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Exhibit 2.10
ASSET PURCHASE AGREEMENT
AGREEMENT made as of this 1st day of May 1998 between TRI STAR WEB
CREATIONS, INC., a New York corporation (the "Company"), XXXXXX XXXXXX, XXXXXXX
XXXXXXXXX ("Xxxxxxxxx") and XXXXX XXXXXXXXX ("Xxxxxxxxx"; Xxxxxx Xxxxxx,
Xxxxxxxxx and Xxxxxxxxx being hereinafter referred to collectively as
"Shareholders"), XXXX XXXXXX ("AS") and SAGE NETWORKS ACQUISITION CORP., a
Delaware corporation ("Buyer").
W I T N E S S E T H :
WHEREAS, the Company desires to sell and the Buyer desires to
purchase on the date hereof (the "Closing Date") the web hosting business of the
Company as a going concern (the "Business") consisting of the Purchased Assets
(hereinafter defined), and the Assumed Liabilities (as hereinafter defined), for
a purchase price determined as set forth in Exhibit A (the "Purchase Price") and
for the assumption of the Assumed Liabilities (hereinafter defined); and
WHEREAS, Shareholders and AS join in the execution of this Agreement
as the shareholders, directors and/or officers of the Company and they are
familiar with the material aspects of operations of the business of the Company,
including, without limitation, the Business.
NOW THEREFORE, in consideration of the mutual covenants and promises
contained in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by all parties, the
parties hereto agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES
Section 1. Purchase and Sale. Subject to the terms and conditions of
this Agreement, the Company hereby sells, assigns and transfers to the Buyer and
the Buyer hereby purchases and acquires from the Company, all of the right,
title and interest of the Company in and to the Purchased Assets (as hereinafter
defined) for the Purchase Price set forth herein.
Section 2. Representations of the Company, Shareholders and AS. The
following agreements, representations and warranties are made by the Company,
Shareholders and AS, jointly and severally, to the Buyer.
(A) Corporate Matters; No Conflict. The Company is duly formed,
organized, incorporated, is validly existing and in good standing under the laws
of its state of incorporation as set forth in Exhibit A, maintains offices only
at the site listed on Exhibit A and has no other
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locus of operations other than from that site, is qualified or authorized to
transact business and is in good standing in each other jurisdiction in which it
is doing business, except where failure to be qualified or be in good standing
would not have a material adverse effect on the business of the Company, and has
the corporate power to enter into this Agreement, to perform its obligations
hereunder and to conduct its business as currently conducted. The execution,
delivery and performance of this Agreement and the transactions contemplated
hereby by the Company, Shareholders and/or AS will not (i) conflict with or
violate the provisions of any applicable law (including, without limitation, any
bulk sales laws), rule or order or the Company's Articles or Certificate of
Incorporation, by-laws or any other organizational or governing documents of the
Company, (ii) conflict with or constitute a default under any agreement or
contract by which the Company or any Shareholder or AS is bound or (iii) require
the consent or approval of, or filing with, any governmental body or third party
except as set forth on Exhibit C-5. The execution, delivery and performance by
the Company of this Agreement has been duly authorized and approved by all
requisite corporate action on the part of the Company. The Shareholders are all
the beneficial and/or record owners of the issued and outstanding shares of
capital stock of the Company and each Shareholder owns the number of shares of
such stock set forth opposite his name on Exhibit A. Also set forth on Exhibit A
is the total number and type of authorized shares and outstanding shares of
capital stock of the Company. Set forth on Exhibit B is a list of officers and
directors of the Company, all trade names used by the Company and all
jurisdictions in which the Company is doing business. This Agreement and the
consummation of the transactions contemplated hereby have been approved
unanimously by the Shareholders and board of directors of the Company, and the
authorized officers of the Company named on Exhibit A are jointly and severally
authorized and empowered by the Company to execute and deliver this Agreement in
the name and on behalf of the Company.
(B) Purchased Assets. (i) All vendor and customer contracts,
confidentiality agreements, purchase and sales orders, powers of attorney,
undertakings, commitments and other agreements to which the Company is a party
and which relate in any manner to the Business and/or the relationship between
the Company and the Customers (hereinafter defined), whether written or oral,
shall be referred to herein collectively as the "Business Agreements". The
Company has delivered to Buyer, on or before the Closing Date, true and correct
copies of all written Business Agreements and detailed summaries of all oral
agreements. Attached hereto as Exhibit C-1 are true and correct copies of the
only forms of agreements which have been entered into between the Company and
its Customers concerning the Business. Also attached as part of Exhibit C-1 is a
schedule stating the identity of the other party to each of those agreements
which are in force and effect as of the Closing Date. Annexed as Exhibit C-2 is
a detailed summary of all oral Business Agreements and all written Business
Agreements between the Company and vendors or service providers, or relating to
any strategic partnerships or joint ventures between the Company and others,
concerning the Business. Listed on Exhibit C-3 is a description of each and
every real estate, equipment and personal property lease (collectively, the
"Leases") to which the Company is a party and which relates to the Business. The
Leases are also included within the definition of Business Agreements as said
term is used herein. Neither the Company nor any other
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party, is in default under any Business Agreement and no other party to any
Business Agreement has made any claim or given the Company notice of any dispute
under any Business Agreement, except as set forth on Exhibit C-4. Each Business
Agreement is in full force and effect and the Company has the right to assign
the Business Agreements and the Company has obtained all required consents to
the assignment and transfer thereof, except as set forth on Exhibit C-5. The
Company is not the owner or lessee of any motor vehicles which are used in the
Business. The Company does not own or lease any interest in any real property,
or lease any equipment used in the Business, except as expressly stated on
Exhibit C-3. Neither the Company nor any other party has made any modifications
to the Company's office space at 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx which would
be required to be removed and/or restored at the expiration or termination of
the Lease thereof.
(ii) All of the tangible assets of the Company used in the
Business, including, without limitation, all machinery, office and other
equipment, furniture, computers and related equipment, business machines,
telephones and telephone systems, parts and accessories, telephone numbers,
facsimile numbers, e-mail addresses and Internet domain addresses presently
utilized by the Company in the Business, shall be referred to herein
collectively as the "Tangible Assets". Attached hereto as Exhibit E is a true
and correct list or description of the material Tangible Assets. As of the
Closing Date, each of the Tangible Assets is in good and operable condition,
reasonable wear and tear excepted.
(iii) All patents, trademarks, trade names, service marks,
service names, logos, designs, formulations, copyrights and other trade rights
and all registrations and applications therefor, all know-how, trade secrets,
technology or processes, and all computer programs, data bases and software
documentation owned or used by the Company in the Business, other than
off-the-shelf software licensed by the Company, shall be referred to herein
collectively as the "Intellectual Property." Attached hereto as Exhibit F is a
true and correct copy of all of the Intellectual Property. Such exhibit also
indicates which of such items have been patented or registered or are in the
process of application for same. The Company has taken all necessary and
reasonable actions to protect its rights in Intellectual Property owned by it
and to the knowledge of the Company, is not infringing on the rights of any
third parties to Intellectual Property used, but not owned by, the Company.
Included among the Intellectual Property, among other things, are all trade
names utilized by the Company in the Business, including those trade names
listed on Exhibit B. On the Closing Date, the Company will deliver to Buyer a
Certificate of Amendment of the Company's Articles or Certificate of
Incorporation ("Certificate of Amendment") changing its corporate name so as to
delete the words "Tri Star" and will cause the same to be duly filed with the
Secretary of State's Office for the State of its incorporation within ten days
from the Closing Date. Promptly after such filing, the Company will deliver
proof of said filing to Buyer. The Company has valid and fully-paid licenses for
all off-the-shelf software used by the Company in its operation of the Business.
(iv) The Company will deliver at the Closing a true and
complete copy of the Company's customer list as of the Closing Date relating to
the Business which includes, in
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the case of each customer, the name of the customer, its billing and domain
addresses, identity and contact information of each relevant contact person, a
statement of the monthly or annual (as indicated) service charges relating to
such customer and the Company's files regarding such Customer (the "Customer
List"). All customers of the Company relating to the Business, including without
limitation, those customers included on the Customer List, together with the
good will and business opportunities of the Company as it relates to the
Business shall be referred to herein as the "Customers."
(v) As used herein, the term "Purchased Assets" shall be
defined as all classes of assets of the Company as shown on the Company's
certified financial statement as of December 31, 1997 (annexed as Exhibit H)
including, without limitation, the Business Agreements, the Tangible Assets, the
Intellectual Property, the Customer List, the Customers and all other assets of
the Company used in connection with the operation of the Business, wherever
located, tangible or intangible, including without limitation, all rights the
Company may have under any insurance policies relating to the Purchased Assets,
excluding, however, Excluded Assets (as defined below). The Purchased Assets are
not subject to (i) any lien or encumbrance of any character whatsoever except as
set forth on Exhibit N or (ii) any adverse claims by any third parties. At the
Closing upon consummation of the transactions contemplated by this Agreement,
Buyer will receive good and marketable title to the Purchased Assets, free and
clear of all liens and encumbrances of any character whatsoever. The Purchased
Assets include all rights, properties, interests and assets used by Company
and/or necessary to permit Buyer to carry on the Business as presently conducted
by the Company except for Excluded Assets.
(vi) The Company, the Shareholders and AS reasonably expect
that the business represented by the Business Agreements will continue after the
date hereof. Neither the Company nor any Shareholder nor AS has any knowledge
that any customers included on the Customer List, other than those listed on
Exhibit G-1, intend to terminate or reduce the amount of business they presently
do with the Company, and they have no knowledge of any state of facts which
would lead them to believe that any of the customers included on the Customer
List will terminate their relationship with the Company or significantly reduce
the amount of business they presently do with the Company.
(vii) Excluded Assets. The Company is not selling and
Purchaser is not buying or acquiring hereunder the following items ("Excluded
Assets") which are not included in the defined term "Purchased Assets": (a) All
cash and cash equivalents; (b) the Company's corporate minute and stock books,
tax returns and other records having to do solely with the Company's
organization and/or capitalization; (c) all outstanding billed receivables of
the Company (the "Closing Accounts Receivable"); (d) any rights to any of the
Company's claims for any federal, state or local tax refunds; and (e) any rights
which accrue or will accrue to the Company under this Agreement or the
transactions contemplated hereby.
(C) Financial Statements. The Company has delivered to the Buyer
copies of the Company's audited financial statements for the last three fiscal
years of the Company ended
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December 31, 1997, 1996 and 1995, respectively. Attached hereto as Exhibit H is
a certified audited balance sheet and profit and loss statement for the fiscal
year ended December 31,1997 and unaudited financial statements for each of the
months ending January 31, 1998, February 28, 1998 and March 31, 1998, all of
which reflect the assets, liabilities, net worth, profit and loss, and cash flow
of the Company with respect to the Business. All financial statements referred
to herein are complete and correct in all material respects, present fairly the
financial condition and results of operations of the Company as at the dates of
such statements and have been prepared in accordance with generally accepted
accounting principles. The books of account and records of the Company have been
maintained in accordance with good business practice and reflect fairly all
properties, assets, liabilities and transactions of the Company. The Company has
no material liabilities or obligations of any kind (whether accrued, absolute,
direct, indirect, contingent or otherwise) which are not fully accrued or
reserved against in the Company's financial statements in accordance with
generally accepted accounting principles. Except as set forth on Exhibit I the
Company has no bad debts as of the Closing Date. Since the last day of the
Company's last fiscal year, the Company has conducted the Business only in the
ordinary and usual course and has not experienced any material adverse change in
the Business or the financial condition of the Company. Since March 31, 1998,
the Company has had no loss in net monthly recurring revenue from the Business.
Between March 31, 1998 and the Closing Date, the Company, Shareholders and AS
warrant and represent that they have not withdrawn, expended or applied any cash
or other assets of the Company, except in the ordinary course of operations of
the Business of the Company in accordance with past practices of the Company,
and that no amounts have been paid to any Shareholder or AS except for salary of
approximately $3,900.
(D) Assumed Liabilities. The Buyer shall not be liable for and is
not assuming any liabilities of the Company whatsoever, whether related or
unrelated to the Purchased Assets, or whether arising under the Business
Agreement or otherwise, unless specifically listed on Exhibit J hereto (the
"Assumed Liabilities"). The Company, Shareholders and AS understand and agree
that the Buyer is not assuming any liabilities of any Shareholder whatsoever.
The Company has no outstanding loans of any kind and none of the Company's
obligations have been guaranteed by any other person or entity.
(E) Existing Employment Arrangements. Except as set forth on Exhibit
K the Company has no employment agreements, labor or collective bargaining
agreements or employee benefit or welfare plans. All vacation pay, if any, due
to employees of the Company has been fully paid by the Company. No employees of
the Company are entitled to any sick pay. The Company has no retirement plans.
There are no pending or, to the knowledge of the Company, threatened strikes,
job actions or other labor disputes affecting the Company or its employees and
there have been no such disputes for the past three years. Also set forth on
Exhibit K is a true and complete list of all employees of the Company employed
in connection with the Business, which list provides, among other things, the
name, residence address, title, job description and salary information
concerning each employee.
(F) Claims, Litigation, Disclosure. There is no claim, litigation,
tax audit,
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proceeding or investigation pending or, to the Company's, Shareholders' or AS'
knowledge, threatened against the Company, any Shareholder or AS, with respect
to the Business or any of the Purchased Assets of the Company (including,
without limitation, any claims of infringement or actions of opposition with
respect to Intellectual Property), nor does the Company, any Shareholder nor AS
know of any facts which would provide a basis for any such claim, litigation,
audit, proceeding or investigation.
(G) Taxes. Except as specifically set forth on Exhibit I (the "Tax
Liabilities"), the Company has correctly prepared and timely filed all Federal,
state and local tax returns, estimates and reports, and paid all such taxes as
and when due. For purposes of this paragraph, taxes shall mean all taxes,
charges, fees, levies or other assessments of any kind whatsoever (including,
without limitation, income, franchise, sales, use and withholding taxes). On or
before the Closing, the Company shall pay off and satisfy any of the Tax
Liabilities which are then due and payable and provide Buyer with evidence
thereof in form satisfactory to Buyer and its counsel.
(H) No Other Agreements to Sell Assets or Business. None of the
Company, any Shareholder or AS is a party to any existing agreement which
obligates the Company to sell to any other person or firm the Purchased Assets
(other than sales in the ordinary course of business), to issue or sell any
capital stock or any security convertible into or exchangeable for capital stock
of the Company or to effect any merger, consolidation or other reorganization of
the Company or to enter into any agreement with respect thereto.
(I) No Brokers. The only broker, leasing agent, finder or similar
person or entity with whom the Company, Shareholders or AS have made contact or
had any dealings with or entered into any agreement, arrangement or
understanding with concerning this Agreement and to whom the Company and/or
Shareholders and/or AS are responsible to pay a finder's fee, brokerage
commission or similar payment to is the party or parties listed in item 6 on
Exhibit A, if any, and the Company, Shareholders and AS shall be solely
responsible for the payment of same.
(J) Environmental Compliance. (i) Neither the Company nor any
operator of the Company's properties is in violation, or alleged to be in
violation, of any federal, state or local judgment, decree, order, consent
agreement, law (including common law), license, rule or regulation pertaining to
environmental health or safety matters, including without limitation those
arising under the Resource Conservation and Recovery Act, as amended, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, as
amended, Water Act, as amended, the Federal Clean Air Act, as amended, the Toxic
Substances Control Act, or any state or local analogue (hereinafter
"Environmental Laws").
(ii) Neither the Company nor any Shareholder nor AS has
received a notice, complaint, order, directive, claim or citation from any third
party, including without limitation any federal, state or local governmental
authority, indicating or alleging that
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the Company or any predecessor may have any liability or obligation under any
Environmental Law.
(iii) (A) No portion of the property of the Company has been
used by any person for the generation, handling, processing, treatment, storage
or disposal of Hazardous Materials except in accordance with applicable
Environmental Laws; (B) no underground tank or other underground storage
receptacle for Hazardous Materials, asbestos-containing materials or
polychlorinated biphenyls are located on any portion of any location occupied by
the Company each of which is listed as a Site on Exhibit A; (C) in the course of
any activities conducted by the Company or its invitees, agents, contractors,
licensees or employees in connection with the Business of the Company, no
Hazardous Materials have been generated or are being used except in accordance
with applicable Environmental Laws; and (D) there have been no releases (i.e.,
any past or present releasing, spilling, leaking, leaching, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, disposing or dumping) or
threatened releases of Hazardous Materials on, upon, into or from the property
currently or formerly owned, operated or leased by the Company, which releases
would have a material adverse effect on the value of any of the property or
adjacent properties or the environment.
(iv) The execution, delivery and performance of this Agreement
is not subject to any Environmental Laws which condition, restrict or prohibit
the sale, lease or other transfer of property or operations, including, without
limitation, any so-called "environmental cleanup responsibility acts" or
requirements for the transfer of permits, approvals, or licenses. There have
been no environmentally related audits, studies, reports, analyses (including
soil and groundwater analyses), or investigations of any kind performed with
respect to the currently or previously owned, leased, or operated properties of
the Company.
For purposes of this Section, "Hazardous Material" shall mean any
hazardous waste, as defined by 42 U.S.C. ss. 6903(5), any hazardous substances
or wastes as defined by 42 U.S.C. ss. 9601(14), any pollutant or contaminant as
defined by 42 U.S.C. ss. 9601(33) or any toxic substances or wastes, oil or
hazardous materials or other chemicals or substances regulated by any public or
governmental authority.
(K) Year 2000. All hardware and software products owned by the
Company and used in the administration and the business operations of the
Company will be able to accurately process date data (including, but not limited
to calculating, comparing and sequencing) from the twentieth century (through
the year 1999) into, between and through the year 2000, including leap year
calculations, when used in accordance with the product documentation
accompanying such hardware and software products.
(L) Licenses and Compliance with Laws. The Company holds no material
governmental or regulatory licenses, permits, consents or approvals in
connection with the Business, and the Company is in compliance with all material
laws and regulations applicable to the Business.
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(M) True and Complete. No representation or warranty made by
Company, any Shareholder or AS in this Agreement, nor any statement, certificate
or exhibit furnished by or on behalf of Company pursuant to this Agreement, nor
any document or certificate delivered to Buyer pursuant to this Agreement, or in
connection with the transactions contemplated hereby, contains or shall contain
any untrue statement of a material fact, or omits or shall omit to state a
material fact necessary to make the statements contained therein not misleading.
Neither the Company nor any Shareholder nor AS has not failed to disclose to
Buyer any pending developments or circumstances of which any of them are aware
which are reasonably likely to have a material adverse effect on the Company or
the Business.
Section 3. Representations of the Buyer. Buyer represents and
warrants to the Company, Shareholders and AS as follows.
(A) Corporate Matters; No Conflict. Buyer is a wholly owned
subsidiary of Sage Networks, Inc. ("Parent"). Each of the Buyer and Parent is
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, is in good standing in each other jurisdiction in which it is
doing business, except where failure to be in good standing would not have a
material adverse effect on the business of Buyer or Parent, and has the
corporate power to enter into this Agreement (and as to the Parent only, the
Employment Agreement (hereinafter defined)), to perform its obligations
hereunder (and as to the Parent only, the Employment Agreement) and to conduct
its business as currently conducted. The execution, delivery and performance of
this Agreement (and as to the Parent only, the Employment Agreement) and the
transactions contemplated hereby (and thereby) by the Buyer and Parent,
respectively, will not (a) conflict with or violate the provisions of any
applicable law, rule or order or the Buyer's or the Parent's respective
Certificate of Incorporation or by-laws, (b) conflict with or constitute a
default under any agreement or contract by which the Buyer or Parent is bound or
(c) require the consent or approval of, or filing with, any governmental body or
third party. The execution, delivery and performance by the Buyer of this
Agreement has been authorized and approved by all requisite corporate action on
the part of the Buyer.
(B) No Brokers. The only broker, leasing agent, finder or similar
person or entity with whom the Buyer or Parent has made contact or had any
dealings with or entered into any agreement, arrangement or understanding with
concerning this Agreement and to whom the Buyer and/or the Parent is responsible
to pay a finder's fee, brokerage commission or similar payment to is the party
listed in item 7 on Exhibit A, if any, and the Buyer shall be solely responsible
for the payment of same.
(C) Claims, Litigation, Disclosure. There is no claim, litigation,
tax audit, proceeding or investigation pending or threatened against the Buyer
or Parent.
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ARTICLE II.
CERTAIN COVENANTS OF THE COMPANY, SHAREHOLDERS AND AS
Section 1. Non-competition; non-solicitation.
(A) For a period commencing on the Closing Date and ending on the
second anniversary of the Closing Date (in the case of the Company) and for a
period commencing on the Closing Date and ending on the second anniversary of
the termination of the Employment Agreement in accordance with its terms (in the
case of the Xxxxxxxxx, Xxxxxxxxx and AS), neither the Company nor Shareholders
nor AS shall engage in any capacity in an Internet web hosting business which is
similar to or in competition with the Business and is located or does business
in any state in the United States. The Company, each Shareholder and AS
understand that pursuant to this Agreement they have received confidential and
proprietary information of Buyer, Parent and their respective affiliates,
including, without limitation, customer lists and other trade secrets. Neither
the Company nor any Shareholder nor AS, shall at any time, either before or
after the Closing Date, disclose to any third party any such confidential or
proprietary information of Buyer or make use of any of such information except
in evaluating whether to enter into this Agreement. In connection with such
evaluation, the Company, Shareholders and AS may disclose such proprietary
information to their legal and financial consultants on a need to know basis on
the condition that those consultants are similarly prohibited from further
disclosing such information as provided herein. The Company, Shareholders and
AS, and each of them, expressly acknowledges, understands and agrees (i) that
remedies at law for any breach of this Article II, Section 1 will be inadequate,
(ii) that the damages resulting from such breach are not readily susceptible to
measurement in monetary terms and (iii) that Buyer and/or Parent shall be
entitled to immediate injunctive relief and may obtain temporary and permanent
orders restraining any threatened or further breach of this Article II, Section
1 by the Company and/or any Shareholder and/or AS. The Company, each Shareholder
and AS have been advised by their respective counsel with respect to the meaning
and effect of this Article II, Section 1.
(B) For a period commencing on the Closing Date and ending on the
second anniversary of the Closing Date (in the case of the Company) and for a
period commencing on the Closing Date and ending on the second anniversary of
the termination of Xxxxxxxxx, Xxxxxxxxx or AS's Employment Agreement (as
hereinafter defined) in accordance with its terms, neither the Company nor any
Shareholder nor AS, unless acting with the express written consent of the Buyer
or Parent, will, directly or indirectly, interfere with, solicit or endeavor to
entice away:
(i) any person who was an employee, subcontractor or
consultant of the Company, the Buyer, the Parent or any of their
affiliates during the twelve months immediately preceding the date
of such solicitation, interference or endeavor,
(ii) with respect to any Internet web hosting business similar
to or in competition with the Business in which the Company, Buyer,
Parent, or any of
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their affiliates is or has been engaged after the date of this
Agreement, any person or entity who was a customer or client of the
Company or of the Buyer or of the Parent, or any person or entity
who requested or received a proposal from Buyer, Parent or the
Company.
Section 2. Survival of Representations and Warranties;
Indemnification.
(A) The representations and warranties of the parties herein
contained shall survive the closing of the purchase contemplated by this
Agreement, notwithstanding any investigation at any time made by or on behalf of
the other party, provided that any claims for indemnification in accordance with
Article II, Section 2 below with respect to any representation or warranty must
be made (and will be null and void unless made) on or before the date
twenty-four months following the Closing Date (except in the case of
representations contained in Paragraphs (B)(v), (G), (I) and (J) of Article I,
Section 2 hereof, which must be made within six months following the expiration
of the applicable statute of limitations).
(B) The Company, Shareholders and AS, jointly and severally, hereby
agree to indemnify and hold Buyer, Parent, and their respective officers,
directors, stockholders, affiliates, employees, representatives and other agents
harmless from and against any and all claims, liabilities, losses, damages or
injuries, together with costs and expenses, including reasonable legal fees,
arising out of or resulting from (i) any breach, misrepresentation or material
omission of the representations and warranties made by the Company and/or any
Shareholder and/or AS in this Agreement or in any Exhibit hereto or other
documents delivered in connection herewith, (ii) any breach in any material
respect by the Company and/or any Shareholder and/or AS, or any of them, unless
waived in writing by the Buyer, of any covenant or agreement contained in or
arising out of this Agreement, or any other agreement delivered in connection
herewith on the Closing Date, including without limitation, the Employment
Agreement, (iii) the Business conducted by the Company prior to the Closing Date
and any actions or events associated therewith, (iv) any and all liabilities of
the Company, other than the Assumed Liabilities, and (v) any failure by any
Shareholder or the Company to comply with any provisions of the bulk sales or
similar laws of any jurisdiction which are applicable to this Agreement or the
transactions contemplated hereby.
(C) Buyer hereby agrees to indemnify and hold the Company,
Shareholders and AS harmless from and against any and all claims, liabilities,
losses, damages or injuries, together with costs and expenses, including
reasonable legal fees, arising out of or resulting from (i) any breach,
misrepresentation or material omission in the representations and warranties
made by the Buyer in this Agreement, (ii) any breach in any material respect by
Buyer, unless waived in writing by the Company, of any covenant or agreement of
Buyer contained in or arising out of this Agreement, or (iii) the Business as
conducted by Buyer, after the Closing Date.
(D) Any party claiming a right to indemnification hereunder (the
"Indemnified Party") shall give the other party from whom indemnification is
sought (the "Indemnifying Party")
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prompt written notice of any claim, demand, action, suit, proceeding or
discovery of fact upon which the Indemnified Party intends to base a claim for
indemnification under this Section 2, provided, however, that no failure to give
such notice shall excuse any Indemnifying Party from any obligation hereunder
except to the extent the Indemnifying Party is materially prejudiced by such
failure. The Indemnified Party shall have full responsibility and authority with
respect to the disposition of any action, suit or proceeding brought against it;
provided, however, that it will not settle any such action, suit or proceeding
without the prior written consent of the Indemnifying Party, which will not be
unreasonably withheld or delayed. In the event any action, suit or proceeding is
brought against the Indemnified Party with respect to which the Indemnifying
Party may have liability under the indemnity agreements contained in Paragraphs
(B) and (C) of Article II, Section 2 hereof, however, the Indemnifying Party
shall have the right, without prejudice to the Indemnified Party's rights under
this Agreement, at the Indemnifying Party's sole expense, to be represented by
counsel of its own choosing and with whom counsel for the Indemnified Party
shall confer in connection with the defense of any such action, suit, or
proceeding. The Indemnified Party shall make available to the Indemnifying Party
and its counsel and accountants, all books and records of the Indemnified Party
relating to such action, suit or proceeding and the parties agree to render to
each other such assistance as may reasonably be requested in order to insure the
proper and adequate defense of any such action, suit or proceeding.
(E) On the Closing Date, ten (10%) percent of the Purchase Price
(the "Escrowed Amount") shall be paid to the escrow agent listed on Exhibit A
(the "Escrow Agent") to be held in escrow in accordance with the terms of an
escrow agreement to be entered into between the parties (the "Escrow Agreement")
on or prior to the Closing Date. The Escrowed Amount will be held in escrow by
the Escrow Agent as security for any indemnification obligation of the Company,
Shareholders and AS, or any of them, to Buyer pursuant to the terms of Article
II, Section 2, Paragraph (B) of this Agreement. Indemnity claims by Buyer
pursuant to said Paragraph (B) shall be satisfied first by the reduction of the
Escrowed Amount until the termination of the Escrow Agreement and thereafter by
the Company, Shareholders and AS, jointly and severally. The Escrowed Amount
does not constitute a limit on the liability of the Company, Shareholders or AS
to Buyer hereunder, it being understood and agreed that the Company,
Shareholders and AS, and each of them, shall remain jointly and severally liable
to satisfy the amount of such claims which exceed the Escrowed Amount. The
Escrowed Amount shall be held by the Escrow Agent pursuant to the terms of the
Escrow Agreement which shall be agreed upon and entered into by the Escrow
Agent, the Company, Shareholders, AS and Buyer on or before the Closing Date.
Among other things, the Escrow Agreement will provide that on the second
anniversary hereof, the Escrow Agent shall pay to the Company or its designee
such amount of the Escrow Amount then remaining, if any, as has not previously
been applied pursuant to the terms of said Escrow Agreement, unless an
indemnification claim by Buyer against the Company and/or any Shareholder and/or
AS is then pending.
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ARTICLE III
CLOSING AND DELIVERIES AT CLOSING
Section 1. Closing. The closing of the purchase and sale of the
transaction contemplated herein shall take place on May __, 1998 (the
"Closing"), at the offices of Buyer's counsel, Xxxxxxx & Xxxxxxx P.C. located at
000 Xxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 a.m. The deliveries
described in Section 2 and 3 of this Article III will take place at the Closing.
Section 2. Deliveries by the Company, Shareholders and AS. On the
Closing Date, the Company, Shareholders and AS will deliver, or cause to be
delivered, to the Buyer the following:
(A) Such instruments of transfer or conveyance executed by the
Company, and each Shareholder where applicable, as Buyer may reasonably request
in order to convey and transfer to Buyer good and marketable title to all of the
Purchased Assets, free and clear of all liens, claims, encumbrances and other
charges, including, without limitation, a Xxxx of Sale.
(B) Physical delivery of all Tangible Assets by making them
available at the Sites listed on Exhibit A, together with any and all
warranties, manuals, instructions, and other literature in the possession of the
Company or any Shareholder relating to the ownership or operation of the
Tangible Assets. In addition, such notices to telephone companies and others
required to transfer the Company's telephone and facsimile numbers, e-mail
addresses and domain addresses, used in the Business to Buyer.
(C) Physical delivery of all original or certified copies of
documentation concerning the Intellectual Property, including, without
limitation, registrations and applications of any patents, trademarks or service
marks, original artwork, data bases, computer programs and software.
(D) The following corporate documentation:
(i) The Company's Articles or Certificate of Incorporation
certified as of a date within thirty days prior to the Closing Date
by the Secretary of State of the state of the Company's
organization;
(ii) Good Standing Certificates as of date within thirty days
prior to the Closing Date from the Secretary of State of the state
of the Company's organization and each other state in which the
Company is qualified to do business;
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(iii) The Company's By-Laws certified as of the Closing Date
by the President or Secretary of the Company as being in full force
and effect and unmodified; and
(iv) Corporate Resolutions of the Board of Directors and
Shareholders of the Company, approving this Agreement and all the
transactions contemplated hereby, certified by the President or
Secretary of the Company as being in full force and effect and
unmodified.
(E) The legal opinions of counsel to the Company, Shareholders and
AS, in a form acceptable to Buyer and its counsel.
(F) Evidence in form satisfactory to Buyer and its counsel that the
Tax Liabilities, if any, have been paid off and satisfied.
(G) The Escrow Agreement duly executed by the Company.
(H) A copy of the Certificate of Amendment duly executed by the
President and Secretary of the Company which is to be filed in the Secretary of
State's Office for the State of the Company's incorporation pursuant to Article
I, Section 2, Paragraph (B) (iii) hereof.
(I) The Company, Shareholders and AS shall use their reasonable best
efforts to deliver a Non-Competition, Non-Disclosure and Intellectual Property
Agreement in a form to be provided by Buyer prior to the Closing, executed by
each employee of the Company who will be employed by Buyer or its affiliate
after the Closing.
(J) Notices of termination of all employees of the Company employed
in connection with Business satisfactory to Buyer, which notices will be
delivered to the employees concurrently with the Closing.
(K) Employment Agreements ("Employment Agreements") between each of
Xxxxxxxxx, Xxxxxxxxx and AS and Parent executed by each of Xxxxxxxxx, Xxxxxxxxx
and AS.
(L) Keys to all entrances and possession of the Site listed on
Exhibit A.
(M) Such notice or notices as Buyer may reasonably request in order
to notify the customers included on the Customer List that the Business has been
sold to Buyer.
Section 3. Deliveries by the Buyer.
On the Closing Date, the Buyer will deliver, or cause to be
delivered, to the Company and Shareholders (and AS, where applicable) the
following:
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(A) The Purchase Price by cash, or certified or official bank check
payable to the order of the Company, or by wire transfer of federal funds to the
account of the Company, as the Company and Shareholders shall direct in writing
on or before the Closing Date; provided, however, Buyer may, upon written
agreement of all parties hereto, deduct from the Purchase Price and pay directly
amounts due any creditor of the Company, including, without limitation, the Tax
Liabilities (but excluding any amounts due for any of the Assumed Liabilities),
in which event, evidence of such payment shall be presented at the Closing.
(B) Such instruments of assignment and assumption executed by the
Buyer, as the parties hereto reasonably may determine necessary to effectuate
the assignment to the Buyer of the Business Agreements and the assumption by
Buyer of the Assumed Liabilities.
(C) The Escrow Agreement duly executed by the Buyer and the Escrow
Agent.
(D) The Employment Agreements executed by Parent.
(E) The legal opinion of counsel to the Buyer, in a form acceptable
to the Company and its counsel.
(F) Resolution of the Board of Directors of Buyer, authorizing the
execution of this Agreement and the transactions contemplated hereby.
ARTICLE IV
OBLIGATIONS FOLLOWING CLOSING
Section 1. Further Cooperation. The Company, Shareholders and AS
will, at any time and from time to time after the Closing Date, execute and
deliver such further instruments of conveyance, transfer and license, and take
such additional actions as Buyer, Parent or its successor and/or assigns, may
reasonably request, to effect, consummate, confirm or evidence the transfer to
Buyer of the Purchased Assets pursuant to this Agreement.
Section 2. Transition Assistance and Adjustments.
(A) The Company shall reasonably cooperate and provide assistance to
the Buyer as shall be reasonably appropriate during the transition of the
Business and the Purchased Assets from the Company to the Buyer, or its
successors and/or assigns, after the Closing Date. All assistance shall be made
promptly when available after any request by Buyer. Buyer shall only reimburse
the Company for reasonable out-of-pocket expenses incurred in rendering such
assistance, but not for any time of any personnel.
(B) Buyer and its successors and/or assigns shall have the right at
any time and
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from time to time upon reasonable notice and during normal business hours to
examine and make copies of all corporate books, records and other documents of
the Company relating to the Business and generated prior to the Closing Date,
which documents will be maintained by the Company and Shareholders for a period
of five (5) years after the Closing Date.
(C) The Company, Shareholders and AS will reasonably cooperate with
Buyer in notifying the customers included on the Customer List that the Business
has been sold to Buyer, including, without limitation, executing any additional
notices which Buyer may reasonably request. Neither the Company, Shareholders
nor AS, nor any of them, will, directly or indirectly, take any action which is
designed or intended to have the effect of discouraging customers, suppliers or
vendors and other business associates of the Business, from maintaining the same
business relationships with Buyer or its successors and/or assigns after the
Closing Date as were maintained with the Company and/or Shareholders and/or AS
with respect to the Business prior to the Closing Date.
(D) The Buyer will attempt, without out-of-pocket cost to Buyer, to
collect, on behalf of the Company, all Closing Accounts Receivable of the
Company. The Buyer will be entitled, as agreed reimbursement of Buyer's
overhead, to receive and retain 25% of all Closing Accounts Receivable received
by Buyer, Company, any Shareholder or AS. In the event payment of any Closing
Account Receivable is received by the Company, any Shareholder or AS, they shall
promptly forward to Buyer the full amount so received. Buyer will forward to the
Company by the 15th day after the month in which such amount is received, 75% of
any amounts it receives as payment for all or part of the Closing Accounts
Receivable from the Company, Shareholders, AS or any third party. The Company
shall provide a monthly report of collections to Shareholders. The Company,
Shareholders and AS will forward to Buyer any amounts any of them receive from
customers of the Business relating to any matter other than Excluded Assets.
(E) Following the Closing, the Company, Shareholders, and AS, and
each of them, or any affiliate of the Company (as defined under federal
securities laws), shall not use the name "Tri Star" or any confusingly similar
name to said trade name in any trade or business, other than as an employee of
Buyer or an affiliate of Buyer.
ARTICLE V
MISCELLANEOUS
Section 1. Governing Law; Jurisdiction. This Agreement shall be
governed by the laws of the State of New York. The parties hereto submit and
consent to the exclusive jurisdiction of the state courts of the State of New
York in the County of New York and the federal courts located therein with
respect to any legal actions relating to this Agreement, or any other agreements
delivered in connection herewith, between the Company, Shareholders and AS, or
any of them, on the one hand, and the Buyer and/or Parent, on the other hand,
and any
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transactions contemplated thereby.
Section 2. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which together shall
constitute one and the same instrument.
Section 3. Confidentiality. The Company, Shareholders and AS, and
each of them, on the one hand, and the Buyer, on the other hand, each agree not
to disclose or use any information acquired by it about the other party during
the course of the negotiations of this Agreement and the transactions to which
it relates which is confidential in nature or not otherwise generally available
to the public without the prior written consent of such other party unless
required to do so by applicable law or by order of a court of competent
jurisdiction.
Section 4. Amendments. This Agreement supersedes any prior contracts
relating to the subject matter hereof between the Buyer, Parent, the Company,
Shareholders and AS. This Agreement cannot be changed, modified or amended and
no provision or requirement hereof may be waived without the consent in writing
of the parties hereto.
Section 5. Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect. Each provision of this Agreement shall be deemed to be the agreement of
the parties hereto to the full extent that the power to enter into such
provisions shall have been conferred on the parties by law.
Section 6. Benefit; Assignment. This Agreement is binding upon and
inures to the benefit of the parties, their successors and permitted assigns.
This Agreement may not be assigned or the duties of the parties hereunder
delegated to others without the prior written consent of all parties hereto,
except that Buyer may assign its rights, duties and obligations hereunder to
Parent or an affiliate of Buyer or Parent without the Company's, Shareholders'
or AS's consent.
Section 7. Construction. All exhibits annexed hereto are hereby
incorporated herein by reference and made a part of this Agreement. Whenever
used in this Agreement and the context so requires, the singular shall include
the plural and the plural shall include the singular.
Section 8. Imputed Knowledge. Anywhere in this Agreement where it
refers to the "knowledge of" the Company, or words of similar import, the
knowledge of the
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Shareholders and AS shall be imputed to be the knowledge of the Company.
Anywhere in this Agreement where it refers to the "knowledge of" the Buyer or
the Parent, or words of similar import, the knowledge of Xxxxxxx X. Xxxxxxx
shall be imputed to be the knowledge of the Buyer and the Parent, respectively.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
SAGE NETWORKS ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxx, President
TRI STAR WEB CREATIONS, INC
By:
----------------------------------------
/s/ Xxxxxx Xxxxxx
--------------------------------------------
XXXXXX XXXXXX
Xxxxxxx Xxxxxxxxx
--------------------------------------------
XXXXXXX XXXXXXXXX
Xxxxx Xxxxxxxxx
--------------------------------------------
XXXXX XXXXXXXXX
/s/ Xxxx Xxxxxx
--------------------------------------------
XXXX XXXXXX
19
DESCRIPTION OF EXHIBITS:
Exhibit A -- Basic Provisions
Exhibit B -- Ownership of Capital Stock of the Company; Description of Capital
Stock; Officers; Directors; Trade Names
Exhibit C-1 -- Forms of Business Agreements with Customers
Exhibit C-2 -- Summary of Oral Business Agreements and Vendor/Service Provider
Agreements
Exhibit C-3 -- Leases
Exhibit C-4 -- Claims of Disputes Under Business Agreements
Exhibit C-5 -- Consents to Transfer or Assign Not Obtained
Exhibit D -- [INTENTIONALLY DELETED]
Exhibit E -- Tangible Assets
Exhibit F -- Intellectual Property
Exhibit G -- Customer List and Related Information
Exhibit G-1 -- Customer Terminations
Exhibit H -- Financial Statements
Exhibit I -- Bad Debts and Tax Liabilities of the Company
Exhibit J -- Assumed Liabilities
Exhibit K -- Existing Employment Agreements, Labor or Collective Bargaining
Agreements, Employee Benefit or Welfare Plans, Description of
Employees
Exhibit L -- Excluded Assets
In accordance with Item 601(b)(2) of Regulation S-K all exhibits other than
Exhibit A have been omitted. The Company hereby agrees to furnish supplementally
a copy of any omitted exhibit to the Commission upon request.
20
EXHIBIT A
TO
ASSET PURCHASE AGREEMENT
BETWEEN
SAGE NETWORKS ACQUISITION CORP.
and
TRI STAR WEB CREATIONS, INC.
BASIC PROVISIONS
1. Name of BUYER: Sage Networks Acquisition Corp.
2. Name of COMPANY: Tri Star Web Creations, Inc.
(a) Names, addresses and stock ownership of SHAREHOLDER of COMPANY:
Name and Address Number of Shares (Type)
---------------- -----------------------
Xxxxxx Xxxxxx 1
Xxxxxxx Xxxxxxxxx 1
Xxxxx Xxxxxxxxx 1
Total Outstanding Shares 3 Common Shares
(b) STATE OF INCORPORATION of COMPANY: New York
(c) AUTHORIZED OFFICERS of the COMPANY:
Xxxxxxx Xxxxxxxxx - President and Treasurer
Xxxxx Xxxxxxxxx - Vice President and Secretary
(d) Address of each SITE from which the COMPANY conducts the Business:
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
3. [INTENTIONALLY DELETED]
4. RESIDENCE ADDRESSES of SHAREHOLDERS: See above
5. PURCHASE PRICE: $955,000 plus 3,000 shares of
Common
21
Stock of Sage Network, Inc.
6. COMPANY AND SHAREHOLDERS' BROKER: None
7. BUYER'S BROKER: Am-Tech Associates
8. ESCROW AGENT: Xxxxxxx & Xxxxxxx P.C.
