Exhibit 2.8
ASSET AND STOCK PURCHASE AGREEMENT
Agreement made as of June 14, 1999 by and between DURO Communications,
Inc., a Delaware corporation ("Buyer"), MetroLink Internet Services, Inc. a
Florida corporation ("Seller"), and Xxxxx Xxxxxx, Jr. and Xxxxxx X. Xxxxxxxxxx
(collectively the "Principal Shareholders"), as the sole shareholders of the
Seller and MetroLink Internet Services of Port St. Lucie, Inc., a Florida
corporation ("Port St. Lucie").
WHEREAS, subject to the terms and conditions hereof, Seller desires to
sell, transfer and assign to Buyer, and Buyer desires to purchase from Seller,
all of the properties, rights and assets used or useful in connection with
Seller's Internet service business (the "Business"), and
WHEREAS, subject to the terms and conditions hereof, the Principal
Shareholders desire to sell, transfer, assign and deliver to Buyer, and Buyer
desires to purchase from the Principal Shareholders, all of the outstanding
capital stock, shares or other equity ownership interest in Port St. Lucie (the
"Capital Stock").
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
SECTION 1. PURCHASE AND SALE OF ASSETS AND STOCK.
1.1 Sale of Assets. Upon the terms and subject to the conditions set forth
in this Agreement, and the performance by the parties hereto of their respective
obligations hereunder, Seller agrees to sell, assign, transfer and deliver to
Buyer, and Buyer agrees to purchase from Seller at the First Closing (as defined
in Section 1.4 below), all of Seller's right, title and interest in and to all
of the properties, assets and business of the Business of every kind and
description, tangible and intangible, real, personal or mixed, and wherever
located, but excluding the Excluded Assets (as defined in Section 1.2 below),
including, without limitation, the following:
(a) Equipment. All free standing kiosks, servers, routers, modems,
computers, electronic devices, test equipment and all other fixed assets,
equipment, furniture, fixtures, leasehold improvements, parts, accessories,
inventory, office materials, software, supplies and other tangible personal
property of every kind and description owned by Seller and used or held for use
in connection with the Business, all as set forth on Schedule 1.1(a) attached
hereto (collectively, "Equipment");
(b) Contracts. Subject to Buyer's obligations to indemnify Seller,
all of the rights of Seller under and interest of Seller in and to all contracts
relating to the Business (other than the Excluded Contracts (as defined in
Section 1.2(b) below)), including, without limitation, original contracts for
the provision of telecommunications services, Internet connectivity, subscriber
services, corporate subscriber services, dedicated subscriber services,
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web-hosting, web-domain, dial-up services, web-development and Internet
commerce, all leases with respect to real property, if any, and all co-location
agreements, a true, correct and complete list of which contracts is attached
hereto as Schedule 1.1(b) (collectively, the "Contracts"). All rights of Seller
in the Contracts accruing prior to the First Closing Date (as defined in Section
1.4 below) shall be retained by and be the property of Seller and all payments
becoming due under the Contracts shall be prorated based upon the First Closing
Date with all payments becoming due thereafter being the obligation and
liability of Buyer;
(c) Intellectual Property. All of Seller's Intellectual Property (as
defined in Section 2.20), as set forth on Schedule 1.1(c) attached hereto;
(d) Licenses and Authorizations. All rights associated with the
licenses, licensing agreements, permits, easements, registrations, domains, IP
addresses and authorizations issued or granted to Seller by any governmental
authority with respect to the operation of the Business, including, without
limitation, those licenses and authorizations listed on Schedule 1.1(d) attached
hereto, and all applications therefor, together with any renewals, extensions,
or modifications thereof and additions thereto;
(e) Current Assets; Accounts Receivable. All current assets of
Seller except cash (the "Current Assets"), including security deposits, prepaid
expenses, and all accounts receivable incurred in the ordinary course of
business and included on Seller's balance sheet as of the First Closing Date, as
determined in accordance with generally accepted accounting principles ("GAAP"),
consistently applied; a complete list of such Current Assets and the values
attributable thereto as of the First Closing Date is attached hereto as Schedule
1.1(e) ("Current Assets");
(f) Goodwill. All of the goodwill of Seller in, and the going
concern value of, the Business, and all of the business and customer lists,
proprietary information, and trade secrets related to the Business; and
(g) Records. All of Seller's customer logs, location files and
records and other business files and records relating to the Business, provided,
however, that Seller shall retain all of its financial, accounting and employee
records relating to the Business, subject to Buyer's right to obtain copies of
the same as necessary for the operation of the Business following the First
Closing.
The assets, properties and business of Seller being sold to and purchased
by Buyer under this Section 1.1 are referred to herein collectively as the
"Assets."
1.2 Excluded Assets. There shall be excluded from the Assets and retained
by Seller, to the extent in existence on the First Closing Date, the following
assets (the "Excluded Assets"):
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(a) Other Assets. All other assets of Seller which are not used or
held for use in connection with the Business or otherwise necessary to the
operation of the Business now or after the First Closing Date and which are set
forth on Schedule 1.2(a) attached hereto;
(b) Excluded Contracts. All of Seller's right, title and interest
in, to and under the Contracts listed on Schedule 1.2(b) attached hereto (the
"Excluded Contracts");
(c) Insurance. All of Seller's insurance contracts and all insurance
proceeds of settlement and insurance claims made by Seller on or before the
First Closing Date;
(d) Tax Items. All claims, rights and interest in and to any refunds
for federal, state or local Taxes (as defined in Section 2.4(a) below) for
periods prior to the First Closing Date;
(e) Corporate Records. All of Seller's corporate and other
organizational records; and
(f) Bank Accounts. All of Seller's bank accounts.
(g) Cash. All of Seller's cash on hand as of the First Closing Date.
(h) Reimbursements. All reimbursements, credits or payments due to
Seller under the Contracts which became due and owing prior to the First Closing
Date.
1.3 Seller's Liabilities; Equipment Lease Liabilities; Employees.
(a) Seller's Liabilities. It is expressly understood that, except
for any liabilities or obligations arising under the Contracts after the First
Closing Date, Buyer shall not assume, pay or be liable for any liability or
obligation of Seller of any kind or nature at any time existing or asserted,
whether, known, unknown, fixed, contingent or otherwise, and including, without
limitation, any liability or obligation relating to, resulting from or arising
out of (i) the Excluded Assets, including, without limitation, the Excluded
Contracts, (ii) the employees of the Business, including, without limitation,
any obligation to provide any amounts due to the employees under any pension,
profit sharing or similar plan, any bonus or other compensation plan, or related
to vacation or other similar employee benefits, or arising as a result of the
transactions contemplated hereby, (iii) any fact existing or event occurring
prior to the First Closing Date or relating to the operation of the Business
prior to the First Closing Date, (iv) any federal income, social security
withholding, payroll, sales or other tax, license or fee obligations of Seller
and/or its agents and (v) any amounts payable to BellSouth Telecommunications,
Inc. ("BellSouth") in respect of accounts 407-M15-5035 and 954-V70- 3037. The
liabilities which are not assumed by Buyer under this Agreement are hereinafter
sometimes referred to as the "Excluded Liabilities."
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(b) Equipment Lease Liabilities. At the First Closing, all of
Seller's obligations under the equipment lease agreements or other secured
obligations/liabilities of Seller specifically identified on Schedule 1.3(b)
("Secured Liabilities") shall be satisfied in full by Buyer (as a debit to the
Purchase Price), and Buyer shall be provided with sufficient proof of the
amounts necessary to satisfy such obligations in the form of payoff letters and,
in the case of amounts owed to Colonial Pacific Leasing in respect of the XXXX
XXXX-0X0-00/XX phone system, confirmation that Colonial Pacific Leasing will
deliver to counsel to Buyer, or file with the appropriate filings offices, a
UCC-3 termination statement within two business days of the First Closing Date.
Liabilities of Seller that do not affect Seller's right to convey title to the
Assets to Buyer shall be satisfied, disputed or litigated by Seller as it deems
necessary and proper and subject to Seller's obligations to indemnify Buyer from
same hereunder.
(c) Employees, Wages and Benefits.
(i) Seller shall terminate all of its employees effective as
of the First Closing Date and Buyer shall not assume or have any
obligations or liabilities with respect to such employees or such
terminations except as provided in Section 7.3 with respect to the
Principal Shareholders, including, without limitation, any severance
obligation. Seller acknowledges and agrees that Buyer has the right to
interview and discuss employment terms and issues with such employees
prior to and after the First Closing.
(ii) Buyer specifically reserves the right, on or after the
First Closing Date, to employ or reject any of Seller's employees or other
applicants in its sole and absolute discretion; provided that Buyer shall
provide to Seller a list of employees to whom Buyer intends to offer
employment at the First Closing. Except as set forth in Section 7.3,
nothing in this Agreement shall be construed as a commitment or obligation
of Buyer to accept for employment, or otherwise continue the employment
of, any of Seller's employees, and no employee shall be a third-party
beneficiary of this Agreement. If Buyer, in its absolute discretion,
decides to and does hire any employee of Seller, Buyer shall indemnify and
hold Seller harmless from and against any and all claims or liability,
including reasonable costs, expenses and attorney fees arising out of such
employee's work for or employment with Buyer after the First Closing.
(iii) Seller shall pay all wages, salaries, commissions, and
the cost of all fringe benefits provided to its employees, if any, which
shall have become due for work performed as of and through the day
preceding the First Closing Date, and Seller shall collect and pay all
Taxes in respect of such wages, salaries, commissions and benefits.
(iv) Seller acknowledges and agrees that Buyer shall not
acquire any rights or interests of Seller in, or assume or have any
obligations or liabilities of Seller
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under, any benefit plans maintained by, or for the benefit of any
employees of Seller prior to the First Closing Date, including, without
limitation, obligations for severance or vacation accrued but not taken as
of the First Closing Date. If Buyer, in its absolute discretion, decides
to and does hire any employee of Seller, Buyer shall indemnify and hold
Seller harmless from and against any and all claims or liability arising
out of such employee's work for or employment with Buyer after the First
Closing.
1.3A Port St. Lucie Stock. Upon the terms and subject to the conditions
set forth in this Agreement, and the performance by the parties hereto of their
respective obligations hereunder, each of the Principal Shareholders agrees to
sell, transfer, assign and deliver to Buyer, and Buyer agrees to purchase from
each of the Principal Shareholders, all of the shares of Capital Stock of Port
St. Lucie owned by such Principal Shareholder at the Second Closing (as defined
in Section 1.4 below).
1.4 The Closings. The transactions contemplated by this Agreement in
connection with the purchase and sale of the Business, but excluding the
purchase of the Capital Stock of Port St. Lucie, shall take place at a closing
(the "First Closing") to be held at 10:00 a.m., local time, at the offices of
Fallace & Associates, P.A., on the date of this Agreement, or at such other time
and place as shall be mutually agreed upon in writing by Buyer, Seller and the
Principal Shareholders (the "First Closing Date"). The transactions contemplated
by this Agreement in connection with the purchase of the Capital Stock of Port
St. Lucie shall take place at a closing (the "Second Closing") to be held at
10:00 a.m., local time, at the offices of Fallace & Associates, P.A., on the
earliest date following satisfaction of the conditions to the Second Closing,
but in no event later than sixty (60) days after the First Closing, or at such
other time and place as shall be mutually agreed upon in writing by Buyer,
Seller and the Principal Shareholders (the "Second Closing Date"). Either or
both closings may be performed by facsimile, with originals to follow as soon as
commercially reasonable.
1.5 Purchase Price.
(a) At the First Closing, in consideration of the sale by Seller to
Buyer of the Assets, in consideration of the agreement by each of the Principal
Shareholders to sell to Buyer their respective shares of Capital Stock held by
such Principal Shareholder, and subject to the assumption by Buyer of all
liabilities and obligations of Seller under the Contracts arising after the
First Closing Date and satisfaction of the conditions contained herein, Buyer
shall pay to Seller, in U.S. dollars, an amount (as adjusted in accordance with
this Section 1.5 below, the "Purchase Price") equal to $1,000,000 PLUS (i)
$12,172.14, the dollar value of all accounts receivable of Seller relating to or
arising from subscriber accounts that are less than thirty (30) days past due as
of the First Closing, (ii) $3,005.82, the dollar value of fifty percent (50%),
but in no event more than $7,500, of the accounts receivable of Seller relating
to or arising from subscriber accounts that are greater than thirty (30) past
due as of the First Closing, (iii) $4,998.50, the dollar value of any credits
due to Seller under any of the Contracts, leases, service agreements, payments
or overpayments made by Seller prior to the First Closing Date and (iv)
$8,410.55, the dollar value of all security deposits of Seller, which
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are identified on Schedule 1.1(e); and MINUS the sum of (v) $15,000, the amount
allocable to the Capital Stock to be delivered to counsel for Seller acting in
the capacity of escrow agent (the "Port St. Lucie Escrow Agent") pending the
Second Closing as contemplated by a second Escrow Agreement by and between Buyer
and each of the Principal Shareholders (the "Port St. Lucie Escrow Agreement")
in the form attached hereto as Exhibit A, (w) $102,473.49, the aggregate amount
of the Secured Liabilities owed in connection with the equipment leases as set
forth on Schedule 1.3(b) and (y) $0.00, the revenue adjustment, if any,
calculated pursuant to Section 6.8 of this Agreement for a total Purchase Price
of $911,113.52.
(b) The Purchase Price of $1,013,587.01 (prior to subtraction of the
Secured Liabilities) shall be paid by Buyer to Seller and/or applied to the
payment of the Secured Liabilities at the First Closing as follows:
(i) Buyer shall deliver the sum of $842,780.01 to Seller or
its designated agent or attorney by bank cashier's check or bank wire
transfer pursuant to payment instructions delivered by Seller to Buyer at
the First Closing; and
(ii) Buyer shall deposit the sum of $68,333.51 (the "Escrow
Deposit") with Boston Safe Deposit and Trust Company as Escrow Agent under
the Escrow Agreement in the form attached hereto as Exhibit B (the "Escrow
Agreement") on behalf of Buyer and Seller. The Escrow Deposit shall at all
times be deemed the property of Seller as part of the Purchase Price paid
herein, but shall be held, administered and distributed in accordance with
the terms of the Escrow Agreement and can be a remedy of Buyer for any
indemnification claims made pursuant to Section 10 hereof; and
(iii) Buyer shall deliver the sum of $4,702.08 to AT&T Capital
Corp. by bank cashier's check or bank wire transfer pursuant to payment
instructions provided by AT&T Capital Corp. prior to the First Closing;
and
(iv) Buyer shall deliver the sum of $49,294.90 to Balboa
Capital by bank cashier's check or bank wire transfer pursuant to payment
instructions provided by Balboa Capital prior to the First Closing; and
(v) Buyer shall deliver the sum of $16,249.00 to Colonial
Pacific Leasing by bank cashier's check or bank wire transfer pursuant to
payment instructions provided by Colonial Pacific Leasing prior to the
First Closing; and
(vi) Buyer shall deliver the sum of $13,239.39 to Financial
Pacific Leasing by bank cashier's check or bank wire transfer pursuant to
payment instructions provided by Financial Pacific Leasing prior to the
First Closing; and
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(vii) Buyer shall deliver the sum of $5,360.57 to Inter-Tel
Leasing by bank cashier's check or bank wire transfer pursuant to payment
instructions provided by Inter-Tel Leasing prior to the First Closing; and
(viii) Buyer shall deliver the sum of $13,627.55 to Sunrise
Leasing by bank cashier's check or bank wire transfer pursuant to payment
instructions provided by Sunrise Leasing prior to the First Closing; and
(ix) Buyer shall deliver the sum of $15,000.00 to counsel for
Seller, as escrow agent (the "Port St. Lucie Escrow Agent") as the
contemplated Purchase Price for the Capital Stock of Port St. Lucie.
(c) At the Second Closing, upon satisfaction or waiver of all of the
conditions to the Second Closing, the Port St. Lucie Escrow Agent shall pay to
each Principal Shareholder such Principal Shareholder's pro rata share (based on
his percentage ownership of the Capital Stock) of $15,000.00 by bank cashier's
check or bank wire transfer pursuant to payment instructions provided by such
Principal Shareholder to the Port St. Lucie Escrow Agent prior to the Second
Closing.
1.6 [INTENTIONALLY OMITTED]
1.7 Purchase Price Allocation. The Purchase Price shall be allocated
pursuant to the Internal Revenue Code of 1986, as amended (the "Code"), and
Treasury Regulation 1.1060-1T and all subparagraphs thereof, such allocation
shall be calculated promptly following the First Closing, and $275,000 shall be
allocated to the fixed Assets.
Buyer and Seller agree to report the transactions provided for in this
Agreement for feral income tax purposes in a manner consistent with the
allocations of the Purchase Price as provided in this Agreement, and shall file
any and all Internal Revenue Service ("IRS") forms necessary to report this sale
as stated herein. Buyer and Seller each further agrees to file its Federal
income tax returns and its other tax returns reflecting such allocation.
1.8 Records and Contracts. To the extent not previously provided to Buyer,
at or before the First Closing, Seller shall deliver to Buyer all of the
Contracts, with such assignments thereof and consents to assignments as are
necessary to assure Buyer of the full benefit of the same. Seller shall also
deliver to Buyer at the First Closing all of Seller's files and records relating
to the Assets.
1.9 Sales and Transfer Taxes. All sales, transfer, use, recordation,
documentary, stamp, excise taxes, personal property taxes (prorated through the
First Closing), fees and duties, under the laws of the United States and the
State of Florida, incurred in connection with this Agreement or the transactions
contemplated thereby will be borne and paid by Seller, and Seller shall promptly
reimburse Buyer for the payment of any such tax, fee or duty which Buyer is
required to make under applicable law.
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1.10 Transfer of Assets. At the First Closing, and upon payment of the
Purchase Price, Seller shall deliver or cause to be delivered to Buyer a Xxxx of
Sale and any other instruments or other documents required under Florida law to
fully transfer and assign to Buyer title to all of the Assets, together with all
required consents. Such instruments of transfer (a) shall contain appropriate
warranties and covenants which are usual and customary for transferring the type
of property involved under the laws of the jurisdictions applicable to such
transfers, (b) shall effectively vest in Buyer good and marketable title to all
of the Assets free and clear of all Liens (as defined in Section 2.8 below), and
(c) where applicable, shall be accompanied by evidence of the discharge of all
Liens against the Assets. At the Second Closing, each of the Principal
Shareholders shall deliver to Buyer one or more stock certificates, together
with stock powers executed in blank, representing such Principal Shareholder's
ownership of his shares of Capital Stock of Port St. Lucie.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SELLER AND PRINCIPAL SHAREHOLDERS.
In order to induce Buyer to enter into this Agreement, Seller and each of
the Principal Shareholders, jointly and severally, hereby represent and warrant
to Buyer as follows:
2.1 Organization; Subsidiaries.
(a) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida. Seller has all requisite
power and authority to conduct its business as it is now conducted or proposed
to be conducted and to own, lease and operate its properties and assets. The
copies of Seller's Certificate of Incorporation and By- Laws each as amended to
date, heretofore delivered to Buyer's counsel are complete and correct. Seller
is not in violation of any term of the Certificate of Incorporation and By-Laws.
Seller is duly qualified to do business in the state of its incorporation, and
does not conduct its business in any other jurisdiction.
(b) Seller has no subsidiaries and does not own any securities
issued by any other business organization or governmental authority.
2.2 Required Action. All actions and proceedings necessary to be taken by
or on the part of Seller in connection with the transactions contemplated by
this Agreement have been duly and validly taken or will have been duly and
validly taken prior to First Closing, and this Agreement and each other
agreement, document and instrument to be executed and delivered by or on behalf
of Seller pursuant to, or as contemplated by, this Agreement (collectively, the
"Seller Documents") has been or shall be duly and validly authorized, executed
and delivered by Seller and no other action on the part of Seller or its
officers, directors or shareholders shall be required in connection therewith.
Each of Seller and the Principal Shareholders have full right, authority, power
and capacity to execute and deliver this Agreement and each other Seller
Document and to carry out the transactions contemplated
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hereby and thereby. To the knowledge of Seller and the Principal Shareholders,
this Agreement and each other Seller Document constitutes, or when executed and
delivered will constitute, the legal, valid and binding obligation of each of
Seller and the Principal Shareholders enforceable in accordance with its
respective terms.
2.3 No Conflicts.
(a) The execution, delivery and performance by Seller of this
Agreement and each other Seller Document does not and will not (i) violate any
provision of the Certificate of Incorporation and By-Laws of Seller, in each
case as amended to date, (ii) constitute a violation of, or conflict with or
result in any breach of, acceleration of any obligation under, right of
termination under, or default under, any agreement or instrument to which Seller
is a party or by which Seller or the Assets is bound, (iii) violate any
judgment, decree or order, or, to Seller's knowledge, any statute, rule or
regulation applicable to Seller or the Assets, (iv) require Seller to obtain any
approval, consent or waiver of, or to make any filing with, any person or entity
(governmental or otherwise) that has not been obtained or made or (v) result in
the creation or imposition of any Lien (as defined in Section 2.8 below) on any
of the Assets.
(b) The execution, delivery and performance by each of the Principal
Shareholders of this Agreement and each other Seller Document does not and will
not (i) constitute a violation of, or conflict with or result in any breach of,
acceleration of any obligation under, right of termination under, or default
under, any agreement or instrument to which any or all of the Principal
Shareholders are a party or by which any or all of the Principal Shareholders
are bound, (ii) violate any judgment, decree or order, or, to each Principal
Shareholder's knowledge, any statute, rule or regulation applicable to the
Principal Shareholders, (iii) require the Principal Shareholders to obtain any
approval, consent or waiver of, or to make any filing with, any person or entity
(governmental or otherwise) that has not been obtained or made or (iv) result in
the creation or imposition of any Lien (as defined in Section 2.8 below) on any
of the Assets.
2.4 Taxes.
(a) Seller has paid, caused to be paid or shall cause to be paid all
federal, state, local, foreign and other taxes, including, without limitation,
income taxes, estimated taxes, alternative minimum taxes, excise taxes, sales
taxes, use taxes, value-added taxes and property taxes, whether or not measured
in whole or in part by net income, and all deficiencies, or other additions to
tax, interest, fines and penalties owed by it (collectively, "Taxes"), required
to be paid by it through the date hereof whether disputed or not.
(b) Seller has in accordance with applicable law filed all federal,
state, local and foreign tax returns required to be filed by it through the date
hereof. To Seller's knowledge, all such returns correctly and accurately set
forth the amount of any Taxes relating to the applicable period. Seller has
delivered to Buyer correct and complete copies of all
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federal, state, local and foreign income tax returns requested by Buyer, and of
all examination reports and statements of deficiencies assessed against or
agreed to by Seller with respect to said returns.
(c) Neither the IRS nor any other governmental authority is now
asserting or, to the knowledge of Seller or the Principal Shareholders,
threatening to assert against Seller any deficiency or claim for additional
Taxes. No claim has ever been made by an authority in a jurisdiction where
Seller does not file reports and returns that Seller is or may be subject to
taxation by that jurisdiction. 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 Taxes. Seller has never entered into a First Closing agreement
pursuant to Section 7121 of the Code.
(d) Seller has not been notified by any tax authority that any audit
of any tax return filed by Seller is in progress, and Seller has not been
notified by any tax authority that any such audit is contemplated or pending. No
extension of time with respect to any date on which a tax return was or is to be
filed by Seller is in force, and no waiver or agreement by Seller is in force
for the extension of time for the assessment or payment of any Taxes.
(e) Seller has never been (and has never had any liability for
unpaid Taxes because it once was) a member of an "affiliated group" (as defined
in Section 1504(a) of the Code). Seller has never filed, and has never been
required to file, a consolidated, combined or unitary tax return with any other
entity. Seller does not own and has never owned a direct or indirect interest in
any trust, partnership, corporation or other entity and therefore Buyer is not
acquiring from Seller an interest in any entity. Seller is not a party to any
tax sharing agreement.
(f) Seller is not a "foreign person" within the meaning of Section
1445 of the Code and Treasury Regulations Section 1.1445-2.
(g) For purposes of this Agreement, all references to Sections of
the Code shall refer to the Code currently in force.
2.5 Compliance with Laws. To Seller's knowledge, Seller's operation of the
Business and the Assets is in compliance in all material respects with all
applicable statutes, ordinances, orders, rules and regulations promulgated by
any federal, state, municipal or other governmental authority (including the
Federal Communications Commission), and Seller has not received notice of a
violation or alleged violation of any such statute, ordinance, order, rule or
regulation.
2.6 Insurance. The physical properties and tangible Assets of Seller are
adequately insured as of the First Closing Date.
2.7 Contracts. The Contracts constitute all leases, contracts and
arrangements, whether oral, if any, or written, under which Seller is
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currently bound or to which Seller is currently a party, which relate to the
Business or Assets, which are not being satisfied and paid by Seller through
Buyer from the Purchase Price. Schedule 1.1(b) attached hereto contains a true,
correct and complete list of all Contracts. With respect to any oral agreement
or understanding involving the Business, and which may affect the operations of
the Business after First Closing, Seller has provided a written summary of the
material terms of each such agreement or understanding on Schedule 1.1(b). To
Seller's knowledge, each Contract identified on Schedule 1.1(b) is valid, in
full force and effect and binding upon Seller and the other parties thereto in
accordance with its terms and Seller has not been notified by any party to a
Contract that such party contests or disputes the validity of such Contract
which will not be paid off or brought current as of the First Closing. Seller is
not in default under or in arrears in the performance, payment or satisfaction
of any agreement or condition on its part to be performed or satisfied under any
Contract. Seller has not received notice of, and each of Seller and the
Principal Shareholders have no knowledge of, any fact which would result in a
termination, repudiation or breach of any Contract. Seller has provided Buyer
with true and complete copies of all of such Contracts, other than with respect
to the oral agreements or understandings described on Schedule 1.1(b).
2.8 Title. Seller has good and marketable title to all of the Assets,
which as of the First Closing Date or immediately thereafter (upon Buyer's
payment from the Purchase Price), shall be free and clear of all mortgages,
pledges, security interests, charges, liens, restrictions and encumbrances of
any kind (collectively, "Liens"). Upon the sale, assignment, transfer and
delivery of the Assets to Buyer hereunder or as reasonably practicable
thereafter (subject to the provisions of Section 1.3(b)) and under the Seller
Documents, there will be vested in Buyer good, marketable and indefeasible title
to the Assets, free and clear of all Liens. The Assets include all of the assets
and properties (i) held for use by Seller to conduct the Business as presently
conducted and (ii) necessary or useful for Buyer to operate the Business in the
same manner as such Business is currently operated by Seller as of the First
Closing Date. As of the First Closing Date, all of the tangible Assets are in
good repair, have been maintained and are in operating condition, ordinary wear
and tear excepted, and to Seller's knowledge do not require any material
modifications or repairs as of the date hereof, and, to Seller's knowledge,
comply in all material respects with applicable laws, ordinances and
regulations. It is understood and agreed that Seller currently has a
month-to-month lease to its only place of Business (the "Leased Real Property")
and makes no representations or warranties to Buyer as to its continued right to
lease or remain in possession of such premises. The current lease is not
assignable and set forth on Schedule 1.1(b) are the lease payment terms for the
Leased Real Property. Seller does not hold or own a fee interest in any real
property and makes no representations or warranties with regard thereto. To
Seller's knowledge, there are no material defects in the physical condition of
any improvements constituting a part of the Leased Real Property, including,
without limitation, structural elements, mechanical systems, roofs or parking
and loading areas, and, to Seller's knowledge, all of such improvements are in
operating condition and have been maintained. To Seller's knowledge, all water,
sewer, gas, electric, telephone, drainage and other utilities required by law or
necessary for the current or planned operation of the Leased Real Property have
been installed and connected pursuant to valid permits, and are sufficient to
service the Leased Real Property.
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2.9 Litigation. Except as set forth on Schedule 2.9, Seller is not now
involved in nor, to the knowledge of Seller and the Principal Shareholders, is
Seller threatened to be involved in (not including disputed non-secured debts)
any litigation or legal or other proceedings related to or affecting the
Business or any Asset (including any Intellectual Property) or which would
prevent or hinder the consummation of the transactions contemplated by this
Agreement or Seller's ability to convey title to the Assets, free and clear of
all Liens, to Buyer or to otherwise perform its obligations herein. Seller has
not been operating the Business under, and the Business is not subject to, any
order, injunction or decree of any court of federal, state, municipal or other
governmental department, commission, board, agency or instrumentality.
2.10 Employees; Labor Matters. Seller employs approximately seven (7)
full-time employees and two (2) part-time employees and generally enjoys good
employer-employee relationships. Seller has provided to Buyer a list of the
employees of Seller in connection with the Business at the First Closing,
including the name of such employees, their date of hire, wages and the general
benefits, such as vacation and bonuses, to be paid to such employees. There is
no written or oral contract between Seller and any employee which would impose
any liability upon Buyer with regard to any of its employees or which would
prevent Seller from terminating its relationship with such employees without
being required to pay any form of "severance pay" or any other like payment. To
the knowledge of Seller and the Principal Shareholders, it has complied with all
federal, state, and local laws, rules, regulations and ordinances with regard to
its employees and is not aware of any threatened or pending action relating to
its employees or any compensation or other benefits paid or due to such
employees.
2.11 Financial Statements. Attached hereto as Schedule 2.11 are copies of
the balance sheet of Seller as of March 31, 1999 (the "Base Balance Sheet") and
the statements of income and expense of Seller for the three months ended March
31, 1999 (collectively the "Financial Statements"). The Financial Statements
were prepared in accordance with generally accepted accounting principles
applied consistently during the periods covered thereby (except for the absence
of footnotes with respect to unaudited financial statements), and to Seller's
knowledge were complete and correct and present fairly and accurately the
financial condition of the Business at the dates of said statements and the
results of operations of the Business for the periods covered thereby. As of the
date on the Base Balance Sheet contained in the Financial Statements (the "Base
Balance Sheet Date"), Seller had no liabilities or obligations of any kind with
respect to the Business, whether accrued, contingent or otherwise, that are not
disclosed and adequately reserved against on the Base Balance Sheet and which
would otherwise prevent Seller from performing its obligations herein. As of the
date hereof and at the First Closing, Seller had and will have no liabilities or
obligations of any kind with respect to the Business, whether accrued,
contingent or otherwise, that are not disclosed and adequately reserved against
on the Base Balance Sheet and which would materially affect the value of the
Business or calculations utilized by Buyer in formulating the Purchase Price
utilizing the GAAP principles or prevent Seller from performing his
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obligations herein. Buyer was provided with an opportunity to review Seller's
Financial Statements and has upon its own or its accountants' inspection and
analysis of such Financial Statements decided to proceed with the First Closing
under this Agreement based, in part, upon its own review and inspection of the
Business, the Assets and Seller's Financial Statements and upon Seller's
representations and warranties as to their preparation, validity and
truthfulness.
2.12 Business Since the Base Balance Sheet Date (March 31, 1999). Since
the Base Balance Sheet Date:
(a) there has been no material adverse change in the Business or in
the Assets, operations or financial condition of the Business;
(b) the Business has, in all material respects, been conducted in
the ordinary course of business and in substantially the same manner as it was
conducted before the date of the Base Balance Sheet Date;
(c) there has not been any material obligation or liability
(contingent or other) incurred by Seller with respect to the Business, whether
or not incurred in the ordinary course of business;
(d) there has not been any purchase, sale or other disposition, or
any agreement or other arrangement, oral or written, for the purchase, sale or
other disposition, of any material properties or assets of the Business, whether
or not in the ordinary course of business;
(e) there has not been any mortgage, encumbrance or lien placed on
any of the Assets, nor any payment or discharge of a material lien or liability
of Seller which was not reflected on the Base Balance Sheet;
(f) there has not been any damage, destruction or loss, whether or
not covered by insurance, materially adversely affecting the Business or Assets;
(g) there has not been any change in Seller's pricing, marketing,
customer service, billing, operational or promotional activities in any material
way from that which Seller was providing these activities directly prior to the
Base Balance Sheet Date; and
(h) there has not been any agreement or understanding, whether in
writing or otherwise, for Seller to take any of the actions specified above.
2.13 Licenses. As of the date of this Agreement, Seller is the holder of
all licenses, permits and authorizations with respect to the Business (the
"Authorizations"). To the knowledge of Seller, the Authorizations are in full
force and effect and constitute all of the licenses, permits and authorizations
required for operation of the Business as it is now
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operated. As of the date hereof, there is not pending or, to the knowledge of
Seller and the Principal Shareholders, threatened any action by or before any
governmental agency to revoke, cancel, rescind or modify any of the
Authorizations, and there is not now issued, outstanding, pending or, to the
knowledge of Seller and the Principal Shareholders, threatened any order to show
cause, notice of violation, notice of apparent liability, or notice of
forfeiture or complaint against Seller with respect to the Business.
2.14 Approvals; Consents. No approval, consent, authorization or exemption
from or filing with any person or entity not a party to this Agreement is
required to be obtained or made by Seller in connection with the execution and
delivery of this Agreement and the Seller Documents and the consummation of the
transactions contemplated hereby and thereby.
2.15 Customers and Suppliers. To Seller's knowledge, its relations with
its customers and suppliers, including its Subscribers (as defined in Section
2.16 below), are good.
2.16 Subscribers. Schedule 2.16(a) attached hereto sets forth, as of the
date hereof, the Subscribers (as defined herein) of the Business as listed by
class, type and billing plan. For purposes of this Agreement, the terms
"Subscriber" shall mean any active (service not terminated more than thirty (30)
days prior to the date hereof) subscriber to Internet services offered by Seller
in the Business who has subscribed to a service for at least two months and has
paid at least two bills at any given time, including, without limitation, any
person or corporation who receives dial-up Internet access through the Business
(a "Dial-up Subscriber"), any person who receives dedicated Internet access from
Seller offering higher data transmission rates than available from dial-up
access (a "Dedicated Subscriber"), and any person with a web page or domain name
on Seller's server and to whom Seller provides Internet access (a "Web-hosting /
Domain-hosting Subscriber"); provided, however, that "Subscriber" shall not
include any person or entity receiving complimentary Internet services or
Internet services at a promotional discounted rate. Set forth on Schedule
2.16(b) attached hereto is a listing of all such accounts which receive
complimentary Internet services or Internet services at a promotional discounted
rate. Set forth on Schedule 2.16(c) attached hereto is Seller's policy and
practice with respect to the disconnection of Subscribers, with which Seller
has, except as set forth on Schedule 2.16(c), at all times since its inception,
complied in all material respects. It is understood and agreed that Schedule
2.16(a) may contain some Subscribers of Seller with outstanding balances due or
for which service has been temporarily terminated by Seller, but due to past
actions of such Subscribers, Seller believes that they will continue to use
Seller for their Internet access and therefore remain a Subscriber transferred
to Buyer under this Agreement. As of the date hereof, Buyer expressly assumes
all obligations and liability of Seller under a Subscriber Contract or to such
Subscribers and shall indemnify and hold harmless Seller from any claims, causes
of action or demands arising from or related to the Subscriber.
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2.17 Brokers. Seller has not retained any broker or finder or other person
who would have any valid claim against any of the parties to this Agreement for
a commission or brokerage fee in connection with this Agreement or the
transactions contemplated hereby.
2.18 Collectibility of Accounts Receivable. As of the First Closing, all
of the accounts receivable of Seller identified on the Schedules attached
hereto, are or will be as of the First Closing Date bona fide and, to Seller's
knowledge, valid and enforceable claims, subject to no set off or counterclaim
and are collectible in accordance with their terms. Seller has not been notified
by any party that such party contests or disputes the validity of such accounts
receivable. Seller has no accounts or loans receivable from any person, firm or
corporation which is affiliated with Seller or from any director, officer or
employee of Seller, or from any of their respective spouses or family members.
2.19 [INTENTIONALLY OMITTED].
2.20 Intellectual Property.
(a) All of the Intellectual Property of Seller, if any, is set forth
on Schedule 2.20 attached hereto. For purposes hereof, the term "Intellectual
Property" includes: (i) Seller's rights to the name "MetroLink Internet
Services", all trade names, trade dress, logos, packaging design, slogans, any
and all Internet domain names used or useful in the business of Seller,
registered and unregistered trademarks and service marks and applications
(collectively, "Marks"); (ii) all know-how, trade secrets, confidential or
proprietary information, customer lists, IP addresses, research in progress,
algorithms, data, designs, processes, formulae, drawings, schematics,
blueprints, flow charts, models, prototypes, techniques, Beta testing procedures
and Beta testing results (collectively, "Trade Secrets"); (iii) Seller's
web-sites (including the domain name "xxx.xxxxxxxxx.xxx" and any other similar
domain name); (iv) all goodwill, franchises, licenses, permits, consents,
approvals, technical information, telephone numbers, and claims of infringement
against third parties (the "Rights"); and (v) all contracts relating to the
Intellectual Property to which Seller is a party or is bound, including, without
limitation, all nondisclosure and/or confidentiality agreements entered into by
persons in connection with disclosures by Seller (collectively,"Assigned
Contracts").
(b) To Seller's knowledge it has ownership of, and has good, valid
and marketable title to, all of the Intellectual Property, free and clear of any
Liens, and has the right to use all of the Intellectual Property without payment
to any third party. Seller's rights in all of such Intellectual Property are
freely transferable. There are no claims or demands pending or, to the knowledge
of Seller and the Principal Shareholders, threatened of any other person
pertaining to any of such Intellectual Property and no proceedings have been
instituted, or are pending or, to the knowledge of Seller and the Principal
Shareholders, threatened against Seller and/or its officers, employees and
consultants which challenge the validity and enforceability of Seller's rights
in respect of the Intellectual Property. The Intellectual Property represents
all of the assets of Seller of such class or type necessary for the operation of
Seller's Business as currently conducted.
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To Seller's knowledge, no employee, consultant or contractor of Seller has
entered into any agreement that restricts or limits in any way the scope or type
of work in which the employee, consultant or contractor may be engaged or
requires the employee, consultant or contractor to transfer, assign, or disclose
information concerning his work to anyone other than Seller.
(c) Schedule 2.20 sets forth a complete and accurate list and
summary description of all of Seller's Marks. It is understood that, with the
exception of common law rights, the name "MetroLink" and /or "MetroLink Internet
Services, Inc." are not federally registered or protected trademarks or service
marks and that MetroLink does not have exclusive legal right to their use.
(d) Seller has no patents, patent applications, patent rights, and
inventions and discoveries and invention disclosures (whether or not patented)
(collectively, "Patents").
(e) Seller has no copyrights in either published or unpublished
works.
(f) Seller has the exclusive right to use, license, distribute,
transfer and bring infringement actions with respect to the Intellectual
Property. Except for websites created by Seller for its customers, Seller (i)
has not licensed or granted to anyone rights of any nature to use any of its
Intellectual Property and (ii) is not obligated to and does not pay royalties or
other fees to anyone for its ownership, use, license (other than software
utilized by Seller and transferred hereunder as set forth in Schedule 2.20) or
transfer of any of its Intellectual Property.
(g) All licenses or other agreements under which Seller is granted
rights by others in Intellectual Property are listed on Schedule 2.20. Except as
set forth on such Schedule, all such licenses or other agreements are in full
force and effect, there is no material default by any party thereto, and all of
the rights of Seller thereunder are freely assignable. True and complete copies
of all such licenses or other agreements, and any amendments thereto, have been
provided to Buyer, and Seller has no reason to believe that the licensors under
the licenses and other agreements under which Seller is granted rights and has
granted rights to others do not have and did not have all requisite power and
authority to grant the rights purported to be conferred thereby.
(h) Except for websites created by Seller for its customers, Seller
has granted no rights to others in its Intellectual Property.
(i) With the exception of the I.E.A./Emerald Radius Software
utilized by Seller in the operation of its Business, Seller and the Principal
Shareholders reasonably believe that the "Year 2000 Problem" (i.e., the risk
that applications used by Seller or its suppliers and/or providers may be unable
to recognize and properly perform date-sensitive functions involving certain
dates prior to and any date after December 31, 1999) will not have any
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material adverse effect on the business or operations of Seller. To Seller's
knowledge, the I.E.A./Emerald Radius Software is not Year 2000 compliant.
2.21 Absence of Restrictions. Seller has not entered into any other
agreement or arrangement with any other party with respect to the sale, transfer
or any other disposition or encumbrance of the Business or the Assets, in whole
or in part.
2.22 Transactions with Interested Persons. Except for Seller's use, rental
and/or lease of lines from MetroLink Internet Services of Port St. Lucie, Inc.
(a C-LEC company owned by the Principal Shareholders), neither Seller, nor any
shareholder, officer, supervisory employee or director of Seller or, any of
their respective spouses or family members owns directly or indirectly on an
individual or joint basis any material interest in, or serves as an officer or
director or in another similar capacity of, any competitor or supplier of
Seller, or any organization which has a material contract or arrangement with
Seller.
2.23 Employee Benefit Programs. Seller has never provided, offered,
maintained, supervised, managed or operated any deferred compensation benefit or
Employee Retirement Income Security Act of 1974, as amended ("ERISA") plan and
Seller does not have any employee benefits, retirement or other deferred
compensation plans in effect which would impose any obligations, duties,
responsibilities or liabilities upon Buyer.
2.24 Environmental Matters.
(a) To Seller's knowledge, (i) Seller has not generated,
transported, used, stored, treated, disposed of, or managed any Hazardous Waste
(as defined in Section 2.24(c) below) at any time; (ii) Seller has never
spilled, released, or disposed of any Hazardous Material (as defined in Section
2.24(c) below) at any site associated with a structure presently or formerly
owned, operated, leased, or used by Seller, nor has any such Hazardous Material
ever been located in the soil or groundwater at any such site; (iii) Seller has
never transported any Hazardous Material from any site associated with a
structure presently or formerly owned, operated, leased, or used by Seller for
treatment, storage, or disposal at any other place; (iv) Seller does not
presently own, operate, lease, or use, and has not previously owned, operated,
leased, or used any site associated with a structure on which underground
storage tanks are or were located; and (v) no lien has ever been imposed by any
governmental agency on any property, facility, machinery, or equipment owned,
operated, leased, or used by Seller in connection with the presence of any
Hazardous Material.
(b) To Seller's knowledge, (i) Seller does not have any liability
under, nor has it ever violated, any Environmental Law (as defined in Section
2.24(c) below); (ii) Seller has not entered into or been subject to any
judgment, consent decree, compliance order, or administrative order with respect
to any environmental or health and safety matter or received any request for
information, notice, demand letter, administrative inquiry, or formal or
informal complaint or claim with respect to any environmental or health and
safety matter or the enforcement of any Environmental Law; and (iii) neither
Seller nor any Principal
17
Shareholder has any knowledge or reason to know that any of the items enumerated
in clause (ii) of this subsection will be forthcoming.
(c) For purposes of this Agreement, (i) "Hazardous Material" shall
mean and include any hazardous waste, hazardous material, hazardous substance,
petroleum product, oil, toxic substance, pollutant, contaminant, or other
substance which may pose a threat to the environment or to human health or
safety, as defined or regulated under any Environmental Law; (ii) "Hazardous
Waste" shall mean and include any hazardous waste as defined or regulated under
any Environmental Law; and (iii) "Environmental Law" shall mean any
environmental or health and safety-related law, regulation, rule, ordinance, or
By-law at the foreign, federal, state, or local level, whether existing as of
the date hereof, previously enforced, or subsequently enacted.
2.25 Port St. Lucie.
(a) Organization and Qualifications of Port St. Lucie. Port St.
Lucie is a corporation duly organized, validly existing and in good standing
under the laws of the State of Florida with full corporate power and authority
to own or lease its properties and to conduct its business in the manner and in
the places where such properties are owned or leased or such business is
currently conducted. Port St. Lucie is duly qualified to do business as a
foreign corporation in each jurisdiction in which such qualification is
necessary, except where the failure to be so qualified would not have a material
adverse effect.
(b) Capital Stock of Port St. Lucie. The authorized Capital Stock of
Port St. Lucie consists of 1,000 shares of common stock, par value $1.00 per
share, of which 1,000 shares are duly and validly issued, outstanding, fully
paid and non-assessable. Each Principal Shareholder owns 500 shares of the
Capital Stock. There are no outstanding options, warrants, rights, commitments,
preemptive rights or agreements of any kind for the issuance or sale of, or
outstanding securities convertible into, any additional shares of common stock
of Port St. Lucie.
(c) Beneficial Ownership of the Capital Stock. Each of the Principal
Shareholders owns beneficially and of record the Capital Stock set forth
opposite such Shareholder's name on Schedule 2.25(c) hereto. Such Capital Stock
is, and when delivered by such Principal Shareholders to Buyer pursuant to this
Agreement will be, free and clear of any and all liens, encumbrances,
restrictions, charges or claims and upon payment for such Capital Stock pursuant
to Section 1.5 hereof at the Second Closing in accordance with the terms of this
Agreement and the Port St. Lucie Escrow Agreement, Buyer will acquire good and
valid title to the Capital Stock being sold by such Principal Shareholders at
the Second Closing.
(d) Corporate Records; Copies of Documents. The copies of the
corporate records of Port St. Lucie, as made available to Buyer for review, are
true and complete copies of the originals of such documents.
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(e) The representations made with respect to the Seller in Sections
2.4, 2.5, 2.6, 2.9, 2.12, 2.14, 2.21, 2.23 and 2.24 are hereby made by each of
the Principal Shareholders with respect to Port St. Lucie.
(f) Port St. Lucie has no employees. Port St. Lucie does not hold or
own a fee interest in any real property.
2.26 Disclosure. The representations, warranties and statements contained
in this Agreement and in the Seller Documents delivered by Seller and the
Principal Shareholders to Buyer pursuant to this Agreement do not contain any
untrue statement of a material fact, and, when taken together, do not omit to
state a material fact required to be stated therein or necessary in order to
make such representations, warranties or statements not misleading in light of
the circumstances under which they were made. It is expressly acknowledged and
agreed that Buyer was provided sufficient time to inspect the Financial
Statements, the Assets, and the Business of Seller prior to the date hereof and
that it is entering into this Agreement and purchasing the Assets, Contracts,
Capital Stock and other property of Seller and the Principal Shareholders
hereunder based upon its own inspection and due diligence.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF BUYER.
As a material inducement to Seller entering into this Agreement, Buyer
hereby represents and warrants to Seller as follows:
3.1 Organization. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Buyer has all
requisite power and authority to conduct its business in the State of Florida as
it is now conducted and to own, lease and operate its properties and assets.
3.2 Required Action; Authority. All actions and proceedings necessary to
be taken by or on the part of Buyer in connection with the transactions
contemplated by this Agreement have been duly and validly taken, and this
Agreement and each other agreement, document and instrument to be executed and
delivered by or on behalf of Buyer pursuant to, or as contemplated by, this
Agreement (collectively, the "Buyer Documents") has been duly and validly
authorized, executed and delivered by Buyer. Buyer has full right, authority,
power and capacity to execute and deliver this Agreement and each other Buyer
Document and to carry out the transactions contemplated hereby and thereby. This
Agreement and each other Buyer Document constitutes, or when executed and
delivered will constitute, the legal, valid and binding obligations of Buyer
enforceable in accordance with its respective terms.
3.3 No Conflicts. The execution, delivery and performance by Buyer of this
Agreement and each other Buyer Document does not and will not (a) violate any
provision of the Certificate of Incorporation or By-Laws of Buyer, as amended to
date, (b) constitute a violation of, or conflict with or result in any breach
of, acceleration of any obligation under, right of termination under, or default
under, any agreement or instrument to which Buyer is a
19
party or by which it is bound, (c) violate any judgment, decree, order, statute,
rule or regulation applicable to Buyer, (d) require Buyer to obtain any
approval, consent or waiver of, or to make any filing with, any person or entity
(governmental or otherwise) that has not been obtained or made. The officers who
execute this Agreement and the other Buyer Documents contemplated hereby on
behalf of Buyer have and shall have all requisite power to do so in the name of
and on behalf of Buyer.
3.4 Brokers. Except for fees payable to Rampart Associates, LLC
("Broker"), Buyer has not retained any broker or finder or other person who
would have any valid claim against any of the parties to this Agreement for a
commission or brokerage fee in connection with this Agreement or the
transactions contemplated hereby. Buyer assumes all liability for any
commissions, fees or other payments which Broker may be entitled to herein, and
any such commissions, fees or other amounts shall not be paid from or by Seller
from the Purchase Price. Buyer expressly indemnifies and shall hold harmless
Seller from and against any claims by Broker.
3.5 Full and Complete Inspection. Buyer has made a full and complete
inspection of the Assets and Financial Statements of the Business, has been
provided copies of all records of Seller Buyer reasonably believes are necessary
and relevant to the Business, the Assets and a determination of the valuation,
worth and Purchase Price of the Business.
3.6 Management and Operation of an Internet Service Company. As of the
date hereof, Buyer has been engaged in the operation and management of an
Internet service company or related business and is familiar with the risks
associated with the ownership and operation of such a company. Buyer is assuming
any and all risks associated with and which may arise in the operation of the
Business after the First Closing Date which do not arise from events or
circumstances that constitute a breach of this Agreement or representations made
herein. Except for claims arising from Seller's breach of this Agreement, the
representations hereunder or any of the Seller Documents, Buyer waives any right
to bring a claim against Seller or the Principal Shareholders as a result of
such known and understood risks which are associated with operating such a
Business or in the management of the Assets or performance of the obligations
assumed by Buyer under the Contracts.
3.7 Disclosure. The representations, warranties and statements contained
in this Agreement and the Seller Documents do not contain any untrue statement
of material fact, and, when taken together, do not omit to state a material fact
required to be stated therein or necessary in order to make such
representations, warranties or statements not misleading in light of the
circumstances under which they were made.
SECTION 4. COVENANTS OF SELLER.
Seller covenants and agrees that:
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4.1 Use of Trade Names. After the First Closing Date, neither Seller, nor
any person controlling, controlled by or under common control with Seller will
for any reason, directly or indirectly, for itself or any other person, (a) use
the names "MetroLink" or "MetroLink Internet Services" or (b) use or disclose
any trade secrets, confidential information, know-how, proprietary information
or other Intellectual Property of Seller transferred pursuant to this Agreement.
4.2 Post-First Closing Transitional Matters. For a period of ninety (90)
days following the First Closing, Seller shall provide, without additional cost
to Buyer (except for amounts due under the Employment Agreement), such
assistance as is reasonably requested by Buyer in order to effect an orderly
transition in the ownership and operation of the Assets and the Capital Stock;
provided, however, such post-First Closing assistance shall not, in any event,
exceed ten (10) hours per week. Such assistance by Seller or the Principal
Stockholders shall not constitute a default under such Employment Agreements
with Buyer.
4.3 Collection of Assets. Subsequent to the First Closing, Buyer shall
have the right and authority to collect all receivables (except as provided
herein) and other items transferred and assigned to Buyer by Seller hereunder
and to endorse with the name of Seller any checks received on account of such
receivables, and Seller agrees that it will promptly transfer or deliver to
Buyer from time to time, any cash or other property that such Seller may receive
with respect to any contracts, licenses, commitments, sales orders, purchase
orders, accounts receivable of any character or any other items included in the
Assets.
4.4 Payment of Obligations. Seller shall take appropriate action to
defend, pay or settle any Seller Liabilities to insure that no claims are
asserted against Buyer for such amounts and shall pay all of Seller's
Liabilities not otherwise disputed, denied or litigated, from the Purchase
Price.
4.5 Further Assurances. Seller, from time to time after the First Closing
at the request of Buyer and without further consideration, shall execute and
deliver further instruments of transfer and assignment to more effectively
transfer and assign to, and vest in, Buyer the Assets free and clear of all
Liens.
SECTION 5. COVENANTS OF BUYER.
Buyer covenants and agrees that:
5.1 Payment of Post-First Closing Liabilities. From and after the First
Closing Date, Buyer shall take appropriate action to defend, pay or settle any
obligations or liabilities arising under the Contracts or with regard to the
Assets or Business to insure that no claims are asserted against Seller for such
amounts.
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5.2 Contractual Obligations. After the execution hereof, Buyer shall
perform all obligations of Seller arising under the Contracts with regard to the
Contracts purchased and assigned to Buyer under this Agreement.
5.3 Further Assurances. Should an error or omission be discovered in this
Agreement or the Financial Statements after the First Closing, Buyer agrees to
cooperate with Seller to rectify such error or omission without further
consideration. Buyer agrees to execute and deliver further instruments necessary
to carry out the intent of this Agreement.
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATION OF BUYER AT THE FIRST CLOSING.
Buyer's obligation to consummate the transactions contemplated by this
Agreement is subject to the satisfaction, on or prior to the First Closing Date,
of each of the following conditions, unless otherwise waived by Buyer in
writing:
6.1 Performance of Agreements and Deliveries. Seller shall have performed
in all material respects all of its covenants, agreements and obligations under
this Agreement which are to be performed or complied with by Seller prior to or
upon the First Closing Date and shall have delivered all documents and items
required to be delivered at or prior to the First Closing, including, without
limitation:
(a) A certificate, dated the First Closing Date, from the President
of Seller to the effect that the conditions set forth in Sections 6.1, 6.8 and
6.9 have been satisfied and that the representations and warranties of Seller
set forth in Section 2 are true and correct;
(b) A certificate, dated the First Closing Date, from Seller's
Secretary certifying as to the Certificate of Incorporation, By-Laws, authority
and the incumbency of all officers executing this Agreement and the Seller
Documents on behalf of Seller;
(c) A copy of Seller's Certificate of Incorporation from the
Secretary of State of the State of Florida;
(d) An Amendment to the Articles of Incorporation and any other
required documentation, which effect a change of Seller's name, which name
change shall take effect not more than five (5) days following the date of First
Closing; and
(e) A Certificate of Good Standing from the Secretary of State of
the State of Florida.
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6.2 Asset Transfer. Seller shall have delivered to Buyer the following
instruments of transfer and assignment in accordance with the provisions hereof,
transferring to Buyer all of Seller's right, title and interest in and to the
Assets, free and clear of all Liens:
(a) A Xxxx of Sale in the form attached hereto as Exhibit C;
(b) An Assignment and Assumption Agreement in the form attached
hereto as Exhibit D; and
(c) An Assignment of Internet Domain Name in the form attached
hereto as Exhibit E.
6.3 Assignment of Contracts and Authorizations; Approvals. All Contracts
assumed by Buyer shall have been duly and validly assigned to Buyer by Seller,
and all consents and approvals required in connection with the consummation of
the transactions contemplated hereby under any Contract or Authorization or
otherwise shall have been obtained by Buyer in form and substance satisfactory
to Buyer. All such Contracts and Authorizations shall remain in full force and
effect and shall not have been amended, modified or repudiated in any material
respect by either party thereto. Neither Seller nor, to the knowledge of Seller
and the Principal Shareholders, the other party thereto, shall have breached or
defaulted under any Contract or Authorization. Seller shall not have received
notice of or have knowledge of any fact which could result in the termination,
repudiation or breach of any Contract or Authorization.
6.4 Escrow Agreement. Seller shall have executed and delivered to Buyer
the Escrow Agreement.
6.5 Non-Competition Agreement. Seller shall have executed and delivered to
Buyer a Non-Competition Agreement in substantially the form attached hereto as
Exhibit F.
6.6 Release of Liens. Seller and Buyer shall reasonably cooperate and
assist Seller in obtaining and delivering to Buyer at, prior to or immediately
following the First Closing instruments (including payoff letters, bills of sale
and UCC-3 termination statements) releasing any and all Liens on the Assets.
6.7 Opinion of Seller's Counsel. Buyer shall have received the opinion of
Fallace & Associates, P.A., counsel for Seller, dated the First Closing Date,
substantially in the form of Exhibit G attached hereto.
6.8 Minimum Number of Subscribers. Seller must submit proof, through the
Subscriber List attached hereto, that it is delivering to Buyer at the First
Closing documentation establishing the assignment and transfer of a minimum of:
(a) 2,400 Subscriber Services Agreements;
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(b) 140 Corporate Subscriber Services Agreements;
(c) 28 Dedicated Subscriber Services Agreements including 33.6 to
full T-1; and
(d) 100 Web-hosting/Domain-hosting Subscribers.
Prior to First Closing, Buyer shall review the Subscriber List to
determine that the requisite number of Subscribers are being delivered to Buyer.
Buyer shall notify Seller prior to First Closing if the requisite number are not
being delivered, and the Purchase Price shall be mutually adjusted prior to the
First Closing to reflect the proper number of actual Subscribers being
transferred.
SECTION 6A. CONDITIONS PRECEDENT TO OBLIGATION OF BUYER AT THE SECOND CLOSING.
6A.1 Performance of Agreements and Deliveries on the Second Closing. The
Principal Shareholders shall have performed in all material respects all of its
covenants, agreements and obligations under this Agreement which are to be
performed or complied with by such Principal Shareholders prior to or upon the
Second Closing Date and shall have delivered all documents and items required to
be delivered at or prior to the Second Closing, including, without limitation:
(a) A certificate, dated the Second Closing Date (the "Second
Closing Certificate"), from the Principal Shareholders to the effect that: (i)
they have obtained all necessary regulatory approvals pertaining to the purchase
and sale of the Capital Stock and business of Port St. Lucie; (ii) the
representations and warranties made by such Principal Shareholders with respect
to Port St. Lucie and the Capital Stock in this Agreement are true and correct
in all material respects on the Second Closing Date with the same force and
effect as if they had been made on and as of that date; and (iii) there has been
no material adverse change in the financial condition of Port St. Lucie on or
prior to the Second Closing Date;
(b) A certificate, dated the Second Closing Date, from Port St.
Lucie's Secretary certifying as to the Certificate of Incorporation, By-Laws,
authority and the incumbency of all officers executing this Agreement and the
Seller Documents on behalf of Port St. Lucie;
(c) A copy of Port St. Lucie's Certificate of Incorporation from the
Secretary of State of the State of Florida; and
(d) A certificate of good standing for Port St. Lucie from the
Secretary of State of the State of Florida.
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6A2. Opinion of Principal Shareholders' Counsel. Buyer shall have received
the opinion of Fallace & Associates, P.A., counsel for the Principal
Shareholders, dated the Second Closing Date, substantially in the form of
Exhibit H attached hereto.
6A3. Consent of Senior Lender. Buyer shall have received the consent of
its senior lender to purchase the shares of Capital Stock.
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATION OF SELLER AT THE FIRST CLOSING.
The obligation of Seller to consummate the transactions contemplated by
this Agreement is subject to the satisfaction, on or prior to the First Closing
Date, of the following conditions, unless waived by Seller in writing:
7.1 Performance of Agreement and Deliveries. Buyer shall have performed in
all material respects all of its covenants, agreements and obligations under
this Agreement which are to be performed or complied with by Buyer prior to or
upon the First Closing Date and shall have delivered all documents and items
required to be delivered at or prior to the First Closing, including, without
limitation:
(a) A certificate, dated the First Closing Date, from the President
of Buyer to the effect that the conditions set forth in Section 7.1 have been
satisfied and that the representations and warranties of Buyer set forth in
Section 3 are true and correct;
(b) A certificate, dated the First Closing Date, from Buyer's
Secretary as to the Certificate of Incorporation, By-Laws, authority and the
incumbency of all officers executing the Buyer Documents on behalf of Buyer;
(c) A copy of Buyer's Certificate of Incorporation from the
Secretary of State of the State of Delaware;
(d) A Certificate of Good Standing from the Secretary of State of
the State of Delaware;
(e) A Certificate from the State of Florida certifying that Buyer
has properly registered to do Business in the State of Florida.
7.2 Escrow Agreement. Buyer shall have executed and delivered to Seller
the Escrow Agreement.
7.3 Employment Agreements. Buyer agrees to enter into a one-year
employment agreement with each of Xxxxx Xxxxxx and Xxx Xxxxxxxxxx, dated the
First Closing Date, substantially in the form of Exhibit I attached hereto.
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7.4 Opinion of Buyer's Counsel. Seller shall have received an opinion of
Xxxxxxx, Procter & Xxxx LLP, counsel for Buyer, dated the First Closing Date,
substantially in the form of Exhibit J attached hereto.
SECTION 7A. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER AND THE PRINCIPAL
SHAREHOLDERS AT THE SECOND CLOSING.
7A. Performance of Agreement and Deliveries. Buyer shall have performed in
all material respects all of its covenants, agreements and obligations under
this Agreement which are to be performed or complied with by Buyer prior to or
upon the Second Closing Date and shall have delivered all documents and items
required to be delivered at or prior to the Second Closing, including, without
limitation:
(a) A certificate, dated the Second Closing Date, from the President
of Buyer to the effect that the conditions set forth in Section 7A have been
satisfied and that the representations and warranties of Buyer set forth in
Section 3 are true and correct;
(b) A certificate, dated the Second Closing Date, from Buyer's
Secretary as to the Certificate of Incorporation, By-Laws, authority and the
incumbency of all officers executing the Buyer Documents on behalf of Buyer;
(c) A certified copy of Buyer's Certificate of Incorporation from
the Secretary of State of the State of Delaware;
(d) A Certificate of Good Standing from the Secretary of State of
the State of Delaware;
(e) A Certificate from the State of Florida certifying that Buyer
has properly registered to do Business in the State of Florida.
SECTION 8. SURVIVAL.
Each of the representations, warranties, agreements, covenants and
obligations herein or in any schedule, exhibit, certificate or financial
statement delivered by any party to the other party incident to the transactions
contemplated hereby are material, shall be deemed to have been relied upon by
the other party and shall survive the First Closing and shall not merge in the
performance of any obligation by either party hereto.
SECTION 9. INDEMNIFICATION.
9.1 Indemnification by Seller and the Principal Shareholders.
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(a) Seller and each of the Principal Shareholders hereby agrees,
jointly and severally, to indemnify and hold harmless Buyer, its affiliates and
its and their respective directors, officers, stockholders, partners, members,
employees, and agents (individually, a "Buyer Indemnified Party" and
collectively, "Buyer Indemnified Parties"), against and in respect of all
losses, liabilities, obligations, damages, deficiencies, actions, suits,
proceedings, demands, assessments, orders, judgments, costs and expenses
(including the reasonable fees, disbursements and expenses of attorneys and
consultants) of any kind or nature whatsoever, but net of the proceeds from any
insurance policies or other third party reimbursement for such loss, to the
extent sustained, suffered or incurred by or made against any Buyer Indemnified
Party, to the extent based upon, arising out of or in connection with: (i) any
breach of any representation or warranty made by Seller and the Principal
Shareholders in this Agreement or in any schedule, exhibit, certificate,
agreement or other instrument delivered pursuant to this Agreement; (ii) any
breach of any covenant or agreement made by Seller or the Principal Shareholders
in this Agreement or in any schedule, exhibit, certificate, financial statement,
agreement or other instrument delivered pursuant to this Agreement; (iii) any
claim made by any person or entity which relates to the operation of the Assets
or the Business which arises in connection with or on the basis of events, acts,
omissions, conditions or any other state of facts occurring on or existing
before the First Closing Date; (iv) any claim which arises in connection with
any Excluded Liabilities; (v) any claim made by any person or entity which
relates to the operation of Port St. Lucie which arises in connection with, or
on the basis of events, acts, omissions, conditions or any other state of facts
occurring on or existing before the Second Closing and (vi) any claim arising
from Seller's or the Principal Shareholders' failure to perform all of its or
his obligations under the Xxxx of Sale, Assignment of Internet Domain Name, and
Assignment and Assumption Agreement.
9.2 Indemnification by Buyer. Buyer agrees to indemnify and hold harmless
Seller and its officers, directors, managers, members, employees and agents,
including the Principal Shareholders (individually, a "Seller Indemnified Party"
and collectively, "Seller Indemnified Parties") at all times against and in
respect of all losses, liabilities, obligations, damages, deficiencies, actions,
suits, proceedings, demands, assessments, orders, judgments, costs and expenses
(including the reasonable fees, disbursements and expenses of attorneys and
consultants), of any kind or nature whatsoever, to the extent sustained,
suffered or incurred by or made against any Seller Indemnified Party, to the
extent based upon, arising out of or in connection with: (i) any breach of any
representation or warranty made by Buyer in this Agreement or in any schedule,
exhibit or certificate delivered pursuant to this Agreement; (ii) any breach of
any covenant or agreement made by Buyer in this Agreement or in any schedule,
exhibit or certificate delivered pursuant to this Agreement; (iii) any claim
made against Seller which relates to, results from or arises out of Buyer's
operation of the Assets or the Business from and after the First Closing Date;
(iv) any claim asserted against Seller Indemnified Parties by Buyer's broker for
any claims or commissions due; (v) any claim asserted against Seller Indemnified
Parties away from or relating to any of the Contracts; (vi) any claim asserted
against Seller Indemnified Parties arising from or relating to the operation of
Port St. Lucie after the Second Closing and (vii) any claim arising from Buyer's
improper
27
exercise of any right under the Xxxx of Sale, Assignment of Internet Domain
Name, and Assignment and Assumption Agreement.
9.3 Notice; Defense of Claims.
(a) Notice of Claims. Promptly after receipt by an indemnified party
(a party against whom a claim for indemnification is asserted) of notice of any
claim, liability or expense to which either Seller or Buyer believes the
indemnification obligations hereunder would apply ("Indemnifiable Claims"), and
in any event within thirty (30) days of becoming aware of such claim the
indemnified party shall give notice thereof in writing to the indemnifying
party. Such notice shall state the information then available regarding the
amount and nature of such claim, the person or entity asserting the claim, the
liability or expense and shall specify the provision or provisions of this
Agreement under which the liability or obligation is asserted. Failure to
provide notice within such thirty-day period shall constitute a waiver of any
right to assert a claim against the Escrow Fund for such claim, but shall not
waive any other right that either Seller or Buyer may have under this Agreement.
(b) Third Party Claims. With respect to a claim for indemnification
arising from a claim asserted by any persons or entities (other than Buyer or
Seller directly under the Agreement) against either party ("Third Party
Claims"), if within twenty (20) days after receiving the notice described in
clause (a) above the indemnifying party gives (i) written notice to the
indemnified party stating that (A) it would be liable under the provisions
hereof for indemnity in the amount of such claim if such claim were successful
and (B) that it disputes and intends to defend against such claim, liability or
expense at its own cost and expense and (ii) provides reasonable assurance to
the indemnified party that such claim will be promptly paid in full if required,
then counsel for the defense shall be selected by the indemnifying party
(subject to the consent of the indemnified party which consent shall not be
unreasonably withheld) and the indemnified party shall not be required to make
any payment with respect to such claim, liability or expense as long as the
indemnifying party is conducting a good faith and diligent defense at its own
expense; provided, however, that the assumption of defense of any such matters
by the indemnifying party shall relate solely to the claim, liability or expense
that is subject or potentially subject to indemnification. The indemnified party
shall reasonably cooperate with the indemnifying party and its counsel in the
defense of such claim and shall not make any admission or take any actions which
impair, hinder or obstruct the ability to defend against a Third Party Claim or
which admit, concede or settle the claim without the consent of the indemnifying
party. The indemnifying party shall have the right, with the consent of the
indemnified party, which consent shall not be unreasonably withheld, to settle
all indemnifiable matters related to claims by third parties which are
susceptible to being settled provided the indemnifying parties' obligation to
indemnify the indemnified party therefor will be fully satisfied. The
indemnifying party shall keep the indemnified party apprised of the status of
the claim, liability and any resulting suit, proceeding or enforcement action,
shall furnish the indemnified party with all documents and information that the
indemnified party shall reasonably request (except for documents protected by
the attorney/client or work product privileges) and shall consult with the
indemnified party prior
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to acting on major matters, including settlement discussions, however only to
the extent such actions may impose restrictions, obligations or liability upon
the indemnified party. Notwithstanding anything herein stated, the indemnified
party shall at all times have the right to fully participate in such defense at
its own expense directly or through counsel (with the cost of such participation
not constituting an indemnifiable claim hereunder) provided such participation
does not impair, hinder, interfere with or obstruct the indemnifying party's
defenses and settlement of any claims and ; provided, however, if the named
parties to the action or proceeding include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate under applicable standards of professional conduct, the expense
of separate counsel for the indemnified party shall be paid by the indemnifying
party. If no such notice of intent to dispute and defend is given by the
indemnifying party, or if such diligent good faith defense is not being or
ceases to be conducted, the indemnified party shall, at the expense of the
indemnifying party, undertake the defense of (with counsel selected by the
indemnified party), and shall have the right to reasonably compromise or settle
(exercising reasonable business judgment), such claim, liability or expense. If
such claim, liability or expense is one that by its nature cannot be defended
solely by the indemnifying party, then the indemnified party shall make
available all information and assistance that the indemnifying party may
reasonably request and shall cooperate with the indemnifying party in such
defense.
(c) Non-Third Party Claims. With respect to non-third party claims
(those asserted by Buyer or Seller directly under this Agreement for
Indemnifiable Claims), if within twenty (20) days after receiving the notice
described in clause (a) above the indemnifying party does not give written
notice to the indemnified party that it contests such indemnity, the amount of
indemnity payable for such claim shall be as set forth in the indemnified
party's notice. If the indemnifying party provides written notice to the
indemnified party within such 20-day period that it contests such indemnity in
whole or in part, the parties shall attempt in good faith to reach an agreement
with regard thereto within thirty (30) days of delivery of the indemnifying
party's notice.
9.4 Claims Against Escrow Deposit. In the event that any Buyer Indemnified
Party sustains or incurs actual damages, liabilities, losses, taxes, fines,
penalties, costs or expenses, including, without limitation, attorneys fees, for
which it believes it is entitled to indemnification from Seller or the Principal
Shareholders under this Agreement and on the condition that Buyer has otherwise
complied with the provisions for asserting claims for indemnification herein
(including the right to collect directly from Seller or the Principal
Shareholders), such Buyer Indemnified Party shall be entitled to make a claim
against and receive in cash from the Escrow Deposit an amount equal to the
damages, liabilities, losses, taxes, fines, penalties, costs and expenses,
including, without limitation, attorneys fees, sustained or incurred by such
Buyer Indemnified Party. In order to assert a claim against the Escrow Fund and
potentially receive payment, in addition to the notice provisions herein, Buyer
must comply with the terms and provisions contained in the Escrow Agreement (as
defined herein).
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SECTION 10. NOTICES.
All notices and other communications required to be given hereunder, or
which may be given pursuant or relative to the provisions hereof, shall be in
writing and shall be deemed to have been given when delivered in hand or mailed,
postage prepaid, by first class United States mail, certified return receipt
requested as follows:
If to Seller: MetroLink Internet Services, Inc.
0000 Xxxx Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxx 00000
Attn.: Xxxxx Xxxxxx, President
With a copy to: Fallace & Associates, P.A.
0000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx 00000
Attn.: Xxxxx X. Xxxxxx
Fax No.: (000) 000-0000
If to Buyer: DURO Communications, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn.: Xxxxx X. Xxxxxx, President
Fax No.: (000) 000-0000
With a copy to: Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn.: Xxxxx X. Xxxxx, P.C.
Fax No.: (000) 000-0000
SECTION 11. MISCELLANEOUS.
11.1 Assignability; Binding Effect. This Agreement shall not be assignable
by Buyer or Seller except with the written consent of the other, except that
Buyer may assign its rights hereunder either (a) to any affiliate of Buyer or
its owners, (b) as a result of any merger, reorganization or other
consolidation, or (c) in connection with the granting of a security interest to
its senior lender. This Agreement shall be binding upon and shall inure to the
benefit of, the parties hereto and their respective successors and assigns.
30
11.2 Headings. The subject headings used in this Agreement are included
for purposes of convenience only and shall not affect the construction or
interpretation of any of its provisions.
11.3 Amendments; Waivers. This Agreement may not be amended or modified,
nor may compliance with any condition or covenant set forth herein be waived,
except by a writing duly and validly executed by Buyer and Seller or, in the
case of a waiver, the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any such right,
power or privilege, or any single or partial exercise of any such right, power
or privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege.
11.4 Bulk Sales Law. Buyer hereby waives compliance by Seller of any
applicable bulk sales law and Seller agrees, to make full and timely payment
when due of all amounts owed by such Seller to its creditors. Seller agrees to
indemnify and hold Buyer harmless from, and reimburse Buyer for, any loss, cost,
expense, liability or damage (including reasonable counsel fees and
disbursements and expenses) which Buyer may suffer or incur by virtue of the
non-compliance by Seller with such laws.
11.5 Entire Agreement. This Agreement, together with the schedules and
exhibits hereto, constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes and cancels any and all
prior or contemporaneous arrangements, understandings and agreements between
them relating to the subject matter hereof.
11.6 Severability. In the event that any provision or any portion of any
provision of this Agreement shall be held to be void or unenforceable, then the
remaining provisions of this Agreement (and the remaining portion of any
provision held to be void or unenforceable in part only) shall continue in full
force and effect.
11.7 Governing Law / Exclusive Venue. This Agreement and the transactions
contemplated hereby shall be construed in accordance with and governed by the
laws of the State of Florida, without regard to conflict of laws principles. The
exclusive venue for any action arising out of or relating to this Agreement
shall be Orlando, Florida.
11.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which shall
constitute the same instrument.
11.9 Expenses. Each party shall pay its own expenses incident to the
negotiation, preparation and performance of this Agreement and the transactions
contemplated hereby, including all fees and expenses of its counsel and
accountants for all activities of such counsel and accountants undertaken
pursuant to this Agreement, whether or not the transactions contemplated hereby
are consummated.
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11.10 Dispute Resolution. In the event of a dispute or breach of or
arising under this Agreement, both parties agree to attempt to amicably resolve
the dispute between themselves. Prior to either party initiating any action in a
court of competent jurisdiction for an alleged breach of this Agreement, both
parties agree to submit the dispute and/or alleged breach to non- binding
mediation before a mediator agreed to by both parties, and both parties agreed
to participate in good faith in such mediation to resolve all matters arising
under this Agreement. The cost of the mediation shall be born equally by both
parties and the mediation shall take place at an agreed location in Orlando,
Florida or other place mutually agreed upon by the parties. Only upon the
mediator determining that an impasse has been reached shall either party be
entitled to bring an action in a court of competent jurisdiction. In any action
or proceeding arising out of or relating to this Agreement or a dispute herein,
the prevailing party in such action or proceeding shall be entitled to recover
its reasonable costs, expenses and attorney fees (through the appellate levels).
11.11 Third Party Rights. This Agreement is for the benefit of the parties
hereto and is not entered into for the benefit of, and shall not be construed to
confer any benefit upon, any other party or entity.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, Seller, Principal Shareholders and Buyer have caused
this Asset Purchase Agreement to be executed as of the date first above written.
SELLER:
METROLINK INTERNET SERVICES, INC.
By: /s/ Xxxxx Xxxxxx
----------------------------------------
Xxxxx Xxxxxx, President
PRINCIPAL SHAREHOLDERS:
/s/ Xxxxx Xxxxxx
-------------------------------------------
Xxxxx Xxxxxx
/s/ Xxx Xxxxxxxxxx
-------------------------------------------
Xxx Xxxxxxxxxx
BUYER:
DURO COMMUNICATIONS, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------
Xxxxx X. Xxxxxx, President
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A - Form of Port St. Lucie Escrow Agreement
Exhibit B - Form of Escrow Agreement
Exhibit C - Form of Xxxx of Sale
Exhibit D - Form of Assignment and Assumption Agreement
Exhibit E - Form of Assignment of Internet Domain Name
Exhibit F - Form of Non-Competition Agreement
Exhibit G - Form of Opinion of Seller's Counsel
Exhibit H - Form of Opinion of Principal Shareholders' Counsel
Exhibit I - Form of Employment Agreement
Exhibit J - Form of Opinion of Buyer's Counsel
SCHEDULES
Schedule 1.1(a) Equipment
Schedule 1.1(b) Contracts
Schedule 1.1(c) Intellectual Property
Schedule 1.1(d) Licenses and Authorizations
Schedule 1.1(e) Current Assets
Schedule 1.2(a) Excluded Assets
Schedule 1.2(b) Excluded Contracts
Schedule 1.3(b) Equipment Lease Liabilities
Schedule 2.9 Litigation
Schedule 2.11 Financial Statements
Schedule 2.16(a) Subscribers
Schedule 2.16(b) Complimentary Subscriber Accounts
Schedule 2.16(c) Disconnection Policy
Schedule 2.20 Intellectual Property
Schedule 2.25(c) Beneficial Ownership of Capital Stock
33
