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ASSET PURCHASE AGREEMENT
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DATED AS OF JUNE 17, 0000
XXXXXXX
XXXXXXXX COMMUNICATIONS, INC.
AS SELLER
AND
DFW INTERNET SERVICES, INC.,
A WHOLLY-OWNED SUBSIDIARY OF MOBILEPRO CORPORATION
AS BUYER
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "AGREEMENT"), is made and entered into
as of June 17, 2004 (the "EFFECTIVE DATE"), by and among Crescent
Communications, Inc., a Nevada corporation ("SELLER") and DFW Internet Services,
Inc., a Texas corporation (the "BUYER"), and wholly-owned subsidiary of
Mobilepro Corp.
RECITALS
WHEREAS, Seller is engaged in the business of providing connectivity
services including wireless, digital subscriber line and traditional
communication technologies to business and residential customers (the
"BUSINESS"); 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" has the meaning set forth in Section 4.7.
"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.
"ASSUMPTION AGREEMENT" has the meaning set forth in Section 3.2.2.
"ASSUMED LIABILITIES" has the meaning set forth in Section 2.2.1.
"BALANCE SHEET" has the meaning set forth in Section 3.2.4.
"XXXX OF SALE" has the meaning set forth in Section 3.2.1.
"BLUEGATE BUSINESS" means Seller's network and software applications
specifically designed to provide secure internet connectivity, managed services,
security and related technical support to aid healthcare providers in their
efforts to use information technology and comply with HIPAA regulations,
including but not limited to applications that provide secure e-mail and "chat"
services, and the ability to control the access to patient information on the
Internet.
"BRIDGE NOTE AMOUNT" means the amount (including principal and accrued
interest) payable as of the Effective Date, to Mobilepro Corp. under that
certain Note issued by Crescent Communications to Mobilepro Corp.
"BUSINESS" has the meaning set forth in the recitals, except that the
Business shall not be deemed to include the Bluegate Business.
"BUSINESS CONTRACT" means any Contract: (a) to which the Seller is a
party; (b) by which the Seller or any of its 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, 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" AND "CLOSING DATE" has the respective meanings specified for such
terms in 3.1.
"CLOSING DATE BALANCE SHEET" has the meaning set forth in 8.2.1.
"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.
"CYRUS ONE" shall mean that certain co-location facility located at 0000
Xxxxxxxxx Xxxxxxx, Xxxxxxx, XX 00000.
"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.
"DOMAIN TRANSFER AGREEMENTS" has the meaning set forth in Section 3.2.3.
"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.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rulings and regulations promulgated thereunder.
"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.
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"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;
(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
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(l) any and all inter-company payables incurred by, or
owed to, the Business accrued or arising prior to the Closing.
"HIPAA" means the Health Insurance Portability and Accountability Act of
1996.
"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 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.
"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.
"MAINTENANCE AND SUPPORT CONTRACTS" means the contracts pursuant to which,
prior to the Closing Date, Seller has obligations to provide maintenance and
support to its customers.
"XXXX ASSIGNMENT" has the meaning set forth in Section 3.2.3.
"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:
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(a) Documentation, if any;
(b) the Intellectual Property Rights used in the conduct of the Business
by Seller and listed in Section 1.1(b) of the Seller Disclosure Schedule;
(c) the Accounts Receivable listed in the AR Schedule;
(d) inventory listed in Section 1.1(d) of the Seller Disclosure Schedule;
(e) instruments, equipment, machinery, furniture, fixtures and fittings,
tools and other similar items of tangible personal property used in the conduct
of the Business by Seller located at Cyrus One, except those listed in Section
1.1(e) of the Seller Disclosure Schedule;
(f) instruments, equipment, machinery, furniture, fixtures and fittings,
tools and other similar items of tangible personal property used in the conduct
of the Business by Seller located at 000 X. Xxxx Xxx Xxxx, Xxxxx 000, Xxxxxxx,
XX 00000 and listed on Section 1.1(f) of the Seller Disclosure Schedule;
(g) any and all copies in a tangible medium and other tangible embodiments
of (i) the Software (whether in source code or object code form); (ii) the
Documentation; and (iii) the Intellectual Property Rights;
(h) the Assigned Contracts;
(i) the Business Records.
(j) a copy of the books and records used in the conduct of the Business,
including without limitation, copies of all credit records, billing records,
payroll records, computer records, computer programs, contracts, agreements,
operating manuals, schedules of assets, correspondence, books 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;
(k) real property, if any, owned in fee and leasehold estates and the
related and sublease agreements, whether as owner, lessee or sublessee, in each
case which property is used in the conduct of the Business by Seller, together
with all other buildings, fixtures and improvements thereon, and all rights,
privileges, permits and easements appurtenant thereto, except for that certain
leasehold at 000 X. Xxxx Xxx Xxxx, Xxxxx 000, a portion of which is being
sublet, pursuant to that certain sublease (referenced in Section 3.2.14);
(l) agreements in favor of Seller that pertain to any network
relationships the Seller may have which are necessary for the conduct of the
Business, if any;
(m) licenses in favor of Seller that are used in or necessary for the
conduct of the Business, if any; and
(n) 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;
"PURCHASE PRICE" has the meaning set forth in Section 2.3.
"PURCHASE INDEMNITIES" has the meaning set forth in Section 10.1.
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"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 INDEMNITEES" has the meaning set forth in Section 10.1.
"SOFTWARE" means, collectively, all of the software (including all software
programs, objects, modules, routines, algorithm and code, in both source code
and object code form) that are more fully described in Exhibit A attached
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hereto, and includes, without limitation, (i) any other software owned by Seller
that is used by Seller in connection with the development or utilization of the
software described in Exhibit A; and (ii) all derivative works of any of the
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software described in Exhibit A.
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"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.
"WARN" means the Federal Worker Adjustment and Retraining Act.
ARTICLE 2
PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES
2.1 AGREEMENT TO SELL AND PURCHASE. Subject to the terms and
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conditions 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.
2.2 ASSUMPTION AND EXCLUSION OF LIABILITIES.
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2.2.1 Assumed Liabilities. Subject to the terms and
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conditions of 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 B
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attached hereto (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, (ii) with respect only
to those Maintenance and Support Contracts that are part of the Assigned
Contracts, obligations to provide maintenance and support under such Contracts
regardless of whether such obligations first accrued or arose before or after
the Closing Date, and (iii) those miscellaneous and sundry liabilities
specifically listed on Section 2.2.1 of the Seller Disclosure Schedule (the
obligations and liabilities under (i), (ii) and (iii) collectively referred to
herein as the "ASSUMED LIABILITIES").
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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; ALLOCATION OF PURCHASE PRICE. The purchase price
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(the "PURCHASE PRICE") in the aggregate for all the Purchased Assets shall
consist of the following:
2.3.1 Nine Hundred Thousand ($900,000) in cash (the "CASH
AMOUNT") less the Bridge Note Amount;
2.3.2 a promissory note issued by Buyer with a principal
amount equal to Two Hundred Fifty Thousand ($250,000) (the "NOTE"), in the form
attached hereto as Exhibit C; and
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2.3.3 an amount equal to 70% of that portion of the Accounts
Receivable that have been earned by Seller as of the Effective Date through the
rendering of services in connection with the underlying receivable. An
additional 15% of the Accounts Receivable that have been earned by Seller as of
the Effective Date through the rendering of services in connection with the
underlying receivable shall be paid to the Seller within 30 days of such time as
Buyer receives payment for such receivables (such payment by Buyer to Seller
referred to herein as the "ADDITIONAL PAYMENT").
2.4 TAX ALLOCATION. The parties hereto agree that the sum of the
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Purchase Price shall be allocated among the Purchased Assets and Seller's
covenants not to compete in accordance with the fair market value of each which
shall be determined in good faith by the purchaser within sixty (60) days after
the Closing; and the parties hereto shall each act in a manner consistent with
such determination in (i) filing Internal Revenue Form 8594, captioned "Asset
Acquisition Statement under Section 1060"; (ii) paying sales and other transfer
Taxes in connection with the purchase and sale of the Purchased Assets pursuant
to this Agreement, except as required by a final determination of the relevant
tax authorities; and (iii) for all other purposes.
ARTICLE 3
CLOSING
3.1 TIME AND PLACE. The Closing under this Agreement shall take
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place at the offices of Xxxxxx Xxxxxx LLP, Suite 600, 0000 Xxxxxxxxxxx Xxxxxx,
X.X., Xxxxxxxxxx XX 00000 at 10:00 a.m., local time, on the Effective Date,
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.
For purposes of this Agreement, the date of the execution of this Agreement
shall be known as the "CLOSING DATE" and the actions taken on such date and at
such time the "CLOSING."
3.2 DELIVERIES BY SELLER TO THE BUYER. At the Closing, Seller shall
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deliver to the Buyer:
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3.2.1 the Xxxx of Sale in substantially the form of Exhibit D
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attached hereto (the "XXXX OF SALE"), dated the Closing Date and duly executed
by an authorized officer of Seller, transferring certain Purchased Assets to the
Buyer;
3.2.2 the Assumption Agreement in substantially the form of
Exhibit E attached hereto (the "ASSUMPTION AGREEMENT") dated the Closing Date
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and duly executed by an authorized officer of Seller transferring the Purchased
Assets to the Buyer;
3.2.3 assignments in substantially the form of Exhibit F of
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all of Seller's Intellectual Property Rights (together with goodwill pertaining
thereto) included in the Purchased Assets, dated the Closing Date and duly
executed by an authorized officer of Seller, including but not limited to domain
name transfer agreements for each of the domain names included in the Purchased
Assets in substantially the form of Exhibit F-1 attached hereto (the "DOMAIN
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TRANSFER AGREEMENTS") duly executed on behalf of Seller by authorized officer of
Seller;
3.2.4 a Balance Sheet, dated as of March 31, 2004 (the
"BALANCE SHEET");
3.2.5 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 natural material adverse change in
the Purchased Assets or the Business whether or not resulting from a breach in
any representation, warranty or covenant in this Agreement and (iv) that the
Balance Sheet was prepared in conformity with GAAP, that the Balance Sheet
fairly presents the financial position of the Business as of the date thereof,
and that there are no Liabilities which are required to be disclosed by GAAP
other than those included therein;
3.2.6 an opinion, dated the Closing Date, of counsel to
Seller, in substantially the form of Exhibit G;
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3.2.7 a copy of all Business Records;
3.2.8 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) 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;
3.2.9 the Required Consents indicated on Section 4.5 of the
Seller Disclosure Schedule as having been received as of the Closing Date;
3.2.10 all documentation, if any, necessary or appropriate to
convey all transferable rights under all Permits issued to Seller by any
governmental agency or authority;
3.2.11 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;
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3.2.12 the Non-Competition Agreement in substantially the form
of Exhibit H attached hereto (the "NON-COMPETITION AGREEMENT") duly executed by
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the individuals on Section 3.2.12 of the Seller Disclosure Schedule;
3.2.13 offer letters or consulting agreements in substantially
the form of Exhibit I attached hereto dated on or before the Closing Date (to
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become effective on the Closing Date), between the Buyer and those employees
listed on Section 3.2.13 of the Seller Disclosure Schedule;
3.2.14 a sublease agreement in substantially the form of
Exhibit J attached hereto dated the Closing Date, between Seller and the Buyer;
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3.2.15 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;
3.2.16 such other documents and instruments as are reasonably
required to be delivered to the Buyer by Seller in order to effect the
transactions contemplated by this Agreement; and
3.3 DELIVERIES BY THE BUYER TO SELLER. At the Closing, the Buyer
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shall deliver to Seller the following:
3.3.1 the Purchase Price, payable in accordance with Section
2.3;
3.3.2 the Note, executed in accordance with Section 2.3;
3.3.3 counterpart of the Assumption Agreement in
substantially the form of Exhibit E, dated the Closing Date and duly executed by
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an authorized officer of the Buyer assuming obligations of Seller under the
Assumed Contracts arising after the Closing Date;
3.3.4 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;
3.3.5 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; and
3.3.6 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.
3.3.7 sublease agreement in substantially the form of Exhibit
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J attached hereto dated the Closing Date, between Seller and the Buyer;
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants 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 the 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 Nevada. 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
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power and authority to enter into, execute, deliver and perform its obligations
under this Agreement, the Xxxx of Sale and the Assumption Agreement (the Xxxx of
Sale and the Assumption 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.
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 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 Articles 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
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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 Articles of Incorporation and Bylaws, each as
currently in effect. Seller is not in violation of its Articles 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
------------------------
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
-------------------------------------------
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. All of the tangible personal property
included in the Purchased Assets is conveyed in an "as is" condition. 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 Receivable constitute valid
--------------------
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 Effective Date are 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 collectible in their stated
amount and each has been or is collectible on or before the one hundred
eightieth (180th) 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
---------------------
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
----------
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
-11-
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.
------------
4.10.1 Except as set forth in Section 4.10 of Seller's
Disclosure Schedule, each Tax required to have been paid, 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. The Seller has
not entered into or become bound by any agreement or consent pursuant to Section
341(f) of the Internal Revenue Code.
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
-12-
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, (ii) the Export Administration Act and regulations
promulgated thereunder and all other laws, regulations, rules, orders, writs,
injunctions, judgments and decrees applicable to the export or re-export of
controlled commodities or technical data and (iii) the Immigration Reform and
Control Act.
4.13 INTELLECTUAL PROPERTY.
----------------------
4.13.1 The Purchased Assets include all Intellectual Property
Rights necessary to enable the Buyer to conduct the Business in the manner in
which such business was conducted on December 31, 2003, 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
Property 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.
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 PRODUCT WARRANTIES; DEFECTS. Each product and service sold,
-----------------------------
manufactured, licensed, leased or delivered by the Seller in connection with the
Business has been in substantial
-13-
conformity with all applicable contractual commitments and all express
warranties made by the Seller and there is, to the best of Seller's knowledge,
no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any such contractual
commitments or express warranties for replacement or repair thereof or other
damages in connection therewith. No service or product manufactured, sold,
licensed, leased or delivered by the Seller in connection with the Business is
subject to any guaranty, warranty, or other indemnity beyond the Seller's
applicable standard terms and conditions of sale, lease or licensing (as set
forth in written agreements that Seller has delivered to the Buyer) or beyond
that imposed by applicable law.
4.15 ASSIGNED CONTRACTS.
-------------------
4.15.1 Exhibit B 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 B,
---------
including all amendments thereto. Each Contract is valid and in full force and
effect.
4.15.2 Except as set forth in Section 4.15 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.
4.15.3 Except as set forth in Section 4.15 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.
4.15.4 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.
4.15.5 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.
4.16 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 4.16 of Seller's Disclosure Schedule.
4.17 ORAL CONTRACTS. Except as set forth on Section 4.17 of Seller's
---------------
Disclosure Schedule, Seller is not, and has not been a party to any material
contract or arrangement that has
-14-
not been set forth in a written contract (a copy of which has been delivered by
Seller to the Buyer).
4.18 LIABILITIES.
-----------
4.18.1 Set forth on Section 4.18 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
Company prepared in a manner consistent with prior periods and which materially
represents the liabilities of the Company. There are no contingent liabilities
of Seller except as set forth on Section 4.18 of Seller's Disclosure Schedule,
except for obligations under the Assigned Contracts listed on Exhibit B, to the
---------
extent that the existence of such obligations is ascertainable solely by
reference to such Assigned Contracts.
4.18.2 Section 4.18 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.
4.19 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.
4.20 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.
4.21 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.
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
Texas.
-15-
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 each of the Buyer Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and each of the Buyer Ancillary Agreements have been duly
authorized by all necessary corporate action on the part of Buyer. This
Agreement has been duly and validly executed and delivered by the Buyer, and
(assuming due authorization, execution and delivery by Seller) this Agreement
constitutes a legal, valid and binding obligation of Buyer enforceable against
the Buyer in accordance with its terms.
5.3 NO CONFLICT. The execution, delivery and performance of this
------------
Agreement do not (a) violate or conflict with the Articles 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 taxing
authorities) 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 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 internally 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.
6.3 REGULATORY AND OTHER AUTHORIZATIONS; CONSENTS.
-------------------------------------------------
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
-16-
with the other party in promptly seeking to obtain all such authorizations,
consents, orders and approvals. The parties hereto will not take any action
that will have the effect of delaying, impairing or impeding the receipt of any
required approvals.
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 party 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, the 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, 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 party and its counsel.
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.
6.5 FURNISHING OF OUTSTANDING BUSINESS PROPOSALS. Prior to or
------------------------------------------------
concurrently with the Closing, Seller will furnish to the Buyer with copies of
all business proposals (including names and status of discussions with
prospective customers and strategic partners) that are pending or outstanding
with respect to the Business.
6.6 NON-COMPETITION AND OTHER COVENANTS.
--------------------------------------
6.6.1 Agreement Not to Compete. For a period of three (3)
---------------------------
years after the Closing Date, neither the Seller, nor any individuals listed in
Section 3.2.12 of Seller's Disclosure Schedule shall be engaged or interested in
any business which competes directly with the business of the Buyer as is
currently conducted, or in those states in which the Buyer or its Affiliates has
specific plans to conduct business and the Seller or the individuals listed in
Section 3.2.14 of Seller's Disclosure Schedule have knowledge of such plans at,
or prior to the Closing. Each of the Seller and the individuals listed in
Section 3.2.12 of Seller's Disclosure Schedule shall be deemed to be interested
in a business if he, she or it is engaged or interested in that business as a
stockholder, director, officer, employee, salesman, sales representative, agent,
partner, individual proprietor, consultant or otherwise, but not if such
interest is limited solely to ownership of 2% or less of the equity or debt
securities of any class of a corporation whose shares are listed for trading on
a national securities exchange or traded in the over the counter market.
Nothing in this Section 6.6.1, shall be construed as to prohibit any of the
individuals identified on Section 3.2.12 of Seller's Disclosure Schedule from
being or remaining "interested" in the Bluegate Business as currently conducted
by the Seller or any business which provides internet connectivity, managed
services, security, network and software applications specifically designed to
aid healthcare providers in their efforts to comply with HIPAA regulations,
-17-
provided, that, such individual's "interest" does not result in the individual
-------- ----
engaging, or assisting any person within that business, in the establishment,
development, management, operations or sales efforts of the business (including
any line of business, affiliate, parent or subsidiary) in providing internet
service(s) for the purpose of providing connectivity to the internet.
6.6.2 Non-solicitation. For a period of three (3) years
----------------
after the Closing Date, neither the Company, nor any individual listed on in
Section 3.2.12 of Seller's Disclosure Schedule shall, directly or indirectly,
(a) cause or attempt to cause any customer, client, account or vendor, or
prospective customer, client, account or vendor to divert, terminate, limit or
in any manner modify or fail to enter into any actual or potential business
relationship with the Buyer, or (b) divert, solicit or employ, or attempt to
divert, solicit or employ, any of the individuals listed on Section 3.2.12 of
the Seller's Disclosure Schedule. For purposes of this 6.6, a prospective
customer, client, account or vendor shall mean any customer, client, account or
vendor that the Seller was involved with or any individual listed in Section
3.2.12 of Seller's Disclosure Schedule had knowledge of in his or her position
with the Seller for the twelve month period prior to the Closing Date.
6.6.3 Necessary and Reasonable. The Seller agrees that the
--------------------------
covenants provided for in Section 6.6 hereof are necessary and reasonable in
order to protect the Buyer in the conduct of its business, to protect the trade
secrets and other proprietary information of the Buyer and to protect the Buyer
in the utilization of the assets, tangible and intangible, including the
goodwill of the Buyer.
6.6.4 Internet Services Agreement. The Buyer and Seller will
---------------------------
enter into an agreement pursuant to which Buyer will purchase internet
connectivity services, in the form attached hereto as Exhibit K.
----------
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 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.
-18-
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 or state governmental
------------------
authority or other agency or commission or federal or state 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 Balance Sheet. Seller shall have
-----------------------------
delivered a balance sheet of Seller prepared in a manner consistent with prior
periods and which materially represents the financial status of the Company and
dated as of the Closing Date (the "CLOSING DATE BALANCE SHEET"), 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 Balance Sheet.
-19-
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 Seller's Outstanding Business Proposals. Seller will
-----------------------------------------
have furnished to the Buyer copies of all business proposals outstanding, if
any, for the Seller's utilization of the Purchased Assets.
8.2.5 No Order. No federal or state governmental authority
---------
or other agency or commission or federal or state 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 any of
the transactions contemplated by this Agreement illegal or otherwise restraining
or prohibiting consummation of such transactions.
8.2.6 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.
8.2.7 Release of Encumbrances. Any Encumbrance with respect
------------------------
to any Purchased Asset shall have been released to the satisfaction of the
Buyer.
8.2.8 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.
8.2.9 No Other Action. 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.
8.2.10 Other Deliveries. Seller will have made the other
-----------------
deliveries required by Section 3.2 and 6.6.4 hereof.
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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 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 ADDITIONAL PAYMENTS. At such time as the Additional Payment is
--------------------
made, Buyer will deliver to Seller, a detailed accounting evidencing the receipt
of payment by Buyer of the Accounts Receivable underlying the Additional
Payment.
9.4 CUSTOMER AND OTHER BUSINESS RELATIONSHIPS. After 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;
-21-
(b) any of the Excluded Assets or any of the Excluded
Liabilities;
(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
(j) any Liability under WARN or other applicable state
or local statute or regulation affecting termination of employment of employees
("WARN LIABILITY").
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
-22-
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 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 the 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) 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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(a) If to Buyer:
DFW Internet Services, Inc.
c/o Mobilepro Corp.
0000 Xxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxx X. Xxxxxx, CEO
Facsimile: (000) 000-0000
With a copy (which will not constitute notice) to:
Xxxxxx Xxxxxx LLP
0000 Xxxxxxxxxxx Xxx., X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
(b) If to the Company:
000 Xxxxx Xxxx Xxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx
Facsimile:
With a copy (which will not constitute notice) to:
Xxxx Xxxxxxxxxxx
Xxxxxxx Xxxxxxxxx & Associates, PC
000 X. Xxxx Xxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: 000-000-0000
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
-24-
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 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 Company 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, (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 Texas applicable to contracts
executed in and to be performed entirely within that State.
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 Texas or any Texas 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
-25-
this Agreement in any court other than a federal court sitting in the State of
Texas or a Texas 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."
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, reasonable
attorneys' fees to be fixed by the court (including costs, expenses and fees on
any appeal). The prevailing party 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 the 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
than for the purpose of effectuating the Asset Purchase and related
transactions. The obligations of this section will not apply to
-26-
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 party 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.
-27-
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.
CRESCENT COMMUNICATIONS, INC.
By:_____________________________________
Name: Xxxxxxx Xxxxxxxxx
Title:
DFW INTERNET SERVICES, INC.
By:_____________________________________
Name: Xxx X. Xxxxxx
Title: Chief Executive Officer
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
EXHIBIT A
---------
SOFTWARE
NONE
EXHIBIT B
---------
ASSIGNED CONTRACTS
Vendor
MAINTENANCE AND SUPPORT CONTRACTS FOR CUSTOMERS LISTED ON A/R
EXHIBIT C
---------
NOTE
EXHIBIT D
---------
XXXX OF SALE
EXHIBIT E
---------
ASSUMPTION AGREEMENT
EXHIBIT F
---------
DOMAIN TRANSFER AGREEMENTS
EXHIBIT G
---------
OPINION
EXHIBIT H
---------
NON-COMPETITION AGREEMENT
EXHIBIT I
---------
OFFER LETTERS AND CONSULTING AGREEMENTS
EXHIBIT J
---------
SUBLEASE AGREEMENT
EXHIBIT K
---------
INTERNET SERVICES AGREEMENT
