Communications World International, Inc.
Form 10-SB/A
Exhibit 2 (g)
ASSET PURCHASE AGREEMENT
BY AND AMONG
IAC ACQUISITION CORPORATION,
COMMUNICATIONS WORLD INTERNATIONAL, INC.,
WEST-TECH COMMUNICATIONS CORP.
AND
XXXX XXXXXXXX
Dated as of October 29, 1999
ASSET PURCHASE AGREEMENT - Page 1
TABLE OF CONTENTS
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Page No.
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1. DEFINITIONS................................................................1
1.1 GENERAL DEFINITIONS....................................................1
2. SALE OF ASSETS; ASSUMPTION OF CERTAIN LIABILITIES..........................5
2.1 AGREEMENT TO PURCHASE AND SELL.........................................5
(a) Equipment...........................................................5
(b) Vehicles............................................................5
(c) Scheduled Contracts.................................................5
(d) Intangible Assets...................................................5
(e) Goodwill............................................................5
(f) Accounts Receivable.................................................5
(g) Permits.............................................................5
(h) Name................................................................6
(i) Warranty Rights.....................................................6
(j) Other Intangibles...................................................6
(k) Other Property......................................................6
2.2 EXCLUDED ASSETS........................................................6
2.3 PURCHASE PRICE.........................................................6
2.4 POST-CLOSING ADJUSTMENT................................................6
(a) Adjustment Period...................................................6
(b) Reports to the Company..............................................7
(c) Deduction from Note.................................................7
(d) Other Accounts......................................................7
2.5 ALLOCATION.............................................................8
2.6 ASSUMPTION OF LIABILITIES..............................................8
(a) Assumed Obligations.................................................8
(b) Retained Liabilities................................................8
2.7 FURTHER ASSURANCES.....................................................9
3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS..............................9
3.1 ORGANIZATION; QUALIFICATION............................................9
3.2 AUTHORITY RELATIVE TO THIS AGREEMENT...................................9
3.3 CAPITALIZATION.........................................................9
3.4 SUBSIDIARIES...........................................................9
3.5 CONSENTS AND APPROVALS................................................10
3.6 NO VIOLATIONS.........................................................10
3.7 TITLE TO AND CONDITION OF ASSETS AND PROPERTY.........................10
3.8 INVESTIGATION OR LITIGATION...........................................10
3.9 TAXES.................................................................10
3.10 NO BROKERS...........................................................11
3.11 ACCOUNTS.............................................................11
3.12 INSURANCE............................................................11
3.13 CONTRACTS; ORAL COMMITMENTS; DEFAULTS................................11
3.14 SOLVENCY.............................................................11
3.15 CORPORATE MATTERS....................................................12
3.16 PERMITS..............................................................12
3.17 COMPLIANCE WITH LAWS.................................................12
3.18 CORPORATE NAME.......................................................12
3.19 DISCLOSURE...........................................................12
ASSET PURCHASE AGREEMENT - Page 2
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER...............................13
4.1 ORGANIZATION..........................................................13
4.2 AUTHORITY RELATIVE TO THIS AGREEMENT..................................13
4.3 CONSENTS AND APPROVALS................................................13
4.4 CWII STOCK............................................................13
4.5 DISCLOSURE............................................................13
5. ADDITIONAL AGREEMENTS.....................................................14
5.1 CONDUCT OF BUSINESS OF SELLER.........................................14
5.2 FORBEARANCES BY SELLER................................................14
5.3 NO SOLICITATION.......................................................14
5.4 INVESTIGATION OF BUSINESS AND PROPERTIES..............................15
5.5 AGREEMENT TO CONSUMMATE...............................................15
5.6 APPROVAL OF THIRD PARTIES.............................................15
5.7 AGREEMENT REGARDING BROKERS...........................................16
5.8 NOTICE................................................................16
5.9 INFORMATION FOR TAX RETURNS...........................................16
5.10 MAINTENANCE OF EXISTENCE.............................................16
5.11 PAYMENT OF LIABILITIES...............................................16
5.12 DISCLOSURE SCHEDULE..................................................16
5.13 EMPLOYEES............................................................16
5.14 CHANGE OF SELLERS'NAME...............................................17
5.15 AUDITED FINANCIALS...................................................17
5.16 REGISTRATION RIGHTS AGREEMENT........................................17
6. CONDITIONS PRECEDENT TO CLOSING...........................................17
6.1 GENERAL CONDITIONS....................................................17
(a) No Injunction......................................................17
(b) Proceedings........................................................17
(c) Noncompetition and Employment Agreement............................17
6.2 CONDITIONS TO CLOSING IN FAVOR OF SELLERS.............................17
(a) Representations and Warranties of Purchaser........................17
(b) Purchaser's Officers'Certificate...................................18
(c) Governmental Consents, Authorizations, Etc.........................18
(d) Assumption Agreement...............................................18
(e) Closing Consideration..............................................18
(f) Subordinated Promissory Note.......................................18
6.3 CONDITIONS TO CLOSING IN FAVOR OF PURCHASER...........................18
(a) Representations and Warranties of Sellers..........................18
(b) Sellers'Officers'Certificate.......................................18
(d) Governmental Consents, Authorizations, Etc.........................19
(e) Legislation........................................................19
(f) Litigation.........................................................19
(g) No Adverse Change..................................................19
(h) Delivery of Documents/Acceptance of Schedules......................19
(i) Third Party Consents...............................................19
(j) Purchaser's Investigation..........................................19
(k) Other Matters......................................................20
7. CLOSING AND TERMINATION...................................................20
7.1 CLOSING DATE..........................................................20
7.2 TERMINATION...........................................................20
7.3 EFFECT OF TERMINATION.................................................20
ASSET PURCHASE AGREEMENT - Page 3
7.4 AMENDMENT.............................................................21
7.5 EXTENSION; WAIVER.....................................................21
8. SURVIVAL AND INDEMNIFICATION..............................................21
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES............................21
8.2 SELLER INDEMNITY......................................................21
8.3 PURCHASER INDEMNITY...................................................22
8.4 NO THIRD PARTY BENEFICIARIES..........................................23
8.5 INDEMNIFICATION NOTICE................................................23
8.6 OFFSET................................................................23
9. GENERAL PROVISIONS AND OTHER AGREEMENTS...................................24
9.1 NOTICES...............................................................24
9.2 FEES AND EXPENSES.....................................................25
9.3 INTERPRETATION........................................................25
9.4 FACSIMILE; COUNTERPARTS...............................................25
9.5 PUBLICITY.............................................................25
9.6 INVALID PROVISIONS....................................................25
9.7 BINDING EFFECT........................................................26
9.8 CAPTIONS..............................................................26
9.9 ATTORNEYS'FEES........................................................26
9.10 JURISDICTION AND VENUE...............................................26
9.11 ASSIGNABILITY........................................................26
9.12 ENTIRETY.............................................................26
9.13 AMENDMENT............................................................26
9.14 GOVERNING LAW........................................................26
LIST OF EXHIBITS
Exhibit A - Form of Assumption Agreement
Exhibit B - Form of Xxxx of Sale and Assignment
Exhibit C - Purchase Price Allocation
Exhibit D - Form of Employment and Noncompetition Agreement
Exhibit E - Form of Subordinated Promissory Note
LIST OF SCHEDULES
Disclosure Schedules
Schedule 2.1(a) - Equipment
Schedule 2.1(b) - Vehicles
Schedule 2.1(c) - Scheduled Contracts
Schedule 2.1(h) - Permits
Schedule 2.2(a) - Excluded Assets
Schedule 2.4(a) - Pre-Closing Receivables
Schedule 2.6(a) - Assumed Obligations
Schedule 3.5 - Consents and Approvals
Schedule 3.8 - Investigation or Litigation
Schedule 3.11 - Accounts Receivable
Schedule 3.12 - Insurance Policies
Schedule 3.13 - Contracts
Schedule 3.16 - Permits
ASSET PURCHASE AGREEMENT - Page 4
ASSET PURCHASE AGREEMENT
------------------------
This ASSET PURCHASE AGREEMENT (this "Agreement") is made as of October 29,
1999, by and among IAC ACQUISITION CORPORATION, a Colorado corporation
("Purchaser"), COMMUNICATIONS WORLD INTERNATIONAL, INC., a Colorado corporation
("CWII"), WEST-TECH COMMUNICATIONS CORP., a Colorado corporation (the
"Company"), and XXXX XXXXXXXX (the "Shareholder") (the Company and the
Shareholder are sometimes collectively referred to herein as "Sellers" and
individually as a "Seller").
In consideration of the mutual covenants and agreements contained herein,
the parties covenant and agree as follows:
1. DEFINITIONS
1.1. General Definitions. Unless otherwise stated in this Agreement, the
following terms shall have the following meanings:
"Accounts": As defined in Section 2.1(f) hereof.
"Adjustment Period": As defined in Section 2.4(b) hereof.
"Affiliate": Any Person that, directly or indirectly, controls, or is
controlled by or under common control with, another Person. For the purposes of
this definition, "control" (including the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the power to
direct or cause the direction of the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities or by
contract or otherwise.
"Assets": As defined in Section 2.1 hereof.
"Assumed Obligations": As defined in Section 2.6(a) hereof.
"Assumed Payables": As defined in Section 2.4(a) hereof.
"Assumption Agreement": The Assumption Agreement in the form of Exhibit "A"
attached hereto.
"Xxxx of Sale and Assignment": The Xxxx of Sale and Assignment in the form of
Exhibit "B" attached hereto.
"Business": Means the business acquired or to be acquired by Purchaser pursuant
to the Operative Documents, consisting of the Assets and the Assumed Obligations
(but not including the Excluded Assets), and which may be more particularly
described as the interconnect business operated by Seller using the name
West-Tech Communications.
"Closing": As defined in Section 7.1 hereof.
ASSET PURCHASE AGREEMENT - Page 1
"Closing Date": As defined in Section 7.1 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"CWII Stock": As defined in Section 2.3 hereof.
"Damages": As defined in Section 8.2(a) hereof.
"Disclosure Schedules": The package of disclosure schedules to this Agreement
delivered by Sellers to Purchaser prior to the date hereof (and as subsequently
supplemented and amended) which are approved by Purchaser (with reservation of
all rights with respect thereto) and incorporated by reference to the Section of
this Agreement to which each such schedule relates.
"Employment and Noncompetition Agreement": The Employment and Noncompetition
Agreement in the form of Exhibit "D" attached hereto
"Equipment": As defined in Section 2.1(a) hereof.
"Excluded Assets": As defined in Section 2.2 hereof.
"Goodwill": As defined in Section 2.1(e) hereof.
"Governmental Body": Any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency, authority or
instrumentality, domestic or foreign.
"Indemnification Claim": As defined in Section 8.4 hereof.
"Indemnification Notice": As defined in Section 8.4 hereof.
"Indemnitor": As defined in Section 8.4 hereof.
"Intangible Assets": As defined in Section 2.1(d) hereof.
"Knowledge": In the case of the Shareholder, "Knowledge" shall mean the actual
knowledge of such individual after reasonable investigation and inquiry by such
person, and in the case of knowledge of the Company and the Shareholder,
"Knowledge" shall mean the actual knowledge of the directors, officers and
shareholders of the Company and the Shareholder, after reasonable inquiry and
investigation by such persons.
"Leased Real Property": That certain lease agreement covering Sellers'
corporate offices and operations located at 00000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxx..
"Lien": All mortgages, deeds of trust, claims, liens, security interests,
pledges, leases, conditional sale contracts, rights of first refusal, options,
charges, liabilities, obligations, agreements, easements, rights-of-way, powers
of attorney, limitations, reservations, restrictions and other encumbrances of
any kind.
ASSET PURCHASE AGREEMENT - Page 2
"Material Adverse Effect": Any change (individually or in the aggregate) in the
general affairs, management, business, goodwill, results of operations,
condition (financial or otherwise), assets, liabilities or prospects (whether or
not the result thereof would be covered by insurance) that will or can
reasonably be expected to result in a cost, expense, charge, liability, loss of
revenue or diminution in value equal to or greater than $25,000.00.
"Operative Documents": This Agreement, the Assumption Agreement, the Xxxx of
Sale and all other agreements, instruments, documents, schedules and
certificates executed and delivered by or on behalf of Sellers or Purchaser at
or before the Closing pursuant to this Agreement.
"Order": Any order, writ, injunction, decree, judgment, award or determination
of any Governmental Body.
"Permits": All permits, authorizations, certificates, approvals, registrations,
variances, exemptions, rights-of-way, franchises, privileges, immunities,
grants, ordinances, licenses and other rights of every kind and character (a)
under any (1) federal, state, local or foreign statute, ordinance or regulation,
(2) Order or (3) contract with any Governmental Body or (b) granted by any
Governmental Body.
"Person": An individual, partnership, joint venture, corporation, company,
limited liability company, bank, trust, unincorporated organization,
Governmental Body or other entity or group.
"Post-Closing Receivables": As defined in Section 2.4(d) hereof.
"Pre-Closing Receivables": As defined in Section 2.4(b) hereof.
"Premises": All Business locations of Sellers, including without limitation,
the Leased Real Property.
"Proceeding": Any action, order, claim, suit, proceeding, litigation,
investigation, inquiry, review or notice.
"Proposal": As defined in Section 2.4(b) hereof.
"Purchase Price": As defined in Section 2.3 hereof.
"Purchaser Indemnitees": As defined in Section 8.2(a) hereof.
"Resolution Period": As defined in Section 2.4(b) hereof.
"Retained Liabilities": As defined in Section 2.6(b) hereof.
"Scheduled Contracts": As defined in Section 2.1(c) hereof.
"Seller Indemnitees": As defined in Section 8.3(a) hereof.
ASSET PURCHASE AGREEMENT - Page 3
"Subordinated Promissory Note": The Subordinated Promissory Note substantially
in the form of Exhibit "E" attached hereto.
"Subsidiary" or "Subsidiaries": With respect to any corporation shall mean any
other corporation of which at least a majority of the securities having by their
terms ordinary voting power to elect a majority of the Board of Directors of
such other corporation is at the time directly or indirectly owned or controlled
by such first corporation, or by such first corporation and one or more of its
Subsidiaries.
"Tax Obligations": Any Taxes which are attributable or related to the assets or
the Business of Sellers for any periods ending on or before the Closing Date or
which may be applicable because of the Transactions.
"Taxes": Any federal, state, local or foreign income, sales, excise, real or
personal property or other taxes, assessments, fees, levies, imposts, duties,
deductions or other charges of any nature whatsoever (including, without
limitation, interest and penalties) imposed by any law, rule or regulation.
"Third Party Consents": As defined in Section 5.6 hereof.
"Threatened": Any matter or thing will be deemed to have been Threatened when
used herein with respect to any party if that party has received notice, in
writing, from the Person to whom the threat is attributable, or such Person's
agents, which makes specific reference to and clearly identifies the matter or
thing being threatened.
"Threshold": As defined in Section 8.2(c) hereof.
"Transaction" or "Transactions": The acquisition of the Assets and the
performance of the other covenants and transactions described in this Agreement.
"Transaction Expenses": The expenses incurred in connection with the
preparation, negotiation, execution and performance of this Agreement and the
Transactions, including all fees and expenses of counsel and representatives.
"Vehicles": As defined in Section 2.1(b) hereof.
Other defined terms shall have the meanings ascribed to such terms elsewhere
herein.
ASSET PURCHASE AGREEMENT - Page 4
2. SALE OF ASSETS; ASSUMPTION OF CERTAIN LIABILITIES
2.1. Agreement to Purchase and Sell. Subject to the applicable terms and
conditions of this Agreement, at the Closing, the Company shall sell, transfer,
assign, convey and deliver to Purchaser, and Purchaser shall purchase from the
Company, the following assets (such assets, specifically excluding the Excluded
Assets, being collectively referred to as the "Assets") used or useable in
connection with the Business, free and clear of all Liens:
(a) Equipment. All hardware and equipment, furniture, office
equipment, supplies and all other tangible personal property of every kind
and description located either on the Premises or elsewhere insofar as any
of the foregoing relate to the Business (the "Equipment"). The Equipment
includes, without limitation, all of the items listed in Schedule 2.1(a)
hereto.
(b) Vehicles. All vans, automobiles and other titled motor vehicles,
including, without limitation, those listed on Schedule 2.1(b) hereto (the
"Vehicles"). The Disclosure Schedule contains a true and correct list of
the Vehicles.
(c) Scheduled Contracts. The contracts and agreements described on
Schedule 2.1(c) hereto (the "Scheduled Contracts") and all rights
(including rights of refund and offset), privileges, deposits, claims,
causes of action and options relating or pertaining to the Scheduled
Contracts or any thereof. The Disclosure Schedule contains a true and
correct listing of the Scheduled Contracts.
(d) Intangible Assets. All copyrights, trademarks, trade secrets,
trade names, telephone numbers, data, service marks, licenses, franchises,
distributorships, labels, logos, covenants by others not to compete,
rights, privileges and any registrations or applications for registrations
of the foregoing, and any right to recovery for infringement thereof
(including past infringement) and any and all goodwill associated therewith
or connected with the use thereof and symbolized thereby (the "Intangible
Assets").
(e) Goodwill. Any and all goodwill of the Business or associated with
the Intangible Assets.
(f) Accounts Receivable. All accounts receivable of the Company and
other rights of the Company to payment for services rendered, including,
without limitation, those which are not evidenced by instruments or whether
or not they have been earned by performance or have been written off or
reserved against as a bad debt or doubtful account in any financial
statement, together with all instruments representing any of the foregoing
(the "Accounts").
(g) Permits. All Permits, to the extent transferable, a list of which
are attached to Schedule 2.1(g) hereto.
ASSET PURCHASE AGREEMENT - Page 5
(h) Name. All of the Company's right, title and interest in and to the
name "West-Tech Communications," all other names used in connection with
the Business and all derivatives if any of same.
(i) Warranty Rights. To the extent transferable, the benefit of and
the right to enforce the covenants and warranties, if any, that Sellers are
entitled to enforce with respect to the Business or all or any part of the
Assets against Sellers' predecessors in title to the Assets.
(j) Other Intangibles. All right, title and interest of Sellers in, to
and under all rights, privileges, claims, causes of action and options
relating or pertaining to the Business or the foregoing Assets.
(k) Other Property. All other or additional privileges, rights,
interests, properties and assets of Sellers of every kind and description
and wherever located, that are used or intended for use in connection with,
or that are necessary to the continued conduct of, the Business as
presently being conducted, except for the Excluded Assets.
2.2. Excluded Assets. Notwithstanding those assets listed in Section 2.1
hereto, the Assets shall specifically exclude those assets identified in
Schedule 2.2(a) hereto (the "Excluded Assets").
2.3. Purchase Price. At the Closing, subject to the terms and conditions of
this Agreement, in consideration for Purchaser's acquisition of the Assets, and
subject to adjustment as provided in Section 2.4 hereof, Purchaser shall pay the
Company ONE MILLION, ONE HUNDRED NINETY THOUSAND, FIVE HUNDRED TWENTY-TWO AND
71/100 DOLLARS ($1,190,522.71), which is equal to the sum of (a) ONE MILLION
FIFTY ONE THOUSAND FIVE HUNDRED SEVENTY SIX AND NO/100 DOLLARS ($1,051,576.00)
consisting of (i) the payment of FOUR HUNDRED TWENTY THOUSAND and no/100 Dollars
($420,000.00) by certified or cashier's cash; (ii) the delivery of the
Subordinated Promissory Note in the original principal amount of THREE HUNDRED
SEVENTY THOUSAND AND NO/100 DOLLARS ($370,000.00); and (iii) the issuance to
Shareholder of 270,000 restricted shares of Common Stock, no par value per share
of Communications World International, Inc., representing a value of $.9688 per
share (the "CWII Stock"); and (b) the payment in cash at Closing of ONE HUNDRED
THIRTY-EIGHT THOUSAND, NINE HUNDRED FORTY-SIX AND 71/100 DOLLARS ($138,946.71),
which is equal to the product of (i) the excess of the Pre-Closing Receivables
over the Assumed Payables, (ii) multiplied by ninety percent (90%) ((a) and (b)
collectively, the "Purchase Price").
2.4. Post-Closing Adjustment.
(a) Adjustment Period. For a period of ninety (90) days after Closing
(the "Adjustment Period"), Purchaser shall collect all Accounts existing as
of the day immediately prior to the Closing Date (for this purpose,
Accounts existing as of the date immediately prior to Closing shall mean
that at Closing the subject invoice giving rise to
ASSET PURCHASE AGREEMENT - Page 6
the Account has been deposited in the U.S. Mail in accordance with normal
business practices) and described on Schedule 2.4(a) (the "Pre-Closing
Receivables").
(b) Reports to the Company. Every week during the Adjustment Period
Purchaser shall provide the Company with a reconciliation report containing
the Pre-Closing Receivables received and the Assumed Payables paid during
the previous week and cumulative through the Adjustment Period.
(c) Deduction from Subordinated Promissory Note. If, at the end of the
Adjustment Period, any Pre-Closing Receivables are not collected by
Purchaser during the Adjustment Period, Purchaser shall deduct such
uncollected Pre-Closing Receivables from the next payment or payments
payable by Purchaser to the Company under the Subordinated Promissory Note
and Purchaser shall promptly assign the uncollected Pre-Closing Receivables
to the Company.
(d) Other Accounts. Within five (5) business days after the Closing
Date, Seller shall provide Purchaser with a proposed list (the "Proposal")
of all Accounts arising on and after the Closing Date and relating either
in whole or in part to products sold and services provided by the Company
prior to 5:00 p.m. (Denver time) on the Closing Date (Post-Closing
Receivables) and the percentage of each such Post-Closing Receivable
relating to the period prior to 5:00 p.m. (Denver time) on the Closing Date
("Seller's Portion"). Purchaser shall review the Proposal and provide
Seller with any objections or proposed changes thereto within five (5)
business days after Purchaser's receipt of the Proposal. For a period of
fourteen (14) days after Seller's receipt of Purchaser's objections and
proposed changes to the Proposal, (the "Resolution Period"), Seller and
Purchaser shall negotiate in good faith the resolution of any objections or
proposed changes of Purchaser with respect to the Proposal. If Purchaser
and Seller shall fail to reach an agreement with respect to any objection
or proposed change to the Proposal prior to the expiration of the
Resolution Period, then all such disputed objections or changes shall, not
later than five (5) business days after the earlier to occur of (i) the
expiration of the Resolution Period, or (ii) the date one of the parties
affirmatively terminates discussions in writing with respect to such
objections or changes, be submitted for resolution to the Denver office of
an impartial certified public accounting firm (the "Accountants") selected
by Purchaser and Seller. If Purchaser and Seller cannot agree on the
selection of the Accountants within such five (5) business day period, then
Purchaser and Seller shall each have the right to request the American
Arbitration Association to appoint as the Accountants a certified public
accounting firm that has not had a material relationship with Seller,
Purchaser or the Affiliates of either of them within the preceding five (5)
years. Seller and Purchaser agree to execute, if requested by the
Accountants, an engagement letter and shall share equally the cost of the
Accountants. Seller and Purchaser shall use their reasonable efforts to
cause the report of the Accountants, which shall be in the form of a
written statement addressed and delivered to Purchaser and Seller, to be
rendered within thirty (30) days after the Accountants' appointment. Seller
and Purchaser shall request the Accountants to act as an arbitrator to
determine, based solely on presentations by Purchaser and Seller, and not
by independent review, only those issues still in disputes; provided,
however, that the role and
ASSET PURCHASE AGREEMENT - Page 7
the scope of investigation of the Accountants may be modified by Seller and
Purchaser in the event that the Accountants would otherwise refuse such
engagement. The Accountants' determination as to the appropriateness and
extent of such changes (if any) to the Proposal shall be final and binding
on the parties thereto. Purchaser shall pay to the Company Sellers' Portion
of the Post-Closing Receivables collected by Purchaser, minus Sellers'
Portion of the product and labor costs associated therewith, promptly after
Purchaser's receipt of same.
2.5. Allocation. The Purchase Price shall be allocated among the Assets as
set forth on Exhibit "C" attached hereto. Sellers and Purchaser agree that they
will not take any position on their income tax returns or on any other document
that is inconsistent with such allocation, and the parties shall duly prepare
and timely file such returns under the Code to report such allocation.
2.6. Assumption of Liabilities.
(a) Assumed Obligations. Subject to and upon all of the terms and
conditions of this Agreement, at the Closing, Purchaser shall assume and
agree to pay, perform and discharge in accordance with their respective
terms the obligations and liabilities of Sellers under the terms of those
Scheduled Contracts specifically set forth on Schedule 2.1(c) hereto to the
extent that such Scheduled Contracts have not been performed and are not in
default at the time of the Closing, the Assumed Payables (herein so-called)
set forth on Attachment No. 1 attached to Schedule 2.6(a) and the other
assumed obligations set forth on Schedule 2.6(a) hereto (the "Assumed
Obligations");
(b) Retained Liabilities. Except as provided in Section 2.6(a),
Purchaser will not assume or agree to pay, perform or discharge, and shall
not be responsible for, any other liabilities or obligations of Sellers
(collectively, "Retained Liabilities"), whether accrued, absolute,
contingent or otherwise, including without limitation, liabilities or
obligations based on, arising out of, or in connection with:
(i) any expenses incurred by either Seller in connection with the
negotiation, preparation, execution and performance of the
Transactions;
(ii) any events or circumstances occurring prior to the Closing
Date, including, without limitation, any obligation or liability of
Sellers arising out of or relating to the Assumed Liabilities which
are payable or performable prior to Closing;
(iii) any Taxes which are attributable or relating to the Assets
or the Business or Sellers, for any periods ending on or before the
Closing Date, or which may be applicable because of Sellers sale of
the Business or any of the Assets to Purchaser, except for any State
of Colorado and local sales and use tax payable by Purchaser in
connection with its acquisition of the Assets;
(iv) any lease obligations or indebtedness of either Seller;
ASSET PURCHASE AGREEMENT - Page 8
(v) any unlicensed or unauthorized use by either Seller of any
trademark or other intellectual property rights;
(vi) any note, account payable or other obligation to any person,
entity or Governmental Body, except to the extent expressly assumed
herein; and
(vii) any claims or conditions arising under any federal, state
or foreign statutes, laws, ordinances, regulations, rules, permits,
judgments, orders or decrees attributable or relating to the Assets
(including, without limitation, the operation thereof) or the Business
or either Seller.
2.7. Further Assurances. At the Closing, and at all times thereafter as may
be reasonably necessary, Sellers shall execute and deliver to Purchaser such
instruments of transfer as shall be reasonably necessary or appropriate to vest
in Purchaser title of the type specified herein to the Assets and to otherwise
comply with the terms, purposes and intent of this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of the Sellers hereby jointly and severally represents and warrants to
Purchaser that the following are true and correct as of the date of this
Agreement and will be true and correct (without limitation) through the Closing
Date, regardless of what investigations, if any, Purchaser shall have made prior
hereto or prior to the Closing:
3.1. Organization; Qualification. The Company is a corporation validly
existing and in good standing under the laws of the State of Colorado. The
Company has full corporate power and authority to own and lease all of the
properties and assets it now owns and leases and to carry on its business as now
being conducted.
3.2. Authority Relative to this Agreement. Each of the Sellers has full
power and authority (corporate and otherwise) to execute, deliver and perform
this Agreement (including, without limitation, execution, delivery and
performance of the Operative Documents to which each of them is a party) and to
consummate the Transactions. The execution and delivery by the Company of this
Agreement, and the consummation of the Transactions, have been duly and validly
authorized by the Board of Directors of the Company and the shareholders of the
Company and no other corporate proceedings on the part of the Company are
necessary with respect thereto. This Agreement has been duly and validly
executed and delivered by each of the Sellers, and constitutes a legal, valid
and binding obligation of each of the Sellers, enforceable against each of them
in accordance with its terms. The Company will take, and the Shareholder will
cause to be taken, all corporate action that is necessary for the Company to
complete the Transactions to be completed by Sellers pursuant to this Agreement.
3.3. Capitalization. The Shareholder owns of record and beneficially one
hundred percent (100%) of the issued and outstanding shares of capital stock of
the Company.
3.4. Subsidiaries. The Company does not have any Subsidiaries.
ASSET PURCHASE AGREEMENT - Page 9
3.5. Consents and Approvals. Except as set forth in Schedule 3.5 and the
approval of the sole shareholder of the Company, the execution, delivery and
performance by each of the Sellers of this Agreement and the consummation of the
Transactions by them requires no consent, approval, order or authorization of,
action by or in respect of, or registration or filing with, any Governmental
Body or other Person.
3.6. No Violations. The execution, delivery and performance of this
Agreement by each of the Sellers, the consummation by each of the Sellers of the
Transactions and compliance by Sellers with the provisions hereof does not and
will not (a) conflict with or result in any breach or violation of any provision
of the Articles of Incorporation or Bylaws of the Company, (b) result in a
default, or give rise to any right of termination, cancellation or acceleration
or loss of any material benefit under any of the provisions of any note, bond,
mortgage, indenture, license, trust, agreement, lease or other instrument or
obligation to which either Seller is a party or by which either Seller may be
bound, (c) result in the creation or imposition of any Lien on any of the
property of either Seller, (d) to Sellers' Knowledge, violate any Order,
statute, rule or regulation applicable to either Seller, or (e) violate any
territorial restriction on the Business or either Seller or any noncompetition
or similar arrangement.
3.7. Title to and Condition of Assets and Property. Except as specifically
set forth in the Disclosure Schedule, the Company has good and marketable title
to all Assets and such Assets are free and clear of all Liens. Upon consummation
of the Transactions, Purchaser will own the Assets free and clear of all Liens.
Except for the Excluded Assets, the Assets constitute all assets and properties,
real, personal, tangible and intangible that are used or useable in the conduct
of the Business as presently being conducted.
3.8. Investigation or Litigation. Except as set forth on Schedule 3.8,
there is no Proceeding pending or Threatened against, relating to or affecting
the Assets. Sellers are not subject to any currently existing Proceeding by any
Governmental Body. To the Knowledge of the Sellers, there is no basis for the
assertion of any Proceeding by any Governmental Body or any Person regarding any
violation of federal or state laws.
3.9. Taxes. All Taxes that are due and payable by Sellers, other than those
presently payable without penalty or interest, have been timely paid, and
Sellers have timely filed (and, through the Closing Date, will timely file) all
Tax reports and returns required by law to be filed by them. All such Tax
reports and returns are true, complete and correct in all respects with regard
to each Seller for the periods covered thereby. Each Seller is not delinquent in
the payment of any Tax. There is no Tax deficiency asserted against either
Seller, and there is no unpaid assessment, proposal for additional Taxes,
deficiency or delinquency in the payment of any of the Taxes of either Seller or
any violation of any Tax law that could be asserted by any taxing authority.
There are no Tax Liens upon any properties or assets of Sellers nor has notice
been given of any event which could lead to any such Lien. No Internal Revenue
Service, state or local, audit, investigation or Proceeding of either Seller is
pending or Threatened, and the results of any completed audits are properly
reflected in the Financial statements. Neither Seller has granted any extension
to any taxing authority of the limitation period during which any Tax liability
may be asserted. To the Knowledge of the Sellers, neither Seller has committed
any violation of any Tax laws. All monies
ASSET PURCHASE AGREEMENT - Page 10
required for the payment of Taxes not yet due and payable with respect to the
operations of Sellers through and including the Closing Date have been approved,
reserved against and entered upon the books and Financial statements. All monies
required to be withheld by Sellers from employees, if any, independent
contractors, or others or collected from customers for income taxes, social
security and unemployment insurance taxes and sales, excise and use taxes, and
the portion of any such taxes to be paid by Sellers to governmental agencies or
set aside in accounts for such purpose have been approved, reserved against and
entered upon the books and Financial statements. Consummation of the
Transactions will not result in any Tax Obligations on the Assets, other than
Purchaser's obligation to pay any State of Colorado or local use or sales taxes
in connection with its acquisition of the Assets.
3.10. No Brokers. Neither Seller has employed any broker, agent or finder
or incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the Transactions.
3.11. Accounts. Schedule 3.11 of the Disclosure Schedule contains a
complete and accurate list of all the Company's Accounts as of Closing, showing
the name of each account debtor and the amount due from each by invoice number
and date. All of such Accounts have arisen in the ordinary course of business
for services rendered. Except as set forth on the Disclosure Schedule, there is
no event or condition with respect to a specific customer that will cause such
Accounts to not be collected in full in due course without resort to litigation
and such Accounts will not be subject to counterclaim or setoff.
3.12. Insurance. All the insurance policies maintained by the Sellers are
in full force and effect, all insurance premiums have been timely paid to date,
and no such policy will be cancelled prior to Closing. A description of each of
the Seller's insurance policies (including, without limitation, insurance
providing benefits for employees) is attached hereto as Schedule 3.12. The
insurance policies set forth in the Disclosure Schedule provide adequate
coverage, less deductibles, against the risks involved in the Business and
operation of the Assets.
3.13. Contracts; Oral Commitments; Defaults. Schedule 3.13 sets forth a
true and correct list of all contracts of the Sellers (or summaries of all oral
commitments) that are material to the Business and, the Sellers have provided
copies of such material contracts to Purchaser prior to the date hereof. There
exists no breach or default under any of such contracts by the Sellers, or, to
the Knowledge of the Sellers, any other party thereto.
3.14. Solvency. Neither Seller is now insolvent, nor will either Seller be
rendered insolvent by the consummation of the Transactions. In addition,
immediately after giving effect to the Transactions, (a) each Seller will be
able to pay their debts as they become due, (b) each Seller will not have
unreasonably small capital and will not have insufficient capital with which to
conduct its present or proposed business and (c) taking into account pending and
Threatened litigation, final judgments against either Seller in actions for
money damages are not reasonably anticipated to be rendered at a time when, or
in amounts such that, either Seller will be unable to satisfy any such judgments
promptly in accordance with their terms (taking into account the maximum
probable amount of such judgments in any such actions and the earliest
reasonable time
ASSET PURCHASE AGREEMENT - Page 11
at which such judgments might be rendered). The cash available to each Seller,
after taking into account all other anticipated uses of the cash of each Seller,
will be sufficient to pay all such judgments promptly in accordance with their
terms. As used in this Section only, (x) "insolvent" means, for any Person, that
the sum of the present fair saleable value of its assets does not and/or will
not exceed its debts and other probable liabilities, and (y) the term "debts"
includes any legal liability, whether matured or unmatured, liquidated or
unliquidated, absolute, fixed or contingent, disputed or undisputed or secured
or unsecured.
3.15. Corporate Matters. The Board of Directors and shareholders of the
Company have approved the execution and delivery of this Agreement and the
consummation of the Transactions contemplated hereby in accordance with
applicable law.
3.16. Permits. Schedule 3.16 lists all Permits held by Sellers and used or
useable in the conduct of the Business. To the Knowledge of the Sellers, such
Permits are valid, and neither Seller has received any notice that any
Governmental Body intends to cancel, terminate or not renew any such Permit.
Sellers hold all licenses, franchise, permits and other governmental
authorizations the absence of any of which could have a Material Adverse Effect
on the Business. To the Knowledge of the Sellers, the Business is not being
conducted, in violation of any statute, law, ordinance, regulation, rule or
Permit of any Governmental Body or any Order.
3.17. Compliance with Laws. To the Knowledge of the Sellers, Sellers have
complied with and are in compliance with all federal, state, local and foreign
statutes, laws, ordinances, regulations, rules, permits, judgments, orders or
decrees applicable to either of them or any of their respective properties,
assets, operations and businesses, and there does not exist any basis for any
claim or default under or violation of any such statute, law, ordinance,
regulation, rule, judgment, order or decree.
3.18. Corporate Name. To the Knowledge of the Sellers, the use of the
corporate name of the Company does not and the assumed name "West-Tech
Communications" does not infringe upon the right of any third party. After the
Closing Date, to the Knowledge of the Sellers, no Person other than the
Purchaser will be authorized directly or indirectly to use the corporate name of
the Company, the name "West-Tech Communications" or any name deceptively or
confusingly similar thereto, other than West-Tech Communications of Southern
Colorado, West-Tech WAN, Inc. and West-Tech Data, Inc..
3.19. Disclosure.
(a) The Sellers have delivered or made available to Purchaser complete
and accurate copies of all documents listed on the schedules delivered as a
part hereof and all other information requested by Purchaser pursuant
hereto. To Sellers' Knowledge, no representation or warranty of the Sellers
contained in this Agreement or any statement in the schedules hereto
contains any untrue statement. To Sellers' Knowledge, no representation or
warranty of the Sellers contained in this Agreement or statement in the
schedules hereto omits to state a material fact necessary in order to make
the statements herein or therein, in light of the circumstances under which
they were made, not misleading.
ASSET PURCHASE AGREEMENT - Page 12
(b) There is no fact known to the Sellers which has specific
application to the Purchaser and which could have a Material Adverse Effect
on Sellers but which has not been set forth in this Agreement or the
schedules hereto.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser and CWII hereby jointly and severally represent and warrant to Sellers
that the following are true and correct as of the date of this Agreement and
will be true and correct through the Closing Date, regardless of what
investigations, if any, Sellers shall have made prior hereto or prior to the
Closing:
4.1. Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado.
4.2. Authority Relative to this Agreement. Purchaser has full power and
authority (corporate and otherwise) to execute, deliver and perform this
Agreement (including, without limitation, execution, delivery and performance of
the Operative Documents to which it is a party) and to consummate the
Transactions. The execution and delivery by Purchaser of this Agreement, and the
consummation of the Transactions, have been duly and validly authorized by the
Board of Directors of Purchaser and no other corporate proceedings on the part
of Purchaser are necessary with respect thereto.
4.3. Consents and Approvals. Except as set forth in or otherwise required
by this Agreement or the Operative Documents, the execution, delivery and
performance by Purchaser of this Agreement and the consummation of the
Transactions by it requires no consent, approval, order or authorization of,
action by or in respect of, or registration or filing with, any Governmental
Body or other Person.
4.4. CWII Stock. The CWII Stock has been duly authorized and at Closing
will be validly issued, fully paid and non-assessable, free and clear of any
liens, claims and encumbrances, other than the restrictive legend contained on
the stock certificates for the CWII Stock.
4.5. Disclosure.
(a) To Purchaser's Knowledge, no representation or warranty of
Purchaser contained in this Agreement or any statement in the schedules
hereto contains any untrue statement. To Purchaser's Knowledge, no
representation or warranty of Purchaser contained in this Agreement omits
to state a material fact necessary in order to make the statements herein,
in light of the circumstances under which they were made, not misleading.
(b) There is no fact known to Purchaser which has specific application
to Purchaser and which could have a Material Adverse Effect on Purchaser
but which has not been disclosed to Sellers.
ASSET PURCHASE AGREEMENT - Page 13
5. ADDITIONAL AGREEMENTS
5.1. Conduct of Business of Seller. Sellers covenant that after the date
hereof and prior to the Closing Date, each Seller shall use commercially
reasonable efforts to conduct its operations according to its normal course of
business to preserve its business organization, keep available the services of
its employees and independent contractors, maintain satisfactory relationships
with Governmental Bodies, suppliers, customers and all others having business
relationships with it and continue to service and maintain all of its respective
assets in a manner consistent with past practice. All risk of loss arising out
of fire and casualty and all liability to third parties arising out of the
operations of the Business prior to the Closing Date shall be that of Sellers,
and Purchaser shall have no obligation or liability in connection therewith.
5.2. Forbearances by Seller. Sellers covenant that except as contemplated
by this Agreement, Sellers shall not, after the date hereof and prior to the
Closing Date, without the prior written consent of Purchaser:
(a) sell any Assets not in the ordinary course of business;
(b) mortgage, pledge or otherwise encumber any of the Assets;
(c) enter into any employment, independent contractor agreement or
arrangement relating to any of the Assets or the Business other than in the
ordinary course of business consistent with past practice;
(d) take any action, or fail to take any action, the result of which
can reasonably be expected to be a termination of or material default under
any Scheduled Contract or Permit;
(e) materially amend, modify or terminate, or agree to materially
amend, modify or terminate any Scheduled Contract;
(f) fail to maintain the confidential treatment or otherwise fail to
preserve any of its proprietary rights; or
(g) enter into any agreement to do any of the things described in
clauses (a) through (f) above.
5.3. No Solicitation. Each of the Sellers covenants and agrees that it will
not and will not permit any of its Affiliates, agents or representatives
(including, without limitation, investment bankers, attorneys and accountants)
to, directly or indirectly (a) solicit, initiate or encourage submission of
proposals or offers by, or (b) furnish any information with respect to or
otherwise cooperate in any way with, or participate in any discussions or
negotiations with, any Person with respect to any proposal regarding the
acquisition or purchase of all or a material portion of the assets of (including
the Business and the Assets), or any equity interest in the Company or any
business combination with the Company. The Sellers shall promptly notify the
Purchaser in writing of any inquiry or proposal that is received concerning any
of the foregoing Transactions.
ASSET PURCHASE AGREEMENT - Page 14
5.4. Investigation of Business and Properties. Purchaser may make or cause
to be made such investigation of the Business and Assets of Sellers and of their
financial and legal condition as appropriate or advisable to familiarize itself
therewith. Sellers agree to furnish Purchaser and its employees, officers,
agents, accountants, counsel and other representatives with all financial,
operating and other data and information concerning Sellers and commitments of
Sellers as Purchaser shall from time to time reasonably request and will afford
Purchaser and its employees, officers, accountants, attorneys, agents,
investment bankers and other authorized representatives access to Sellers'
offices (including access during normal business hours) to review such documents
and their books and records and will be given opportunity to ask questions of,
and receive answers from, representatives of Sellers with respect to such
matters. No investigations by the Purchaser or its employees, representatives or
agents shall reduce or otherwise affect the obligation or liability of the
Sellers with respect to any representations, warranties, covenants or agreements
made herein or in an exhibit, schedule or other certificate, instrument,
agreement or document (including the Disclosure Schedule), executed or delivered
in connection with this Agreement.
5.5. Agreement to Consummate. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to do
all things necessary, proper or advisable under applicable laws and regulations
to consummate and make effective, as soon as reasonably practicable, the
Transactions contemplated by the Operative Documents, including, but not limited
to, the obtaining of all consents, authorizations, orders and approvals of any
Governmental Body required in connection therewith and initiating or defending
any legal action that is necessary or appropriate to permit the Transactions to
be consummated. At any time after the Closing Date, if any further action is
necessary, proper or advisable to carry out the purposes of this Agreement,
then, as soon as is reasonably practicable, each party to this Agreement shall
take, or cause its proper officers to take, such action. Each of the parties
hereto further agree that it will cooperate with the other after the
consummation of the Transactions for the purpose of providing Purchaser with the
information and access to information necessary to ensure Purchaser with a
reasonably smooth transition into the ownership of the Business. No party to
this Agreement shall take or cause to be taken any action that would cause the
representations or warranties expressed herein to be untrue or incorrect on the
Closing Date.
5.6. Approval of Third Parties. As soon as practicable after the execution
of this Agreement, Sellers will use their reasonable good faith efforts to
obtain all necessary approvals and consents of all third parties required on the
part of Sellers for the consummation of the Transactions (the "Third Party
Consents"). Purchaser will reasonably cooperate with the Sellers in securing any
necessary consents from, or in making any filings with or giving any notice to
any third parties necessary for the Sellers to comply with this Section 5.6.
Notwithstanding any other provision of this Agreement, to the extent that the
assignment by Sellers of any Scheduled Contract or Permit to be assigned
hereunder shall require the consent or approval of another party thereto, the
consummation of the Transactions shall not constitute an assignment or attempt
at an assignment thereof if such assignment or attempted assignment would
constitute a breach thereof. If any Third Party Consent with respect to any one
or more Scheduled Contract or Permit is not obtained at or prior to Closing,
each party hereto agrees to take whatever action may be necessary to provide
Purchaser with the uninhibited benefits of such Scheduled Contracts and Permits,
subject to the
ASSET PURCHASE AGREEMENT - Page 15
assumption by the Purchaser of Sellers' obligations thereunder. Purchaser and
CWII shall use their reasonable good faith efforts to obtain a release of
Sellers from any Assumed Obligation.
5.7. Agreement Regarding Brokers. Each party agrees that it will pay or
dispute, and hold the other party harmless from, any claims of brokers or others
for finder's or brokerage fees asserted as a result of representations by such
party to such brokers or others, regardless of whether the existence of such
brokers or others are disclosed herein.
5.8. Notice. Seller shall promptly give notice to Purchaser upon becoming
aware of the occurrence or failure to occur, or the impending or threatened
occurrence or failure to occur, of any event that would cause or constitute, any
of their representations or warranties being or becoming untrue.
5.9. Information for Tax Returns. Sellers shall cooperate with Purchaser
after the Closing by providing Purchaser, without any additional consideration
but at the expense of Purchaser, promptly upon request, such records and other
information regarding the Assets and/or the Business as may reasonably be
requested from time to time by Purchaser in connection with the preparation or
audit of its federal, state and local income and other Tax returns, and audits,
disputes, refund claims or litigation relating thereto. In such connection,
Sellers will afford the Purchaser's representatives including independent tax
advisers and others access to books and records or relating to the Assets.
5.10. Maintenance of Existence. Seller shall preserve and maintain its
corporate existence and good standing under the laws of the State of Colorado
for a period of at least two (2) years after the Closing Date.
5.11. Payment of Liabilities. Except as otherwise provided in Section 2.4,
following the Closing, Sellers shall promptly pay or otherwise satisfy all
claims or liabilities relating to the Assets or the Business of Sellers incurred
through the Closing Date, other than the Assumed Obligations.
5.12. Disclosure Schedule. Sellers shall have delivered to Purchaser, prior
to the date hereof, the proposed final version of the Disclosure Schedule
containing all of the disclosures, exhibits and other information or items
required by the various provisions of this Agreement. Thereafter, Sellers shall
deliver to Purchaser any supplements or amendments to such Disclosure Schedule
promptly after Sellers becomes aware of any event which changes any
representation, warranty or disclosure made by Sellers in this Agreement or any
statement made by the Disclosure Schedule or in any supplement or amendment
thereto.
5.13. Employees. From and after the date hereof through the Closing Date or
earlier termination of this Agreement, Purchaser has the right to enter into
negotiations with any or all of the employees and independent contractors of
Sellers for their continued employment with Purchaser from and after the Closing
Date at compensation levels as Purchaser and such employees or contractors shall
agree. Purchaser shall have no liability whatsoever with respect to any matter
relating to the employment or contracting of such persons by Sellers prior to
the Closing Date.
ASSET PURCHASE AGREEMENT - Page 16
5.14. Change of Sellers' Name. Within 30 days after the Closing, Sellers
shall file with the office of the Secretary of State of the State of Colorado
all documents necessary to change the name to a name reasonably satisfactory to
Purchaser and to assign or release to Purchaser all assumed name filings for the
name West-Tech Communications or any name similar to any of such names. Sellers
shall promptly provide reasonable evidence to Purchaser indicating the
effectiveness of its name change and the assignment of the assumed names.
5.15. Audited Financials. Sellers shall use commercially reasonable efforts
to cooperate with CWII's preparation of audited financial statements of the
Company, prepared by independent auditors selected by CWII, as required by
Regulations S-X for filings under the Securities Exchange Act of 1934, as
amended; and the Sellers shall promptly reimburse CWII for $7,500.00 of the cost
of such audit. Sellers shall not have any further liability or obligation with
respect to such audited financial statements.
5.16. Registration Rights Agreement. CWII hereby agrees to grant the
Shareholder any registration rights granted by CWII to Xxx Xxxxxxxxxx or Xxxxxx
Xxxxx. CWII hereby represents to the Shareholder that Messrs. Xxxxxxxxxx and
Xxxxx do not currently have any registration rights from CWII.
6. CONDITIONS PRECEDENT TO CLOSING
6.1. General Conditions. Consummation of the Transactions shall be subject
to the fulfillment at the Closing Date of each of the following conditions:
(a) No Injunction. No court having jurisdiction shall have issued, to
the Knowledge of Purchaser or Sellers, an injunction preventing the
consummation of the Transactions that shall not have been stayed or
dissolved at the Closing Date.
(b) Proceedings. All proceedings taken or to be taken in connection
with the Transactions, and all documents incident thereto shall be
reasonably satisfactory in form and substance to the parties and their
counsel, and the parties and their counsel shall have received all such
counterpart originals or certified or other copies of such documents as the
parties or their counsel may reasonably request.
(c) Noncompetition and Employment Agreement. Purchaser and the
Shareholder shall enter into a Noncompetition and Employment Agreement.
Purchaser shall also enter into an employment agreement, in form and
substance satisfactory to Purchaser, with Xxxxx Xxxxxxx and Xxxx Xxxxx.
6.2. Conditions to Closing in Favor of Sellers. Consummation of the
Transactions shall be subject to the fulfillment, to the reasonable satisfaction
of Sellers, or their written waiver, at or before the Closing Date, of each of
the following conditions:
(a) Representations and Warranties of Purchaser. The representations,
warranties and statements of Purchaser contained in this Agreement and the
exhibits hereto shall be complete and accurate as of the date of this
Agreement and shall also be complete
ASSET PURCHASE AGREEMENT - Page 17
and accurate at and as of the Closing Date, except for changes contemplated
by this Agreement, as if made on the Closing Date; and Purchaser shall have
performed or complied with all agreements and covenants required by this
Agreement to be performed or complied with by it at or prior to the Closing
Date.
(b) Purchaser's Officers' Certificate. Purchaser shall have delivered
to Sellers an Officers' Certificate, dated the Closing Date, of the
Purchaser and CWII certifying to (a) the due adoption by the Board of
Directors of the attached resolutions approving the execution and delivery
of this Agreement, and the consummation of the Transactions and (b) the
incumbency of the President, Secretary and other officers of the Purchaser
and CWII executing any of the Operative Documents.
(c) Governmental Consents, Authorizations, Etc. All material consents,
authorizations, orders or approvals of, and filings or registrations with,
and any permits, licenses or other authorizations required by, any
applicable Governmental Body that are required for, or in connection with,
the execution and delivery of this Agreement by Purchaser and the
consummation by Purchaser of the Transactions shall have been obtained or
made.
(d) Assumption Agreement. Purchaser shall have delivered to Sellers an
Assumption Agreement, in the form of Exhibit "A" hereto, pursuant to which
Purchaser shall evidence its agreement to assume and discharge the Assumed
Obligations.
(e) Closing Consideration. Purchaser shall have delivered to Sellers
the Closing payment required by Section 2.3 hereof.
(f) Subordinated Promissory Note. Purchase shall have delivered to
Sellers a Subordinated Promissory Note in the form attached as Exhibit "E"
hereto.
6.3. Conditions to Closing in Favor of Purchaser. Consummation of the
Transactions shall be subject to the fulfillment, to the reasonable satisfaction
of Purchaser, or its written waiver, at or before the Closing Date of the
following conditions:
(a) Representations and Warranties of Sellers. The representations,
warranties and statements of Sellers contained in this Agreement, the
exhibits hereto and the Disclosure Schedule shall be complete and accurate
as of the date of this Agreement and shall also be complete and accurate at
and as of the Closing Date, except for changes contemplated by this
Agreement, as if made at and as of the Closing Date; and Sellers shall have
performed or complied with all agreements and covenants required by this
Agreement to be performed or complied with by them at or prior to the
Closing Date.
(b) Sellers' Officers' Certificate. Sellers shall have delivered to
Purchaser an Officers' Certificate, dated the Closing Date, of the
President and Secretary of the Company certifying to (a) the Certificate of
Incorporation of the Company (as certified to by an appropriate officer of
the State issuing same), (b) the Bylaws of the Company, (c) the due
adoption by the Board of Directors and shareholders of the Company Seller
of the attached
ASSET PURCHASE AGREEMENT - Page 18
resolutions approving the execution and delivery of this Agreement, and the
consummation of the Transactions, (d) the incumbency of the President,
Secretary and other officers of the Company executing any of the Operative
Documents, and (e) a Certificate of Good Standing of the Company.
(c) Governmental Consents, Authorizations, Etc. All material consents,
authorizations, orders or approvals of, and filings or registrations with,
and any permits, licenses or other authorizations required by, any
applicable Governmental Body that are required for or in connection with,
the execution and delivery of this Agreement by Sellers and the
consummation by Sellers of the Transactions shall have been obtained or
made.
(d) Legislation. No law or legally binding regulation shall have been
enacted that does or would prohibit, restrict or delay consummation of the
Transactions or any of the conditions to the consummation of the
Transactions or that does or would have a Material Adverse Effect on
Seller.
(e) Litigation. There shall be no effective Order of any nature
(including any temporary restraining order) issued by a court or
Governmental Body of competent jurisdiction restraining or prohibiting
consummation or altering the terms of any of the Transactions, or actions
seeking damages based upon the foregoing which Purchaser reasonably deems
material. Sellers shall not have become subject to any litigation, which,
if adversely determined, could, in the opinion of Purchaser, have a
Material Adverse Effect on the Business or Assets.
(f) No Adverse Change. There shall have occurred no adverse change
(whether or not covered by insurance) in the Assets or Business since the
date of the balance sheet.
(g) Delivery of Documents/Acceptance of Schedules. Sellers shall have
timely delivered (1) any and all amendments and/or supplements to the
Disclosure Schedules, (2) the Xxxx of Sale and Assignment, and (3) all
other documents, instruments, schedules and financial statements required
hereunder to Purchaser. The Disclosure Schedules, as amended and
supplemented, shall be acceptable in form and substance to Purchaser, in
its absolute discretion.
(h) Third Party Consents. Sellers shall have delivered copies of all
Third Party Consents and all necessary action shall have been taken to
assign to Purchaser the Scheduled Contracts and Permits, and any other
material agreements between Sellers and their suppliers, customers and
third parties.
(i) Purchaser's Investigation. The investigations by Purchaser and its
representatives in connection with the proposed Transactions shall not have
caused Purchaser or its representatives to become aware of any facts or
circumstances relating to the Business or Assets of Seller or the Leased
Real Property that in the sole good faith judgment of Purchaser make it
inadvisable for Purchaser to proceed with the Transactions.
ASSET PURCHASE AGREEMENT - Page 19
(j) Other Matters. Sellers shall have delivered to Purchaser, in form
and substance reasonably satisfactory to counsel for Purchaser, such
certificates and other evidence as Purchaser may reasonably request as to
the satisfaction of the conditions contained in this Section 6.3.
7. CLOSING AND TERMINATION
7.1. Closing Date. Subject to the right of the Purchaser and Sellers to
terminate this Agreement pursuant to Section 7.2 hereof, the closing for of the
Transactions contemplated by this Agreement (the "Closing") shall, unless
another date or place is agreed to in writing by Sellers and Purchaser, take
place at the offices of Communications World International, Inc., 0000 X.
Xxxxxxxxx Xxxxx Xxxx., Xxxxxxxxx, Xxxxxxxx 00000 at 10:00 a.m. on Friday,
October 29, 1999 (the "Closing Date") or such other place and date as the
parties may agree upon in writing. Purchaser shall, at its option, have the
right, but not the obligation to extend the Closing Date by not more than thirty
(30) days by giving written notice thereof to Seller at least three (3) business
days prior to the Closing Date referred to in the preceding sentence. If
Purchaser exercises its option hereunder to extend the Closing Date, the term
Closing Date as used herein shall mean and refer to such Closing Date as
extended.
7.2. Termination. This Agreement may be terminated at any time prior to the
Closing Date:
(a) by mutual consent of Purchaser and Sellers;
(b) by Sellers if any representation or warranty of Purchaser or by
Purchaser if any representation or warranty of Sellers contained herein
shall have been incorrect or breached in any material respect, as to which
notice shall have been given to the breaching party, and shall not have
been cured or otherwise resolved to the reasonable satisfaction of the
other party on or before the Closing Date, or by either the Purchaser or
the Sellers if any condition to the consummation of the Transactions
contemplated hereunder that must be fulfilled to its satisfaction has
become impractical to be fulfilled;
(c) by either Purchaser or the Sellers if any permanent injunction or
other order of a court or other competent authority preventing the
consummation of the Transactions shall have become final and
non-applicable; or
(d) by Purchaser or the Sellers if the Closing has not occurred by
November 30, 1999; provided, however, that such date may be extended by
written agreement among the parties and provided, further, that no party
shall be permitted to terminate hereunder if such party is in violation of
this Agreement.
7.3. Effect of Termination. In the event of the termination of this
Agreement as provided herein, this Agreement shall become wholly void and have
no further force and effect except as hereinafter provided; and there shall be
no liability on the part of Sellers or Purchaser (or their respective officers
of directors) except to comply with the provisions of Section 5.9 regarding
brokers, to pay the fees and expenses as apportioned in Section 9.2 and except
as otherwise
ASSET PURCHASE AGREEMENT - Page 20
provided herein. Nothing contained herein shall relieve any party from liability
for its breach of this Agreement.
7.4. Amendment. This Agreement and the exhibits and schedules hereto may be
amended by the parties hereto at any time prior to the Closing Date; provided,
however, that any amendment must be by an instrument or instruments in writing
signed and delivered on behalf of each of the parties hereto.
7.5. Extension; Waiver. At any time prior to the Closing Date, any party
hereto that is entitled to the benefits hereof (with respect to any such
corporate party by action taken by its Board of Directors or a duly authorized
officer), may (a) extend the time for the performance of any of the obligations
or other acts of any of the other parties hereto, (b) in whole or in part, waive
any inaccuracy in the representations and warranties of any of the other parties
hereto contained herein or in any exhibit or schedule hereto or in any document
delivered pursuant hereto, and (c) in whole or in part, waive compliance with
any of the agreements of any of the other parties hereto or conditions contained
herein. Any agreement on the part of any party hereto to any such extension or
waiver shall be valid as set forth in an instrument in writing signed and
delivered on behalf of such party.
8. SURVIVAL AND INDEMNIFICATION
8.1. Survival of Representations and Warranties. The respective
representations and warranties contained in this Agreement, the Operative
Documents and any investigation shall survive the consummation of the
Transactions contemplated in this Agreement and shall continue in full force and
effect after the Closing for a period of four (4) years from the Closing at
which time they shall expire, except as to claims made in respect thereof in
writing by either party on or before the expiration of such period; provided,
however that (a) the representations and warranties contained in Section 3.12
shall survive until the expiration of the statutory period of limitations for
assessment of Tax deficiencies, including any extensions thereof, for each
taxable year of the Company which begins before the Closing, and (b) the
representations and warranties contained in Sections 3.1 and 3.29 shall survive
indefinitely. The covenants and agreements hereunder shall not be affected by
the expiration of any representation or warranty pursuant to this Section 8.1
and shall survive indefinitely.
8.2. Seller Indemnity.
(a) Sellers jointly and severally agree to indemnify and hold
Purchaser, its officers, directors, agents, attorneys and accountants
("Purchaser Indemnitees") harmless from any and all damages, losses (which
shall include any diminution in value, liabilities, joint or several),
payments, obligations, penalties, claims, litigation, demands, defenses,
judgments, suits, proceedings, costs, disbursements or expenses (including
without limitation, fees, disbursements and expenses of attorneys,
accountants and other professional advisors and of expert witnesses and
costs of investigation and preparation) of any kind or nature whatsoever
(collectively "Damages"), directly or indirectly resulting from, relating
to or arising out of:
ASSET PURCHASE AGREEMENT - Page 21
(i) any breach or nonperformance (partial or total) of or
inaccuracy in any representation or warranty or covenant or agreement
of Sellers contained in any Operative Document;
(ii) any liability or obligation arising out of Sellers' business
as conducted prior to the Closing and not expressly assumed by
Purchaser pursuant to this Agreement;
(iii) any losses or costs of defending against any claims which
may be made against Purchaser by any Person claiming violations by
either Seller of any local, state, or federal law relating to the
employment relationship, including, but not limited to, wages, hours,
concerted activity, nondiscrimination, occupational health and safety
and the payment and withholding of Taxes, where such claims arise out
of circumstances occurring prior to the Closing Date;
(iv) any actual or threatened violation of or non-compliance
with, or remedial obligation arising under, any environmental laws
arising from any event, condition, circumstance, activity, practice,
incident, action or plan existing or occurring prior to the Closing
relating in any way to the assets or the business of Sellers;
(v) Either Seller's failure to comply with the laws of any
jurisdiction with respect to the bulk sales laws that may be
applicable to the sale of the Assets to Purchaser as contemplated
hereby; and
(vi) the Transaction Expenses incurred by either Seller.
(b) Sellers shall retain joint and several liability, and shall
indemnify Purchaser, for the payment of any Tax liabilities of either
Seller.
(c) Notwithstanding anything contained herein to the contrary, Sellers
shall not be liable for any indemnification obligations hereunder for
breaches of representations and warranties set forth in this Agreement
until the aggregate amount for which the Sellers would otherwise (but for
this provision) be liable on account thereof exceeds in the aggregate the
sum of Twenty Five Thousand Dollars ($25,000.00) (the "Threshold"), in
which case the Sellers shall be liable for all such indemnification
obligations incurred, including the Threshold.
8.3. Purchaser Indemnity. Purchaser and CWII jointly and severally agree to
indemnify and hold Sellers, their officers, directors, agents, attorneys and
accountants ("Seller Indemnitees") harmless from any and all Damages directly or
indirectly resulting from, relating to or arising out of any breach or
nonperformance (partial or total) of or inaccuracy in any representation or
warranty or covenant or agreement of Sellers contained in any Operative
Document.
ASSET PURCHASE AGREEMENT - Page 22
8.4. No Third Party Beneficiaries. The foregoing indemnification is given
solely for the purpose of protecting the Purchaser Indemnitees and Seller
Indemnitees and shall not be deemed extended to, or interpreted in a manner to
confer any benefit, right or cause of action upon, any other Person.
8.5. Indemnification Notice. If a Purchaser Indemnitee or Seller Indemnitee
intends to exercise its right to indemnification provided in this Article 8,
such Purchaser Indemnitee or Seller Indemnitee shall promptly provide the party
or parties from whom the indemnification will be sought (the "Indemnitor") at
least fifteen (15) days prior written notice (the "Indemnification Notice") of
such Purchaser Indemnitee's or Seller Indemnitee's intention to do so and the
facts or circumstances giving rise to the claim ("Indemnification Claim").
Nothing contained herein shall preclude any Purchaser Indemnitee or Seller
Indemnitee from taking any actions deemed reasonably necessary or appropriate in
response to any third party claims during such interim period. An
Indemnification Claim may, at the option of the Purchaser Indemnitee or Seller
Indemnitee, be asserted as soon as any situation, event or occurrence has been
noticed by the Purchaser Indemnitee or Seller Indemnitee regardless whether
actual harm has been suffered or out-of-pocket expenses incurred. During such
fifteen (15) day period, the Indemnitor shall be entitled to cure the defect or
situation giving rise to the Indemnification Claim to the satisfaction of the
Purchaser Indemnitee. If the Indemnitor is unwilling or unable to cure the
defect giving rise to the Indemnification Claim during such fifteen (15) period,
the Purchaser Indemnitee may, on the sixteenth (16th) day after the
Indemnification Notice, seek indemnification as provided in this Article 8;
provided, however, that if such matter cannot reasonably be cured within such
fifteen (15) day period, then the Indemnitor shall have an additional period
(not to exceed 90 days) to cure such matter if the Indemnitor promptly commences
to cure and diligently pursues same to completion..
8.6. Offset. At any time or from time to time prior to the final payment by
Purchaser to Sellers of any amounts or sums due under or pursuant to this
Agreement, including, without limitation, the Subordinated Promissory Note,
Purchaser shall be entitled, in addition to, and not in lieu of, any other right
or remedy which Purchaser may have against Sellers, under or pursuant to this
Agreement, or otherwise, to notify Sellers in writing (an "Offset Notice") that
Purchaser reasonably believes that it is entitled to indemnity for Damages under
Section 8.2. Any Offset Notice provided hereunder shall identify the provision
of this Agreement which Purchaser believes entitles it to such indemnity for
Damages and shall briefly identify the facts which constitute the basis for each
such claim of indemnity and the dollar amount of such claim. If on or before
thirty (30) days after delivery of the Offset Notice, the Shareholder or the
Company shall not have objected thereto, Purchaser may, but, shall not be
required to, offset against any portion of the amounts due under this Agreement
then remaining unpaid, the amount of the Damages claimed in the Offset Notice
(and thus to reduce the amounts due under this Agreement). Notwithstanding any
offset exercised pursuant to this Section 8.6, to the extent that the actual
amount of any Damages arising from a claim for indemnity set forth in an Offset
Notice shall exceed the value of the offset against the amounts due under this
Agreement claimed, Sellers shall remain liable for, and shall promptly reimburse
Purchaser the amount of, any such excess Damages. If on or before thirty (30)
days following delivery of the Offset Notice, the Shareholder or the Company
shall notify Purchaser that Sellers question the amount
ASSET PURCHASE AGREEMENT - Page 23
of any Damages for which indemnity is claimed therein (or the entitlement to
indemnity), Purchaser shall nonetheless be entitled to exercise its rights of
offset provided for in this Section 8.6, but in lieu of reducing the amounts due
under this Agreement immediately, shall make payment of a portion or portions of
the amounts due under this Agreement remaining unpaid in the amount of the
disputed claim into a separate escrow account (to be established with an escrow
agent or third party mutually satisfactory to the parties and the prevailing
party shall be entitled to receive any interest thereon) until such time as (i)
Purchaser shall have received written authorization from Sellers to retain such
unpaid portion of the amounts due under this Agreement in partial or total
satisfaction of Purchaser's claim for indemnity, or (ii) Purchaser has received
a certified or file-stamped copy of a final decision of a court of competent
jurisdiction establishing the amount of such Damages or directing a specific
distribution of all or any part of the amounts due under this Agreement being
held by Purchaser pursuant to this Section 8.6. Purchaser shall not be obligated
to exercise the rights of offset provided for in this Section 8.6, and no
failure to exercise any such right of offset shall relieve Sellers of any
indemnity obligations under Section 8.2, or otherwise.
9. GENERAL PROVISIONS AND OTHER AGREEMENTS
9.1. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if and when delivered personally or
transmitted by telex, telecopy (receipt confirmed) or telegram, mailed by
registered or certified mail (return receipt requested) or sent by a recognized
next business day courier to the following persons at the following addresses
(or at such other address for a party as shall be specified by like notice):
(a) If to Purchaser:
Communications World International, Inc.
0000 Xxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxxxxxx, Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxx, Esq.
Xxxx, Xxxxxxxx & Xxxxxx PLLC
1400 One XxXxxxxx Plaza
0000 XxXxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
ASSET PURCHASE AGREEMENT - Page 24
(b) If to Sellers:
Xxxx Xxxxxxxx
00000 Xxxx 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxx, Esq.
Xxxxxxx X. Xxxxx, P.C.
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
9.2. Fees and Expenses. Sellers and Purchaser shall each pay all of their
own fees, costs and expenses (including without limitation, those of
accountants, appraisers and attorneys) incurred in connection with or related to
the preparation, negotiation, execution, delivery, satisfaction, compliance and
consummation of this Agreement and the Transactions contemplated hereby and the
closing conditions hereunder.
9.3. Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement. Terms such as "herein," "hereof," "hereinafter" refer to this
Agreement as a whole and not to the particular sentence or paragraph where they
appear, unless the context otherwise requires. Terms used in the plural include
the singular, and vice versa, unless the context otherwise requires.
9.4. Facsimile; Counterparts. This Agreement may be executed by facsimile
and in two or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
9.5. Publicity. Prior to Closing, no party hereto shall issue any press
release or make any other public statement, in either case relating to or
connected with or arising out of this Agreement or the matters contained herein,
without obtaining the prior written approval of the other parties to the
contents and the manner of presentation and publication thereof, which approval
shall not be unreasonably withheld.
9.6. Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable. This Agreement shall
be construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof; and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or its severance from this
Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable
provision there shall be added automatically as part hereof a provision as
similar in terms, but in any event no more restrictive than, such illegal,
invalid or unenforceable provision as may be possible and be legal, valid and
enforceable.
ASSET PURCHASE AGREEMENT - Page 25
9.7. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
successors and permitted assigns.
9.8. Captions. The captions, headings and arrangements used in this
Agreement are for convenience only and do not in any way affect, limit or
amplify the provisions hereof.
9.9. Attorneys' Fees. In the event that any Proceeding is commenced by any
party hereto for the purpose of enforcing any provision of this Agreement, the
party to such Proceeding may receive as part of any award, judgment, decision or
other resolution of such Proceeding its costs and attorneys' fees as determined
by the person or body making such award, judgment, decision or resolution.
Should any claim hereunder be settled short of the commencement of any such
Proceeding, the parties in such settlement may mutually agree to include as part
of the damages alleged to have been incurred reasonable costs of attorneys or
other professionals in investigation or counseling on such claim.
9.10. Jurisdiction and Venue. Any judicial proceedings brought by or
against any party on any dispute arising out of this Agreement or any matter
related thereto shall be brought in the state or federal courts of Arapahoe
County, Colorado and, by execution and delivery of this Agreement, each of the
parties accepts for itself the exclusive jurisdiction and venue of the aforesaid
courts as trial courts, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement after exhaustion of all
appeals taken (or by the appropriate appellate court if such appellate court
renders judgment).
9.11. Assignability. This Agreement may not be transferred, assigned,
pledged or hypothecated by any party hereto without the prior written consent of
the other parties to this Agreement.
9.12. Entirety. This Agreement and the documents executed and delivered
pursuant hereto, executed on the date hereof or in connection herewith, contain
the entire agreement among the parties with respect to the matters addressed
herein and supersede all prior representations, inducements, promises or
agreements, oral or otherwise, which are not embodied herein or therein.
9.13. Amendment. This Agreement and the exhibits and schedules hereto may
be amended by the parties hereto at any time prior to the Closing Date;
provided, however, that any amendment must be by an instrument or instruments in
writing signed and delivered on behalf of each of the parties hereto.
9.14. Governing Law. This Agreement shall be governed by the substantive
laws of the State of Colorado without regard to principles of choice or conflict
of law.
[Signature Page Follows]
ASSET PURCHASE AGREEMENT - Page 26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers.
WEST-TECH COMMUNICATIONS CORP.,
a Colorado corporation
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
--------------------------------------
XXXX XXXXXXXX
IAC ACQUISITION CORPORATION,
a Colorado corporation
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
COMMUNICATIONS WORLD INTERNATIONAL,
INC., a Colorado corporation
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
ASSET PURCHASE AGREEMENT - Page 27
EXHIBIT "A"
-----------
Form of Assumption Agreement
----------------------------
EXHIBIT "B"
-----------
Form of Xxxx of Sale and Assignment
-----------------------------------
EXHIBIT "C"
-----------
Purchase Price Allocation
-------------------------
1. Cash $
2. Accounts Receivable $
3. Furniture, Fixtures and Equipment $
4. Goodwill and Intangibles $
EXHIBIT "D"
-----------
Form of Employment and Noncompetition Agreement
-----------------------------------------------
EXHIBIT "E"
-----------
Form of Subordinated Promissory Note
------------------------------------
