1
Exhibit 2.1
=========================================
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
MINDSPRING ENTERPRISES, INC.
AND
NETCOM ON-LINE COMMUNICATION SERVICES, INC.
DATED AS OF JANUARY 5, 1999
=========================================
2
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS.............................................................................. 1
ARTICLE II PURCHASE AND SALE........................................................................ 7
SECTION 2.1 Basic Transaction........................................................... 7
SECTION 2.2 Purchase Price.............................................................. 9
SECTION 2.3 Payment of Purchase Price................................................... 9
SECTION 2.4 Assumption of Liabilities................................................... 10
SECTION 2.5 Closing; Closing Date....................................................... 11
SECTION 2.6 Deliveries at the Closing................................................... 11
(a) Deliveries by Seller............................................. 11
(b) Deliveries by Buyer.............................................. 12
SECTION 2.7 Transfer Taxes.............................................................. 13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER................................................. 14
SECTION 3.1 Organization, Good Standing, Etc............................................ 14
SECTION 3.2 [Intentionally Omitted]..................................................... 14
SECTION 3.3 Authority; No Violation..................................................... 14
SECTION 3.4 Subsidiary.................................................................. 15
SECTION 3.5 Consents and Approvals...................................................... 15
SECTION 3.6 Financial Statements........................................................ 15
SECTION 3.7 Absence of Certain Changes or Events........................................ 15
SECTION 3.8 Tax Matters................................................................. 16
SECTION 3.9 Assets and Properties....................................................... 16
SECTION 3.10 Contracts................................................................... 17
SECTION 3.11 Litigation, Compliance with Applicable Laws and Permits..................... 17
SECTION 3.12 Insurance................................................................... 18
SECTION 3.13 Pension and Employee Benefit Matters........................................ 18
SECTION 3.14 Labor and Employment........................................................ 18
SECTION 3.15 Environmental Matters....................................................... 18
SECTION 3.16 Intellectual Property....................................................... 19
SECTION 3.17 Brokers' Fees and Commissions............................................... 20
SECTION 3.18 Employees................................................................... 20
SECTION 3.19 Books and Records........................................................... 20
SECTION 3.20 Subscribers................................................................. 20
SECTION 3.21 Securities Matters.......................................................... 21
SECTION 3.22 Year 2000 Compliance........................................................ 21
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER.................................................. 22
SECTION 4.1 Organization and Qualification, Etc......................................... 22
SECTION 4.2 Authority Relative to Agreement............................................. 22
-i-
3
SECTION 4.3 Non-Contravention........................................................... 23
SECTION 4.4 Consents and Approvals...................................................... 23
SECTION 4.5 Brokers' Fees and Commissions............................................... 23
SECTION 4.6 The Shares.................................................................. 23
ARTICLE V PRE-CLOSING COVENANTS.................................................................... 23
SECTION 5.1 General..................................................................... 23
SECTION 5.2 Operation and Preservation of Business...................................... 24
SECTION 5.3 Full Access................................................................. 24
SECTION 5.4 Notice of Developments...................................................... 25
SECTION 5.5 Announcements............................................................... 25
SECTION 5.6 Confidentiality............................................................. 25
SECTION 5.7 Consents and Approvals...................................................... 26
SECTION 5.8 Values of Assets............................................................ 26
SECTION 5.9 Name........................................................................ 26
SECTION 5.10 Resale Prospectus........................................................... 27
ARTICLE VI POST-CLOSING COVENANTS................................................................... 27
SECTION 6.1 Further Assurances.......................................................... 27
SECTION 6.2 Cooperation................................................................. 27
SECTION 6.3 Confidentiality............................................................. 27
SECTION 6.4 Resale Prospectus and Listing of Shares..................................... 28
SECTION 6.5 Restriction on Distribution................................................. 28
ARTICLE VII CONDITIONS TO CLOSING.................................................................... 28
SECTION 7.1 Conditions to Obligation of Buyer........................................... 28
SECTION 7.2 Conditions to Obligation of Seller.......................................... 29
ARTICLE VIII REMEDIES FOR BREACHES OF THIS AGREEMENT.................................................. 30
SECTION 8.1 Indemnification Provisions for Benefit of Buyer............................. 30
SECTION 8.2 Indemnification Provisions for Benefit of Seller............................ 31
SECTION 8.3 Matters Involving Third Parties............................................. 32
SECTION 8.4 Survival.................................................................... 33
SECTION 8.5 Limitations................................................................. 33
SECTION 8.6 Basket and Ceiling.......................................................... 33
ARTICLE IX TERMINATION.............................................................................. 34
SECTION 9.1 Termination of Agreement.................................................... 34
SECTION 9.2 Effect of Termination....................................................... 35
SECTION 9.3 Confidentiality............................................................. 35
ARTICLE X MISCELLANEOUS............................................................................ 35
SECTION 10.1 No Third-Party Beneficiaries............................................... 35
SECTION 10.2 Entire Agreement........................................................... 35
-ii-
4
SECTION 10.3 Succession and Assignment.................................................. 35
SECTION 10.4 Counterparts............................................................... 35
SECTION 10.5 Headings, Terms............................................................ 36
SECTION 10.6 Notices.................................................................... 36
SECTION 10.7 Governing Law.............................................................. 36
SECTION 10.8 Amendments and Waivers..................................................... 37
SECTION 10.9 Severability............................................................... 37
SECTION 10.10 Expenses................................................................... 37
SECTION 10.11 Arbitration................................................................ 37
SECTION 10.12 Construction............................................................... 38
SECTION 10.13 Incorporation of Exhibits and Schedules.................................... 38
SECTION 10.14 Representations as to Knowledge............................................ 38
-iii-
5
EXHIBIT
Exhibit A Network Services Agreement
SCHEDULES
---------
Schedule 1.1(i) Other Assets
Schedule 1.1(ii) Latest Balance Sheet
Schedule 1.1(iii) Other Contracts
Schedule 2.4(a) Assumed Liabilities
Schedule 2.4(b) Retained Employees
Schedule 3.1 Organization, Good Standing, Etc.
Schedule 3.3 Violations
Schedule 3.5 Seller Notices and Consents
Schedule 3.6(a) Audited Financial Statements
Schedule 3.6(b) Unaudited Financial Statements
Schedule 3.7 Changes or Events
Schedule 3.8 Taxes
Schedule 3.9(a) Description of Premises and Equipment
Schedule 3.9(b) Encumbrances on Assets
Schedule 3.10 Seller Contracts
Schedule 3.11(a) Outstanding Litigation, Etc.
Schedule 3.11(c) Authorizations and Permits
Schedule 3.14 Labor and Employment
Schedule 3.16 Intellectual Property
Schedule 3.18 Employees
Schedule 3.20 Subscribers
Schedule 4.4 Buyer Notices and Consents
-iv-
6
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into as of
January 5, 1999, by and between MINDSPRING ENTERPRISES, INC., a Delaware
corporation ("Buyer"), and NETCOM ON-LINE COMMUNICATION SERVICES, INC., a
Delaware corporation ("Seller").
RECITALS
A. Seller owns or leases and uses certain tangible and intangible
assets and rights in connection with the Internet services business currently
operated by Seller in the United States, which business provides, among other
services, dial-up access services, dedicated access services and Web-hosting
services (collectively, the "Business").
B. Buyer desires to purchase the Assets from Seller and Seller
desires to sell the Assets to Buyer, all in accordance with and subject to the
terms and conditions in this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the Parties hereto hereby agree
as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement:
Adverse Consequences means all losses, damages, costs, expenses, fees and
Liabilities, but will not include any losses or damages arising from or
attributable to lost profits, or consequential, incidental, speculative or
punitive damages (except to the extent such items are payable to a Person not a
Party to this Agreement).
Affiliate means, with respect to any Person, any Person Controlling,
Controlled by or under common Control with such Person.
Agreement means this Asset Purchase Agreement entered into between Buyer
and Seller.
Assets means, collectively, all right, title, benefit and interest of
Seller in and to the following assets, rights, benefits and privileges, both
tangible and intangible (including without limitation the Business as a "going
concern" and customer relationships and reputation of Seller ("Goodwill")),
wherever situated or located, owned, leased, used, held for use or otherwise
held by Seller in connection with the Business, including all such assets
existing on the date of this
7
Agreement and all such assets acquired between that date and the Closing Date in
connection with the Business:
(a) all Subscriber Contracts;
(b) the contracts described on SCHEDULE 1.1(III) except (i)
contracts involving bounty payments of $50 or more per Subscriber, (ii)
contracts involving the payment of monthly recurring revenue, and (iii)
contracts involving annual payments, in cash or in kind, in excess of One
Hundred Thousand Dollars ($100,000) per annum, unless Buyer elects prior to the
Closing to treat any of such excepted contracts as Assets;
(c) all of Seller's rights in and to the name "NETCOM" and
related intellectual property in all jurisdictions in the world except Canada,
the United Kingdom and Brazil;
(d) all Intellectual Property, including that described in the
preceding clause (c);
(e) all engineering, business and other books, papers, files
and records directly relating to the Business, including customer lists;
(f) all manufacturer's warranties with respect to the Assets,
if any, to the extent assignable;
(g) customer accounts receivable as of the Closing; and
(h) all other assets, rights, benefits and privileges owned,
leased, used or held for use or otherwise held by Seller in connection with the
Business and any contract or agreement relating thereto, a partial list of which
is set forth on SCHEDULE 1.1(i) and which list will be supplemented by the
inventory pursuant to Section 2.1(c)(i) to create a true, correct and complete
list of such assets, rights, benefits and privileges; provided that in no event
will the Assets be deemed to include (a) any benefits arising under or relating
to any of the above-described Assets attributable to the period prior to the
Closing, (b) any receivables held by Seller from, or other amounts owed to
Seller by, ICG or its Affiliates, (c) the Retained Assets, (d) any cash or cash
equivalents held or beneficially owned by Seller in any Seller account or
otherwise or (e) any interest of Seller in NETCOM Internet Limited or NETCOM
Canada, Inc.
Assumed Liabilities means (a) all Liabilities of Seller arising with
respect to or otherwise associated with the Business that are described on
SCHEDULE 2.4(a) attributable to the period following the Closing, (b) the
employee-related Liabilities described in Section 2.4(b)(i) and (c) the
obligation to pay accrued bonuses and vacation pay under Section 2.4(b)(iii);
provided, that in no event will Buyer assume any of Seller's Liabilities
relating to (a) the payment of Taxes of Seller with respect to any period prior
to the Closing Date, (b) any Plans, which Liabilities are due to any of Seller's
current (active or non-active), former or retired employees, (c) any
-2-
8
Liability of Seller to ICG or its Affiliates, or (d) any Liabilities under
Seller Contracts with respect to services rendered to Subscribers or events
occurring in either case prior to the Closing.
Basket Amount has the meaning set forth in Section 8.6(a).
Business shall have the meaning specified in Recital A.
Business Day means any day on which commercial banks are open for
business in Denver, Colorado and in Atlanta, Georgia.
Buyer means MindSpring Enterprises, Inc., a Delaware corporation.
Buyer Documents means, collectively, the documents described in Section
2.6(b).
Closing and Closing Date have the meanings given in Section 2.5.
Closing Permitted Encumbrances means all Pre-Closing Permitted
Encumbrances other than those described in clause (ii) of the definition of
Pre-Closing Permitted Encumbrances.
Code means the Internal Revenue Code of 1986, as amended, and all Legal
Requirements promulgated pursuant thereto or in connection therewith.
Confidential Information means, with respect to any Person, any
information concerning such Person or its business, products, financial
condition, prospects and affairs that is not already generally available to the
public.
Control means the power to direct the management or policies of any
Person, through the power to vote shares or other equity interests, by contract
or otherwise.
Employees has the meaning specified in Section 3.18.
Encumbrance means any mortgages, pledges, liens, claims, security
interests, agreements, restrictions, defects in title, easements, restrictions,
encumbrances, or charges.
Environmental Obligations means all Legal Requirements and Permits
concerning land use, public health, safety, welfare or the environment,
including, without limitation the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et seq.), as amended, and the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.), as
amended.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and any regulations, rules or orders promulgated under the Employee
Retirement Income Security Act of 1974, as amended.
Financial Statements has the meaning set forth in Section 3.6.
-3-
9
GAAP means generally accepted accounting principles as in effect from
time to time in the United States.
Goodwill has the meaning set forth in the definition of Assets.
Governmental Authority means the United States of America or any foreign
jurisdiction, any state, commonwealth, territory or possession of the United
States of America or any such foreign jurisdiction, any political subdivision of
any of them (including counties, municipalities, home-rule cities and the like),
and any agency, authority or instrumentality of any of the foregoing, including,
without limitation, any court, tribunal, department, bureau, commission or
board.
Xxxx-Xxxxx-Xxxxxx means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and all Legal Requirements promulgated pursuant thereto or
in connection therewith.
ICG means ICG Services, Inc., a Delaware corporation.
Indemnified Party has the meaning set forth in Section 8.3(a).
Indemnifying Party has the meaning set forth in Section 8.3(a).
Intellectual Property means all intellectual property of Seller held or
used in connection with the Business, including: (i) all inventions (whether
patentable or unpatentable and whether or not reduced to practice) held or used
in connection with the Business, all improvements thereto and all patents,
patent applications and patent disclosures held or used in connection with the
Business, (ii) all trademarks, service marks, trade dress, logos, trade names,
and corporate names held or used in connection with the Business, together with
all translations, adaptations, derivations, and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith; provided that the term
Intellectual Property will apply to Seller's rights in and to the name NETCOM
(and related trademarks and other intellectual property) only to the extent of
Seller's rights in and to such name and related items anywhere in the world
except Canada, Brazil and the United Kingdom, (iii) all copyrightable works, all
copyrights and maskworks and all applications, registrations and renewals in
connection therewith held or used in connection with the Business, and the right
to bring suit or make any claim for infringement of rights in any such works,
(iv) all trade secrets and confidential information held or used in connection
with the Business (including all ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, business and marketing plans and proposals and
other information or material within the definition of a "trade secret" as set
forth in Section 1(4) of the Uniform Trade Secrets Act (1995), (v) all computer
programs (including, without limitation, data and related documentation) held or
used in connection with the Business, (vi) all other intellectual property held
or used in connection with the Business, (vii) all rights as a licensee or
authorized user of the intellectual property of any third party, and (ix) all
copies and tangible
-4-
10
embodiments of the foregoing in whatever form or medium; provided that in no
event will the term Intellectual Property be deemed to include any Retained
Assets.
Latest Balance Sheet means the unaudited balance sheet of Seller and the
related unaudited statement of operations dated as of September 30, 1998 and
attached as SCHEDULE 1.1(II).
Legal Requirement means any constitution, statute, ordinance, code, or
other law (including common law), rule, regulation, Order, notice, standard,
procedure or other requirement enacted, adopted, applied or issued by any
Governmental Authority, including, without limitation, judicial decisions
applying or interpreting any such Legal Requirement.
Liability means any liability or obligation (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due).
Material means, unless the context otherwise requires, material with
respect to the Business or the Assets.
Material Adverse Effect means, with respect to the Business or the
Assets, any event, fact, circumstance or condition that in the aggregate results
in, or is likely to result in, a material adverse impact on the Business or the
Assets.
MindSpring Stock means the common stock of Buyer, par value $.01 per
share.
NASDAQ means the over-the-counter national market of the National
Association of Securities Dealers, Inc.
Network means the Internet network currently operated by Seller,
including all intellectual property (which is not Intellectual Property) used or
held for use in connection therewith.
Orders means all judgments, injunctions, orders, rulings, decrees,
directives, notices of violation or other requirements of any Governmental
Authority or arbitrator having jurisdiction in the matter, including a
bankruptcy court or trustee.
Ordinary Course of Business means, with respect to Seller and the
operation of the Business, with respect to any period, the ordinary course of
business consistent with past practices of Seller.
Party means each of Buyer and Seller.
Permits means all governmental permits, licenses, consents, franchises,
authorizations, approvals, privileges, waivers, exemptions, variances,
exclusionary or inclusionary Orders and
-5-
11
other concessions, including, without limitation, those relating to
environmental, public health, welfare or safety matters.
Pre-Closing Permitted Encumbrances has the meaning set forth in Section
3.9(b).
Person means an individual, and a partnership, corporation, association,
joint stock company, trust, joint venture, limited liability company,
unincorporated organization, Governmental Authority or other entity.
Plans has the meaning set forth in Section 3.13(a).
Premises means the real property, buildings and improvements on such real
property constituting the Business premises of Seller as described on SCHEDULE
3.9(a).
Purchase Price has the meaning specified in Section 2.2, as such amount
may be adjusted pursuant to Section 2.3(c).
Resale Prospectus has the meaning set forth in Section 5.10.
Retained Assets means all assets, rights, benefits and privileges, both
tangible and intangible, wherever situated or located, owned, leased, used or
held for use or otherwise held by Seller other than the Assets, all of which
items are to be retained by Seller, including the software described in Section
2.1(c)(ii)(A)(1) and (4), as of and after the Closing.
Schedules means the disclosure Schedules attached to this Agreement.
SEC means the United States Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
Seller means NETCOM On-Line Communication Services, Inc., a Delaware
corporation.
Seller Contracts has the meaning set forth in Section 3.10.
Seller Documents means, collectively, the documents described in Section
2.6(a).
Seller Software means the software developed by employees, consultants,
and independent contractors of Seller which (a) is owned by Seller, and (b) is
transferred to Buyer under this Agreement, including software that is licensed
or provided to the Subscribers.
Shares has the meaning set forth in Section 2.3(b).
Subscriber means a subscriber to Seller's dial-up or dedicated Internet
access services or Web-hosting services.
-6-
12
Subscriber Contracts means all contracts for the provision of dial-up or
dedicated Internet access services or Web-hosting services between Seller and
any Subscriber.
Survival Period means, with respect to a representation or warranty, the
applicable period after the Closing Date during which such representation or
warranty survives pursuant to Section 8.4.
Tax means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, documentary, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated or other tax of any kind whatsoever, or any escheat
obligations, including any interest, penalty or addition, whether disputed or
not.
Tax Return means any return, declaration, report, claim for refund or
information return or statement relating to Taxes of Seller, including any
schedule or attachment to any of them, and including any amendment of any of
them.
Third Party Claim has the meaning set forth in Section 8.3(a).
Third Party Products has the meaning set forth in Section 3.22.
WARN Act means the Worker Adjustment and Retraining Notification Act, 29
U.S.C. Sec. 2101 et. seq.
ARTICLE II
PURCHASE AND SALE
SECTION 2.1. Basic Transaction.
(a) Subject to the terms and conditions set forth in this Agreement,
Buyer agrees to purchase and assume from Seller, and Seller agrees to sell and
transfer to Buyer, or to such Affiliate or Affiliates of Buyer as Buyer may
designate in writing to Seller, all of Seller's right, title and interest in, to
and under the Assets, for the consideration specified in Section 2.2.
(b) Seller will retain, and Buyer will not acquire or assume, any of
the Retained Assets.
(c) (i) It is the intent of this Agreement that the Assets will
comprise, and Seller will assign and transfer to Buyer at the Closing, all of
the real, personal and mixed assets and property, both tangible and intangible,
which are being used or held for use by Seller in the conduct of the Business,
as of the date of this Agreement and as of and at the Closing consistent with
Seller's historical and current practices. The Parties acknowledge and agree
that the SCHEDULES attempt to accurately describe the Assets, but certain
SCHEDULES, including SCHEDULES
-7-
13
1.1(i), 1.1(III), 3.9(a), 3.10 and 3.16, may not describe the Assets with the
specificity desired by Buyer. Seller will undertake an inventory of all personal
property comprising the Assets, including tangible and intangible property, the
names of all Subscribers as of a date no earlier than five days prior to the
Closing, and the Intellectual Property, and will deliver such inventory to Buyer
as promptly as practicable but in any event no earlier than ten days or later
than five days prior to the Closing Date.
(ii) The Parties acknowledge and agree to the following in respect
of Intellectual Property comprised of computer software:
(A) Computer software used or held for use by Seller as of
the date of this Agreement consists of the following five categories:
(1) Software licensed from third parties that is not
assignable to Buyer by its terms if the licensor of such software withholds its
consent to such assignment (where the requirement of such consent is
applicable); provided that Seller will use its commercially reasonable best
efforts to secure such consent;
(2) Software licensed from third parties that is
used exclusively in connection with the Business and that is assignable either
by its terms or pursuant to the consent of the other parties thereto where such
consent is obtained;
(3) Internally-developed software that is used
exclusively in connection with the Business;
(4) Software licensed from third parties and
internally-developed software that is used exclusively in connection with the
Network; and
(5) Software licensed from third parties and
internally-developed software that is used both in connection with the Business
and the Network.
Based on the above clauses (1) through (5), the Parties further agree as
follows: (a) ownership of the software described in the preceding clauses (1)
(subject to the provisions of Section 2.1(d)) and (4) will be retained by Seller
and constitute part of the Retained Assets and will not be considered to be
Assets under this Agreement; (b) ownership of the software described in the
preceding clause (2) will be assigned to Buyer; (c) ownership of the software
described in the preceding clause (3) will be assigned and transferred to Buyer;
(d) software described in the preceding clause (5) will be licensed to Buyer
under a worldwide, perpetual, royalty-free licensing arrangement (including both
source and object code) to be mutually satisfactory to Seller and Buyer and
under which arrangement both Seller and Buyer will have unfettered use of such
software and the right to modify and develop such software consistent with the
operation of each of their respective businesses after the Closing; and (e) if
any software described above the ownership of which is transferred to Buyer
under this paragraph is used in connection with the business conducted by NETCOM
Canada, Inc. or NETCOM Internet, Ltd., such use to be determined in Seller's
reasonable discretion, Buyer will enter into with Seller as of the Closing a
-8-
14
perpetual, royalty-free license arrangement (including both source and object
code), to be mutually satisfactory to Buyer and Seller, providing for the
unfettered use of such software in Canada and/or the United Kingdom, as the case
may be, and the right to modify and develop such software consistent with the
operation of the business by those two Affiliates of Seller. In furtherance of
the agreements set forth in this Section 2.1(c)(ii), the Parties will cooperate
with each other, and enter into appropriate agreements and licensing
arrangements to be effective as of the Closing, to ensure the continued use of
such software to the maximum extent possible by Buyer and Seller (and to the
extent applicable, by NETCOM Canada, Inc. or NETCOM Internet, Ltd.) after the
Closing in connection with their operation of the Business and the Network (and
the business conducted by NETCOM Canada, Inc. or NETCOM Internet, Ltd., as
applicable), respectively.
(d) Notwithstanding anything else in this Agreement to the contrary,
this Agreement shall not constitute an agreement to assign or transfer any Asset
or part thereof or any rights or benefit arising thereunder or resulting
therefrom if an attempted assignment or transfer thereof, without the consent of
a third party thereto, would constitute a breach thereof, or make Buyer or
Seller liable for damages or other penalties. If such consent is not obtained
prior to Closing, or if an attempted assignment thereof would be ineffective or
would affect the rights of Buyer or Seller so that Buyer would not in fact
receive substantially all such rights, Seller (i) at Seller's cost and expense
shall continue to use its commercially reasonable efforts to obtain such consent
and (ii) if any such consent is unobtainable, shall cooperate with Buyer in a
mutually agreed-upon arrangement under which at Seller's cost and expense Buyer
would obtain the benefits and assume the obligations thereunder, or under which
Seller would enforce for the benefit of Buyer, at Buyer's cost and expense, with
Buyer assuming Seller's obligations, any and all rights of Seller against a
third party thereto. To the extent the benefits therefrom have been provided to
Buyer by alternative arrangements as provided above or a consent is obtained,
the contract, agreement or other asset shall be deemed to be an Asset
transferred to Buyer.
SECTION 2.2. Purchase Price. At the Closing, and in addition to the
assumption of the Assumed Liabilities as set forth in Section 2.4, Buyer agrees
to pay to Seller, and Seller agrees to accept from Buyer, an aggregate purchase
price (the "Purchase Price") equal to Two Hundred Forty-Five Million Dollars
($245,000,000), payable as described in Section 2.3. The Purchase Price will be
allocated among the Assets in accordance with Section 5.8.
SECTION 2.3. Payment of Purchase Price. The Purchase Price shall be
payable to Seller at the Closing as follows:
(a) Buyer will pay to Seller the amount of Two Hundred Fifteen Million
Dollars ($215,000,000) in cash in immediately available funds by wire transfer
to an account or accounts designated in writing by Seller; and
(b) Buyer will deliver to Seller certificates representing that number
of shares (the "Shares") of MindSpring Stock obtained by dividing (i) Thirty
Million Dollars ($30,000,000) by (ii) the average closing price for the
MindSpring Stock, as reported on the NASDAQ, for the five consecutive trading
days ending the last trading day immediately before the Closing. The Shares
-9-
15
will be delivered to Buyer at the Closing free and clear of all Liabilities,
Taxes and other Encumbrances, other than those allowed to arise solely by
Seller.
(c) Within ten days following the Closing Date, Buyer and Seller will
make a calculation to determine whether there shall be a Purchase Price
adjustment. For the purposes of this calculation, as of the Closing Date each
dial-up Subscriber will be valued at $490.1838, each Web-hosting Subscriber will
be valued at $1,225.4595 and each dedicated access Subscriber will be valued at
$12,254.5950. If Buyer and Seller calculate that the aggregate value of all the
Subscribers who are current customers (as defined in Section 3.20) as of the
Closing Date is less than Two Hundred Forty Million One Hundred Thousand Dollars
($240,100,000), a Purchase Price adjustment will be payable in cash from the
Seller to the Buyer in an amount equal to the difference between such aggregate
value and Two Hundred Forty Million One Hundred Thousand Dollars ($240,100,000),
such payment to be made by Seller within 15 days after the Closing Date.
SECTION 2.4. Assumption of Liabilities.
(a) At the Closing, Buyer, or the Affiliate of Buyer that purchases
the Assets pursuant to Section 2.1(a), as the case may be, will assume the
Assumed Liabilities. Except for the Assumed Liabilities, Buyer (or such
Affiliate) will not assume or have any responsibility for any liabilities or
other obligations of any kind or description of Seller, whether connected with
the Business, the Assets or otherwise.
(b) (i) Except as provided in Section 2.4(b)(ii), as of the Closing,
Buyer will offer to employ all of the employees of the Seller (including for
this purpose all employees of Seller hired in the Ordinary Course of Business in
connection with the Business after the date of this Agreement and before the
Closing) other than the employees that are listed on SCHEDULE 2.4(b) as of the
Closing Date; provided that Buyer will not be prevented from terminating the
employment of any such employee after the Closing in accordance with Buyer's
practices and procedures. A preliminary list of the employees to be employed by
Buyer under this Section 2.4(b)(i) as of the Closing is set forth on SCHEDULE
3.18, which list will be finalized within ten days following the date of this
Agreement and contain a listing of employees reasonably necessary for the
operation of the Business. SCHEDULE 2.4(b) sets forth a preliminary list of
employees to be employed by Seller after the Closing, which list will be
finalized within ten days following the date of this Agreement. Buyer will not
assume, and will have no Liability with respect to, any Plan maintained or
contributed to by Seller, and will not assume, and will have no liability for,
any Liability arising out of or accruing during the period prior to the Closing,
except as expressly set forth in the next sentence or Section 2.4(b)(iii). After
the Closing, Buyer will comply with the requirements, if any, under the WARN Act
with respect to the employees who accept employment offers from Buyer under this
Section 2.4(b)(i) and are subsequently terminated by Buyer. Buyer will assume
all costs of employee compensation and other Liabilities relating to such
employees attributable to the period after the Closing. Seller will remain
responsible for all Legal Requirements relating to group health plan
continuation coverage to which any employee or former employee (or dependent of
either) of Seller is entitled because of a qualifying event (as defined in
Section 4980(f)(3) of the Code) occurring through
-10-
16
the Closing Date, and any benefit or excise tax liability or penalty or other
costs arising from any failure by Seller to provide such group health plan
continuation coverage.
(ii) By written notification to Seller at least ten days prior to the
Closing, Buyer may identify those executive officers of Seller who Buyer will
not offer to employ as of the Closing, and Buyer will have no responsibility
for, and bear no Liability for, those identified executive officers under
Section 2.4(b)(i). Buyer agrees that for a period of six months following the
Closing, neither Buyer nor any of its Affiliates will employ any of such
identified executive officers, whether as an employee, consultant, independent
contractor, advisor or in any other capacity. The Parties agree that the
restriction set forth in the preceding sentence is a material element of this
Agreement and will be specifically enforceable by Seller against Buyer, and upon
a breach by Buyer of such restriction, Buyer agrees that Seller could not be
adequately compensated at law.
(iii) Buyer will assume the obligation to pay bonuses and vacation pay
accrued on the books and records of Seller as of the Closing, in an amount not
to exceed One Million Seven Hundred Thousand Dollars ($1,700,000), with respect
to the employees who Buyer is required to offer to employ as of the Closing in
accordance with Section 2.4(b)(i). Within ten days after the Closing, Seller
will pay to Buyer in cash Five Hundred Thousand Dollars ($500,000) in respect of
the obligation assumed by Buyer for vacation pay described in the immediately
preceding sentence. In the event that Buyer actually pays any bonuses to any
such employee and such bonuses relate to any period preceding the Closing Date,
Seller will reimburse Buyer for all amounts actually paid with respect to such
bonuses to the extent that such amounts relate to any period preceding the
Closing Date; provided that the aggregate amount to be reimbursed by Seller to
Buyer under this sentence will not exceed One Million Two Hundred Thousand
Dollars ($1,200,000). All bonus reimbursements required by Seller under this
Section 2.4(b)(iii) will be paid to Buyer within ten days of the receipt by
Seller from Buyer of evidence reasonably satisfactory to Seller of the payment
by Buyer of reimbursable bonuses.
SECTION 2.5. Closing; Closing Date. The closing of the transactions
contemplated by this Agreement (the "Closing") will take place within two
Business Days after the satisfaction or waiver of all conditions set forth in
Sections 7.1 and 7.2, at the offices of Xxxxxxx & Xxxxxx L.L.C. in Denver,
Colorado, and all transactions contemplated by this Agreement will be effective
at 12:01 a.m. local time in Denver, Colorado, on the day of the Closing (such
effective time being the "Closing Date").
SECTION 2.6. Deliveries at the Closing.
(a) Deliveries by Seller. At or before the Closing, Seller will
deliver to Buyer the following documents, dated as of the Closing Date and duly
executed by Seller, ICG or Seller's counsel, as applicable.
(i) the Xxxx of Sale in a form reasonably acceptable to Buyer
and Seller;
-11-
17
(ii) the Assignment and Assumption of Contracts and Leases in a
form reasonably acceptable to Buyer and Seller;
(iii) the Assumption Agreement in a form reasonably acceptable to
Buyer and Seller;
(iv) the Network Services Agreement substantially in the form
attached as EXHIBIT A;
(v) the opinion of Xxxxxxx & Xxxxxx L.L.C. in a form reasonably
acceptable to Buyer;
(vi) copies of the resolutions of the board of directors of
Seller and ICG, certified by the Secretaries of Seller and ICG, respectively, as
being correct and complete and then in full force and effect, authorizing the
execution, delivery and performance of this Agreement and of the Seller
Documents, and the consummation of the transactions contemplated hereby and
thereby;
(vii) certificates of Seller signed by an Executive Vice
President of Seller certifying to the fulfillment of the conditions identified
in Section 7.1(a) through (f);
(viii) certificates of Seller and ICG signed by the Secretaries or
Assistant Secretaries of Seller and ICG as to the incumbency of the officers of
Seller and ICG; and
(ix) all such other general instruments of transfer, assignment
and conveyance, assignments, evidences of consent or waiver, and other
instruments or documents, including appropriate license and other agreements
between Seller and Buyer, and assignments of copyrights and trademarks/service
marks, with respect to the use of intellectual property as contemplated in
Section 2.1(c)(ii), in form and substance reasonably satisfactory to Buyer, as
shall be necessary to evidence or perfect the sale, assignment, transfer and
conveyance of the Assets to Buyer and the assumption by Buyer of the Assumed
Liabilities, and effectively vest in Buyer all right, title and interest in the
Assets free and clear of any and all Encumbrances (other than the Closing
Permitted Encumbrances), together with possession (or constructive possession,
in the case of intangibles) thereof, all in accordance with the terms and
conditions of this Agreement, and such other certificates, instruments, opinions
or documents as Buyer may reasonably request in order to effect and document the
transactions contemplated hereby.
(b) Deliveries by Buyer. At or before the Closing, Buyer shall deliver
to Seller the following:
(i) The Purchase Price payable at the Closing in the amount and
manner set forth in Sections 2.2 and 2.3;
(ii) the Assignment and Assumption of Contracts and Leases in a
form reasonably acceptable to Buyer and Seller;
-12-
18
(iii) the Assumption Agreement in a form reasonably acceptable to
Buyer and Seller;
(iv) the Network Services Agreement substantially in the form
attached as EXHIBIT A;
(v) the opinion of Xxxxx & Xxxxxxx L.L.P. in a form reasonably
acceptable to Seller;
(vi) copies of the resolutions of the board of directors of
Buyer, certified by the Secretary of Buyer as being correct and complete and
then in full force and effect, authorizing the execution, delivery and
performance of this Agreement and of the Buyer Documents, and the consummation
of the transactions contemplated hereby and thereby;
(vii) a certificate of Buyer signed by the Chairman, the
President or an Executive Vice President of Buyer certifying to the fulfillment
of the conditions identified in Section 7.2(a) and (b);
(viii) a certificate signed by the Secretary or an Assistant
Secretary of Buyer as to the incumbency of the officers of the Buyer executing
this Agreement or any of the Buyer Documents on behalf of Buyer; and
(ix) such other certificates, instruments, opinions or documents
as Seller may reasonably request in order to effect and document the
transactions contemplated by this Agreement, including all appropriate licensing
and other agreements between Seller and Buyer as contemplated by Section
2.1(c)(ii).
SECTION 2.7. Transfer Taxes.
(a) Buyer will be responsible for the payment of any Taxes or fees
imposed by any Governmental Authority with respect to the transfer to Buyer of
any of the Assets or the assumption of the Assumed Liabilities by Buyer pursuant
to this Agreement. Seller will cooperate on a reasonable basis with Buyer to
minimize to the maximum lawful extent Buyer's Liability for such Taxes or fees.
(b) All (i) property taxes, ad valorem taxes and special taxes or
assessments attributable to the Assets (including real estate taxes and special
taxes and assessments required to be paid on the Premises or under leases,
whether required to be paid directly to applicable Taxing authorities or the
lessors under leases) for the fiscal year during which the Closing Date occurs
and (ii) amounts payable under equipment leases and outsourcing contracts to be
transferred to and assumed by Buyer as of the Closing will be prorated and
adjusted as of the Closing Date. If the real property taxes, personal property
or ad valorem taxes for the fiscal year during which the Closing Date occurs are
not finally determined as of the Closing Date, then such Taxes for the
immediately preceding fiscal year will be used for purposes of prorating taxes
-13-
19
on the Closing Date, with a further adjustment to be made after such taxes or
assessments are finalized.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows, in each case as of
the date of this Agreement:
SECTION 3.1. Organization, Good Standing, Etc. Except as set forth on
SCHEDULE 3.1, Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is qualified and
authorized to do business as a foreign corporation and is in good standing in
each jurisdiction in which the failure to be so qualified and authorized would
result in a Material Adverse Effect. Seller has all requisite corporate power
and authority to own, lease and operate its properties and assets and to carry
on its business as is now being conducted. ICG is the sole shareholder of
Seller.
SECTION 3.2. [Intentionally Omitted].
SECTION 3.3. Authority; No Violation. Seller has the full and absolute
right, corporate power, authority and legal capacity to execute, deliver,
perform and consummate the transactions contemplated on its part by this
Agreement and all other documents and agreements to be executed and delivered by
Seller pursuant to this Agreement. The execution and delivery by Seller of this
Agreement and all other documents and agreements to be executed and delivered by
Seller pursuant to this Agreement, and the consummation by Seller of the
transactions contemplated on its part hereby and thereby, have been duly
authorized by Seller's board of directors and ICG. No other corporate approvals
on the part of the Seller's board of directors or ICG are necessary to authorize
the execution and delivery of this Agreement and such other documents. Assuming
the due authorization, execution and delivery by other applicable parties, this
Agreement constitutes, and all other documents and agreements to be executed and
delivered by Seller pursuant to this Agreement when executed and delivered will
constitute, the legal, valid, and binding obligation of, and will be enforceable
in accordance with their respective terms against, Seller, except as such
enforcement is subject to the effect of (i) any applicable bankruptcy,
insolvency, reorganization or similar laws relating to or affecting creditors'
rights generally, and (ii) general principles of equity, including concepts of
reasonableness, good faith and fair dealing, and other similar doctrines
affecting the enforceability of agreements generally (regardless of whether
considered in a proceeding in equity or at law). Except as set forth on SCHEDULE
3.3, the execution, delivery and performance of this Agreement and all other
documents and agreements to be executed and delivered by Seller pursuant to this
Agreement, and the consummation of the transactions contemplated hereby and
thereby, will not (a) violate any provision of the certificate of incorporation
or bylaws of Seller, (b) violate, with or without the giving of notice or the
lapse of time or both, or result in the breach or termination of any provision
of, or a diminution of the rights of Seller under, or constitute a default
under, or give any Person the right to accelerate any obligation under, or
result in the creation of any material Encumbrance upon the Assets or the
Business, pursuant to any indenture, mortgage, deed of
-14-
20
trust, lien, lease, license, Permit, agreement, instrument or other arrangement
to which Seller is a party or by which Seller, or any of the Assets is bound or
subject, or (c) violate in any material respect any Legal Requirement to which
Seller is subject.
SECTION 3.4. Subsidiary. Seller has no subsidiary, and no equity
investment or other interest in any Person, that owns or holds any interest in
the Assets or the Business.
SECTION 3.5. Consents and Approvals. Except as set forth in SCHEDULE 3.5,
no filing or registration with, no notice to and no permit, authorization,
consent or approval of any Governmental Authority or any Person is necessary for
the consummation by Seller of the transactions contemplated by this Agreement
other than (a) requirements of federal and state securities laws, (b) the
authorization of all applicable regulatory agencies necessary or desirable to
consummate the transactions contemplated by this Agreement and (c) those
consents and approvals already obtained as described on SCHEDULE 3.5.
SECTION 3.6. Financial Statements. Seller has delivered to Buyer complete
and correct copies of (a) the audited consolidated balance sheet and related
audited consolidated statements of operations, stockholders' equity and cash
flows for Seller for and as of the year ended December 31, 1997 and all notes
and schedules to such financial statements and (b) the unaudited consolidated
balance sheet of Seller, and the related unaudited consolidated statement of
operations for the calendar quarters ending March 31, 1998, June 30, 1998 and
September 30, 1998 (collectively, the "Financial Statements"). The Financial
Statements are in accordance with the books and records of Seller, as
applicable, and were prepared in accordance with GAAP on a consistent basis
throughout the periods covered and present fairly in all material respects
Seller's financial position and results of operations as of the dates and for
the periods indicated, subject in the case of the unaudited Financial Statements
to standard year-end adjustments (none of which will be material in amount) and
the omission of footnotes. Copies of the financial statements described in
clause (a) of this Section 3.6 are attached as SCHEDULE 3.6(a), and copies of
the financial statements described in clause (b) of this Section are attached as
SCHEDULE 3.6(b). All balance sheets, statements of operations and other
financial statements prepared by or with respect to Seller that are delivered to
Buyer after the date of this Agreement until the Closing will be prepared on a
basis and in a manner consistent with the Financial Statements, subject to
standard year-end adjustments (none of which will be material in amount) and the
omission of footnotes.
SECTION 3.7. Absence of Certain Changes or Events. Since September 30,
1998, and except as disclosed in SCHEDULE 3.7, the Business has been conducted
in the Ordinary Course of Business and there has not been (i) any material
adverse change or any change except in the Ordinary Course of Business in the
financial condition or operations of the Business, (ii) any damage, destruction
or loss that materially and adversely affects the financial condition or
operations of the Business or (iii) except as permitted or contemplated by this
Agreement or as a result of any action taken with the approval or consent of
Buyer, (a) any action by Seller which, if taken on or after the date of this
Agreement, would be prohibited without the consent of Buyer pursuant to Section
5.2 or (b) any agreement by Seller, whether in writing or otherwise, to take any
action described in this Section 3.7.
-15-
21
SECTION 3.8. Tax Matters.
(a) Except as described on SCHEDULE 3.8, Seller has paid, and will
continue to pay, all Taxes, including, without limitation, all federal, state
and local excise Taxes, due and payable by it or required to be withheld or
collected and paid by it for or with respect to all periods, whether or not
shown on any Tax Return.
(b) Seller has filed, and will continue to file, on a timely basis all
Tax Returns that it was or will be required to file. All such Tax Returns were
and will be accurate and complete in all material respects. There are no
security interests on any of the assets of Seller that arose in connection with
any failure (or alleged failure) to pay any Tax.
(c) Seller has withheld and paid, and will continue to withhold and
pay, all Taxes required to have been or to be withheld and paid in connection
with amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party.
(d) Seller has no knowledge of any facts or circumstances that could
give rise to a reasonable expectation that any Tax authority may assess any
additional Taxes for any period for which Tax Returns of Seller have been or
will be filed. Seller has made available to Buyer correct and complete copies of
all federal income Tax returns, examination reports and statements of
deficiencies assessed against or agreed to by Seller since December 31, 1995.
SECTION 3.9. Assets and Properties.
(a) SCHEDULE 3.9(a) lists (i) the Premises and (ii) all of the
material equipment leased by Seller in relation to the Business as of the date
of this Agreement.
(b) As of the date of this Agreement, Seller owns or leases (to the
extent described in SCHEDULE 3.9(a)) all of the Assets free and clear of all
Encumbrances and has valid title to (or, in the case of the Assets that are
leased, valid leasehold interests in) all of the Assets that are material to the
financial position or results of operations of the Business subject, in each
case, only to (i) statutory Encumbrances arising or incurred in the Ordinary
Course of Business with respect to which the underlying objections are not
delinquent or the validity of which is being contested in good faith by
appropriate proceedings as disclosed on SCHEDULE 3.9(b), (ii) Encumbrances
disclosed or reflected in the Latest Balance Sheet, (iii) Encumbrances for Taxes
not yet delinquent, (iv) Encumbrances which constitute valid leases or subleases
from Seller to third parties none of which leases are delinquent, (v)
Encumbrances and defects in title disclosed on SCHEDULE 3.9(b), and (vi)
Encumbrances and defects in title that are not, individually or in the
aggregate, material to the financial position or results of operations of the
Business (the types of liens described in the foregoing clauses (i) through (vi)
being referred to in this Agreement as "Pre-Closing Permitted Encumbrances").
(c) On the Closing Date, Buyer shall acquire good and marketable title
to, and all right, title and interest in, the Assets, free and clear of all
Encumbrances, except for Closing
-16-
22
Permitted Encumbrances. The Assets so acquired at the Closing shall constitute
all of the real, personal and mixed assets and property, both tangible and
intangible, which are being used by Seller in the conduct of the Business,
consistent with historical and current practices.
(d) The tangible Assets are in good operating condition and repair,
free of material defects and are suitable, adequate and fit for the uses for
which they are intended or are being used consistent with historical practice.
SECTION 3.10. Contracts.
(a) All contracts, agreements, licenses, leases, commitments,
arrangements or understandings (both written and oral) described within the
definition of the term Assets constitute "Seller Contracts."
(b) Except as set forth on SCHEDULE 3.10, Seller has not entered into
any binding agreement with respect to any Seller Contract that could adversely
affect Seller's ability to enforce its rights under such Seller Contract. Seller
has delivered, or otherwise made available, true and complete copies of all
written Seller Contracts (and all amendments and modifications thereto) to Buyer
prior to the execution of this Agreement.
(c) Each Seller Contract is in full force and effect, and constitutes
a valid and binding obligation of Seller in accordance with its terms, and, to
Seller's knowledge, is legally enforceable in accordance with its terms. Seller
is not in default under any Seller Contract and, to Seller's knowledge, there
does not exist any event that (whether with or without notice, lapse of time, or
the happening or occurrence of any other event) would result in such a default.
To Seller's knowledge, there exists no default by any other party to any Seller
Contract. Within the last year, Seller has not received any written notice from
any other party to any material Seller Contract (other than any Subscriber
Contract) pursuant to which such other party threatened cancellation or
revocation of such Seller Contract.
(d) SCHEDULE 3.10 sets forth a partial list of all notices, consents,
waivers or approvals contemplated or required by the terms of any Seller
Contract in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated by this Agreement, which list will
be supplemented by the inventory pursuant to Section 2.1(c)(i) and which list,
as supplemented, will contain all such notices, consents, waivers or approvals
except for any such notices, waivers, consents or approvals the failure of which
to receive would not result in a Material Adverse Effect.
SECTION 3.11. Litigation, Compliance with Applicable Laws and Permits.
(a) There is no outstanding Order against, nor, except as set forth on
SCHEDULE 3.11(a), is there any material litigation, proceeding, arbitration or
investigation by any Governmental Authority or other Person pending or, to the
knowledge of Seller, threatened against, Seller, its properties or businesses or
relating to the transactions contemplated in this Agreement, nor to the
knowledge of Seller is there any basis for any such action.
-17-
23
(b) The Assets and Seller's ownership, lease and use of the Assets are
not in violation of any applicable material Legal Requirement. Seller has not
received notice from any Governmental Authority or other Person of any violation
or alleged violation of any material Legal Requirement relating to the Business
or the Assets, and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand or notice has been filed or commenced or is pending or,
to the knowledge of Seller, threatened against Seller with respect to any such
violation.
(c) Except as disclosed on SCHEDULE 3.11(c), Seller possesses all
material authorizations, Permits, licenses and Orders required or necessary to
conduct the Business in the manner in which such Business is being and
historically has been conducted. Each authorization and Permit of Seller is
valid and effective and Seller is in compliance with all material terms,
conditions and requirements of such authorizations and Permits.
SECTION 3.12. Insurance. The properties and the conduct of the Business
are, in the reasonable judgment of Seller, adequately insured by financially
sound and reputable insurers.
SECTION 3.13. Pension and Employee Benefit Matters.
(a) Neither Seller nor any employee benefit plan (as defined in
Section 3(3) of ERISA) maintained by Seller or in which employees of Seller
participate (the "Plans"), is in material violation of any provision of ERISA or
the Code. No reportable event (within the meaning of Title IV of ERISA) has
occurred and is continuing with respect to any Plan and no prohibited
transaction (as defined in Section 406 of ERISA) has occurred with respect to
any Plan which would result in material liability to Seller.
(b) No material accumulated funding deficiency (as defined in Section
302 of ERISA) exists with respect to any Plan.
(c) Seller has not ever been required to contribute to any
multiemployer plan (as defined in Section 3(37) of ERISA).
SECTION 3.14. Labor and Employment. Except as described on SCHEDULE 3.14,
there are no material labor or employment controversies pending or, to the
knowledge of Seller, threatened against Seller which could reasonably be
expected to have a Material Adverse Effect. Except as disclosed on SCHEDULE
3.14, there are no collective bargaining agreements, employment agreements
between Seller and any of its Employees, or professional service agreements not
terminable at will relating to the Business or any of the Assets. Except as set
forth in Section 2.4(b)(i), the sale of the Assets and the Business to Buyer
pursuant to the terms of this Agreement will not cause Buyer to incur or suffer
any liability relating to, or obligation to pay, severance, termination or other
similar payments to any current or former employee or independent contractor of
Seller, except as disclosed on SCHEDULE 3.14.
-18-
24
SECTION 3.15. Environmental Matters. Seller is conducting and at all
times has conducted the Business, and has occupied, used and operated the
Premises and all other real property and facilities presently or previously
occupied, used or operated by Seller in material compliance with all
Environmental Obligations and so as not to give rise to any material Liability
under any Environmental Obligations or to any Material Adverse Effect.
SECTION 3.16. Intellectual Property.
(a) Within ten days of the date of this Agreement, Seller will provide
to Buyer a partial list of all Intellectual Property, which list will be
supplemented by the inventory pursuant to Section 2.1(c)(i) and which list, as
supplemented, will constitute a true, correct and complete list of all
Intellectual Property. Such list will identify Seller as either the owner, joint
owner or licensee of each item of Intellectual Property and in the cases where
Seller is a licensee, will identify the related licensors and license agreements
for such Intellectual Property. Seller either owns, owns jointly or has the
right to use as a licensee all of the Intellectual Property, free and clear of
Encumbrances, including any exclusive rights, however described, granted to
Persons other than Seller with respect to the Intellectual Property, other than
such rights that are described on SCHEDULE 3.16. All federal and foreign
trademark and service xxxx registrations owned by Seller and all applications
owned by Seller to register any trademarks or service marks on any trademark
register maintained by the United States government or any state or foreign
government are based on truthful affidavits or declarations of use or a bona
fide intention to use.
(b) Except as set forth on SCHEDULE 3.16, with respect to each item of
Intellectual Property required to be identified herein:
(i) such Intellectual Property is not subject to any
outstanding injunction, judgment, order, decree, ruling or charge;
(ii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand is pending or, to the knowledge of Seller, is
threatened which challenges the legality, validity, enforceability, use or
ownership of such piece of Intellectual Property; and
(iii) Seller has not licensed or permitted any third party to use
such piece of Intellectual Property other than in the Ordinary Course of
Business.
(c) Seller has not received notice, orally or in writing, that any
other Person claims any interest in any Intellectual Property, and to the
knowledge of Seller no such other Person has, or has made, such a claim. Seller
has the right to bring action for the infringement of all Intellectual Property.
Seller has not received any notice, charge, claim or assertion nor otherwise has
any knowledge that the Intellectual Property infringes the proprietary rights of
any third party.
(d) Seller has taken all commercially reasonable measures to protect
and maintain the rights of Seller in the Intellectual Property. All Intellectual
Property used by Seller is used with
-19-
25
the authorization of every other claimant thereto and the execution, delivery
and performance of this Agreement by Seller will not impair such use.
(e) Seller has not sent or otherwise communicated to any other Person
any notice, charge, claim or assertion of, nor brought any action for, and
Seller does not have any knowledge of, any present, impending or threatened
infringement by such other Person of any Intellectual Property, and to the
knowledge of Seller, no third party has interfered with, infringed upon,
misappropriated, disclosed or otherwise come into conflict with any Intellectual
Property.
SECTION 3.17. Brokers' Fees and Commissions. Except for Xxxxxxx Xxxxx
Barney, none of Seller or any of Seller's directors, officers, employees or
agents, has employed any investment banker, broker or finder in connection with
the transactions contemplated by this Agreement, and none of Seller or Buyer
will have any liability to any such Persons (other than Xxxxxxx Xxxxx Xxxxxx) on
account of any brokerage, finder's or similar fee payable with respect to
services rendered to Seller or any of Seller's directors, officers, employees or
agents in connection with the transactions contemplated by this Agreement.
Seller will pay and discharge any amounts owing to Xxxxxxx Xxxxx Barney as a
result of the transactions contemplated by this Agreement.
SECTION 3.18. Employees. Seller has no written employment contract with
any person with respect to the Business except any employment contracts as are
set forth on SCHEDULE 3.14. SCHEDULE 3.18 sets forth a preliminary list of all
current employees of Seller employed with respect to the Business (collectively,
the "Employees"), showing each such Person's name, position, initial employment
date, and annual remuneration (without exclusions for deduction pursuant to Code
Sections 125 or 401(k)), plus actual bonus or incentive compensation paid in
calendar year 1998, if any, which list will be finalized within ten days
following the date of this Agreement. Except as set forth on SCHEDULE 3.18 or
otherwise entered into in the Ordinary Course of Business, other than general
understandings which may exist for employment at will, no oral understandings
currently exist between any executive officer or other representative of Seller
authorized to enter into such understandings on behalf of Seller and any
Employee regarding changes in compensation, promotion or any other change in
status. Except as disclosed on SCHEDULE 3.18, as of the date of this Agreement,
other than in the Ordinary Course of Business no Employee has advised any
executive officer of Seller, and to the knowledge of Seller's executive officers
without any investigation or due diligence on their part, no Employee has
advised any manager or supervisor of Seller, orally or in writing, that he or
she intends to terminate such employment or to refuse employment by Buyer after
the Closing.
SECTION 3.19. Books and Records. Seller has maintained business records
reasonably adequate for the operation of the Business, and Seller has no
knowledge of any material deficiencies in such business records.
SECTION 3.20. Subscribers. As of January 1, 1999, the number of the
dial-up, Web-hosting and dedicated access, respectively, Subscribers that are
current customers (that is, Subscribers who paid for service the last time their
credit card was charged (with respect to those who pay by credit card) or
non-credit card Subscribers who paid for service within 31 days of
-20-
26
receipt of their most recent invoice), and the average revenue per Subscriber
with respect thereto, are not less than as shown on SCHEDULE 3.20. As of the
Closing, Seller will certify whether or not the aggregate value of the
Subscribers who are current customers (as provided in the prior sentence, and as
determined as of the Closing) is at least One Hundred Ninety Six Million Dollars
($196,000,000), using for purposes of calculation the values for such
Subscribers set forth in Section 2.3(c).
SECTION 3.21. Securities Matters.
(a) Seller is experienced in evaluating and investing in
high-technology companies such as Buyer. Seller has substantial experience in
investing in and evaluating private placement transactions of securities in
companies similar to Buyer and is capable of evaluating the risks and merits of
its investment in Buyer and has the capacity to protect its own interests.
(b) Seller is acquiring the Shares for investment for its own account
and not with a view to, or for resale in connection with, any distribution
thereof, except in compliance with applicable securities laws, and Seller has no
present intention of selling or distributing the Shares except in compliance
with applicable securities laws. Seller understands that as of the date of this
Agreement the Shares have not been registered under the Securities Act.
(c) Seller acknowledges that, because the Shares have not been
registered under the Securities Act, the Shares that Seller receives at the
Closing must be held indefinitely unless subsequently registered under the
Securities Act or an exemption from such registration is available. Seller is
aware of the provisions of Rule 144 promulgated under the Securities Act which
permits limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things, the resale
occurring not less than one year after a party has purchased and paid for the
security to be sold.
(d) Without in any way limiting the effect of the representations and
warranties of Buyer set forth in this Agreement, Seller has had an opportunity
to discuss in detail Buyer's business, management and financial affairs with
Buyer's officers and management employees and has reviewed all documents and
records of Buyer which Buyer has provided in response to Seller's request.
(e) Seller is an "accredited investor" as that term is defined in Rule
501(a) under the Securities Act. Seller has not been organized for the specific
purpose of acquiring Shares.
(f) Seller has its principal office in the State of California.
SECTION 3.22 Year 2000 Compliance. To the knowledge of Seller, without
any investigation or due diligence on its part or on the part of any of Seller's
employees or any other Person, the Seller Software accurately processes
date/time data (including calculating, comparing, and sequencing) from, into,
and between the twentieth and twenty-first centuries, and the years 1999 and
2000 and leap year calculations when either (A) used as a standalone
application, or (B) integrated into or otherwise used in conjunction with the
third party hardware,
-21-
27
software, firmware and data ("Third Party Products") with
which such Seller Software was designed or intended to operate at the time such
Seller Software was (i) developed or (ii) first provided to Seller's customers
or tested by Seller for such customers, whichever is later. Notwithstanding the
foregoing, the Seller shall not be considered to be in breach of the
representation and warranty in the immediately preceding sentence if the failure
of such Seller Software to comply with such representation and warranty is
attributable solely to (x) a failure by any Third Party Product to accurately
process date/time data (including but not limited to, calculating, comparing,
and sequencing) from, into, and between the twentieth and twenty-first
centuries, and the years 1999 and 2000 and leap year calculations; or (y) any
modification of the Seller Software by any party other than Seller (unless such
modification was made at the direction of Seller). As Buyer's sole and exclusive
remedy for breach of the representation and warranty in this Section 3.22,
Seller will (i) exercise commercially reasonable best efforts to correct any
material breach of the warranty reported to Seller on or before June 30, 2000
and (ii) provide any resulting fix to Buyer without charge.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows, in each case as of
the date of this Agreement:
SECTION 4.1. Organization and Qualification, Etc. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has requisite corporate power and authority to own, lease
and operate its properties and assets and to carry on its business as it is now
being conducted. Buyer is qualified to do business and is in good standing in
each jurisdiction in which the failure to be so qualified would result in a
material adverse effect on Buyer's business.
SECTION 4.2. Authority Relative to Agreement. Buyer has the full and
absolute right, corporate power, authority and legal capacity to execute,
deliver, perform and consummate the transactions contemplated on its part by
this Agreement and all other documents and agreements to be executed and
delivered by Buyer pursuant to this Agreement. The execution and delivery by
Buyer of this Agreement and all other documents and agreements to be executed
and delivered by Buyer pursuant to this Agreement, and the consummation by Buyer
of the transactions contemplated on its part hereby and thereby, have been duly
authorized by Buyer's board of directors. No other corporate approvals on the
part of Buyer's board of directors or shareholders are necessary to authorize
the execution and delivery of this Agreement and such other documents. Assuming
the due authorization, execution and delivery by other applicable parties, this
Agreement constitutes, and all other documents and agreements to be executed and
delivered by Buyer pursuant to this Agreement when executed and delivered will
constitute, the legal, valid, and binding obligation of, and will be enforceable
in accordance with their respective terms against, Buyer, except as such
enforcement is subject to the effect of (i) any applicable bankruptcy,
insolvency, reorganization or similar laws relating to or affecting creditors'
rights generally, and (ii) general principles of equity, including concepts of
reasonableness, good faith and fair dealing, and other similar doctrines
affecting the
-22-
28
enforceability of agreements generally (regardless of whether
considered in a proceeding in equity or law).
SECTION 4.3. Non-Contravention. The execution, delivery and performance
of this Agreement and all other documents and agreements to be executed and
delivered by Buyer pursuant to this Agreement, and the consummation of the
transactions contemplated hereby and thereby, will not (a) violate any provision
of the certificate of incorporation or bylaws of Buyer, (b) violate, with or
without the giving of notice or the lapse of time or both, or conflict with or
result in the breach or termination of any provision of, or a diminution of the
rights of Buyer under, or constitute a default under, or give any Person the
right to accelerate any obligation under, or result in the creation of any
material Encumbrance upon any properties, assets or business of Buyer, pursuant
to any indenture, mortgage, deed of trust, lien, lease, license, Permit,
agreement, instrument or other arrangement to which Buyer is a party or by which
Buyer, or any of its assets and properties, is bound or subject, or (c) violate
in any material respect any Legal Requirement to which Buyer is subject.
SECTION 4.4. Consents and Approvals. Except as described in SCHEDULE 4.4,
no filing or registration with, no notice to and no permit, authorization,
consent or approval of any Governmental Authority or any Person is necessary for
the consummation by Buyer of the transactions contemplated by this Agreement
other than (a) requirements of federal and state securities laws, (b) the
authorization of all applicable regulatory agencies necessary or desirable to
consummate the transactions contemplated by this Agreement and (c) those
consents and approvals already obtained as described on SCHEDULE 4.4.
SECTION 4.5. Brokers' Fees and Commissions. Except for ING Baring Xxxxxx
Xxxx LLC, neither Buyer nor any of Buyer's directors, officers, partners,
employees or agents, has employed any investment banker, broker or finder in
connection with the transactions contemplated by this Agreement, and none of
Buyer, Seller or ICG, or their Affiliates, will have any liability to any such
Persons (other than ING Baring Xxxxxx Xxxx LLC) on account of any brokerage,
finder's or similar fee payable with respect to services rendered to Buyer or
any of Buyer's directors, officers, partners, employees or agents in connection
with the transactions contemplated by this Agreement. Buyer will pay and
discharge any amounts owing to ING Baring Xxxxxx Xxxx LLC as a result of the
transactions contemplated by this Agreement.
SECTION 4.6. The Shares. Upon delivery to Seller at the Closing, the
Shares will be (a) duly authorized, (b) validly issued and fully paid and
nonassessable and (c) free of any Liability, Tax or other Encumbrance, except as
may be created or allowed to arise solely by Seller.
ARTICLE V
PRE-CLOSING COVENANTS
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing:
-23-
29
SECTION 5.1. General. Each of the Parties will use its commercially
reasonable efforts to take all actions necessary, proper or advisable, in order
to consummate and make effective the transactions contemplated by this Agreement
(including the satisfaction, but not the waiver, of the closing conditions set
forth in Article VII) and the other agreements contemplated by this Agreement.
SECTION 5.2. Operation and Preservation of Business. Seller will through
the Closing Date: (a) use its commercially reasonable efforts to preserve the
Business and in connection therewith maintain its existing franchises and
licenses and to preserve Seller's present relationships with customers,
suppliers, consultants, employees and any other Persons having business
relations therewith; and (b) maintain the Assets in the same working order and
condition as the Assets are in on the date of this Agreement, consistent with
how the Assets historically have been maintained in the Ordinary Course of
Business, reasonable wear and tear excepted. Except as contemplated by this
Agreement or as reasonably required to carry out its obligations hereunder,
Seller will, through the Closing Date, conduct the Business in the Ordinary
Course of Business and, in addition, will not (except to the extent that Buyer
has consented in writing thereto or that such action or inaction would not
reasonably be expected to materially affect or be binding upon any part of the
Business or the Assets): (i) grant any increase in the compensation payable or
to become payable by Seller to officers or employees of the Business other than
in the Ordinary Course of Business, or enter into any bonus, insurance, pension,
profit sharing, incentive, deferred compensation, severance pay, retirement,
hospitalization, employee benefit or other similar plan, payment or arrangement
for or with any of such officers or employees other than in the Ordinary Course
of Business; (ii) enter into any agreement in connection with the Business that
involves more than $25,000 individually or $500,000 in the aggregate that may
not be terminated on less than 31 days' notice or that may reasonably be
expected to have a Material Adverse Effect on the Business or the Assets or
enter into the Marketing and Distribution Agreement with American Automobile
Association, a draft copy of which has been furnished to Buyer; (iii) make any
capital purchases or commitments relating to the Business that exceed $50,000
individually or $200,000 in the aggregate; (iv) other than in the Ordinary
Course of Business, place, or allow to be placed, an Encumbrance on any of the
Assets; (v) sell, assign, lease or otherwise transfer or dispose of any interest
in any Asset (other than in the Ordinary Course of Business); (vi) commit any
act or omit to do any act, or engage in any activity or transaction or incur any
obligation (by conduct or otherwise), that (individually or in the aggregate)
reasonably could be expected to have a Material Adverse Effect; (vii) except for
actions taken or not taken in compliance with this Section 5.2, do or omit to do
any act (or permit such action or omission) which reasonably could be expected
to cause a material breach of any Seller Contract; or (viii) take any action or
fail to take any action that would reasonably be expected to cause any of the
representations, warranties or covenants of Seller contained herein to be untrue
or incorrect in any material respect or incapable of being performed or
satisfied on the Closing Date. Prior to the Closing Date, Seller will maintain
in full force and effect all of its existing casualty, liability, and other
insurance relating to the Business or the Assets through the Closing Date in
amounts not less than those in effect on the date hereof, except for changes in
such insurance that are made in the Ordinary Course of Business.
-24-
30
SECTION 5.3. Full Access. Seller will permit Buyer and its agents to have
full access at all reasonable times, and in a manner so as not to interfere with
the normal business operations of Seller, to all Premises, properties,
personnel, accounting books and records, contracts and documents of or
pertaining to Seller. Buyer's investigation of the financial and operating data,
Assets and other information with respect to the Business and Assets shall in no
way affect the obligations of Seller, or ICG as applicable, with respect to the
agreements, representations, warranties, covenants and indemnification
provisions set forth in this Agreement.
SECTION 5.4. Notice of Developments.
(a) Seller will give prompt written notice to Buyer of any development
which occurs after the date of this Agreement and materially affects the
Business, the Assets, or the liabilities, financial condition, operations,
results of operations, representations, warranties, covenants or disclosure
SCHEDULES of Seller, and will provide Buyer with all information (including,
without limitation, copies of all documents relating thereto) reasonably
requested by Buyer concerning any claims instituted, threatened or asserted
after the date of this Agreement against or affecting the Business or Assets at
law or in equity before or by any Governmental Authority.
(b) Promptly after Seller has knowledge thereof, Seller will, through
the Closing Date, notify Buyer in writing of the occurrence of any event, or the
failure of any event to occur, prior to the Closing that results in a breach of
any of the covenants, representations or warranties made by or on behalf of
Seller in this Agreement, but, in the event the Closing occurs and subject to
the second sentence of Section 8.5(a), such notification will not excuse
breaches of representations, warranties, covenants or agreements disclosed in
such notification.
(c) Promptly after Buyer has knowledge thereof, Buyer will, through
the Closing Date, notify Seller in writing of the occurrence of any event, or
the failure of any event to occur, prior to the Closing that results in a breach
of any of the covenants, representations or warranties made by or on behalf of
Buyer in this Agreement or any other document or agreement furnished by Buyer in
connection with or pursuant to this Agreement, but in the event the Closing
occurs and subject to the second sentence of Section 8.5(a), such notification
will not excuse breaches of representations, warranties, covenants or agreements
disclosed in such notification.
SECTION 5.5. Announcements. Except as may be required by law, no Party
will issue any press release or make any public announcement relating to the
subject matter of this Agreement without the prior written approval of the other
Party.
SECTION 5.6. Confidentiality. Each of the Parties shall keep, and shall
cause its employees, agents, attorneys, accountants and other advisors to keep,
confidential the existence, terms and conditions of this Agreement and all
communications and discussions between or among the Parties. Subject to Section
5.5, without the consent of Buyer and Seller, except as may be required by law
(including disclosure requirements under applicable securities laws), neither
Buyer, nor Seller will make any disclosure of the information described in this
Section 5.6. Nothing contained in this Agreement shall be construed to prohibit
any Party from disclosing the information described in this Section 5.6 or any
Confidential Information in
-25-
31
connection with the institution or defense of any claim pursuant to this
Agreement or other claims which may be the subject of judicial proceedings.
SECTION 5.7. Consents and Approvals.
(a) The Parties, at each of their own expense except as otherwise
provided in this Agreement, shall take all commercially reasonable measures
reasonably necessary or advisable to secure such consents, authorizations and
approvals of Governmental Authorities and of other Persons or entities with
respect to the transactions contemplated by this Agreement, and to the
performance of all other obligations of such Parties under this Agreement, as
may be required by any applicable statute or regulation of the United States or
any country, state or other jurisdiction or by any agreement of any kind
whatsoever to which Buyer or Seller is a party or by which Buyer or Seller is
bound.
(b) Buyer and Seller will (i) cooperate in the filing of all forms,
notifications, reports and information, if any, required or reasonably deemed
advisable pursuant to applicable statutes, rules, regulations or orders of any
Governmental Authority in connection with the transactions contemplated by this
Agreement and (ii) use their respective commercially reasonable efforts to cause
any applicable waiting periods thereunder to expire and any objections to the
transactions contemplated hereby to be withdrawn before the Closing.
(c) In addition to the obligations set forth in Section 5.7(b), as
promptly as practicable, and in any event no later than 15 days following the
execution of this Agreement, Seller and Buyer will complete any filing that may
be required pursuant to Xxxx-Xxxxx-Xxxxxx, or shall mutually agree that no such
filing is required. Seller and Buyer will diligently take (or fully cooperate in
the taking of) all actions, and provide any additional information, required or
reasonably requested in order to comply with the requirements of
Xxxx-Xxxxx-Xxxxxx. Buyer and Seller will each pay one-half of the
Xxxx-Xxxxx-Xxxxxx filing fee.
SECTION 5.8. Values of Assets. As soon as practicable after the Closing
(but not later than 75 days after the Closing Date, Buyer will prepare and
submit to Seller for its approval, which approval will not be unreasonably
withheld, a schedule allocating the Purchase Price among the Assets. For
purposes of this allocation, the Purchase Price will be deemed to include the
amount of the Assumed Liabilities. Seller will be required to approve such
allocation so long as it is reasonable. Seller will be deemed to have approved
such allocation unless it gives written notice of objection to Buyer within ten
days after receipt of the schedule setting forth such allocation. If such notice
of objection is given, within five days after such notice is given, the dispute
will be submitted to Xxxxxx Xxxxxxxx LLP, whose determination will be
conclusive. The fees and expenses payable to such firm will be borne equally by
Seller and Buyer. When the allocation of the Purchase Price is finally
determined, the Parties will report the allocation of the Purchase Price
according to that determination for all applicable income, sales, use and
transaction Tax purposes, and Seller and Buyer will file all required Tax forms
with the applicable Taxing authorities consistent with such determination.
-26-
32
SECTION 5.9. Name. As of the Closing, Seller will change its corporate
name to a name dissimilar to its current name, which name will not include the
word "NETCOM," and thereafter will not use the word "NETCOM" in its corporate
name. As of and after the Closing, neither Seller nor its Affiliates will use
the tradename "NETCOM" nor use such name in any service xxxx, and any pending
applications for the use of such name will be abandoned.
SECTION 5.10. Resale Prospectus. Provided that Seller has provided or
made available to Buyer all information relating to Seller and reasonably
required by Buyer for inclusion therein, Buyer will prepare and file with the
SEC as promptly as practicable after the date of this Agreement a resale
registration statement on Form S-3 or other eligible Form (the "Resale
Prospectus"), in form and substance reasonably satisfactory to Seller, that
provides for the sale by Seller of the Shares after the Closing. Buyer will
provide to Seller for its review a draft copy of the Resale Prospectus prior to
its filing with the SEC. Buyer will use its commercially reasonable best efforts
to cause the Resale Prospectus to become effective with the SEC as of the
Closing or, if such effectiveness does not occur or is not permitted under
applicable federal securities laws, as soon as possible after the Closing.
ARTICLE VI
POST-CLOSING COVENANTS
The parties agree as follows with respect to the period following the
Closing.
SECTION 6.1. Further Assurances. In case at any time after the Closing
any further action is necessary or desirable to carry out the purposes of this
Agreement, Seller, on the one hand, and Buyer, on the other hand, will take such
further action (including the execution and delivery of such further instruments
and documents) as the other party reasonably may request, all at the sole cost
and expense of the requesting Party (unless the requesting Party is entitled to
indemnification therefor under Article VIII).
SECTION 6.2. Cooperation. In the event and for so long as Seller, on the
one hand, or Buyer, on the other hand, actively is contesting or defending
against any action, suit, proceeding, hearing, investigation, charge, complaint,
claim or demand in connection with (a) any transactions contemplated by this
Agreement or (b) any fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act or
transaction on or prior to the Closing Date involving any of the Assets or the
Business, the other Party will cooperate with such party and its counsel in the
contest or defense, make available their personnel (except to the extent that
making their personnel available unreasonably affects the ability of such
personnel to perform their normal duties), and provide such testimony and access
to their books and records as shall be reasonably necessary in connection with
the contest or defense, all at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under Article VIII). The Parties also will cooperate
with each other in all reasonable respects to provide for the transition of the
operation of the Business to Buyer and the retention and operation of the
Network by Seller after the Closing, including reasonable cooperation regarding
access to accounting systems and other items.
-27-
33
SECTION 6.3. Confidentiality. Buyer will treat and hold as confidential
all Confidential Information (except to the extent that the same relates to the
Assets or the Business) concerning Seller and its Affiliates, refrain from using
any such Confidential Information (except to the extent that the same relates to
the Assets or the Business) and deliver promptly to Seller or destroy, at the
request of Seller, all such Confidential Information (except to the extent that
the same relates to the Assets or the Business) in its possession. Seller will
treat and hold as confidential all Confidential Information concerning Buyer and
the Business or Assets, refrain from using any such Confidential Information and
deliver promptly to Buyer or destroy, at the request and option of Buyer, all of
such Confidential Information in its possession.
SECTION 6.4. Resale Prospectus and Listing of Shares. In the event the
Resale Prospectus is not effective with the SEC as of the Closing, Buyer will
use its commercially reasonable best efforts to cause the Resale Prospectus to
become effective with the SEC as soon as possible after the Closing and to
maintain the effectiveness of the Resale Prospectus in accordance with the terms
thereof. Prior to or as of the effectiveness of the Resale Prospectus, the
Shares will be listed for trading on the NASDAQ.
SECTION 6.5. Restriction on Distribution. During the period beginning on
the Closing Date and ending 18 months after the Closing Date, ICG will not
distribute to its shareholder, ICG Communications, Inc., or any Affiliate of ICG
Communications, Inc. that is not a subsidiary of or otherwise controlled by ICG,
any amounts attributable to the Purchase Price that it has received from Seller
after the Closing; provided that if at the end of such 18 month period Buyer has
pending claims for indemnification against Seller and ICG under Article VIII,
the restriction set forth in this Section 6.5 will continue to apply to the
extent of the amount of such pending claims until such claims are finally
resolved. ICG will not sell, assign or transfer any of its assets or properties
in any transaction in which ICG does not receive consideration of a reasonably
equivalent value for such assets or properties. ICG will not incur any liability
for borrowed money without receiving funds corresponding to such borrowing.
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.1. Conditions to Obligation of Buyer. The obligation of Buyer
to consummate the transactions contemplated by this Agreement is subject to
satisfaction of the following conditions:
(a) Seller's representations and warranties (other than the
representations and warranties set forth in Section 3.20), to the extent
qualified by a reference to materiality, shall be correct and complete, and to
the extent not so qualified, shall be correct and complete in all material
respects at and as of the Closing Date and the Closing, and there shall have
occurred no uncured breach of Seller's representations and warranties which,
individually or in the aggregate, taking into account all such breaches, has
resulted in any or may reasonably be expected to result in any Material Adverse
Effect;
-28-
34
(b) Seller shall have performed and complied in all material respects
with all of its covenants hereunder required to be performed or complied with
through the Closing;
(c) Seller shall have given all notices and procured all of the
material third-party consents, authorizations and approvals (including all
consents, authorizations and approvals by Governmental Authorities and the
expiration of the Xxxx-Xxxxx-Xxxxxx waiting period) required to consummate the
transactions contemplated by this Agreement, all in form and substance
reasonably satisfactory to Buyer;
(d) no action, suit or proceeding shall be pending or threatened,
other than an action, suit or proceeding instituted by the Buyer, that involves
any Governmental Authority as a party and wherein an unfavorable Order would,
and no injunction shall be in effect that would, (i) prevent consummation of any
of the transactions contemplated by this Agreement, (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation or (iii) materially affect adversely the right of Buyer to use or
operate the Assets in connection with the Business, and no such Order shall be
in effect;
(e) there shall have occurred no event, fact or circumstance,
including any failure of Buyer to obtain any required consent with respect to
the transfer of any Asset to Seller under this Agreement, that has had or could
reasonably be expected to have a material adverse effect on Buyer's right to
conduct the Business substantially as such Business was being conducted on
September 30, 1998;
(f) there shall have occurred after September 30, 1998, no Material
Adverse Effect; provided that if the number of Subscribers as of the Closing is
less than that set forth in SCHEDULE 3.20, that difference in the number of
Subscribers will not be considered to be a Material Adverse Effect;
(g) Seller shall have delivered to Buyer (i) a certificate to the
effect that each of the conditions specified above in Sections 7.1(a) through
(f) is satisfied in all respects and (ii) good standing certificates for Seller
and ICG, dated within ten days of the Closing, from the Secretary of State of
Seller's and ICG's jurisdiction of incorporation and each other jurisdiction in
which Seller is qualified or authorized to do business as a foreign corporation;
(h) Seller shall have made the certification set forth in the last
sentence of Section 3.20; and
(i) Seller shall have delivered to Buyer the Seller Documents and such
other instruments, certificates and documents as are reasonably requested by
Buyer in order to consummate the transactions contemplated by this Agreement,
all in form and substance reasonably satisfactory to Buyer.
Buyer in its sole discretion may waive any condition specified in this
Section 7.1 at or prior to the Closing.
-29-
35
SECTION 7.2. Conditions to Obligation of Seller. The obligation of Seller
to consummate the transactions contemplated by this Agreement is subject to
satisfaction of the following conditions:
(a) Buyer's representations and warranties, to the extent qualified by
a reference to materiality, shall be correct and complete, and to the extent not
so qualified, shall be correct and complete in all material respects at and as
of the Closing Date and the Closing;
(b) Buyer shall have performed and complied in all material respects
with all of its covenants hereunder required to be performed or complied with
through the Closing;
(c) Buyer shall have delivered to Seller a certificate to the effect
that each of the conditions specified above in Sections 7.2(a) and (b) is
satisfied in all respects;
(d) no action, suit or proceeding shall be pending or threatened,
other than an action, suit or proceeding instituted by Seller, that involves any
Governmental Authority as a party and wherein an unfavorable Order would, and no
injunction shall be in effect that would, (i) prevent consummation of any of the
transactions contemplated by this Agreement or (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, and no such Order shall be in effect;
(e) Buyer shall have paid the cash portion of the Purchase Price
pursuant to Sections 2.2 and 2.3, assumed the Assumed Liabilities and delivered
certificates evidencing the Shares, and the Shares shall be delivered to Seller
free and clear of any Liability, Tax or other Encumbrance, other than those
created or allowed to arise solely by Seller; and
(f) Buyer shall have delivered to Seller the Buyer Documents and such
other documents as are reasonably requested by Seller in order to consummate the
transactions contemplated by this Agreement, all in form and substance
reasonably satisfactory to Seller.
Seller in its sole discretion may waive any condition specified in this
Section 7.2 at or prior to the Closing.
ARTICLE VIII
REMEDIES FOR BREACHES OF THIS AGREEMENT
SECTION 8.1. Indemnification Provisions for Benefit of Buyer. If this
Agreement is not terminated prior to the Closing in accordance with Article IX,
and Seller breaches (a) any of the representations or warranties of Seller
contained herein or in the closing certificate delivered by Seller pursuant to
Section 7.1(g), and Buyer gives notice of a claim for indemnification against
Seller within the applicable Survival Period, or (b) any covenants or agreements
of Seller contained herein or in any Seller Document and Buyer gives notice
thereof to Seller, then, subject to Section 8.6, Seller and ICG, jointly and
severally, will indemnify, defend and hold harmless Buyer from and against any
Adverse Consequences Buyer may suffer arising out of or resulting from any of
the foregoing regardless of whether the Adverse Consequences are suffered
-30-
36
during or after any applicable Survival Period. Subject to Section 8.6, Seller
and ICG, jointly and severally, also will indemnify, defend and hold harmless
Buyer from and against any Adverse Consequences Buyer may suffer, whether
suffered during or after the Survival Period, arising out of or resulting from
(c) any Liability against Buyer or any of the Assets by virtue of the
application of any bulk sales or other similar laws to the sale and transfer of
the Assets to Buyer, or failure of Seller to comply with any applicable bulk
sales laws or (d) any Liability of Seller other than an Assumed Liability, (e)
any Liability of Seller arising from or relating to the matters described in
Schedule 3.11(a) or (f) except as expressly set forth in this Agreement, any
Liability relating to the operation of the Business by Seller prior to the
Closing. In determining the amount of Adverse Consequences suffered by Buyer for
purposes of this Section 8.1 as a result of a breach by Seller described in
Section 8.1(a) or Section 8.1(b) above of any representation, warranty, covenant
or agreement of Seller qualified by the words "material," "materiality," "in all
material respects," "knowledge," "to the knowledge of," or words of similar
import, or by any phrase using any such terms or words, such Adverse
Consequences will be deemed to include only amounts that are material or arising
out of matters of which Seller or ICG had knowledge, as the case may be. If any
dispute arises concerning whether any indemnification is owing which cannot be
resolved by negotiation among the Parties within 30 days of notice of claim for
indemnification from the party claiming indemnification to the Party against
whom such claim is asserted, the dispute will be resolved by arbitration
pursuant to this Agreement.
SECTION 8.2. Indemnification Provisions for Benefit of Seller. If this
Agreement is not terminated prior to the Closing in accordance with Article IX,
and Buyer breaches (a) any of its representations or warranties contained herein
or in the closing certificate delivered by Buyer pursuant to Section 7.2(c), and
Seller gives notice of a claim for indemnification against Buyer within the
applicable Survival Period, or (b) any covenants or agreements of Buyer
contained herein or in any Buyer Document and Seller gives notice thereof to
Buyer, then, subject to Section 8.6(d), Buyer will indemnify, defend and hold
harmless Seller from and against any Adverse Consequences Seller may suffer
arising out of or resulting from any of the foregoing regardless of whether the
Adverse Consequences are suffered during or after the applicable Survival
Period. In determining the amount of Adverse Consequences suffered by Seller for
purposes of this Section 8.2 as a result of a breach by Buyer described in
Sections 8.2(a) and 8.2(b) above of any representation, warranty, covenant or
agreement of Buyer qualified by the words "material," "materiality," "in all
material respects," "knowledge," "to the knowledge of," or words of similar
import, or by any phrase using any such terms or words, such Adverse
Consequences will be deemed to include only amounts that are material or arising
out of matters of which Buyer had knowledge, as the case may be. Subject to
Section 8.6(d), Buyer also will indemnify, defend and hold harmless Seller from
all Adverse Consequences Seller may suffer, whether suffered during or after the
Survival Period, (c) as a result of Buyer's failure to comply with any
applicable requirement under the WARN Act as required under Section 2.4(b)(i) or
(d) attributable to or arising out of the Assumed Liabilities, or from the
operation of the Business after the Closing. If any dispute arises concerning
whether any indemnification is owing which cannot be resolved by negotiation
among the Parties within 30 days of notice of claim for indemnification from the
Party claiming indemnification to the party against whom such claim is asserted,
the dispute will be resolved by arbitration pursuant to this Agreement.
-31-
37
SECTION 8.3. Matters Involving Third Parties.
(a) If any Person not a party to this Agreement (including, without
limitation, any Governmental Authority) notifies Seller, on the one hand, or
Buyer, on the other hand, (the "Indemnified Party") with respect to any matter
(a "Third Party Claim") which may give rise to a claim for indemnification
against the Party (or in the case of Seller, Seller and ICG) (the "Indemnifying
Party"), then the Indemnified Party will notify the Indemnifying Party thereof
in writing within 15 days after receiving such notice. No delay on the part of
the Indemnified Party in notifying the Indemnifying Party will relieve the
Indemnifying Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is prejudiced by such delay.
(b) The Indemnifying Party will have the right, at its sole cost and
expense, to defend the Indemnified Party against the Third Party Claim with
counsel of its choice satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within ten days
after the Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences for which the Indemnified Party is entitled
to indemnification, (ii) the Indemnifying Party provides the Indemnified Party
with evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against the Third
Party Claim and fulfill its indemnification obligations hereunder, (iii) the
Third Party Claim involves only money damages and does not seek an injunction or
other equitable relief, (iv) settlement of, or an adverse judgment with respect
to, the Third Party Claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice materially adverse
to the continuing business interests of the Indemnified Party, and (v) the
Indemnifying Party conducts the defense of the Third Party Claim actively and
diligently. At any time that the Indemnifying Party is entitled to conduct the
defense of the Third Party Claim in accordance with this Section 8.3(b), the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim. In the event any of the
conditions in this Section 8.3(b) is or becomes unsatisfied, the Indemnified
Party may defend against the Third Party Claim so long as the Indemnified Party
conducts the defense of the Third Party Claim actively and diligently.
(c) At any time that a party is defending a Third Party Claim, neither
party will consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without obtaining (A) an entry of
dismissal, with prejudice, or an entry of dismissal, without prejudice, and a
covenant not to xxx (if legal action is instituted), (B) the full and
unconditional release of the other party from all liability in respect of such
Third Party Claim and (C) the prior written consent of the other party (not to
be withheld unreasonably).
(d) If the Indemnified Party has the right to and is in fact defending
the Third Party Claim, the Indemnifying Party will reimburse the Indemnified
Party promptly and periodically for the costs of defending against the Third
Party Claim (including reasonable attorneys' fees and
-32-
38
expenses), and the Indemnifying Party will remain responsible for any Adverse
Consequences for which the Indemnified Party is entitled to indemnification.
SECTION 8.4. Survival. The representations and warranties made in this
Agreement or in any other agreement referred to in this Agreement, or in any
certificate or other document delivered pursuant to this Agreement or in
connection with this Agreement will survive the Closing Date for a period of 18
months from the Closing Date, except that the representations and warranties of
Seller in Sections 3.8 and 3.13 will survive until the expiration of all
applicable statutes of limitations with respect to any such claims that could be
brought regarding such matters and the representations and warranties set forth
in Section 3.15 will survive the Closing Date for a period of five years from
the Closing Date. Neither Buyer, Seller nor ICG will have any obligation to
indemnify any Person pursuant to this Agreement with respect to any breach of a
representation or warranty after the applicable period set forth above. The
covenants and agreements of Seller and Buyer made in Article VI, and the
provisions of Articles VIII and X will survive the Closing Date indefinitely,
except as otherwise specifically provided herein.
SECTION 8.5. Limitations.
(a) Subject solely to Section 9.2, the indemnification and other
provisions of this Article VIII will constitute the exclusive remedy by Seller,
on the one hand, and Buyer, on the other hand, against the other arising by
virtue of a breach of any agreement, representation, warranty, or covenant under
this Agreement. Notwithstanding anything to the contrary in this Agreement,
other than liability for specific performance under Section 9.2, Seller and ICG
will have no liability to Buyer, and Buyer will have no liability to Seller or
ICG, for any Adverse Consequences or other amounts in the event this Agreement
is terminated prior to the Closing in accordance with Article IX.
(b) Notwithstanding any provision in this Agreement to the contrary,
in no event will Seller or ICG, on the one hand, or Buyer, on the other hand, be
liable to the other for amounts attributable to lost profits, or consequential,
incidental, speculative or punitive damages (except to the extent such items are
payable to a Person not a Party to this Agreement).
SECTION 8.6. Basket and Ceiling.
(a) Buyer will not be entitled to indemnification from Seller and ICG
under Section 8.1 or Section 8.3 unless and until the aggregate amount of
Adverse Consequences that Buyer would otherwise be entitled to assert under
either Section 8.1 or Section 8.3 exceeds One Million Dollars ($1,000,000) (the
"Basket Amount"). When the aggregate amount of such Adverse Consequences exceeds
the Basket Amount, Buyer will be entitled to indemnification under Section 8.1
or Section 8.3, as applicable, for all such Adverse Consequences and not just
those in excess of the Basket Amount.
(b) Subject to Section 8.6(a), Seller and ICG will be required to
indemnify Buyer under this Article VIII for all Adverse Consequences suffered as
a result of the breach of any of the representations, warranties or covenants
set forth in Article III or elsewhere in this
-33-
39
Agreement, other than the representations, warranties or covenants set forth in
any of Sections 3.8, 3.13 and 3.15 and the indemnification obligation set forth
in Section 8.1(e), only in an amount, in the aggregate for all or any of such
breaches, not in excess of 75 percent of the Purchase Price.
(c) Subject to Section 8.6(a), Seller and ICG will be required to
indemnify Buyer under this Article VIII for all Adverse Consequences suffered as
a result of one or more breaches of the representations and warranties set forth
in Sections 3.8, 3.13 and 3.15 and the indemnification obligation set forth in
Section 8.1(e), only in an amount, in the aggregate for all or any of such
breaches, not in excess of the Purchase Price.
(d) Buyer will be required to indemnify Seller under this Article VIII
for all Adverse Consequences suffered as a result of one or more breaches of the
representations, warranties or covenants set forth in Article IV or elsewhere in
00000this Agreement in an amount not in excess of the Purchase Price.
ARTICLE IX
TERMINATION
SECTION 9.1. Termination of Agreement. The parties may terminate this
Agreement as provided in this Section 9.1:
(a) Buyer and Seller may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(b) Buyer may terminate this Agreement by giving written notice to
Seller at any time prior to the Closing (i) in the event Seller has breached any
agreement, representation, warranty or covenant contained in this Agreement and
such breach, individually or in the aggregate taking into account all such
breaches, has remained uncured and has resulted in, or reasonably may be
expected to result in, a Material Adverse Effect, Buyer has notified Seller of
the breach, and the breach has not been cured within 30 days after the notice of
breach (unless the representation, warranty or covenant failure results
primarily from Buyer breaching any agreement contained in this Agreement in any
material way); or (ii) if the Closing has not occurred on or before 180 days
following the date of this Agreement becase of the failure of any condition
precedent to Buyer's obligations to consummate the Closing; or
(c) Seller may terminate this Agreement by giving written notice to
Buyer at any time prior to the Closing (i) if Buyer has materially breached any
agreement, representation, warranty or covenant contained in this Agreement,
Seller has notified Buyer of the breach, and the breach has not been cured
within 30 days after the notice of breach (unless the failure results primarily
from Seller or ICG breaching any agreement, representation, warranty or covenant
contained in this Agreement in any material way) or (ii) if the Closing has not
occurred on or before 180 days following the date of this Agreement because of
the failure of any condition precedent to Seller's or ICG's obligations to
consummate the Closing.
-34-
40
(d) Either Buyer or Seller may terminate this Agreement if as of the
Closing the aggregate value of the Subscribers who are current customers (as
determined under Section 3.20 and using the values for such Subscribers set
forth in Section 2.3(c)), is less than One Hundred Ninety-Six Million Dollars
($196,000,000).
SECTION 9.2. Effect of Termination. Upon the termination of this
Agreement by a Party pursuant to Section 9.1(b)(i) or (c)(i), notwithstanding
such termination, the terminating party will have as its sole additional remedy
the equitable remedy of specific performance, and in that regard each Party
agrees that the other Party could not be adequately compensated by its remedies
at law.
SECTION 9.3. Confidentiality. If this Agreement is terminated, each Party
will treat and hold as confidential all Confidential Information concerning the
other Party which it acquired from such other Party in connection with this
Agreement and the transactions contemplated by this Agreement, and upon the
request of Seller, on the one hand, or Buyer, on the other hand, as applicable,
Seller and Buyer will return to the other all such Confidential Information
within its possession.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. No Third-Party Beneficiaries. This Agreement will not
confer any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
SECTION 10.2. Entire Agreement. This Agreement (including the Schedules
and documents referred to herein) constitutes the entire agreement among the
parties and supersedes any prior understandings, agreements or representations
by or among the parties, written or oral, to the extent they relate in any way
to the subject matter hereof; provided that the Confidentiality Agreement dated
September 9, 1998 between ICG Communications, Inc. and Buyer will survive the
execution of this Agreement in accordance with its terms.
SECTION 10.3. Succession and Assignment. This Agreement will be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns. No Party may assign this Agreement or any of its rights,
interests or obligations hereunder without the prior written approval of the
other Party; provided, however, that Buyer may assign to an Affiliate, by prior
written notice to Seller as permitted by law, its rights and obligations under
this Agreement, but not its obligation to pay the Purchase Price.
SECTION 10.4. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original and all of which
together shall be deemed to be one and the same instrument. The execution of a
counterpart of the signature page to this Agreement will be deemed the execution
of a counterpart of this Agreement. The delivery of this Agreement may be made
by facsimile, and facsimile signatures shall be treated as original signatures
for all applicable purposes.
-35-
41
SECTION 10.5. Headings, Terms. The section headings contained in this
Agreement are inserted for convenience only and will not affect in any way the
meaning or interpretation of this Agreement. Terms used with initial capital
letters will have the meanings specified, applicable to both singular and plural
forms, for all purposes of this Agreement. All pronouns (and any variation) will
be deemed to refer to the masculine, feminine or neuter, as the identity of the
Person may require. The singular or plural includes the other, as the context
requires or permits. The word include (and any variation) is used in an
illustrative sense rather than a limiting sense. The word day means a calendar
day.
SECTION 10.6. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if it is sent by
registered or certified mail, return receipt requested, postage prepaid, or by
courier, telecopy or facsimile, and addressed to the intended recipient as set
forth below:
If to Seller or ICG:
c/o ICG Services, Inc.
000 Xxxxxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: H. Xxx Xxxxxx, Esq.
Executive Vice President, Secretary
and General Counsel
Telecopy: (000) 000-0000
If to Buyer:
MindSpring Enterprises, Inc.
0000 X. Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Mr. Xxxxxxx Xxxxxx
Chairman and Chief Executive Officer
Telecopy: (000) 000-0000
Notices will be deemed given seven days after mailing if sent by certified mail,
when delivered if sent by courier, and upon receipt of confirmation by person or
machine if sent by telecopy or facsimile transmission. Any party may change the
address to which notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other parties notice in the manner
herein set forth.
SECTION 10.7. Governing Law. This Agreement will be governed by and
construed in accordance with the domestic laws of the State of Colorado without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Colorado or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Colorado.
-36-
42
SECTION 10.8. Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same is in writing and signed by Buyer,
Seller and ICG. No waiver by any party of any default, misrepresentation or
breach of warranty or covenant hereunder, whether intentional or not, will be
deemed to extend to any prior or subsequent default, misrepresentation or breach
of warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent such occurrence, and no waiver will be
effective unless set forth in writing and signed by the party against whom such
waiver is asserted.
SECTION 10.9. Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction will not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
SECTION 10.10. Expenses. Except as otherwise provided in this Agreement,
(a) Buyer will bear its own costs and expenses incurred either before or after
the date of this Agreement in connection with this Agreement or the transactions
contemplated by this Agreement, and (b) Seller will bear its own costs and
expenses incurred by Seller either before or after the date of this Agreement in
connection with this Agreement or the transactions contemplated by this
Agreement.
SECTION 10.11. Arbitration. Any disputes arising under or in connection
with this Agreement, including, without limitation, those involving claims for
specific performance or other equitable relief, will be submitted to binding
arbitration under the Commercial Arbitration Rules of the American Arbitration
Association under the authority of federal and state arbitration statutes, and
will not be the subject of litigation in any forum. EACH PARTY, BY SIGNING THIS
AGREEMENT, VOLUNTARILY, KNOWINGLY AND INTELLIGENTLY WAIVES ANY RIGHTS SUCH PARTY
MAY OTHERWISE HAVE TO SEEK REMEDIES IN COURT OR OTHER FORUMS, INCLUDING THE
RIGHT TO JURY TRIAL. The arbitration will be conducted only in Denver, Colorado,
before three arbitrators, one selected by Buyer, one selected by Seller and the
third selected by the two aforementioned arbitrators, or if they cannot agree
within 30 days of their selection, by the American Arbitration Association. The
arbitrators will have full authority to order specific performance and award
damages and other relief available under this Agreement or applicable law, but
shall have no authority to add to, detract from, change or amend the terms of
this Agreement or existing law. All arbitration proceedings, including
settlements and awards, will be confidential. The decision of the arbitrators
will be final and binding, and judgment on the award by the arbitrators may be
entered in any court of competent jurisdiction. THIS SUBMISSION AND AGREEMENT TO
ARBITRATE WILL BE SPECIFICALLY ENFORCEABLE. The arbitrators will have no power
to award punitive or exemplary damages, to ignore or vary the terms of this
Agreement, and will be bound to apply controlling law. The Party who prevails on
entry of the award of judgment will be entitled to his or its costs and
expenses, including reasonable attorney's fees incurred in connection with the
arbitration. A judgment upon the award may be entered in any court having
jurisdiction.
-37-
43
SECTION 10.12. Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement will be construed as
if drafted jointly by the parties and no presumption or burden of proof will
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. The parties intend that each representation,
warranty and covenant contained herein will have independent significance. If
any party breaches any representation, warranty or covenant contained herein in
any respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) which the party has not breached will not detract from or
mitigate the fact that the party is in breach of the first representation,
warranty or covenant.
SECTION 10.13. Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
SECTION 10.14. Representations as to Knowledge. Except as otherwise
provided in this Agreement, the representations and warranties contained in
Article III and Article IV will, in each and every case where a statement to the
"knowledge" is required on behalf of any Party to this Agreement, be deemed to
require that such statement be in good faith after reasonable investigation.
[SIGNATURE PAGE FOLLOWS]
-38-
44
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
BUYER:
MINDSPRING ENTERPRISES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxx
-----------------------------
Title: CEO
----------------------------
SELLER:
NETCOM ON-LINE COMMUNICATION
SERVICES, INC.
By: /s/ Xxx Xxxxxx
-------------------------------
Name: Xxx Xxxxxx
-----------------------------
Title: Executive Vice President
----------------------------
ACKNOWLEDGMENT OF ICG SERVICES, INC. FOR THE ASSET PURCHASE AGREEMENT BY AND
BETWEEN MINDSPRING ENTERPRISES, INC. AND NETCOM ON-LINE COMMUNICATION
SERVICES, INC. DATED AS OF JANUARY 5, 1999.
ICG Services, Inc. ("ICG") acknowledges and agrees that it will honor the
Agreement as it applies to ICG and perform the obligations set forth thereunder
as they apply to ICG.
ICG SERVICES, INC.
By: /s/ Xxx Xxxxxx
-------------------------------
Name: Xxx Xxxxxx
-----------------------------
Title: Executive Vice President
----------------------------
- 39 -
