may be expressly otherwise set forth in Seller's
Disclosure Schedule delivered by Seller to the Buyer simultaneously with the
execution of this Agreement, each of the representations, warranties and
statements contained in the following sections of this ARTICLE 4 is true and
correct as of the date hereof and will be true and correct on and as of (he
Closing Date.
4.1 CORPORATE EXISTENCE AND AUTHORITY. Seller is a corporation duly
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incorporated, validly existing and in good standing under the laws of the State
of ________. Seller has all corporate power and authority required to carry on
its business as now conducted, to own or use the properties and assets that it
purports to own or use, and to perform all obligations under the Business
Contracts. Seller is duly qualified to transact business, and is in good
standing, in each jurisdiction where the character of the properties owned,
lease or operated by it or the nature of its activities make such qualification
necessary, except where such failure would not individually or in the aggregate
have a Material Adverse Effect.
4.2 CORPORATE AUTHORIZATION. Seller has all requisite corporate power
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and authority to enter into, execute, deliver and perform its obligations under
this Agreement (together with all other assignments and documents that Seller is
to execute and deliver pursuant to this Agreement being hereinafter collectively
referred to as the "ANCILLARY AGREEMENTS") and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
Seller of this Agreement and each of the Seller Ancillary Agreements, and the
sale of the Purchased Assets to the Buyer, have been duly and validly approved
and authorized by Seller's Board of Directors and the Seller stockholders
holding the requisite number of shares required under laws of the State of
Delaware.
4.3 GOVERNMENTAL AUTHORIZATION. No authorization, decree or order of
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any court, bankruptcy court, bankruptcy trustee, creditors' committee, receiver,
governmental authority or
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any other person is required in order to authorize or enable Seller to: (i)
enter into this Agreement and the Ancillary Agreements; (ii) sell, assign,
convey and transfer all the Purchased Assets to the Buyer as contemplated by
this Agreement; or (iii) to carry out and perform Seller's obligations under
this Agreement and the Ancillary Agreements. This Agreement has been, and at the
Closing the Ancillary Agreements will be, duly and validly executed and
delivered by Seller, and (assuming due authorization, execution and delivery by
the Buyer) this Agreement constitutes and, upon the execution of each of the
Ancillary Agreements by the parties thereto, the Ancillary Agreements will
constitute, legal, valid and binding obligations of Seller enforceable against
Seller in accordance with their respective terms.
4.4 NO CONFLICT. The execution, delivery and performance of this
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Agreement and the Ancillary Agreements by Seller, do not and will not: (i)
conflict with or violate the Certificate of Incorporation or Bylaws of Seller;
(ii) conflict with or violate any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award applicable to the Purchased Assets;
(iii) result in any breach of, or constitute a default (or event which with the
giving of notice or lapse of time, or both, would become a default) under, or
give to others any rights of termination, rescission, amendment, acceleration or
cancellation of, any of the Assigned Agreements or any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument relating to any of the Purchased Assets to which Seller is a
party or is bound or by which any of the Purchased Assets are bound or affected;
or (iv) result in the creation of any Encumbrance on any of the Purchased
Assets. Seller has delivered or made available to the Buyer and the Buyer's
legal counsel copies of its Certificate of Incorporation and Bylaws, each as
currently in effect. Seller is not in violation of its Certificate of
Incorporation or Bylaws, each as currently in effect, except where such
violation would not have an adverse effect on the Buyer, the Purchased Assets or
the consummation of the transactions contemplated hereby.
4.5 CONSENTS AND APPROVALS. Except as set forth on Section 4.5 of
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Seller's Disclosure Schedule, the execution and delivery of this Agreement and
the Ancillary Agreements by Seller do not, and the performance of this Agreement
and the Ancillary Agreements by Seller (including Seller's assignment of any
Assigned Contracts to the Buyer) will not, require any consent, approval,
authorization or other action by, or filing with or notification to, any third
party, including but not limited to any governmental or regulatory authority.
4.6 TITLE TO AND CONDITION OF PURCHASED ASSETS. Seller owns all the
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Purchased Assets and Seller has good and marketable title in and to all the
Purchased Assets, free and clear of all Encumbrances whatsoever. None of the
Purchased Assets is licensed from any third party and none of the Purchased
Assets is licensed to any third party. Title to all the Purchased Assets is
freely transferable from Seller to the Buyer free and clear of all Encumbrances
without obtaining the consent or approval of any person or party.
4.7 ACCOUNTS RECEIVABLE. The Accounts Receivables constitute valid
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receivables that arose from bona fide transactions in the ordinary course of
business, consistent with past practices, A schedule of the Accounts Receivable
as of the Closing Date ix set forth in Section 4.7 of the Seller's Disclosure
Schedule (the "AR SCHEDULE"). Other than ordinary course adjustments not
material in the aggregate and matters listed in the AR Schedule, (i) no
counterclaims or offsetting claims with respect to presently outstanding
Accounts Receivable are pending or, to the knowledge of Seller, threatened and
(ii) subject to such amounts as are reserved for bad debts on the Closing Date
Balance Sheet, such Accounts Receivable are fully
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collectible in their stated amount and each has been or is collectible on or
before the sixtieth (60th) day following the date such Accounts Receivable was
created. Except as provided in AR Schedule, no part of the Accounts Receivable
is contingent upon performance by Seller or any other party of any obligation,
and no agreements for deductions or discounts have been made with respect to any
part of such Accounts Receivable.
4.8 FULL FORCE AND EFFECT. Each Assigned Contract, permit, franchise
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or other instrument assigned to or assumed by the Buyer pursuant to this
Agreement or any of the Ancillary Agreements is in full force and is not subject
to any breach or default thereunder by any party thereto.
4.9 LITIGATION. There is no claim, action, suit, investigation or
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proceeding of any nature pending or, to the best of Seller's knowledge,
threatened, at law or in equity, by way of arbitration or before any court,
governmental department, commission, board or agency that: (i) may adversely
affect, contest or challenge Seller's authority, right or ability to sell or
convey any of the Purchased Assets to the Buyer hereunder or otherwise perform
Seller's obligations under this Agreement or any of the Ancillary Agreements;
(ii) challenges or contests Seller's right, title or ownership of any of the
Purchased Assets; (iii) asserts that any Purchased Asset, or any action taken by
any employee or agent of the Seller with respect to any Purchased Asset,
infringes any Intellectual Property Rights of any third party or constitutes a
misappropriation or misuse of any Intellectual Property Rights, trade secrets or
proprietary rights of any party; (iv) seeks to enjoin, prevent or hinder the
consummation of any of the transactions contemplated by this Agreement or the
Ancillary Agreements; (v) would impair or have an adverse affect on the Buyer's
right or ability to use or exploit any of the Purchased Assets or impair or have
an adverse effect on the value of any Purchased Asset; or (vi) involves a
wrongful termination, harassment or other employment-related claim by any
employee, potential employee or contractor of Seller. There are no judgments,
decrees, injunctions or orders of any court, governmental department,
commission, agency, instrumentality or arbitrator pending or binding against
Seller which affect the Purchased Assets.
4.10 TAX MATTERS.
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4.10.1 Except as set forth in Section 4.10 of Seller's Disclosure
Schedule, each Tax required to have been paid by the Seller, or claimed by any
person to be payable by the Seller, has been duly paid in full on a timely
basis. Any Tax required to have been withheld or collected by the Seller has
been duly withheld and collected; and (to the extent required) each such Tax has
been paid to the appropriate person.
4.10.2 Section 4.10 of the Seller's Disclosure Schedule accurately
identifies each examination or audit of any tax return of the Seller that has
been conducted since January 1, 2003. The Seller has made available to the Buyer
in the course of Buyer's due diligence, accurate and complete copies of all
audit reports and similar documents (to which the Seller has access) relating to
such tax returns.
4.10.3 Except as set forth in Section 4.10 of the Seller's
Disclosure Schedule, no claim or other proceeding is pending or has been
threatened against or with respect to the Seller in respect of any Tax. There
are no unsatisfied Liabilities for Taxes (including liabilities for interest,
additions to tax and penalties thereon and related expenses) with respect to any
notice of deficiency or similar document received by the Seller.
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4.10.4 The Seller has delivered to (or made available for inspection
by) the Buyer accurate and complete copies of all tax returns that have been
filed on behalf of or with respect to the Seller. The information contained in
such tax returns is accurate and complete in all respects.
4.11 EMPLOYEES AND EMPLOYMENT TAXES. Seller is not a party to or bound
-------------------------------
by any union contract and has not experienced any strike, grievance or any
arbitration proceeding, claim of unfair labor practices filed or, to the best of
Seller's knowledge, threatened to be filed or any other material labor
difficulty. To the best of Seller's knowledge, no organizational effort is
being or has been made or threatened by or on behalf of any labor union with
respect to any employees. Seller has withheld all federal and state income
Taxes, FICA, FUTA, and other Taxes required to be withheld and paid such
withheld amounts to the appropriate governmental body within the time period
prescribed by law.
4.12 COMPLIANCE WITH LAWS. Seller has complied with and has not
-----------------------
received any notices of violation with respect to, any federal, state or local
statute, law or regulation (including but not limited to environmental laws),
domestic or foreign, applicable to the Business, Seller's conduct of the
Business or any of the Purchased Assets, including without limitation (i) all
applicable Tax laws and regulations with respect to consultants and (ii) all
other laws, regulations, rules, orders, writs, injunctions, judgments and
decrees applicable to the export or re-export of controlled commodities or
technical data.
4.13 INTELLECTUAL PROPERTY.
-----------------------
4.13.1 The Purchased Assets include all Intellectual Properly
Rights necessary to enable the Buyer to conduct the Business in the manner in
which such business was conducted on July 31, 2005, without the need for any
additional licenses from any person.
4.13.2 The Purchased Assets and the distribution, sale and license
of such Purchased Assets, including but not limited to the Software, the
Documentation and, the Intellectual Property Rights do not infringe upon any
Intellectual Property Rights of any third party and no third party has asserted
or threatened to assert against Seller any claim of infringement of Intellectual
Properly Rights.
4.13.3 Seller owns, possesses, has the exclusive right to make,
use, sell, license, has the right to bring actions for the infringement of, and
where necessary, has made timely and proper applications for, the Intellectual
Property Rights used in the Business that are included in the Purchased Assets.
4.13.4 Seller has not granted any third party any outstanding
licenses or other rights to any of the Purchased Assets.
4.13.5 None of the Purchased Assets is held or used pursuant to a
license or similar grant of rights by any third party.
4.13.6 Neither Seller nor any of its Affiliates is liable for, nor
has made any contract or arrangement whereby it may become liable to, any person
for any royalty, fee or other compensation for the ownership, use, license,
sale, distribution, manufacture, reproduction or disposition of any Purchased
Asset.
-11-
4.13.7 All employees and consultants of Seller and any other third
parties who have been involved in the product development of Seller's Business
or Software or who were otherwise involved in the creation and/or development of
any Software, the Documentation and/or the Intellectual Property Rights have
executed invention assignment agreements in the form delivered to the Buyer's
counsel and all employees and consultants of Seller who have access to
confidential information or trade secrets of the Business and/or which relate to
Purchased Assets have executed appropriate nondisclosure agreements in the form
delivered to the Buyer's counsel.
4.13.8 Seller has taken reasonable steps, consistent with industry
standards, to protect the secrecy and confidentiality of all Software,
Documentation and Intellectual Property Rights.
4.14 ASSIGNED CONTRACTS.
--------------------
4.14.1 Exhibit A identifies and provides an accurate and complete
----------
description of each Assigned Contract. The Seller has delivered to the Buyer
accurate and complete copies of all Contracts identified in Exhibit A, including
----------
all amendments thereto. Each Contract is valid and in full force and effect.
4.14.2 Except as set forth in Section 4.14 of the Seller's
Disclosure Schedule: (i) no party has violated or breached, or declared or
committed any default under, any Assigned Contract; (ii) no event has occurred,
and no circumstance or condition exists, that might (with or without notice or
lapse of time) (A) result in a violation or breach of any of the provisions of
any Assigned Contract, (B) give any party the right to declare a default or
exercise any remedy under any Assigned Contract, (C) give any party the right to
accelerate the maturity or performance of any Assigned Contract, or (D) give any
party the right to cancel, terminate or modify any Assigned Contract; (iii)
the Seller has not received any notice or other communication (in writing or
otherwise) regarding any actual, alleged, possible or potential violation or
breach of, or default under, any Business Contract; and (iv) the Seller has not
waived any right under any Business Contract.
4.14.3 Set forth on Section 4.14 of the Seller Disclosure Letter
is a true, correct and complete list of all pre-paid accounts underlying the
Assigned Contracts;
4.14.4 Except as set forth in Section 4.14 of the Seller's
Disclosure Schedule, the Seller has never guaranteed or otherwise agreed to
cause, insure or become liable for, and the Seller has never pledged any of its
assets to secure, the performance or payment of any obligation or other
Liability of any other party.
4.14.5 No party is renegotiating, or has the right to renegotiate,
any amount paid or payable to the Seller under any Assigned Contract or any
other term or provision of any Assigned Contract.
4.14.6 The Seller has no knowledge of any basis upon which any
party to any Assigned Contract may object to (i) the assignment to the Buyer of
any right under such Assigned Contract, or (ii) the delegation to or performance
by the Buyer of any obligation under such Assigned Contract.
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4.15 GOVERNMENT CONTRACTS. Seller is not, and has not been a party to
----------------------
any contract or arrangement with any foreign or U.S. federal, state or local
government agency relating to the Business other than those identified on
Section 4.15 of Seller's Disclosure Schedule.
4.16 ORAL CONTRACTS. Except as set forth on Section 4.16 of Seller's
----------------
Disclosure Schedule, Seller is not, and has not been a party to any material
contract or arrangement that has not been set forth in a written contract (a
copy of which has been delivered by Seller to the Buyer).
4.17 LIABILITIES.
------------
4.17.1 Set forth on Section 4.17 of Seller's Disclosure Schedule
are all Liabilities of Seller that are fixed or determinable or otherwise
includable in a balance sheet presentation of liabilities of the Seller prepared
in a manner consistent with prior periods and which materially represents the
liabilities of the Seller. There are no contingent liabilities of Seller except
as set forth on Section 4.17 of Seller's Disclosure Schedule, except for
obligations under the Assigned Contracts listed on Exhibit A, to the extent that
----------
the existence of such obligations is ascertainable solely by reference to such
Assigned Contracts.
4.17.2 Section 4.17 of Seller's Disclosure Schedule: (i) provides
an accurate and complete breakdown and aging of the accounts payable of the
Seller; (ii) provides an accurate and complete breakdown of any customer
deposits or other deposits held by the Seller as of the date of this Agreement;
and (iii) provides an accurate and complete breakdown of all notes payable and
other indebtedness of the Seller as of the date of this Agreement.
4.18 FAIR VALUE. Seller's Board of Directors has determined in good
------------
faith that the Purchase Price represents the fair market value of the Purchased
Assets. No order has been made, no petition presented, or resolution passed
for the winding-up of Seller, or then appointment of any trustee or for the
benefit of creditors or the preparation or commencement of any bankruptcy or
insolvency proceeding nor has any resolution been passed, agreement entered
into, or term sheet or letter of intent approved by Seller with respect to a
future sale or disposition of material assets of Seller other than pursuant to
this Agreement
4.19 NO BROKERS. No broker, finder or investment banker is entitled to
-----------
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Seller or its Affiliates.
4.20 FULL DISCLOSURE. All of the representations and warranties made by
----------------
Seller under this ARTICLE 4 of this Agreement (as qualified by Seller's
Disclosure Schedule attached hereto) and in the certificates delivered by Seller
to the Buyer at the Closing are true, correct and complete in all material
respects and do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make such representations,
warranties or statements, in light of the circumstances under which they are
made, not misleading.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to Seller that each of the
representations, warranties and statements contained in the following sections
of this ARTICLE 5 is true and correct as of the date hereof and will be true and
correct as of the Closing Date.
5.1 ORGANIZATION AND GOOD STANDING. The Buyer is a corporation duly
----------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware.
5.2 AUTHORIZATION OF TRANSACTION. The Buyer has full corporate power
-------------------------------
and authority to enter into, execute, deliver and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement has been duly authorized
by all necessary corporate action on the part of Buyer.
5.3 NO CONFLICT. The execution, delivery and performance of this
-------------
Agreement do not (a) violate or conflict with the Certificate of incorporation
or Bylaws of the Buyer or (b) conflict with or violate any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
applicable to the Buyer except such conflicts or violations as would not prevent
or delay the Buyer from consummating the transactions contemplated by this
Agreement.
ARTICLE 6
ADDITIONAL COVENANTS
6.1 BOOKS AND RECORDS. If, in order to properly prepare documents
--------------------
required to be filed with governmental authorities (including without limitation
the taxing authorities and the SEC) or its financial statements, it is necessary
that either party hereto or any successors be furnished with additional
information relating to the Purchased Assets, the Seller Financial Statements,
the Assumed Liabilities or the Business, and such information is in the
possession of the other party hereto, such party agrees to use its reasonable
efforts to furnish such information to such other party, at the cost and expense
of the party being furnished such information.
6.2 CONFIDENTIALITY. All copies of financial information, marketing
----------------
and sales information, pricing, marketing plans, business plans, financial and
business projections, customer lists, methodologies, inventions, software,
know-how, product designs, product specifications and drawings, and other
confidential and/or proprietary information of the Seller related to the
Business or any of the Purchased Assets, including but not limited to the
Software, the Documentation and the Intellectual Property Rights (collectively,
"SELLER'S CONFIDENTIAL INFORMATION") will, be held by Seller in strict
confidence and, at all times following the Closing, will not be used or
disclosed by Seller to any third party and, upon the Buyer's request, will be
promptly destroyed by the Seller or delivered to the Buyer; except that the
------ ----
Seller may use internal copies of Business Records that it is entitled to retain
under Section 6.2 hereof solely to prepare and file tax returns and prepare
Seller's financial statements. It is agreed that Sellers' Confidential
Information will not include information that is now, or later becomes, part of
---
the general public knowledge other than as a result of a breach of this
Agreement by Seller.
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6.3 REGULATORY AND OTHER AUTHORIZATIONS; CONSENTS; FILINGS.
------------------------------------------------------------
6.3.1 Efforts. Each of Seller and the Buyer will use its
--------
respective best efforts to obtain all authorizations, consents, orders and
approvals of all federal, state and local regulatory bodies, courts and
officials that may be or become necessary for the execution and delivery of, and
the performance of its obligations pursuant to, this Agreement or any other
agreements required to be entered into by such party pursuant to this Agreement
and will cooperate fully with the other party in promptly seeking to obtain all
such authorizations, consents, orders and approvals. The parties hereto will not
take my action that will have the effect of delaying, impairing or impeding the
receipt of any required approvals or the filing of any reports.
6.3.2 Communication. Seller on the one hand, and the Buyer on the
--------------
other hand, will promptly inform the other of any material communication between
such parry and any federal, state, local or foreign government or governmental
authority or court regarding any of the transactions contemplated by this
Agreement and the Ancillary Agreements. If either Seller or Buyer, or any
Affiliate thereof, receives a request for additional information or for
documents or any material from any such government or governmental authority
with respect to the transactions contemplated hereby, then such party will
endeavor in good faith to make or cause to be made, as soon as reasonably
practicable and after consultation with the other party, an appropriate response
in compliance with such request. Further, except with respect to any submissions
by Seller or Buyer to any government taxing authority, no written materials will
be submitted by either Seller or the Buyer to any federal, state, or local
governmental agency, nor will any oral communications be initiated with such
governmental entities by a party, without prior disclosure to and coordination
with the other parry and its counsel related to the transactions contemplated by
this Agreement and the Ancillary Agreements.
6.4 FURTHER ACTIONS. From and after the Closing, each of the parties
-----------------
hereto will execute and deliver such documents and other papers and take such
further actions as may be reasonably required to carry out the provisions of
this Agreement or any other agreements required to be entered into by such party
pursuant to this Agreement and give effect to the transactions contemplated by
this Agreement and such other agreements.
ARTICLE 7
TAX MATTERS
7.1 TAXES RELATED TO SALE OF PURCHASED ASSETS. Seller shall be
------------------------------------------------
responsible for, and shall pay all excise, value added, registration, stamp,
property, documentary, transfer, sales, use and similar Taxes, levies, charges
and fees incurred, or that may be payable to any taxing authority, in connection
with the transactions (including without limitation the sale, transfer, and
delivery of the Purchased Assets) contemplated by this Agreement (collectively,
"TRANSACTION TAXES"). Seller shall be responsible for preparing and filing any
tax return relating to such Transaction Taxes and shall provide a copy of such
return to the Buyer, The Buyer and Seller agree to cooperate in minimizing the
amount of any such Transaction Taxes and in the filing of all necessary
documentation and all Tax returns, reports and forms with respect to all such
Transaction Taxes, including any available pre-Closing filing procedures.
7.2 OTHER TAXES. Except as provided in Section 7.1 above, (i) Seller
-------------
shall be responsible for and shall pay any and all Taxes with respect to the
Purchased Assets relating to
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all periods (or portions thereof) ending on or prior to the Closing Date, and
(ii) the Buyer shall be responsible for and shall pay any and all Taxes with
respect to the Purchased Assets relating to all periods (or portions thereof)
ending after the Closing Date.
ARTICLE 8
CONDITIONS TO THE CLOSING
8.1 CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of Seller to
--------------------------------------
consummate the transactions contemplated by this Agreement will be subject to
the fulfillment (or waiver by Seller in writing), at or prior to the Closing, of
each of the following conditions:
8.1.1 Accuracy of Representations and Warranties: The
-----------------------------------------------
representations and warranties of the Buyer contained in ARTICLE 5 of this
Agreement will be true and correct in all material respects as of the Closing,
with the same force and effect as if made as of the Closing, (other than such
representations and warranties as are expressly made as of another date) and
Seller will have received a certificate to such effect, dated as of the Closing
Date, executed by a duly authorized representative of the Buyer.
8.1.2 Compliance with Covenants. All the covenants contained in
----------------------------
this Agreement to be complied with by the Buyer on or before the Closing will
have been complied with and Seller will have received a certificate to such
effect, dated as of the Closing Date, executed by a duly authorized
representative of the Buyer.
8.1.3 No Adverse Order. No federal, state or local governmental
-------------------
authority or other agency or commission or federal, state or local court of
competent jurisdiction will have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and has the effect of
making the transactions contemplated by this Agreement illegal or otherwise
restraining or prohibiting consummation of such transactions.
8.1.4 No Litigation. No suit, claim, cause of action, arbitration,
--------------
investigation or other proceeding contesting, challenging or seeking to alter or
enjoin or adversely affect the sale and purchase of the Purchased Assets or any
other transaction contemplated hereby will be pending or threatened.
8.1.5 Assumption Agreement. Seller shall have received a
----------------------
counterpart of the Assumption Agreement, executed on behalf of the Buyer by a
duly authorized representative of the Buyer.
8.1.6 Other Deliveries. The Buyer will have made the other
------------------
deliveries required of it by Section 3.3 hereof.
8.2 CONDITIONS TO OBLIGATIONS OF THE BUYER. The obligations of the
-------------------------------------------
Buyer to consummate the transactions contemplated by this Agreement will be
subject to the fulfillment to the satisfaction of the Buyer (or waiver by the
Buyer in writing), at or prior to the Closing, of each of the following
conditions:
8.2.1 Closing Date Financial Statements. Seller shall have
-------------------------------------
delivered a balance sheet and income statement of Seller prepared in a manner
consistent with prior periods and which
-16-
materially represents the financial status of the Seller and dated as of the
Closing Date (that balance sheet referred to herein as the "CLOSING DATE BALANCE
SHEET" and the financial statements collectively referred to herein as the
"CLOSING DATE FINANCIAL STATEMENTS"), accompanied by a certificate from a duly
authorized officer of Seller, as of the Closing Date as to the preparation and
delivery of the Closing Date Financial Statements.
8.2.2 Accuracy of Representations and Warranties. The
-----------------------------------------------
representations and warranties of Seller contained in ARTICLE 4 of this
Agreement will be true and correct in all material respects as of the Closing,
with the same force and effect as if made as of the Closing (other than such
representations and warranties that are expressly made as of another date), and
the Buyer will have received a certificate to such, effect, dated as of the
Closing Date, executed by a duly authorized officer of Seller.
8.2.3 Compliance with Covenants. All the covenants contained in
---------------------------
this Agreement to be complied with by Seller on or before the Closing will have
been complied with, and the Buyer will have received a certificate of Seller to
such effect, dated as of the Closing Date, signed by a duly authorized officer
of Seller.
8.2.4 No Litigation. No suit, claim, cause of action,
--------------
arbitration, investigation or other proceeding contesting, challenging or
seeking to alter, enjoin or adversely affect the sale and purchase of the
Purchased Assets or any other transaction contemplated hereby will be pending or
threatened.
8.2.5 Release of Encumbrances. Any Encumbrance with respect to any
-----------------------
Purchased Assets shall have been released to the satisfaction of the Buyer.
8.2.6 Third Party Consents. Seller will have obtained and
-----------------------
delivered to the Buyer all consents, waivers and approvals from third parties
and governmental entities necessary to effect the assignment and transfer to the
Buyer of the Purchased Assets free and clear of all Encumbrances and the
assignment to the Buyer of all Assigned Contracts, including without limitation,
those consents listed on Section 4.5 of Seller's Disclosure Schedule.
8.2.7 No Other Auction. No order has been made, no petition
-------------------
presented, or resolution passed for the winding-up of Seller, or the appointment
of any trustee for the benefit of creditors or the preparation or commencement
of any bankruptcy or insolvency proceeding.
8.2.8 Other Deliveries. Seller will have made the other
-----------------
deliveries required by Section 3.2 and Section 8.2 hereof.
ARTICLE 9
POST-CLOSING COVENANTS OF SELLER
9.1 NO TRANSFER. Seller agrees that it shall not sell, pledge,
-------------
hypothecate, assign or otherwise transfer, directly or indirectly, legally or
beneficially, this Agreement or any benefit hereunder.
9.2 PAYMENTS TO THE BUYER. In the event that Seller receives any
-------------------------
payments that relate to any Assigned Contracts or otherwise relate to the
Purchased Assets, Seller shall
-17-
immediately deliver such payment by certified mail or reputable overnight
delivery service to the Buyer at the address set forth in 11.1.
9.3 DECREASE IN PURCHASE PRICE.
-----------------------------
9.3.1 Decreases in Purchase Price. On December __, 2005 a review
-----------------------------
of the Seller Financial Statements shall be conducted by Buyer. The portion of
the Purchase Price to be paid on that date shall be adjusted on a pro rata basis
for each terminated or non-paying customer. For example, if customer X comprised
1% of the revenue of Seller on September __, 2005 and customer X is no longer a
customer on December __, 2005 or is past due for more than 15 days; then the
$150,000 payment due to Seller shall be reduced by 1%. This calculation shall be
done on a customer by customer basis.
9.4 CUSTOMER AND OTHER BUSINESS RELATIONSHIPS. After the Closing, the
--------------------------------------------
Seller will cooperate with the Buyer in its efforts to maintain the Buyer's
customer relationships pursuant to the Assigned Contracts. Seller will satisfy
the Excluded Liabilities in a manner which is not detrimental to any of such
relationships. The Seller will refer to the Buyer all inquiries relating to the
Purchased Assets. Neither the Seller nor any of its officers, employees, agents,
or shareholders, shall take any action which would tend to diminish the value of
the Purchased Assets after Closing or that would interfere with the business of
the Buyer to be engaged in after the Closing Date, including, without
limitation, disparaging the name or business of the Buyer.
ARTICLE 10
INDEMNIFICATION
10.1 LOSS DEFINED; INDEMNITEES. For purposes of this ARTICLE 10, the
----------------------------
term "LOSS" will mean and include any and all liability, loss, damage, claim,
expense, cost, fine, fee, penalty, obligation or injury including, without
limitation, those resulting from any and all claims, actions, suits, demands,
assessments, investigations, judgments, awards, arbitrations or other
proceedings, together with reasonable costs and expenses including the
reasonable attorneys' fees and other legal costs and expenses relating thereto.
As used in this ARTICLE 10, the term "BUYER INDEMNITEES" means and includes the
Buyer and any present or future officer, director, employee, Affiliate,
stockholder or agent of the Buyer; and the term "SELLER INDEMNITEE" means and
includes any present or future officer, director, employee, Affiliate,
stockholder or agent of Seller.
10.2 INDEMNIFICATION BY SELLER. Seller agrees, subject to the other
----------------------------
terms, conditions and limitations of this Agreement (including the provisions of
ARTICLE 10 hereof), to indemnify the Buyer and any Buyer Indemnitee against, and
to hold the Buyer and each Buyer Indemnitee harmless from, all Loss arising out
of:
(a) the failure of any representation or warranty of Seller
contained in ARTICLE 4 of this Agreement or any certificate delivered pursuant
to this Agreement, to be true and correct as of the Closing Date or the breach
or violation of any covenant of Seller made herein;
(b) any of the Excluded Assets or any of the Excluded Liabilities;
-18-
(c) the operation of the Business or the Purchased Assets by
Seller at any time or times on or prior to the Closing Date (including without
limitation any and all Taxes arising out of, or payable with respect to,
Seller's business operations through the Closing Date);
(d) any failure of Seller to pay the Transaction Taxes;
(e) liability for noncompliance with any bulk sales, bulk transfer
or similar laws applicable to the transactions contemplated by this Agreement
(Seller's compliance with which is hereby waived by the Buyer) or any claims
asserting that any transactions contemplated by this Agreement constitute a
fraudulent conveyance or similar claim;
(f) any demand, claim, debt, suit, cause of action, arbitration or
other proceeding (including, but not limited to, a warranty claim, a product
liability claim or any other claim) that is made or asserted by any third party
that relates to any product or service that was sold, licensed or otherwise
provided by Seller;
(g) any demand, claim, debt, suit, cause of action or proceeding
made or asserted by a shareholder, creditor, receiver, or trustee in bankruptcy
of Seller, or of the property or assets of either, asserting that the transfer
of the Purchased Assets to the Buyer hereunder constitutes a fraudulent
conveyance, fraudulent transfer or a preference under any applicable state or
federal law, including but not limited to the United States Bankruptcy Code;
(h) any demand, claim, debt, suit, cause of action or proceeding
made or asserted by any employee or independent contractor of Seller or any of
its Affiliates or any former employee or independent contractor of Seller or any
of its Affiliates, that relates in any manner to any termination by Seller or an
Affiliate of Seller of such person's employment or the services of such employee
or independent contractor or any other matter relating to the employment of such
employee or independent contractor by Seller or an Affiliate of Seller;
(i) Seller's termination of the contractual relationship with any
Contractor and the employment of any of employees at any time prior to, on or
after the Closing Date and any failure by Seller to pay or withhold any Taxes
payable with respect to Seller's employment of any employee; and
10.3 INDEMNIFICATION BY BUYER. Buyer agrees, subject to the other
---------------------------
terms, conditions and limitations of this Agreement (including the provisions of
ARTICLE 10 hereof), to indemnify the Seller and any Seller Indemnitee against,
and to hold the Seller and each Seller Indemnitee harmless from, all Loss
arising out of the failure of any representation or warranty of Buyer contained
in ARTICLE 4 of this Agreement or any certificate delivered pursuant to this
Agreement, to be true and correct as of the Closing Date or the breach or
violation of any covenant of Buyer made herein.
10.4 PROCEDURES FOR INDEMNIFICATION. As used herein, an "INDEMNIFIED
---------------------------------
PARTY" means a party seeking indemnification pursuant to ARTICLE 10, and the
term "INDEMNIFYING PARTY" means the party who is obligated to provide
indemnification under ARTICLE 10, The Indemnified Party agrees to give the
Indemnifying Party prompt written notice of any event, or any claim, action,
suit, demand, assessment, investigation, arbitration or other proceeding by or
in respect of a third party (a "THIRD-PARTY CLAIM") of which it has knowledge,
for which such Indemnifying Party is entitled to indemnification under this
ARTICLE 10. In the case of a Third-Party Claim, the Indemnifying Party will have
the right to direct, through counsel of its
-19-
own choosing, the defense or settlement of any such Third-Party Claim at its own
expense. In such case the Indemnified Party may participate in such defense, but
in such case the expenses of the Indemnified Party will be paid by the
Indemnified Party. The Indemnified Party will promptly provide the Indemnifying
Party with access to the Indemnified Party's records and personnel relating to
any such Third-Party Claim during normal business hours and will otherwise
cooperate with the Indemnifying Party in the defense or settlement of such
Third-Party Claim, and the Indemnifying Party will reimburse the Indemnified
Party for all its reasonable out-of-pocket costs and expenses incurred in
providing such access, personnel and cooperation. Upon assumption of the defense
of any such Third-Party Claim by the Indemnifying Party, the Indemnified Party
will not pay, or permit to be paid, any part of any claim or demand arising from
such Third-Party Claim, unless the Indemnifying Party consents in writing to
such payment (which consent will not be unreasonably withheld) or unless a final
judgment from which no appeal may be taken by or on behalf of the Indemnified
Party is entered against the Indemnified Party for such liability. No such
Third-Party Claim may be settled by me Indemnifying Party without the written
consent of the Indemnified Party, which consent will not be unreasonably
withheld. If the Indemnifying Party fails to defend or fails to prosecute or
withdraws from such defense, then the Indemnified Party will have the right to
undertake the defense or settlement thereof, at the Indemnifying Party's
expense. If the Indemnified Party assumes the defense of any Such Third-Party
Claim pursuant to this ARTICLE 10 and proposes to settle such Third-Party Claim
prior to a final judgment thereon or to forgo appeal with respect thereto, then
the Indemnified Party will give the Indemnifying Party prompt written notice
thereof and the Indemnifying Party will have the right to participate in the
settlement or assume or reassume the defense of such Third-Party Claim.
10.5 LIMITATIONS ON INDEMNIFICATION. Notwithstanding anything herein to
-------------------------------
the contrary, no claim for indemnification under this ARTICLE 10 may be brought
after the twelve (12) month period following the Closing Date; provided,
however, that claims for indemnification relating to Taxes (including without
limitation Transaction Taxes), Intellectual Property or software, may be brought
at any time prior to the expiration of the applicable statute of limitation.
ARTICLE 11
GENERAL PROVISIONS
11.1 NOTICES. All notices and other communications given or made
--------
pursuant hereto will be in writing and will be deemed to have been duly given or
made (a) as of the date delivered, if delivered personally or by overnight
courier, (b) on the third Business Day after deposit in the U.S. mail, if mailed
by registered or certified mail (postage prepaid, return receipt requested), or
(c) when successfully transmitted by facsimile (with a confirming copy of such
communication to be sent as provided in clauses (a) or (b) above), and, in each
case to the parties at the following addresses or facsimile number (or at such
other address for a party as will be specified by like notice, except that
notices of changes of address will be effective upon receipt):
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If to Buyer, DFW or Parent:
Mobilepro Corp.
0000 Xxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxx X. Xxxxxx, CEO
Facsimile: (000) 000-0000
If to the Seller:
With a copy (which will not constitute notice) to:
Facsimile:
For purposes of this Agreement, a "Business Day" shall mean any day that is
not a Saturday, a Sunday or other day on which banking organizations in
Washington, D.C. are authorized or required by law to close.
11.2 EXPENSES. All fees, costs and expenses incurred in connection with
---------
this Agreement and the transactions contemplated hereby will be paid by the
party incurring such fees, costs and expenses.
11.3 ENTIRE AGREEMENT. This Agreement, the Ancillary Agreements, the
------------------
schedules and exhibits attached hereto and the Disclosure Schedules (including
all schedules thereto), constitute the entire agreement of the parties hereto
with respect to the subject matter hereof and supersede all prior agreements and
undertakings with respect to the subject matter hereof, both written and oral.
11.4 AMENDMENT/WAIVER. This Agreement may not be amended or modified
-----------------
except by an instrument in writing signed by the Buyer and Seller, Waiver of any
term or condition of this Agreement will only be effective if an to the extent
documented in a writing signed by the party making or granting such waiver and
will not be construed as a waiver of any subsequent breach or waiver of the same
term or condition, or a waiver of any other term or condition, of this Agreement
The failure of any party to enforce any provision hereof will not be construed
to be a waiver of the right of such party thereafter to enforce such provisions.
11.5 PUBLIC ANNOUNCEMENTS. Except as may otherwise be required by law,
----------------------
Seller will not make any public announcements with respect to this Agreement or
the transactions contemplated herein or otherwise communicate with any news
media without prior notification to the Buyer, and, to the maximum extent
practicable, the parties will consult with each other before holding any press
conferences, analyst calls or other meetings or discussions and before issuing
any press release or other public announcements with respect to the transactions
contemplated by this Agreement. The parties will provide each other the
opportunity to review and comment upon any press release or other public
announcement or statement with respect to the transactions contemplated by this
Agreement, and will not issue any such press release or other public
announcement or statement prior to such consultation, except as may be required
by applicable Law, court process or by obligations pursuant to any listing
agreement with any
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national securities exchange. The parties agree that the initial press release
or releases to be issued with respect to the transactions contemplated by this
Agreement will be mutually agreed upon prior to the issuance thereof. In
addition, the Seller will, and will cause its Subsidiaries to consult with Buyer
regarding communications with customers, members and employees relating to the
transactions contemplated by this Agreement.
11.6 NO THIRD-PARTY BENEFICIARIES. This Agreement is for the sole
-------------------------------
benefit of the parties hereto and their permitted assigns and nothing herein,
express or implied, is intended to or will confer upon any other person any
legal or equitable right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, except for the indemnification rights of the
Indemnified Persons under ARTICLE 10.
11.7 ASSIGNMENT. This Agreement will not be assigned by the Buyer or
-----------
Seller without the prior written consent of the other party and any purported
assignment without such consent will be void; except, that the Buyer may,
------
without Seller's consent, assign all or a portion of its rights and obligations
hereunder (including rights and obligations under the Ancillary Agreements) (i)
to any of its majority-owned subsidiaries or Parent, (ii) by operation of law,
or (iii) in connection with any merger, consolidation or sale of all or
substantially all of the Buyer's assets used in the business in which the Buyer
uses the Purchased Assets or in connection with any similar transaction;
provided, however, that no such assignment by the Buyer shall relieve the Buyer
-------- -------
of any of its obligations under this Agreement, including the obligation to pay
the Closing Payment and the obligations under the Note.
11.8 GOVERNING LAW. This Agreement will be governed by, and construed
---------------
in accordance with, the Laws of the State of Delaware applicable to contracts
executed in and to be performed entirely within State of Delaware.
11.9 CONSENT TO JURISDICTION. Each of the parties hereto (a) consents
--------------------------
to submit itself to the personal jurisdiction of any federal court located in
the State of Maryland or any Maryland state court in the event any dispute
arises out of this Agreement or any of the transactions contemplated by this
Agreement; (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court; and (c)
agrees that it will not bring any action relating to this Agreement or any of
the transactions contemplated by this Agreement in any court other than a
federal court sitting in the State of Maryland or a Maryland state court.
11.10 HEADINGS; INTERPRETATION. The headings contained in this
--------------------------
Agreement are for reference purposes only and will not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "INCLUDE,"
"INCLUDES" or "INCLUDING" are used in this Agreement, they will be understood to
be followed by the words "WITHOUT LIMITATION."
11.11 CONSTRUCTION. In the event of an ambiguity or question of intent
-------------
or interpretation arises, this Agreement will be construed as if drafted jointly
by the parties and no presumption or burden of proof will arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
11.12 COUNTERPARTS. This Agreement may be executed in one or more
-------------
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed will be deemed to be an original but all of which will
constitute one and the same agreement. In the
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event any signature page is delivered by electronic transmission to the Buyer,
the party using such means of delivery shall cause the original executed
signature pages to be physically delivered to the Buyer within five (5) business
days of the execution and delivery hereof, though failure to deliver such copies
shall not affect the validity of this Agreement.
11.13 SEVERABILITY. If any term or other provision of this Agreement
-------------
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement will nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.
11.14 ATTORNEYS' FEES. Should suit be brought to enforce or interpret
-----------------
any part of this Agreement, the prevailing party will be entitled to recover, as
an element of the costs of suit and not as damages, reasonable attorneys' fees
to be fixed by the court (including costs, expenses and fees on any appeal). The
prevailing parry will be entitled to recover its costs of suit, regardless of
whether such suit proceeds to final judgment.
11.15 SPECIFIC PERFORMANCE. Buyer and Seller each acknowledge that, in
----------------------
view of the uniqueness of the Purchased Assets, the Business and the
transactions by this Agreement and the Seller Ancillary Agreements, a party
would not have adequate remedy at law for money damages if this Agreement or any
Seller Ancillary Agreement is not performed in accordance with its respective
terms. Each party to this Agreement therefore agrees that the other party hereto
shall be entitled to specific enforcement of me terms of this Agreement and any
Seller Ancillary Agreement in addition to any other remedy to which it may be
entitled, at law or in equity/
11.16 CONFIDENTIALITY. Buyer and Seller each recognize that they have
----------------
received and will receive confidential information concerning the other during
the course of the negotiations and preparations. Accordingly, Buyer and Seller
each agree (a) to use its respective best efforts to prevent the unauthorized
disclosure of any confidential information concerning the other that was or is
disclosed during the course of such negotiations and preparations, and is
clearly designated in writing as confidential at the time of disclosure, and (b)
to not make use of or permit to be used any such confidential information other
man for the purpose of effectuating this Agreement and related transactions.
The obligations of this section will not apply to information that (i) is or
becomes part of the public domain, (ii) is disclosed by the disclosing party to
third parties without restrictions on disclosure, (iii) is received by the
receiving party from a third xxxxx without breach of a nondisclosure obligation
to the other party or (iv) is required to be disclosed by law.
11.17 PASSAGE OF TITLE AND RISK OF LOSS. Legal title, equitable title
-----------------------------------
and risk of loss with respect to the Purchased Assets shall not pass to Buyer
until the property or right is transferred at the Closing and possession thereof
is delivered to Buyer.
[SIGNATURE PAGE NEXT]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first written above by their respective officers thereunto duly
authorized.
UC HUB GROUP, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Name: Xxxxx Xxxxxx
Title: Pres/CEO
ALL COM USA, INC
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Name: Xxxxx Xxxxxx
Title: Pres
AMERICAN FIBER NETWORK, INC.
By:
-------------------------------------
Name: Xxx X. Xxxxxx
Title: President
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
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EXHIBIT E
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NON-COMPETITION AGREEMENT
