ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is made as of the 30th day of November, 2001
(the "Effective Date"), by and among CCC GLOBALCOM CORPORATION, a Nevada
corporation ("GlobalCom"); CIERA NETWORK SYSTEMS, INC., a Texas corporation
("Ciera") and wholly-owned subsidiary of GlobalCom; INCOMNET COMMUNICATIONS
CORPORATION, a Delaware corporation ("Incomnet"); and IRONWOOD TELECOM, LLC, a
Colorado limited liability company (the "Seller Stockholder").
W I T N E S S E T H:
WHEREAS, GlobalCom and its affiliates are a telecommunications common
carrier providing a variety of services, including local, wholesale and retail
domestic and international calling;
WHEREAS, Incomnet is a reseller of common carrier telecommunications,
including both domestic and international services and cellular services (the
"Business");
WHEREAS, the Seller Stockholder, together with Gold & Xxxxx Transfer S.A.
("Gold & Xxxxx"), respectively, are all of the stockholders of Incomnet;
WHEREAS, Incomnet desires to sell substantially all of its assets, and
Ciera has agreed to purchase substantially all of the assets of Incomnet;
WHEREAS, Incomnet has agreed to sell substantially all of its assets to
Ciera for the consideration set forth below, which consideration will include
certain shares of common stock issued by GlobalCom as the parent corporation of
Ciera, and the Seller Stockholder, together with Gold & Xxxxx, have agreed to
satisfy or release certain debts of Incomnet as part of the consideration of the
sale;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound hereby, hereto agree as follows:
SECTION 1
TERMS AND CONDITIONS
Article 1.1 Assets to be Transferred.
a. Incomnet hereby sells, conveys, transfers and delivers to Ciera all of
the assets of Incomnet, as of the date hereof, used in connection with the
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Business (the "Assets"), except the Excluded Assets identified in Article 1.1.b.
below, free and clear of all Encumbrances except for Permitted Encumbrances. The
Assets conveyed to Ciera hereunder include the following:
i. Incomnet's rights and interests to all accounts of subscribers to
Incomnet's telecommunications services;
ii. Incomnet's leased facilities, including all leasehold
improvements, located at 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx
00000 (collectively, the "Facilities"); provided, however, that
transferred leasehold improvements shall include only those
leasehold improvements owned by Incomnet that are transferable or
removable in accordance with the terms of the Facilities lease;
together with all of Incomnet's rights as sublessor with respect
to any subleases of any portion of the Facilities;
iii. Incomnet's rights, title and interest in and under those
contracts, agreements, leases and executory contracts identified
on Schedule 1.1.a.iii (collectively, the "Assigned Contracts");
iv. Incomnet's rights, title and interest in and under all licenses,
permits, tariffs, authorizations, approvals and certifications
that any governmental entity has issued to Incomnet (to the
extent that such particular Assets are assignable under
applicable law) (collectively, the "Permits");
v. Incomnet's right, title and interest in and to intangible
telecommunications assets, including, without limitation,
telecommunications numbering codes, locating routing codes and
"800" and "888" numbers and other customer billing and inquiry
numbers, carrier identification codes and other operating codes;
vi. Incomnet's right, title and interest in and to all intellectual
property, including, without limitation, all confidential
proprietary information, technical knowledge, its website(s),
Internet domain names and URL's, trade secrets necessary for the
operation of the Business, including the name "Incomnet" and any
other trade names used in Incomnet's business (the "Incomnet
Intellectual Property");
vii. Incomnet's rights under warranties, representations and
guaranties that suppliers and manufacturers made in connection
with the Assets;
viii. Copies of Incomnet's books and records (the "Books and Records")
relating to the Business;
ix. Incomnet's inventory (including debit card inventory), furniture,
fixtures, and equipment and any other fixed assets relating to
the Business;
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x. Incomnet's goodwill relating to the Business;
xi. All cash and banking or deposit accounts of Incomnet, the
balances of which shall be transferred by Incomnet to Ciera upon
the opening by Ciera of a new bank account;
xii. All notes and accounts receivable of Incomnet, whether recorded
or unrecorded, billed or not billed, or assigned for collection,
accrued and existing in respect of services of the Business up to
the Closing (the "Accounts Receivable"); and
xiii. Any other assets of Incomnet relating to the Business, wherever
located, except for the Excluded Assets.
b. Notwithstanding anything in this Agreement to the contrary, neither the
Cash Consideration, the GlobalCom Stock nor the other Incomnet assets identified
in Schedule 1.1.b (collectively, the "Excluded Assets") are included in the
Assets that Ciera is purchasing under this Agreement.
Article 1.2 Assignment and Assumption of Liabilities.
a. Upon and subject to the terms and conditions of this Agreement, Ciera
hereby fully assumes and will be solely responsible for, as of and after the
Effective Date, the following liabilities of Incomnet (the "Assumed
Liabilities"):
i. All liabilities and obligations under the Assigned Contracts and
the Permits, to the extent first accruing on or after the
Effective Date;
ii. All liabilities and obligations for income, transfer, sales, use
or other Taxes arising on or after the Effective Date in
connection with the Assets, the Business or the completion of the
transactions contemplated by this Agreement;
iii. All other liabilities and obligations arising on or after the
Effective Date in connection with the Assets, the Business or the
completion of the transactions contemplated by this Agreement;
and
iv. Notwithstanding the limitation of Article 1.2.a.i., such other
liabilities of Incomnet as set forth on Schedule 1.2.a. The
limitation set forth in Article 1.2.a.i. shall not be applicable
with respect to the liabilities set forth on Schedule 1.2.a.
b. Ciera does not assume and will not be responsible for, and Incomnet
remains solely liable for, any and all liabilities or obligations of Incomnet or
the Business which are not Assumed Liabilities (collectively, the "Retained
Liabilities"), which Retained Liabilities shall include, without limitation, the
liabilities and obligations set forth on Schedule 1.2.b.
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Article 1.3. Closing Actions.
a. i. Incomnet shall concurrently herewith deliver to Ciera at the
Facilities all of the Assets, free and clear of all Encumbrances,
pursuant to the form of xxxx of sale attached hereto as Exhibit
"A" and the form of assignment and assumption agreement attached
hereto as Exhibit "B" (the "Assignment and Assumption
Agreement");
ii. Incomnet shall promptly file with the Secretary of State of the
State of Delaware an amendment to its certificate of
incorporation, changing the name of Incomnet, and shall promptly
upon receipt, provide evidence of such filing to Ciera; and
iii. Incomnet shall concurrently herewith cause (A) the liens held by
Gold & Xxxxx and Seller Stockholder (and any other liens held by
any other Person) to be released, and (B) if necessary, the
filing of all necessary UCC termination statements to evidence
the termination of such liens.
b. i. Ciera shall concurrently herewith assume from Incomnet all of the
Assumed Liabilities pursuant to the form of Assignment and
Assumption Agreement;
ii. Ciera shall concurrently herewith pay to Incomnet $1,750,000.00
in immediately available funds (the "Cash Consideration"). At
Incomnet's request, the Cash Consideration may be wired directly
to Incomnet's senior secured creditor in satisfaction of a
portion of Incomnet's senior secured debt;
iii. Ciera shall concurrently herewith deliver to Incomnet a
promissory note in the principal amount of $750,000 (the "Note"),
which Note shall bear interest at the rate of eight percent (8%)
per annum and shall be due and payable as follows: (1) monthly
installments of interest only, due and payable on the same day of
each of the first, second and third months after the Effective
Date, (2) monthly installments of $50,000 each, due and payable
on the same day of each of the fourth and fifth months after the
Effective Date, to be applied first to interest and the
remainder, if any, to principal, and (3) one final payment of the
entire outstanding principal balance of the Note, together with
all accrued but unpaid interest thereon, on the date that is six
months after the Effective Date. The Note shall be secured by a
second lien on the Accounts Receivable, subordinated to the liens
of Ciera's senior secured lender, RFC Capital Corporation; and
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iv. GlobalCom shall concurrently herewith issue and deliver to
Incomnet 125,000 shares of common stock of GlobalCom, par value
$.001 per share (the "GlobalCom Stock").
Ciera and GlobalCom acknowledge and agree that Incomnet shall have the
right to transfer and assign all of its rights, titles and interests in and to
the Cash Consideration, the Note and the GlobalCom Stock to Seller Stockholder.
Article 1.4. Benefits Under Unassignable Contracts and Permits. If a
consent of a third party which is required in order to assign any Asset (or any
claim, right or benefit arising thereunder or resulting therefrom) is not
obtained prior to the Effective Date, or if an attempted assignment would be
ineffective or would adversely affect the ability of Incomnet to convey its
interest in question to Ciera, Incomnet and Seller Stockholder will cooperate
with Ciera and use reasonable efforts in any lawful arrangement to provide that
Ciera shall receive Incomnet's interest in the benefits of such Asset. If any
consent or waiver is not obtained before the Effective Date and the Closing is
nevertheless consummated, Incomnet and Seller Stockholder agree to continue to
use reasonable efforts for a period of ninety (90) days after the Effective Date
to obtain all such consents as have not been obtained prior to such date.
Further, Incomnet and Seller Stockholder agree that, to the extent that any
licenses and permits used by Incomnet in connection with the Business are not
assignable, then Incomnet and Seller Stockholder shall, upon the request of
Ciera and at Ciera's sole cost, risk and expense, take such action as may be
reasonably necessary to provide Ciera with the use, enjoyment and benefit of
Incomnet's interest in such licenses and permits for a period of one hundred
twenty (120) days after the Effective Date; provided, that Ciera agrees to
indemnify and hold harmless Incomnet and Seller Stockholder from any and all
taxes and other liabilities arising out of Ciera's use or enjoyment of such
licenses and permits after the Effective Date.
Article 1.5. Apportionment of Taxes. All ad valorem taxes, if any, shall be
prorated through the Effective Date of Closing, with such prorations based on
tax rates and assessments for the calendar year during which the Closing occurs
unless such rates and assessments are unavailable, in which event such
prorations shall be made based on the rates and assessments for the prior year.
At the Closing, Ciera agrees to assume Incomnet's pro rated portion of the ad
valorem taxes, and Ciera shall be entitled to offset such portion from the Note.
SECTION 2
DEFINITIONS
Article 2.1. Certain Definitions. As used in this Agreement, each of the
following terms has the meanings set forth below:
a. "Accounts Receivable" has the meaning ascribed to it in Article 1.1.xii.
of this Agreement.
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b. "Affiliate" when used to indicate a relationship with any Person, means:
(i) any corporation or organization of which such Person is an officer, director
or partner or is directly or indirectly the beneficial owner of 10% or more of
the outstanding shares of any class of equity securities or financial interest
therein; (ii) any trust or other estate in which such Person has a beneficial
interest or as to which such Person serves as trustee or in any similar
fiduciary capacity; or (iii) any Person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, or is acting as agent on behalf of, or as an officer or director
of, such Person. As used in the definition of Affiliate, the term "control"
(including the terms "controlling," "controlled by" or "under common control
with") means the possession, direct or indirect, of the power to direct, cause
the direction of or influence the management and policies of a Person, whether
through the ownership of voting securities, by contract, through the holding of
a position as a director or officer of such Person, or otherwise.
c. "Agreement" means and includes this Asset Purchase Agreement and the
schedules, attachments and exhibits hereto.
d. "Assets" has the meaning ascribed to it in Article 1.1.a. of this
Agreement.
e. "Assumed Liabilities" has the meaning ascribed to it in Article 1.2.a.
of this Agreement.
f. "Business" has the meaning ascribed to it in the recitals of this
Agreement.
g. "Business Laws" means all Laws relating to the establishing, owning,
operating, managing, maintaining, improving or conducting the business operated
by Incomnet prior to the date hereof.
h. "Cash Consideration" has the meaning ascribed to it in Article 1.3.b.ii
of this Agreement.
i. "Claims" means any claims, allegations, demands, actions, costs,
damages, losses, diminution in value, expenses, obligations, liabilities,
recoveries, judgments, settlements, suits, proceedings, fines, levies, imposts,
duties, expenses, causes of action or deficiencies, including interest,
penalties (including civil and criminal penalties) and reasonable attorneys'
fees.
j. "Competing Business" has the meaning ascribed to it in Article 6.1.d. of
this Agreement.
k. "Encumbrance" means any security interest, mortgage, deed of trust,
pledge, lien, Claim or other encumbrance of any nature whatsoever.
l. "Environmental Laws" mean all Laws relating to protection of the
environment, including, without limitation, health and chemical use Laws, and
Laws governing the on or off-site use, storage, treatment, recycling,
generation, transportation, processing, handling, production or disposal of
Hazardous Substances or sanitary (non-hazardous) substances or waste, including,
without limitation, garbage, refuse or other similar substances.
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m. "ERISA" means Employee Retirement Income Security Act of 1974, as
amended.
n. "Excluded Assets" has the meaning ascribed to it in Article 1.1.b. of
this Agreement.
o. "Financial Information" has the meaning ascribed to it in Article 3.4 of
this Agreement.
p. "GlobalCom Stock" has the meaning ascribed to it in Article 1.3.b.iv. of
this Agreement.
q. "Governmental Authority" means any federal, state, county, municipal, or
other local governmental body, legislature, agency, commission, board,
department, court or other governmental authority, and includes, without
limitation, the Federal Trade Commission, the Environmental Protection Agency,
the Interstate Commerce Commission, the Occupational Safety and Health
Administration, the Federal Communications Commission and the Internal Revenue
Service.
r. "Hazardous Substance" means, without limitation, (i) any flammable
explosives, radon, radioactive materials, asbestos, polychlorinated biphenyls,
benzene, petroleum and petroleum products, methane, or (ii) hazardous materials,
hazardous wastes, biomedical wastes, hazardous or toxic substances or related
materials defined as such in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections 9601 et
seq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C.
Sections 6901 et seq.), or any other Environmental Laws.
s. "Incomnet's Broker" has the meaning ascribed to it in Article 3.15 of
this Agreement.
t. "Incomnet Intellectual Property" has the meaning ascribed to it in
Article 0.0.x.xx. of this Agreement.
u. "Laws" mean any applicable statute, law, code, ordinance, rule,
regulation, order, permit, license, certificate, writ, judgment, injunction or
decree promulgated by any Governmental Authority.
v. "Material Contracts" has the meaning ascribed to it in Article 3.9.e. of
this Agreement.
w. "Note" has the meaning ascribed to it in Article 1.3.b.iii. of this
Agreement.
x. "Permits" has the meaning ascribed to it in Article 1.1.a.iv. of this
Agreement.
y. "Permitted Encumbrances" means all Encumbrances (i) relating to the
Assumed Liabilities; (ii) arising before, on or after the date hereof in
connection with inchoate common law, statutory or constitutional liens, and
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liens for Taxes and assessments which are not due or are being contested in good
faith; and (iii) first arising on or after the date hereof in connection with
the Assets and the Business.
z. "Person" means an individual, corporation, limited liability company,
partnership, limited partnership, joint venture, joint stock company, firm,
company, syndicate, trust, estate, association, Governmental Authority,
business, organization or any other incorporated or unincorporated entity.
aa. "Retained Liabilities" has the meaning ascribed to it in Article 1.2.b.
of this Agreement.
bb. "SEC Reports" has the meaning ascribed to it in Article 4.7.a. of this
Agreement.
cc. "Services Agreement" means that certain Services Agreement, dated as of
November 30, 2001, between Incomnet and Buyer.
dd. "Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code ss.59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not, and including any involuntary fund
contributions or similar fees or payments required to be paid to any
Governmental Authority.
ee. "Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
SECTION 3
INCOMNET'S AND SELLER STOCKHOLDER'S
REPRESENTATIONS AND WARRANTIES
Seller Stockholder and Incomnet jointly and severally represent and warrant
to Ciera and GlobalCom that the following representations and warranties are
true and correct as of the date hereof, except with respect to representations
and warranties which are made with reference to another specific date and except
as otherwise described in any schedule attached hereto:
Article 3.1. Organization. Incomnet is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware.
Incomnet has all necessary corporate power and authority to own, operate, and
lease its properties and to carry on its business as now owned or leased and
operated by it. Incomnet is qualified to do business under the laws of any
jurisdiction in which such qualification is required.
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Article 3.2. Authority and Consent. Incomnet and Seller Stockholder have
the requisite power and authority to enter into and perform their obligations
under this Agreement and the ancillary documents to be executed in connection
with this Agreement, and no approval or consent of any Person is necessary in
connection therewith. The members and managers of Seller Stockholder have, at a
formal meeting or by written consent, approved the transactions contemplated by
this Agreement. In addition, the stockholders and the Board of Directors of
Incomnet have, at a formal meeting or by written consent, approved the
transactions contemplated by this Agreement in accordance with laws of Delaware.
A true, correct and complete copy of all of the resolutions and/or consents of
the members and managers of Seller Stockholder and the stockholders and
directors of Incomnet approving the transactions contemplated hereby have been
provided to Ciera. This Agreement, together with all other agreements, documents
and instruments executed in connection herewith by Incomnet and Seller
Stockholder constitute valid and legally binding obligations of Incomnet and
Seller Stockholder, and are enforceable against Incomnet and Seller Stockholder
in accordance with their terms, subject to bankruptcy, receivership, insolvency,
reorganization, moratorium or other similar Laws affecting or relating to
creditors' rights generally and subject to general principles of equity.
Article 3.3. No Conflicts. Neither Incomnet nor Seller Stockholder are
subject to any agreements that could restrict their ability to complete the
transactions contemplated by this Agreement.
Article 3.4. Financial Information. Attached as Schedule 3.4 are true and
correct copies of the internally prepared balance sheets and related statements
of income and changes in stockholders equity for Incomnet as of and for each of
the periods ended December 31, 1999 and 2000 (the "Annual Statements"), and the
unaudited balance sheet and related statement of income as of and for October
31, 2001 (the "2001 Statement," and together with the Annual Statements
collectively referred to as the "Financial Information"). Except as disclosed in
Schedule 3.4, the Financial Information (a) is true, correct and complete and
fairly presents the financial position of Incomnet as of and for the periods
indicated and (b) except for the absence of notes and as otherwise noted therein
and subject to normal recurring year-end adjustments, none of which would be
material, has been prepared in accordance with GAAP applied on a basis
consistent with prior periods. Since December 31, 2000, Incomnet has not
materially changed any significant accounting method or practice. There has been
no material adverse change between September 21, 2001, and the Closing Date with
respect to (i) the condition (financial or otherwise), properties, net worth,
results and operations of Incomnet or (ii) the goodwill of customers and
suppliers having business relations with Incomnet.
Article 3.5. Accounts Receivable. The Accounts Receivable, to the extent
listed on Schedule 3.5, are valid and existing, represent invoices due for goods
sold and delivered or services rendered, as of the date set forth on such
Schedule 3.5. To the knowledge of Incomnet and Seller Stockholder, the Accounts
Receivable are collectible, net of the respective reserves reflected in the
Financial Information (which reserves are adequate and calculated consistent
with past practice), without any set-off. Incomnet has received no notice of any
contest, claim, or right of set-off, other than returns in the ordinary course
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of business, under any contract with any obligor of an Accounts Receivable
relating to the amount or validity of such Accounts Receivable.
Article 3.6. Inventories. Incomnet's inventories, if any, as listed and
described in Schedule 3.6, or which thereafter have been acquired by Incomnet,
consist of items that are free of material defects and are of a quality usable
and salable in the normal course of its business.
Article 3.7. Liabilities. Except for the Assumed Liabilities, Incomnet has
no liabilities that will create an Encumbrance, other than a Permitted
Encumbrance, on the Assets to be delivered to Ciera.
Article 3.8. Defaults. Incomnet is not currently in default under, or in
breach or violation of, (a) any material lease, license, permit, Encumbrance, or
other agreement or instrument to which any Assets is subject; or (b) any Laws
applicable to the Assets or the Business, including, without limitation,
Business Laws and Laws respecting labor, employment and employment practices and
any Laws enforced by the Federal Communications Commission, any public utility
commission or any other Governmental Authority charged with regulating and
enforcing Laws pertaining to the telecommunications industry in general.
Incomnet has all permits, certificates, licenses, approvals and other
authorizations required in connection with the operation of the Business.
Article 3.9. Additional Information. Schedule 3.9 sets forth a true,
complete and correct list and/or summary of the following items:
a. Real Property. A legal description of all real property owned in fee
simple or leased by Incomnet, or for which it has an option to purchase, in
connection with the Business and includes, with respect to each property whether
such property is owned or leased and, a description of each Encumbrance to which
such property is subject (excluding Permitted Encumbrances);
b. Vehicles, Equipment and Machinery. All vehicles, tractors, trailers,
equipment and machinery owned by Incomnet in connection with the Business,
indicating whether such item is owned or leased, and if leased, the name of the
lessor;
c. Intellectual Property. All registered patents, trademarks, service marks
and copyrights owned by or registered in the name of Incomnet;
d. Licenses and Permits. All governmental licenses, governmental permits,
and similar rights held by Incomnet and relating to the Business;
e. Material Contracts. All contracts material to the Business to which
Incomnet is a party, by which it is bound or to which its assets or properties
are subject, including, without limitation, all interconnect agreements with
local exchange carriers, and any other single contract pursuant to which any
party thereto is obligated to make payments after the date of this Agreement
aggregating more than $25,000, whether or not any of the foregoing were made in
the ordinary course of business (collectively, "Material Contracts");
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f. Employee Agreements. Any employment and/or consulting agreements for any
Incomnet employee or consultant;
g. Customer Accounts and Receivables. A detailed listing of all of
Incomnet's customer xxxxxxxx made within 15 days prior to the Effective Date and
a list of all Accounts Receivable of Incomnet in a 30, 60, 90 and over 90 day
aged receivables format as of October 31, 2001, and all customer accounts,
whether or not any amounts are owed to Incomnet with respect to such accounts;
h. Fixed Assets. All fixed assets, whether leased and/or owned, used by
Incomnet in connection with the Business to the extent valued at more than
$2,500 individually, provided that the aggregate value of all fixed assets that
are not listed on Schedule 3.9 does not exceed $50,000. This schedule includes,
but is not necessarily limited to, computers, computer equipment,
telecommunication switching equipment, furniture, and fixtures;
i. Insurance. All insurance policies or bonds carried by Incomnet or for
its benefit or the benefit of its employees, including, without limitation,
property, casualty, liability, workers compensation and auto policies;
j. Personnel. The name, current salary, current bonus arrangements, last
bonus date and amount, and any other compensation arrangements with Incomnet
(excluding employee insurance and benefit plans) of each director and officer,
and each key employee of Incomnet whose base annual compensation exceeds
$100,000;
k. Bank Accounts. The name, address and contact person of each bank or
other financial institution in which Incomnet has an account or safe deposit
box, the account number, account name and type of account, the names of all
persons authorized to draw thereon or have access thereto.
True, correct and complete copies of each of the items set forth in this Article
3.9, to the extent reflected in a writing, have been delivered to Ciera.
Article 3.10. Title to Assets. Except for Assets that are leased or
licensed, Incomnet has good and valid title to all of the Assets. Other than
Permitted Encumbrances, all the Assets are free and clear of all Encumbrances.
Without limiting the generality of the foregoing, Incomnet has the exclusive
right, title and interest in and to any trademarks, service marks, trade names,
and copyrights necessary to the operation of the Business, and the use by
Incomnet of any such logo, trade name, license, or other intangible which is
necessary to the operation of the Business, does not, to the knowledge of
Incomnet or Seller Stockholder, violate or infringe upon the rights of any third
party.
Article 3.11. Condition of Assets. Incomnet's buildings, premises and
fixtures, vehicles, equipment and machinery are in a condition satisfactory to
continue to operate the Business in substantially the manner conducted by
Incomnet through the date hereof. To the knowledge of Incomnet and Seller
Stockholder, there has been no change in the zoning or building ordinances
Page 11 of 26
directly affecting the real property or leasehold interests of Incomnet, pending
or threatened. All Material Contracts which will be Assumed Liabilities are in
full force and effect. Neither Incomnet nor, to the knowledge of Incomnet or
Seller Stockholder, any other party to any such Material Contract which will be
an Assumed Liability is in default thereunder, and no event has occurred which
(with or without notice, lapse of time, or the happening of any other event)
would constitute a default thereunder. Seller Stockholder has received no
information that would reasonably cause Seller Stockholder to conclude that any
customer of Incomnet will (or is likely to) cease doing business with Ciera as a
result of the consummation of the transactions contemplated hereby. All of its
properties and assets have been maintained in customary repair, order and
condition, reasonable wear and tear and use excepted. The Books and Records of
the Business have been maintained in the usual, regular, and ordinary manner, in
accordance with its customary accounting principles applied on a consistent
basis.
Article 3.12. Environmental Matters. The operation of the Business by
Incomnet does not violate any applicable Environmental Laws. Neither Incomnet
nor Seller Stockholder has received notice of an administrative proceeding,
violation, citation, administrative or consent order, lawsuit, action, claim,
demand, or decree which allege any violation of any applicable Environmental
Law, and no disposal or removal of any Hazardous Substances has been conducted
without compliance with all applicable Environmental Laws. To Incomnet's and
Seller Stockholder's knowledge, there are no underground storage tanks on any
Property.
Article 3.13. Taxes. All Taxes owed by Incomnet (whether or not shown on
any Tax Return) have been paid or have been resolved such that there will be no
Tax liens or Encumbrances on the Assets to be delivered to Ciera (except as
otherwise contemplated by this Agreement with respect to the proration of
taxes). Incomnet currently is not the beneficiary of any extension of time
within which to file any Tax Return. No claim has ever been made by an authority
in a jurisdiction where Incomnet does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. Other than Permitted Encumbrances,
there are no Encumbrances on any of the Assets that arose in connection with any
failure (or alleged failure) to pay any Tax.
Article 3.14. Incomnet Intellectual Property.
a. The Incomnet Intellectual Property consists solely of items and rights
that are either: (i) owned solely by Incomnet; (ii) in the public domain; or
(iii) rightfully used and authorized for use by Incomnet and its successors
pursuant to a valid license. Incomnet has all rights in Incomnet Intellectual
Property necessary to carry out the Business as heretofore conducted by
Incomnet.
b. Incomnet is not, nor as a result of the execution or delivery of this
Agreement and all other agreements contemplated hereby, or performance of
Incomnet's obligations hereunder, will Incomnet be, in violation of any license,
sublicense or other agreement relating to any Incomnet Intellectual Property to
which Incomnet is a party or otherwise bound. Incomnet is not obligated to
provide any consideration (whether financial or otherwise) to any third party,
nor is any third party otherwise entitled to any consideration, with respect to
any exercise of rights by Incomnet in Incomnet Intellectual Property.
Page 12 of 26
c. To Seller Stockholder's and Incomnet's knowledge, no claims (i)
challenging the validity, effectiveness, or ownership by Incomnet of any
Incomnet Intellectual Property, or (ii) to the effect that the use or any other
exercise of rights in any product, work, technology, service, or process as
used, provided or offered at any time, or as proposed for use or any other
exercise of rights, by Incomnet infringes or will infringe on any intellectual
property or other proprietary or personal right of any Person have been asserted
to Incomnet or are threatened by any Person nor, to the knowledge of Seller
Stockholder and Incomnet, are there any valid grounds for any bona fide claim of
any such kind. There are no legal or governmental proceedings, including
interference, re-examination, reissue, opposition, nullity, or cancellation
proceedings pending that relate to any Incomnet Intellectual Property, other
than review of pending applications for patent, and to Seller Stockholder's and
Incomnet's knowledge no proceedings are threatened or contemplated by any
Governmental Entity or any other Person. To Seller Stockholder's and Incomnet's
knowledge, all registered trademarks, service marks and copyrights included in
the Incomnet Intellectual Property is valid, enforceable and subsisting.
Article 3.15. Brokers. Other than for Xxxxxx-Xxxxx ("Incomnet's Broker"),
neither Seller Stockholder nor Incomnet nor any of their respective Affiliates
have employed any broker, agent or finder, or incurred any liability for any
brokerage fees, agent's fees, commissions or finder's fees in connection with
the transactions contemplated by this Agreement. In this regard, Incomnet agrees
to indemnify and hold harmless Ciera and GlobalCom from and against any claims
of Incomnet's Broker.
Article 3.16. Litigation. Except as listed in Schedule 3.16, to Seller
Stockholder's and Incomnet's knowledge, there is no lawsuit, action,
arbitration, mediation, administrative proceeding, investigation by a
Governmental Authority, or other legal proceeding pending or threatened against
Incomnet. Incomnet is not subject to any court order, writ, injunction, court
decree, settlement agreement or judgment.
Article 3.17. Conduct of Business. Incomnet has used commercially
reasonable efforts to operate the Business in the usual, regular, and ordinary
manner so as to maintain the goodwill the Business now enjoys; and, to the
extent consistent with such operation, Incomnet has used commercially reasonable
efforts to keep the present business organization intact, to keep the services
of the present officers and employees available, and to preserve relationships
with customers, suppliers, jobbers, distributors and others having business
dealings with the Business.
Article 3.18. Compliance with Law. The Business complies with all Laws
applicable to, and having a material effect on, it and to the conduct of the
Business.
Article 3.19. Securities Representations and Warranties. Incomnet and
Seller Stockholder make the following representations and warranties to
GlobalCom regarding the GlobalCom Stock:
a. The GlobalCom Stock is being acquired for Incomnet's and Seller
Stockholder's own account, for investment purposes only, and not for the account
of any other person, and not with a view to distribution, assignment, or resale
Page 13 of 26
to others or to fractionalization in whole or in part, and that the transfer of
the GlobalCom Stock to Incomnet and Seller Stockholder is intended to be exempt
from registration under the Securities Act of 1933 (the "Securities Act") by
virtue of the exemption under Section 4(2) of the Securities Act. Incomnet and
Seller Stockholder understand that the GlobalCom Stock are and will be
"restricted securities," as said term is defined in Rule 144 of the Rules and
Regulations promulgated under the Securities Act, that the certificates
representing the GlobalCom Stock will bear a legend to the effect that the
transfer of the securities represented thereby is subject to the provisions
hereof. In furtherance thereof, Incomnet and Seller Stockholder represent,
warrant, and agree as follows: (i) no other person has or will have a direct or
indirect beneficial interest in the GlobalCom Stock, Incomnet and Seller
Stockholder are not acquiring the GlobalCom Stock with a view toward resale,
assignment, fractionalization or distribution thereof, and Incomnet will not
sell, hypothecate, or otherwise transfer any of the GlobalCom Stock except in
accordance with the Securities Act and applicable state securities laws or
unless, in the opinion of counsel for GlobalCom, an exemption from the
registration requirements of the Securities Act and such laws is available; and
(ii) GlobalCom is under no obligation to register the GlobalCom Stock on behalf
of Incomnet or Seller Stockholder.
b. Incomnet and Seller Stockholder have been furnished with and have
carefully read GlobalCom's financial statements for the year ending December 31,
2000, and for the period ending September 30, 2001. In evaluating the
suitability of an investment in GlobalCom, neither Incomnet nor Seller
Stockholder have relied upon any representations or other information (whether
oral or written) from GlobalCom, Ciera or any of their respective agents, and no
oral or written representations have been made or oral or written information
furnished to Incomnet or its advisors, if any, in connection with the acceptance
of the GlobalCom Stock which were in any way inconsistent with the information
set forth in the documents listed in the first sentence of this Article 3.19.
Ciera and GlobalCom have granted to Incomnet, Seller Stockholder and their
representatives the opportunity to examine such documents and ask such questions
of Ciera and GlobalCom as Incomnet has deemed necessary, and Incomnet and Seller
Stockholder have received satisfactory answers from Ciera and GlobalCom (or
persons acting on Ciera's or GlobalCom's behalf) concerning GlobalCom and the
terms and conditions of the GlobalCom Stock described herein and all other
information they have deemed necessary with making an informed investment
decision.
c. Ciera and GlobalCom have made available to Incomnet and Seller
Stockholder all documents and information that Incomnet and Seller Stockholder
have requested relating to an investment in GlobalCom.
d. Incomnet and Seller Stockholder recognize that an investment in
GlobalCom involves substantial risks, and Incomnet and Seller Stockholder have
taken full cognizance of and understands all of the risk factors set forth in
GlobalCom's SEC Reports related to the acceptance of the GlobalCom Stock.
e. Incomnet and Seller Stockholder have carefully considered and has, to
the extent Incomnet believes such discussion necessary, discussed with
Incomnet's and Seller Stockholder's professional legal, tax and financial
Page 14 of 26
advisers the suitability of an investment in GlobalCom for Incomnet's and Seller
Stockholder's particular tax and financial situation, and Incomnet and Seller
Stockholder have determined that the GlobalCom Stock is a suitable investment
for Incomnet and Seller Stockholder.
f. Incomnet and Seller Stockholder have such knowledge and experience in
financial and business matters that it is capable of (i) evaluating the merits
and risks of an investment in GlobalCom, and (ii) making an informed investment
decision.
Section 4
REPRESENTATIONS AND WARRANTIES OF GLOBALCOM AND CIERA
GlobalCom and Ciera (as specified below) hereby represent and warrant to
Incomnet and Seller Stockholder that, as of the date hereof:
Article 4.1. Organization. Ciera is a corporation duly organized, validly
existing and in good standing under the laws of Texas. GlobalCom is a
corporation duly organized, validly existing and in good standing under the laws
of Nevada. Each of Ciera and GlobalCom has all the necessary powers to own its
respective business as now owned and operated by it.
Article 4.2. Authority. Ciera and GlobalCom each have the requisite power
and authority to enter into and perform their respective obligations under this
Agreement and the ancillary documents to be executed in connection with this
Agreement, and except as otherwise provided herein, no approval or consent of
any Person is necessary in connection therewith. This Agreement, together with
all other agreements, documents, certificates and instruments executed by Ciera
and GlobalCom in connection herewith, constitute valid and legally binding
obligations of Ciera and GlobalCom, and are enforceable against either of them
in accordance with their terms, subject to bankruptcy, receivership, insolvency,
reorganization, moratorium or other similar Laws affecting or relating to
creditors' rights generally and subject to general principles of equity.
Article 4.3. No Conflicts. Neither Ciera nor GlobalCom are subject to any
agreements that restrict their ability to complete the transactions contemplated
by this Agreement.
Article 4.4. Brokers. Neither Ciera nor GlobalCom nor any of their
respective Affiliates have employed any broker, agent, or finder, or incurred
any liability for any brokerage fees, agent's fees, commissions or finder's fees
in connection with the transactions contemplated herein.
Article 4.5. Capitalization of GlobalCom. The authorized capital stock of
GlobalCom consists of (a) 100,000,000 shares of common stock, $.001 par value
per share, approximately 32,000,000 shares of which are issued and outstanding,
and (b) 5,000,000 shares of preferred stock, no par value per share, none of
which are issued and outstanding. The GlobalCom Stock, when issued to Incomnet,
will be validly issued, fully paid and non-assessable.
Page 15 of 26
Article 4.6. Title to GlobalCom Shares. When issued to Incomnet pursuant to
this Agreement, the GlobalCom Stock will be free and clear of all Encumbrances,
except for restrictions on the transfer of the GlobalCom Stock pursuant to 17
C.F.R. Section 230.144.
Article 4.7. SEC Reports; Financial Statements.
a. GlobalCom has filed all forms, reports and documents required to be
filed by it with the U.S. Securities and Exchange Commission (the "SEC"), each
of which, as amended, has complied in all material respects with all applicable
requirements of the Securities Act, and the Securities Exchange Act (the
"Exchange Act"), each as in effect on the dates such forms, reports and
documents were filed. GlobalCom has heretofore delivered, made available or
promptly shall deliver or make available to Incomnet, in the form filed with the
SEC (including any amendments thereto and all exhibits), (i) its Annual Reports
on Form 10-K for each of the fiscal years ended December 31, 2000 and 2001, (ii)
all definitive proxy statements relating to GlobalCom's meetings of stockholders
(whether annual or special) held since January 1, 2000, and (iii) all other
reports or registration statements filed by the Company with the SEC since
January 1, 2000 (clauses (i) through (iii), collectively, the "SEC Reports").
None of the SEC Reports, including, without limitation, any financial statements
or schedules included or incorporated by reference therein, contained, when
filed, or, if amended, to the extent amended on the date of filing of such
amendment, any untrue statement of a material fact or omitted to state a
material fact required to be stated or incorporated by reference therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The consolidated balance sheets and
the related consolidated statements of operations, stockholders' equity and cash
flows (including the related notes thereto) of GlobalCom included in the SEC
Reports comply in form and substance in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto (each as then in effect), have been prepared in conformity with
generally accepted accounting principles (as then in effect) applied on a
consistent basis (except as otherwise noted therein), and present fairly the
consolidated financial position of GlobalCom and its consolidated subsidiaries
as of their respective dates and their consolidated results of operations and
its cash flows for the periods presented therein (subject, in the case of
unaudited interim financial statements, to normal year-end adjustments).
b. GlobalCom has heretofore made, or promptly shall make, available to
Incomnet a complete and correct copy of any amendments or modifications, which
are or will be required to be filed with the SEC but have not yet been so filed,
to agreements, documents or other instruments which previously have been filed
by GlobalCom with the SEC pursuant to the Exchange Act.
SECTION 5
INDEMNIFICATION
Article 5.1. Survival of Representations and Warranties. The
representations and warranties contained herein or any instrument or document
delivered or to be delivered pursuant to or in connection with this Agreement,
Page 16 of 26
shall survive for a period of one (1) year after the date hereof notwithstanding
any investigation or due diligence theretofore made by or on behalf of any party
hereto. All claims for indemnification by Seller Stockholder or Ciera and
GlobalCom with respect to a breach of a representation or warranty must be
asserted prior to the first anniversary of the date hereof.
Article 5.2. Indemnification of Ciera and GlobalCom. Incomnet and Seller
Stockholder shall jointly and severally indemnify, defend and hold harmless
Ciera and GlobalCom and their Affiliates against and in respect of any and all
Claims that such indemnified persons shall incur or suffer, which arise, result
from or relate to (i) any breach of, or failure by Incomnet or Seller
Stockholder to perform, any of their representations, warranties, covenants or
agreements in or under this Agreement; or (ii) the Retained Liabilities.
Article 5.3. Indemnification of Incomnet. Ciera and GlobalCom shall jointly
and severally indemnify, defend and hold harmless Incomnet, Seller Stockholder
and their respective Affiliates against and in respect of any and all Claims
that such indemnified persons shall incur or suffer, which arise, result from or
relate to (i) any breach of, or failure by Ciera and GlobalCom to perform, any
of its representations, warranties, covenants or agreements in or under this
Agreement; (ii) the ownership of the Assets on and after the date hereof and the
assumption of the Assumed Liabilities on and after the date hereof; or (iii) any
breach of, or failure by Ciera to perform, any of its covenants or agreements in
or under the Services Agreement, including without limitation the payment of all
costs and expenses incurred in connection therewith.
Article 5.4. Indemnification Procedure. Promptly upon the discovery of
facts giving rise to a claim for indemnity under this Section 5 or the receipt
of notice of any Claim, judicial or otherwise, with respect to any matter as to
which indemnification may be claimed under this Section 5, the indemnified party
shall give written notice thereof to the indemnifying party together with such
information respecting such matter as the indemnified party shall then have;
provided, however, that the failure of the indemnified party to give notice as
provided herein shall not relieve the indemnifying party of any obligations, to
the extent the indemnifying party is not materially prejudiced thereby. If
indemnification is sought with respect to a third-party (i.e., one who is not a
party to this Agreement) Claim asserted or brought against an indemnified party,
the indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly notified,
to the extent that it may wish, with counsel reasonably satisfactory to such
indemnified party. After such notice from the indemnifying party to such
indemnified party of its election to so assume the defense of such a third-party
Claim, the indemnifying party shall not be liable to such indemnified party for
any legal or other expenses subsequently incurred by the latter in connection
with the defense thereof, other than reasonable and necessary costs of
investigation, unless the indemnifying party has failed to assume and diligently
prosecute the defense of such third-party Claim. An indemnifying party who
elects not to assume the defense of a third-party Claim shall not be liable for
the fees and expenses of more than one counsel in any single jurisdiction for
all parties indemnified by such indemnifying party with respect to such Claim or
with respect to Claims separate but similar or related in the same jurisdiction
arising out of the same general allegations. Notwithstanding any of the
foregoing to the contrary, the indemnified party will be entitled to select its
own counsel and assume the defense of any action brought against it if the
Page 17 of 26
indemnifying party fails to diligently prosecute the defense of such action; the
expenses of such defense by the indemnified party will be paid by the
indemnifying party. No indemnifying party shall consent to entry of any judgment
or enter into any settlement with respect to a Claim without the consent of the
indemnified party, which consent shall not be unreasonably withheld. No
indemnified party shall consent to entry of any judgment or enter into any
settlement of any such action the defense of which has been assumed by an
indemnifying party without the consent of such indemnifying party, which consent
shall not be unreasonably withheld. If the parties cannot reasonably agree upon
the settlement of any Claim, each party may pursue all available rights and
remedies to which it may be entitles, including, without limitation, all
remedies at law or in equity.
Article 5.5. Limitations.
a. Notwithstanding any provision of this Agreement to the contrary, neither
Incomnet nor Seller Stockholder shall have any obligation to indemnify Ciera,
GlobalCom or their Affiliates under this Section 5 or to pay damages in respect
of contract or other Claims arising under this Agreement or any other instrument
contemplated hereby unless Ciera, GlobalCom and their Affiliates have suffered
indemnifiable losses hereunder in an aggregate amount attributable to all Claims
in excess of $25,000. Once the aggregate amount of indemnifiable losses exceeds
$25,000, Ciera, GlobalCom and their Affiliates will be entitled to recover the
full amount of all losses in excess of $25,000.
b. Notwithstanding any provision of this Agreement to the contrary, the
maximum aggregate liability of Incomnet and Seller Stockholder, together, to
Ciera, GlobalCom and their Affiliates shall not exceed (i) the cash
consideration at any time received by Incomnet and Seller Stockholder pursuant
to this Agreement, including any payments made by Ciera with respect to the
Note, plus (ii) (A) the amount of any proceeds realized by Incomnet or Seller
Stockholder upon any permitted disposition of all or any part of the GlobalCom
Stock to any third party, and (B) with respect to any portion of the GlobalCom
Stock that has not been disposed of to a third party, the then-current market
price of GlobalCom common stock on the date of any determination of maximum
liability hereunder times the number of shares of GlobalCom Stock then held by
Incomnet or the Seller Stockholder (provided that in no event shall the
additional liability pursuant to this Article 5.5.b.ii. exceed $500,000 in the
aggregate).
c. No indemnified party will be entitled to indemnification under this
Section 5 for losses covered by insurance proceeds.
d. No party will be liable to any other party in connection with this
Agreement, or any of the transactions contemplated hereby, for any
consequential, special, indirect or punitive damages. Each party hereby
expressly releases the other parties, their respective Affiliates, directors,
officers, employees, agents and representatives from any such liability.
e. The parties agree that, notwithstanding any provision of this Article
5.5 to the contrary, none of the damage thresholds, limitations, exceptions or
exclusions set forth in this Article 5.5 shall apply to any claims for
Page 18 of 26
indemnification brought by Ciera or GlobalCom against Incomnet and/or Seller
Stockholder relating to or arising out of any fraud or intentional misconduct in
connection with the transactions made the subject of this Agreement.
SECTION 6
NON-COMPETITION AGREEMENTS
Article 6.1. Covenants Not to Compete or Interfere. In consideration of the
agreement of Ciera and GlobalCom contained herein, for a period of three years
after the date hereof, neither Seller Stockholder nor Incomnet shall:
a. Directly or indirectly, engage or invest in, finance, own, manage,
operate, control or participate in the ownership, management, operation or
control of, any Competing Business.
b. Directly or indirectly, either as principal, agent, independent
contractor, consultant, advisor (whether paid or unpaid), stockholder, partner
or in any other representative capacity whatsoever, either for his own benefit
or for the benefit of any other Person, solicit, divert or take away from
Incomnet or Ciera or GlobalCom any Persons who, at any time prior to the date
hereof, were customers or clients of Incomnet with respect to any Competing
Business.
c. For himself or on behalf of any other Person use or disclose to any
Person any of the following non-public information relating in any way to the
Business, Ciera and GlobalCom or their respective businesses: trade secrets,
proprietary information, "know-how;" marketing, distribution and advertising
plans and techniques; the existence or terms of contracts or potential contracts
with, or other information identifying or relating to past, existing or
prospective customers, distributors or vendors; cost data, pricing policies, and
financial and accounting information; or matters pertaining to pending or
threatened litigation; provided, however, that (after reasonable measures have
been taken to maintain confidentiality and after giving reasonable notice to
Ciera specifying the information involved and the manner and extent of the
proposed disclosure thereof) any disclosure of such information may be made to
the extent required by applicable Laws or judicial or regulatory process; and
provided, further, that the foregoing will not apply to any information that is
generally available to the public or independently developed by Incomnet or
Seller Stockholder.
d. "Competing Business" means any Person (other than Buyer and its
Affiliates) engaged, in whole or in part, in any business that involves the
providing of any telecommunications services; provided, however, that "Competing
Business" shall not include any other business or service, other than the
Business, provided by Seller Stockholder or its Affiliates as of the Effective
Date.
e. Notwithstanding any provision in this Agreement to the contrary, nothing
in this Section 6 shall be construed to prevent Incomnet or Seller Stockholder
from directly or indirectly investing in or owning up to five percent (5%) of
the issued and outstanding equity securities of any publicly-traded company
engaged in the Competing Business.
Page 19 of 26
Article 6.2. Necessity and Reasonableness. Seller Stockholder and Incomnet
hereby specifically acknowledge, agree and represent to Ciera and GlobalCom as a
material inducement to enter into this Agreement:
a. The covenants and agreements of Seller Stockholder and Incomnet in this
Article 6 are necessary and essential to the protection of the Business which
will be conducted by Ciera and GlobalCom after the date hereof, and to enable
Ciera and GlobalCom to realize and derive all of the benefits, rights and
expectations associated with this Agreement.
b. Ciera will suffer great loss and irreparable harm if Seller Stockholder
or Incomnet directly or indirectly enter into a Competing Business.
c. The restrictions contained in this Section 6 are in all respects
reasonable and necessary to protect the business goodwill, trade secrets,
prospects and other business interests of Ciera and GlobalCom in respect of
Incomnet.
d. The enforcement of this Agreement in general, and of this Section 6 in
particular, will not work an undue or unfair hardship on Seller Stockholder or
Incomnet or otherwise be oppressive to either of them.
e. The enforcement of this Agreement in general, and of this Section 6 in
particular, will neither deprive the public of needed goods or services nor
otherwise be injurious to the public.
f. Good, independent and valuable consideration exists for the agreement of
Seller Stockholder and Incomnet to be bound by the covenants and agreements
contained in this Section 6.
Article 6.3. Enforcement. Seller Stockholder and Incomnet agree that Ciera
and GlobalCom shall, in addition to any other remedies available to it at law or
in equity, be entitled to temporary, preliminary, and permanent injunctive
relief and specific performance to enforce the terms of this Section 6 without
the necessity of proving inadequacy of legal remedies or irreparable harm, or
posting bond.
SECTION 7
ADDITIONAL AGREEMENTS
Article 7.1. Tax Matters.
a. Seller Stockholder shall prepare or cause to be prepared and file or
cause to be filed all Tax Returns for Incomnet related to Incomnet's provision
of telecommunication services (including, but not limited to, excise taxes,
sales taxes, and all other state, local and federal taxes imposed upon the sale
of telecommunication services) for all periods ending on or prior to the Closing
Date. Incomnet shall be responsible for the payment of all such Taxes, except to
the extent that such Taxes are reflected in Schedule 1.1.b.
Page 20 of 26
b. The parties shall allocate the aggregate consideration for the Assets
(and all other capitalizable costs) among the Assets for all purposes (including
financial accounting and Tax purposes) in accordance with the allocation
schedule attached hereto as Schedule 7.1. The parties hereto acknowledge that
such allocation has been made in the manner required by Section 1060 of the
Internal Revenue Code of 1986, as amended (the "Code"). Ciera and Incomnet shall
prepare and file an IRS Form 8594 in a timely fashion in accordance with the
rules under Section 1060 of the Code. To the extent that the aggregate
consideration for the Assets is adjusted after the date hereof, the parties
hereto shall revise and amend such schedule and IRS Form 8594 in the same manner
and according to the same procedure as used in preparing Schedule 7.1 attached
hereto. The determination and allocation of the aggregate consideration for the
Assets derived pursuant to this Article 7.1 will be binding on the parties for
all Tax reporting purposes.
c. Ciera shall prepare or cause to be prepared and file or cause to be
filed any Tax Returns for Tax periods which begin before the Closing Date and
end after the Closing Date. In the case of any Taxes that are imposed on a
periodic basis and are payable for a Taxable period that includes (but does not
end on) the date hereof, the portion of such Tax which relates to the portion of
such Taxable period ending on the date hereof shall (i) in the case of any Taxes
other than Taxes based upon or related to income or receipts, be deemed to be
the amount of such Tax for the entire Taxable period multiplied by a fraction
the numerator of which is the number of days in the Taxable period ending on the
date hereof and the denominator of which is the number of days in the entire
Taxable period, and (ii) in the case of any Tax based upon or related to income
or receipts be deemed equal to the amount which would be payable if the relevant
Taxable period ended on the date hereof. Any credits relating to a Taxable
period that begins before and ends after the date hereof shall be taken into
account as though the relevant Taxable period ended on the date hereof. All
determinations necessary to give effect to the foregoing allocations shall be
made in a manner consistent with prior practice of Incomnet.
d. Ciera, GlobalCom, Incomnet and Seller Stockholder shall cooperate fully,
as and to the extent reasonably requested by the other party, in connection with
the filing of Tax Returns pursuant to this section and any audit, litigation or
other proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision of records and
information which are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. Incomnet and Seller Stockholder agree (i) to retain all books and
records with respect to Tax matters pertinent to Incomnet relating to any
Taxable period beginning before the date hereof until the expiration of the
statute of limitations (and, to the extent notified by Ciera or Seller
Stockholder, any extensions thereof) of the respective Taxable periods, and to
abide by all record retention agreements entered into with any Taxing authority,
and (ii) to give the other party reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the
other party so requests, the Incomnet or Seller Stockholder, as the case may be,
shall allow the other party to take possession of such books and records.
e. Ciera, GlobalCom and Seller Stockholder further agree, upon request, to
use their best efforts to obtain any certificate or other document from any
Page 21 of 26
governmental authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not limited
to, with respect to the transactions contemplated hereby).
Article 7.2. Communications Law. Each of Ciera, Incomnet and Seller
Stockholder shall file, as soon as possible after the date of this Agreement,
such materials as are required under any rule, regulation or ruling promulgated
by the Federal Communications Commission (the "FCC") and other Governmental
Authorities charged with regulating the businesses of Ciera and Incomnet and
shall (a) cooperate with the other party to the extent necessary to assist the
other party in the preparation of such filings, and (b) request any necessary
approval from the FCC or other Governmental Authority of the transactions
contemplated by the Agreement.
Article 7.3. Reports Under the Exchange Act. With a view to making
available the benefits of Rule 144 under the Securities Act and any other rule
or regulation of the SEC that may at any time permit a holder of GlobalCom Stock
to sell shares of GlobalCom Stock to the public without registration, GlobalCom
agrees to:
a. Make and keep public information available, as those terms are used in
SEC Rule 144, at all times;
b. Furnish to any holder of GlobalCom Stock forthwith on request (i) a
written statement by GlobalCom that it has complied with the reporting
requirements of SEC Rule 144, (ii) a copy of the most recent annual or quarterly
report of GlobalCom and such other reports and documents so filed by GlobalCom
with the SEC, and (iii) such other information as may be reasonably requested in
availing any holder of GlobalCom Stock of any rule or regulation of the SEC that
permits the selling of any such shares of GlobalCom Stock without registration;
and
c. Undertake any additional actions reasonably necessary to maintain the
availability of SEC Rule 144.
Article 7.4. Assignment of Material Contracts. Each of Ciera, Incomnet and
Seller Stockholder shall use their commercially reasonable efforts to obtain
from all necessary parties as soon after the Effective Date as practicable a
consent to the assignment and assumption of each Material Contract and an
estoppel relating to such Material Contract to the extent not obtained as of the
Effective Date.
SECTION 8
Miscellaneous
Article 8.1. Seller's Employees. Ciera may, but shall not be required to,
offer employment to or employ any employees or officers of Incomnet and on such
terms and conditions as Ciera shall determine in it sole discretion. Incomnet
and Seller Stockholder agree to use their reasonable efforts to cause their
employees and officers who have received offers of employment from Ciera to
accept such offers of employment. In the event that Ciera employs any officer or
employee of Incomnet or Seller Stockholder, Incomnet and/or Seller Stockholder
Page 22 of 26
shall provide Ciera, to the extent permitted by applicable Laws, with such
information as it may reasonably request, including, without limitation,
personnel files and other records. Ciera shall not have any liability in respect
of any officers or employees of Incomnet or Seller Stockholder, whether
subsequently employed by Ciera or not, resulting from such officers' and
employees' termination of employment, including without limitation, any
liability under the Worker Adjustment and Retraining Notification Act, severance
benefits, bonuses, vacation time or pay or incentive programs of any type, nor
shall Ciera acquire any obligation under any contract, employee benefit plan or
other agreement or arrangement of Incomnet with respect to any officer or
employee or former officer or employee, except to the extent such liability is
listed on Schedule 1.2.a.
Article 8.2. Further Assurances. From time to time, as and when requested
by any party hereto, any other party hereto shall execute and deliver, or cause
to be executed and delivered, such documents and instruments and shall take, or
cause to be taken, such further or other actions as may be reasonably necessary
to effectuate the transactions contemplated hereby, including, without
limitation, the transfer to Ciera of the Assets and the assumption by Ciera of
the Assumed Liabilities. Ciera hereby grants Incomnet access to the Facilities,
upon reasonable prior notice and during normal business hours, for the purpose
of removing (or having the vendor remove) and returning to the appropriate
vendor any equipment, software or other assets that are the subject of Retained
Liabilities. Any such entry by Incomnet shall be at the sole cost and risk of
Incomnet, and Incomnet agrees to indemnify and hold harmless Ciera from and
against any claims or damages, whether to person or property, arising out of or
relating to any entry by Incomnet. Ciera agrees to safeguard such equipment,
software and other assets from and after the Effective Date until the equipment
is so removed and returned and agrees not to utilize such equipment after the
Effective Date except to the extent such use is at the sole expense of Ciera.
Article 8.3. Public Announcements. Unless required by applicable law or
regulatory authority, none of the parties hereto shall issue any report,
statement or press release to the public, the trade press or any third party
relating to this Agreement or the transactions contemplated hereby, except as
mutually agreed by the parties hereto. Copies of any such reports, statements,
press releases, including any announcements or disclosure mandated by law or
regulatory authorities shall be delivered to each party hereto prior to their
release.
Article 8.4. Expenses. Each party shall bear their own legal and accounting
fees, and other costs and expenses with respect to the negotiation, execution
and delivery of this Agreement, and the transactions contemplated hereby,
whether or not such transactions are consummated.
Article 8.5. Notices and Waivers. Any notice, instruction, authorization,
request, demand or waiver hereunder shall be in writing, and shall be delivered
either by personal delivery, by telegram, telex, telecopy or similar facsimile
means, by certified or registered mail, return receipt requested, or by courier
or delivery service, addressed to the parties hereto at the address indicated
beneath their respective signatures on the execution pages of this Agreement, or
at such other address and number as a party shall have previously designated by
written notice given to the other parties in the manner hereinabove set forth.
Notices shall be deemed given when received, if sent by facsimile means
(confirmation of such receipt by confirmed facsimile transmission being deemed
receipt of communications sent by facsimile means); and when delivered and
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receipted for (or upon the date of attempted delivery where delivery is
refused), if hand-delivered, sent by express courier or delivery service, or
sent by certified or registered mail, return receipt requested. A copy of each
notice sent to GlobalCom and/or Ciera shall be sent to Xxxxxxx X. Xxxxxxxx,
Esq., Xxxxx and Xxxxxx, 0000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000,
Telecopy No.: (000) 000-0000.
Article 8.6. Certain References. Whenever the context requires, the gender
of all words used herein shall include the masculine, feminine and neuter.
References to Articles or Sections shall be to Articles or Sections of this
Agreement unless otherwise specified. The headings and captions used in this
Agreement are solely for convenient reference and shall not affect the meaning
or interpretation of any article, section or paragraph herein, or this
Agreement. The terms "hereof," "herein" or "hereunder" shall refer to this
Agreement as a whole and not to any particular article, section or paragraph.
The terms "including" or "include" are used herein in an illustrative sense and
not to limit a more general statement. When computing time periods described by
a number of days before or after a stated date or event, the stated date or date
on which the specified event occurs shall not be counted and the last day of the
period shall be counted.
Article 8.7. Successors and Assigns. This Agreement shall bind, inure to
the benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns, and if an individual, by his executors,
administrators, and beneficiaries of his estate by will or the laws of descent
and distribution. This Agreement and the rights and obligations hereunder shall
not be assignable or delegable by any party.
Article 8.8. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas and of the United
States applicable in Texas. Each party hereto hereby acknowledges and agrees
that it has consulted legal counsel in connection with the negotiation of this
Agreement and that it has bargaining power equal to that of the other parties
hereto in connection with the negotiation and execution of this Agreement.
Accordingly, the parties hereto agree that the rule that an agreement shall be
construed against the draftsman shall have no application in the construction or
interpretation of this Agreement.
Article 8.9. Amendment and Entirety. This Agreement may be amended,
modified, or superseded only by written instrument executed by all parties
hereto. This Agreement, the exhibits and schedules hereto set forth the entire
agreement and understanding of the parties with respect to the transaction
contemplated supersedes all prior agreements, arrangements, and understandings.
In the event of any conflict or inconsistency between the provisions of this
Agreement and the contents or provisions of any schedule or exhibit hereto, the
provisions of this Agreement shall control. Seller Stockholder, Incomnet, Ciera
and GlobalCom hereby further acknowledge that this Agreement, including all
exhibits and schedules hereto, were jointly drafted and each party hereto had a
full and reasonable opportunity to consult with their respective legal counsels
regarding the matters contemplated hereby.
Article 8.10. Rights of Parties. Nothing in this Agreement, whether express
or implied, is intended to confer any rights or remedies under or by reason of
this Agreement on any Persons other than the parties hereto and their respective
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successors and assigns, nor shall any provision give any third Persons any right
of subrogation or action over against any party to this Agreement. Without
limiting the generality of the foregoing, it is expressly understood that this
Agreement does not create any third party beneficiary rights.
Article 8.11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all which together
shall constitute one and the same instrument.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Purchase Agreement is executed and delivered as of
the date first above written.
GLOBALCOM: INCOMNET:
CCC GLOBALCOM CORPORATION INCOMNET COMMUNICATIONS CORPORATION
By:__________________________________ By:________________________________
Name:________________________________ Name:______________________________
Title:_______________________________ Title:_____________________________
Address: 0000 Xxxx Xxxxxx Xxxx Xxxxx Address: 0000 Xxxx Xxxxxx
0xx Xxxxx Xxxxxx, XX 00000
Xxxxxxx, Xxxxx 00000 Telecopy No._______________________
Telecopy No. (713) (000) 000-0000
CIERA: SELLER STOCKHOLDER:
CIERA NETWORK SYSTEMS, INC. IRONWOOD TELECOM, LLC
By:__________________________________ By:________________________________
Name:________________________________ Name:______________________________
Title:_______________________________ Title:_____________________________
Address: c/o CCC GlobalCom Corporation Address: 000 Xxxxx Xxxxxxxxx Xxxx.
1250 Wood Branch Park Drive Suite 4-280
1st Floor Lakewood, Colorado 80226
Xxxxxxx, Xxxxx 00000 Telecopy No._______________________
Telecopy No. (000) 000-0000
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