Exhibit 2.13
ASSET PURCHASE AGREEMENT
Agreement made as of October 27, 1999 by and between DURO Communications,
Inc., a Delaware corporation ("Buyer"), Internet of Western North Carolina, Inc.
(d/b/a Internet of Asheville) a North Carolina corporation ("Seller"), and
Xxxxxxx X. Xxxxxxxxx as the principal shareholder of the Seller (the "Principal
Shareholder").
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 and the properties, rights and assets of
Primeline Interest Services, Inc. ("Primeline") acquired by Seller immediately
prior to the Closing of the transaction contemplated herein (collectively the
"Business"),
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.
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, 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. 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 Internet connectivity, dedicated
service, web-hosting, web-domain, dial-up services, web-development and Internet
commerce, all leases with respect to real property 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");
(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 (the "Current Assets"), including cash, inventory, prepaid expenses,
security deposits, bank accounts, advance payments and all accounts receivable
of Seller incurred in the ordinary course of business and included on Seller's
balance sheet as of the Closing Date, as determined in accordance with generally
accepted accounting principles ("GAAP"), consistently applied; a complete list
of such accounts receivable is attached hereto as Schedule 1.1(e) ("Accounts
Receivable");
(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, employee records, and other business files and records, in each case
relating to the Business.
The assets, properties and business of Seller (including the properties,
rights and assets of Primeline Interest Services, Inc. (Primeline) acquired by
Seller immediately prior to the Closing of the transaction contemplated herein
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 Closing Date, the following assets
(the "Excluded Assets"):
(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 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
Closing Date as set forth on Schedule 1.2(c) attached hereto;
(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 Closing Date as set forth on Schedule 1.2(d) attached
hereto;
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(e) Corporate Records. All of Seller's corporate and other
organizational records; and
1.3 Assumed Liabilities; Excluded Liabilities; Employees.
(a) Assumed Liabilities. Buyer shall, on and as of the Closing Date,
accept and assume, and shall become and be fully liable and responsible for, and
other than as expressly set forth herein Seller shall have no further liability
or responsibility for or with respect to: (i) liabilities and obligations
arising out of events occurring on and after the Closing Date related to Buyer's
ownership of the Assets and Buyer's operation of the Business after the Closing
Date; (ii) accounts payable, advance payments by Subscribers, accrued expenses,
all deferred revenues and any other current liability of Seller as of the
Closing Date (except the current portion of any bank debt or line of credit to
be paid pursuant to Section 1.5 and except Notes Payable of Seller, as set forth
on Schedule 1.3(a) fees for professional services rendered to Seller prior to
and as of the Closing Date by the law firm of Long, Xxxxxx, Xxxxxx & Xxxxx, P.A.
and by Xxxxx, Xxxxxxx CPA Group, P.A. included on Seller's balance sheet, as
determined in accordance with GAAP consistently applied (the "Assumed Current
Liabilities"); and (iii) all obligations and liabilities of Seller which are to
be performed after the Closing Date arising under the Contracts, including,
without limitation, Seller's obligations to Subscribers (as defined in Section
2.16) under such Contracts for (A) Subscriber deposits held by Seller as of the
Closing Date in the amount for which Buyer receives a credit pursuant to Section
1.6(a) below, (B) Subscriber advance payments held by Seller as of the Closing
Date for services to be rendered in connection with the Business in the amount
for which Buyer receives a credit pursuant to Section 1.6(a) below, and (C) the
delivery of Internet connectivity service to Subscribers (whether pursuant to a
Contract or otherwise) after the Closing Date ((i), (ii) and (iii) together, the
"Assumed Liabilities"). The assumption of the Assumed Liabilities by Buyer
hereunder shall not enlarge any rights of third parties under contracts or
arrangements with Buyer or Seller or any of their respective affiliates or
subsidiaries. No parties other than Buyer and Seller shall have any rights under
this Agreement.
(b) Excluded Liabilities. It is expressly understood that, except
for the Assumed Liabilities, 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, not
specifically assumed herein by Buyer, 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 or (iii) any fact existing or event occurring prior to the
Closing Date or relating to the operation of the Business prior to the Closing
Date. The liabilities which are not assumed by Buyer under this Agreement are
hereinafter sometimes referred to as the "Excluded Liabilities."
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(c) Employees, Wages and Benefits.
(i) Seller shall terminate all of its employees effective as
of the Closing Date and Buyer shall not assume or have any obligations or
liabilities with respect to such employees or such terminations,
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
Closing.
(ii) Buyer specifically reserves the right, on or after the
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 Closing. 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.
(iii) Seller shall pay all wages, salaries, commissions, and
the cost of all fringe benefits provided to its employees which shall have
become due for work performed as of and through the day preceding the
Closing Date, and Seller shall collect and pay all Taxes in respect of
such wages, salaries, commissions and benefits. Seller shall retain
liability for benefits to all individuals entitled to benefits required to
be provided by the continuation health care coverage requirements of
Section 4980B of the Code and Sections 601 through 607 of ERISA or similar
state law as of the Closing including, without limitation, with respect to
any individual entitled to such coverage prior to the Closing and any
individual who loses health care coverage as a result of the transactions
contemplated by this Agreement.
(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 under, any Employee Program (defined
in Section 2.23 hereof) benefit plans maintained by, or for the benefit of
any employees of Seller prior to the Closing Date, including, without
limitation, obligations for severance or vacation accrued but not taken as
of the Closing Date.
1.4 The Closing. The transactions contemplated by this Agreement shall
take place at a closing (the "Closing") to be held at 10:00 a.m., local time, at
the offices of Xxxxxxx, Procter & Xxxx LLP, on the date on which all of the
conditions to closing set forth in Sections 6 and 7 of this Agreement have been
satisfied or waived, or at such other time and place as shall be mutually agreed
upon in writing by Buyer and Seller (the "Closing Date").
1.5 Purchase Price. In consideration of the sale by Seller to Buyer of the
Assets, and subject to the assumption by Buyer of the Assumed Liabilities and
satisfaction of the conditions contained herein, at the Closing, Buyer shall
deliver to Seller:
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Cash in an amount (as adjusted in accordance with Section 1.6 below,
the "Cash Purchase Price") equal to $4,200,000 as follows:
(a) Buyer shall deliver the amount payable to Colonial Pacific
Leasing set forth in the payoff letters attached hereto as Schedule 1.5(a)
(the "Colonial Payment") by bank cashier's check or bank wire transfer
pursuant to the instructions set forth in Schedule 1.5(a).
(b) Buyer shall deliver the amount payable to Sunrise Leasing
Corporation set forth in the payoff letter attached hereto as Schedule
1.5(b) (the "Sunrise Payment") by bank cashier's check or bank wire
transfer pursuant to the instructions set forth in Schedule 1.5(b).
(c) Buyer shall deliver the amount payable to US Bank of WA, N.A.
set forth in the payoff letter attached hereto as Schedule 1.5(c) (the "US
Bank Payment") by bank cashier's check or bank wire transfer pursuant to
the instructions set forth in Schedule 1.5(c).
(d) Buyer shall deliver the amount payable to Xxxxxx Financial
Leasing, Inc. set forth in the payoff letter attached hereto as Schedule
1.5(d) (the "Xxxxxx Payment") by bank cashier's check or bank wire
transfer pursuant to the instructions set forth in Schedule 1.5(d).
(e) Buyer shall deliver the amount payable to GALCO set forth in the
payoff letter attached hereto as Schedule 1.5(e) (the "GALCO Payment") by
bank cashier's check or bank wire transfer pursuant to the instructions
set forth in Schedule 1.5(e).
(f) Buyer shall deliver the amount payable to The Bank of Asheville
set forth in the payoff letter attached hereto as Schedule 1.5(f) (the
"Bank of Asheville Payment") by bank cashier's check or bank wire transfer
pursuant to the instructions set forth in Schedule 1.5(f).
(g) Buyer shall deliver the amount payable to Centura Bank set forth
in the payoff letter attached hereto as Schedule 1.5(g) (the "Centura
Payment") by bank cashier's check or bank wire transfer pursuant to the
instructions set forth in Schedule 1.5(g).
(h) Buyer shall deliver the amount payable to First Citizens Bank
set forth in the payoff letter attached hereto as Schedule 1.5(h) (the
"First Citizens Payment") by bank cashier's check or bank wire transfer
pursuant to the instructions set forth in Schedule 1.5(h).
(i) Bank shall deliver the amount payable to Xxxxxx Capital
Corporation set forth in the payoff letter attached hereto as Schedule
1.5(i) (the "Xxxxxx Capital
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Payment") by bank cashier's check or bank wire transfer pursuant to the
instructions set forth in Schedule 1.5(i).
(j) Buyer shall deposit an amount equal to the sum total of the list
of checks referenced in Section 6.17 (to be delivered by Seller to Buyer)
and hereto as Schedule 1.5(j) (the "Accounts Payable List Payment") by
cashier's check or bank wire transfer in the Internet of Asheville bank
account listed on Schedule 1.1(e).
(k) Buyer shall deliver the amount payable to Xxxx Xxxxxxx set forth
in the payoff letter attached hereto as Schedule 1.5(k) (the "Xxxxxxx
Payment") by bank cashier's check or bank wire transfer pursuant to the
instructions set forth in Schedule 1.5(k).
(l) Buyer shall deliver the amount payable to Xxx Xxxxxx set forth
in the payoff letter attached hereto as Schedule 1.5(l) (the "Xxxxxx
Payment") by bank cashier's check or bank wire transfer pursuant to the
instructions set forth in Schedule 1.5(l).
(m) Buyer shall deliver the amount payable to Xxxxx Xxxxx set forth
in the payoff letter attached hereto as Schedule 1.5(m) (the "Xxxxx
Payment") by bank cashier's check or bank wire transfer pursuant to the
instructions set forth in Schedule 1.5(m).
(n) Buyer shall deliver the amount payable to Systems Express set
forth in the payoff letter attached hereto as Schedule 1.5(n) (the
"Systems Express Payment") by bank cashier's check or bank wire transfer
pursuant to the instructions set forth in Schedule 1.5(n).
(o) Buyer shall deliver to Seller by bank cashier's check or bank
wire transfer pursuant to payment instructions delivered by Seller to
Buyer at the Closing $3,885,000 (i) plus or minus, as applicable, the
Estimated Adjustment (as defined in Section 1.6(c) below); (ii) minus the
Colonial Payment; (iii) minus the Sunrise Payment; (iv) minus the Xxxxxx
Payment; (v) minus the GALCO Payment; (vi) minus the Bank of Asheville
Payment; (vii) minus the Centura Payment; (viii) minus the First Citizens
Payment (viii) (ix) minus the Xxxxxx Capital Payment, (x) minus the
Xxxxxxx Payment, (xi) minus the Xxxxxx Payment, (xii) minus the Xxxxx
Payment, and (xiii) minus the Systems Express Payment (the "Adjusted Cash
Purchase Price").
(q) Buyer shall deposit the sum of $315,000 (the "Escrow Deposit")
with Boston Safe Deposit and Trust Company as Escrow Agent under the
Escrow Agreement in the form attached hereto as Exhibit A (the "Escrow
Agreement"). The Escrow Deposit shall be held, administered and
distributed in accordance with the terms of the Escrow Agreement, and
shall be a remedy of Buyer for any indemnification claims made pursuant to
Section 10 hereof.
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1.6 Adjustments to Purchase Price.
(a) Net Working Capital. The Purchase Price shall be decreased, on a
dollar- for-dollar basis, by the amount of Seller's Net Working Capital (as
defined herein) if such amount is negative, or increased dollar for dollar by
the amount of Seller's Net Working Capital if such amount is positive. "Net
Working Capital" means an amount equal to Current Assets minus Assumed Current
Liabilities as of the Closing Date.
(b) Revenues Adjustment Amount. The Purchase Price shall be
decreased, on a dollar-for-dollar basis, by the Revenues Adjustment Amount (as
defined herein) in the event Recurring Revenues (as defined herein) as of the
Closing Date are less than $169,000 (the "Target Revenues"). For purposes
hereof, the term "Revenues Adjustment Amount" shall equal the product obtained
by multiplying (i) $1,406 by (ii) the quotient obtained by dividing (X) the
Annualized Recurring Revenues Deficiency (as defined herein), by (Y) one
thousand dollars ($1,000). For purposes hereof, "Recurring Revenues" shall mean
revenues of Seller from Subscribers, calculated by multiplying the number of
Subscribers as of the Closing Date by the average monthly rate in effect for
such Subscribers, by type, excluding one-time set-up fees and other ancillary
charges. For purposes hereof, the term "Annualized Recurring Revenues
Deficiency" shall equal the product of the difference between (A) the Target
Revenues and (B) Recurring Revenues multiplied by twelve (12).
(c) Estimated Adjustment Statement. Prior to the Closing, Buyer and
Seller shall prepare a statement to be attached hereto as Schedule 1.6(c) (the
"Estimated Adjustment Statement") which sets forth (x) the estimated amount of
the Net Working Capital of the Business as of the Closing Date (the "Estimated
Net Working Capital") and (y) the Estimated Revenues Adjustment Amount (the
"Estimated Revenues Adjustment Amount"). The Purchase Price payable at the
Closing Date shall be decreased on a dollar-for-dollar basis by the amount of
the Estimated Revenues Adjustment Amount. The Purchase Price payable at Closing
shall be further reduced on a dollar-for-dollar basis by the amount of the
Estimated Net Working Capital if such number is negative. The Purchase Price
payable at Closing shall be increased on a dollar- for-dollar basis by the
amount of the Estimated Net Working Capital if such number is positive. The net
adjustment to the Purchase Price calculated under this subsection (c) shall be
referred to as the "Estimated Adjustment."
(d) Final Adjustment Statement.
(i) No sooner than forty-five (45) days and no later than
sixty (60) days following the Closing Date, Buyer shall prepare and
deliver to Seller a statement (the "Final Adjustment Statement") setting
forth the actual Net Working Capital and the actual Revenues Adjustment
Amount. Subject to Section 1.6(d)(ii) below, within ten (10) days
following the delivery of such Final Adjustment Statement to Seller, Buyer
or Seller, as the case may be, shall pay to the other party, by wire
transfer of immediately available funds, the net difference between (x)
the Estimated Net Working Capital, as
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shown on the Estimated Adjustment Statement, and the actual Net Working
Capital, as shown on the Final Adjustment Statement and (y) the Estimated
Revenues Adjustment Amount, as shown on the Estimated Adjustment
Statement, and the actual Revenues Adjustment Amount, as shown on the
Final Adjustment Statement
(ii) In the event Seller objects to the Final Adjustment
Statement, Seller shall notify Buyer in writing of such objection within
the ten (10) day period following the delivery thereof, stating in such
written objection the reasons therefor and setting forth the Seller's
calculation of Seller's actual Net Working Capital and/or Seller's actual
Recurring Revenue at the Closing Date. Upon receipt by Buyer of such
written objection, the parties shall attempt to resolve the disagreement
concerning the Final Adjustment Statement through negotiation.
Notwithstanding any other dispute resolution procedure provided for in
this Agreement, if Buyer and Seller cannot resolve such disagreement
concerning the Final Adjustment Statement within thirty (30) days
following the end of the foregoing 10-day period, the parties shall submit
the matter for resolution to a nationally recognized firm of independent
certified public accountants not affiliated with either party, with the
costs thereof to be shared equally by the parties. Such accounting firm
shall deliver a statement setting forth its own calculation of the final
adjustment to the parties within thirty (30) days of the submission of the
matter to such firm. Any payment shown to be due by a party on the
statement of such accounting firm shall be paid to the other party
promptly but in no event later than five (5) days following the delivery
of such statement by such accounting firm to the parties.
1.7 Purchase Price Allocation. At or prior to the Closing, Seller shall
determine the allocation of the Purchase Price, subject to Buyer's prior
approval. Such allocation shall be binding upon Buyer and Seller for all
purposes (including financial accounting purposes, financial and regulatory
reporting purposes and tax purposes). Buyer and Seller each further agrees to
file its Federal income tax returns and its other tax returns reflecting such
allocation, Form 8594 and any other reports required by Section 1060 of the
Code.
1.8 Records and Contracts. To the extent not previously provided to Buyer,
at the 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
Closing all of Seller's files and records constituting Assets.
1.9 Sales and Transfer Taxes. All sales, transfer, use, recordation,
documentary, stamp, excise taxes, personal property taxes, fees and duties under
applicable law 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.
1.10 Transfer of Assets. At the Closing, Seller shall deliver or cause to
be delivered to Buyer good and sufficient instruments of transfer transferring
to Buyer title to all of the Assets, together with all required consents. Such
instruments of transfer (a) shall contain appropriate
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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 be in form and substance reasonably satisfactory to Buyer
and its counsel, (c) 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 (d) where applicable, shall be accompanied by evidence of the
discharge of all Liens against the Assets.
1.11 Post-Closing Audits. The Company and the Principal Shareholder hereby
agree to provide such assistance as Buyer reasonably requests to enable Buyer
and its accountant to complete an audit of the pre-Closing financial statement
of Buyer, including, without limitation, providing access to books and records
and executing management representation letters.
1.12 Credit Card Transactions. During the 60-day period following the
Closing Date, Seller, as acquirer of Primeline's First Citizens bank account,
agrees to allow Buyer to deposit credit card payments from Subscribers that are
made to Seller's First Citizens bank account. Seller covenants and agrees to
transfer such payments to Buyer on a weekly basis or at such other time as
reasonably requested by Buyer. At the end of such 60-day period, Buyer shall
provide to Seller a statement of all such payments that were made. Buyer agrees
to indemnify Seller for all losses, damages, chargebacks and claims arising from
the arrangements described in this Section 1.12.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SELLER AND PRINCIPAL SHAREHOLDER.
In order to induce Buyer to enter into this Agreement, Seller and the
Principal Shareholder, 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 North Carolina. 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 is not required to be licensed or qualified to conduct
its business or own its property in any other jurisdiction.
(b) Except as set forth on Schedule 2.1 attached hereto, Seller has
no subsidiaries and does not own any securities issued by any other business
organization or governmental authority, except U.S. Government securities, bank
certificates of deposit and money market accounts acquired as short-term
investments in the ordinary course of its business. Seller does not own or have
any direct or indirect interest in or control over any corporation, partnership,
joint venture or entity of any kind.
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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 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 Shareholder 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 hereby and thereby. 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 Shareholder 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, order, 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 the Principal
Shareholder 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 the Principal Shareholder is a party
or by which the Principal Shareholder is bound, (ii) violate any judgment,
decree, order, statute, rule or regulation applicable to the Principal
Shareholder, (iii) require the Principal Shareholder 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 or caused 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, gross receipts taxes, franchise taxes, capital stock taxes,
employment and payroll-related taxes, withholding taxes, stamp taxes, transfer
taxes, windfall profit taxes, environmental taxes and property taxes, whether or
not
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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, and all such returns correctly and accurately set forth the amount of
any Taxes relating to the applicable period. A list of all federal, state, local
and foreign income tax returns filed with respect to Seller for taxable periods
ended on or after December 31, 1993, is set forth on Schedule 2.4 attached
hereto. Seller has delivered to Buyer correct and complete copies of all
federal, state, local and foreign income tax returns listed on said schedule,
and of all examination reports and statements of deficiencies assessed against
or agreed to by Seller with respect to said returns.
(c) Neither the Internal Revenue Service nor any other governmental
authority is now asserting or, to the knowledge of Seller or the Principal
Shareholder, 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 closing agreement pursuant to
Section 7121 of the Internal Revenue Code of 1986, as amended (the "Code").
(d) There has not been any audit of any tax return filed by Seller,
no audit of any tax return of 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 include any predecessor provisions to such Sections and any
similar provisions of federal, state, local or foreign law.
2.5 Compliance with Laws. Seller's operation of the Business and the
Assets is in compliance in all material respects with all applicable statutes,
ordinances, orders, rules and
11
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
insured to the extent disclosed on Schedule 2.6 attached hereto, and all
insurance policies and arrangements of Seller in effect as of the date hereof
are disclosed on said Schedule. Said insurance policies and arrangements are in
full force and effect, all premiums with respect thereto are currently paid, and
Seller is in compliance in all material respects with the terms thereof. Said
insurance is adequate and customary for the business engaged in by Seller and is
sufficient for compliance by Seller with all requirements of law and all
agreements and leases to which Seller is a party.
2.7 Contracts. The Contracts constitute all leases, contracts and
arrangements, whether oral or written, under which Seller is bound or to which
Seller is a party which relate to the Business or Assets. Schedule 1.1(b)
attached hereto contains a true, correct and complete list of all Contracts.
With respect to each oral agreement or understanding involving the Business,
Seller has provided a written summary of the material terms of each such
agreement or understanding on Schedule 1.1(b). Each Contract is valid, in full
force and effect and binding upon Seller and the other parties thereto in
accordance with its terms. Neither Seller nor, to the knowledge of Seller and
the Principal Shareholder, any other party is 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, nor does any condition
exist that with notice or lapse of time or both would constitute such a default,
and no waiver or indulgence has been granted by any party under any Contract.
Seller has not received notice of, and each of Seller and the Principal
Shareholder has 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 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 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. All of the tangible Assets are in good repair, have been well
maintained and are in good operating condition, ordinary wear and tear excepted,
do not require any material modifications or repairs, and comply in all material
respects with applicable laws, ordinances and regulations. Seller has delivered
complete and true copies of all real property leases (the "Leases") set forth on
Schedule 1.1(b). Seller holds good, clear, marketable, valid and enforceable
leasehold interest in the real property subject to the Leases (the "Leased Real
Property"), subject only to the right of reversion of the landlord or lessor
under the Leases, free and clear of all other prior or subordinate interests,
including, without limitation, mortgages,
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deeds of trust, ground leases, leases, subleases, assessments, tenancies,
claims, covenants, conditions, restrictions, easements, judgments or other
encumbrances or matters affecting title, and free of encroachments onto or off
of the leased real property. 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 all of such improvements are in good operating
condition and repair, have been well maintained. To the knowledge of Seller and
Principal Shareholder 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. Seller
does not hold or own a fee interest in any real property.
2.9 No Litigation. Except as set forth on Schedule 2.9 attached hereto,
Seller is not now involved in nor, to the knowledge of Seller and the Principal
Shareholder, is Seller threatened to be involved in 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. 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 7 full-time
employees and 4 part-time employees (additionally Primeline employees 6
employees) and generally enjoys good employer-employee relationships. Seller
shall provide to Buyer a list of the employees of Seller in connection with the
Business at the Closing, including the name, date of hire and wages of such
employees. Seller is not delinquent in payments to any of its employees for any
wages, salaries, commissions, bonuses or other direct compensation for any
services performed for it to the date hereof or amounts required to be
reimbursed to such employees. Upon termination of the employment of any of said
employees, neither Seller nor Buyer will by reason of the transactions
contemplated hereby or anything done prior to the Closing be liable to any of
said employees for so-called "severance pay" or any other payments, except as
set forth on Schedule 2.10 attached hereto. Seller does not have any policy,
practice, plan or program of paying severance pay or any form of severance
compensation in connection with the termination of employment, except as set
forth on said Schedule. Seller is in compliance in all material respects with
all applicable laws and regulations respecting labor, employment, fair
employment practices, work place safety and health, terms and conditions of
employment, and wages and hours. There are no charges of employment
discrimination or unfair labor practices, nor are there any strikes, slowdowns,
stoppages of work, or any other concerted interference with normal operations
existing, pending or, to the knowledge of Seller and the Principal Shareholder,
threatened against or involving Seller. No question concerning representation
exists respecting any group of employees of Seller. No collective bargaining
agreement is in effect or is currently being or is about to be negotiated by
Seller. Seller has received no information to indicate that any of its
employment policies or practices is currently being audited or investigated by
any
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federal, state or local government agency. Seller is, and at all times since
November 6, 1986 has been, in compliance with the requirements of the
Immigration Reform Control Act of 1986.
2.11 Financial Statements. Attached hereto as Schedule 2.11 are copies of
the balance sheet of Seller as at June 30, 1999 (the "Base Balance Sheet") and
the statements of income and expense of Seller for the month of June and the six
(6) months ended June 30, 1999 (collectively the "Financial Statements"). The
Financial Statements have been 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), are 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 of the Base Balance Sheet (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. As of the date hereof and at the 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.
2.12 Business Since the Base Balance Sheet Date. 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, other than Seller's purchase of
certain rights, properties and assets of Primeline immediately prior to this
Closing, as previously set forth herein;
(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;
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(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"). The Authorizations constitute all of the licenses, permits
and authorizations required for operation of the Business as now operated. All
of the Authorizations are in full force and effect and no licenses, permits or
authorizations of any governmental department or agency are required for the
operation of the Business which have not been duly obtained. As of the date
hereof, there is not pending or, to the knowledge of Seller and the Principal
Shareholder, 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 Shareholder, 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. Except as set forth on Schedule 2.14 attached
hereto, 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. All of the approvals, consents and authorizations listed on
Schedule 2.14 shall be obtained by Seller at or prior to the Closing.
2.15 Customers and Suppliers. Seller's relations with its customers and
suppliers, including its Subscribers (as defined in Section 2.16 below), are
good and there are not pending or, to Seller's knowledge, threatened claims or
controversies with any customer, supplier or Subscriber that is material to the
Assets or the Business.
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 subscriber to Internet services offered by
Seller in the Business (including Subscribers Seller acquired from Primeline
immediately prior to the Closing of the transaction contemplated herein) who has
subscribed to a service for at least one month and has paid at least one xxxx,
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 who is (i) more than
thirty (30) days delinquent in payment of such person's xxxx for such services
provided by the Business (thirty (30) days delinquent shall mean sixty (60)
15
days have elapsed since the billing date, as stated on such xxxx), (ii) any
person who cancels their subscription for Internet Services offered by Seller
within sixty (60) days of the Closing (Buyer shall receive credit for any such
cancelled subscriptions in the Final Adjustment Statement) and (iii) any person
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 on Schedule 2.16(c), at all times since its inception, complied in all
material respects.
2.17 Brokers. Except as set forth in Schedule 2.17 attached hereto, 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. All of the Accounts Receivable
of Seller are or will be as of the Closing Date bona fide, valid and enforceable
claims, subject to no set off or counterclaim and are collectible in accordance
with their terms. 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 Banking Relations. All of the arrangements which Seller has with any
banking institution are completely and accurately described in Schedule 2.19
attached hereto, indicating with respect to each of such arrangements the type
of arrangement maintained (such as checking account, borrowing arrangements,
safe deposit box, etc.) and the person or persons authorized in respect thereof.
2.20 Intellectual Property.
(a) All of the Intellectual Property of Seller is set forth on
Schedule 2.20 attached hereto. For purposes hereof, the term "Intellectual
Property" includes: (i) all patents, patent applications, patent rights, and
inventions and discoveries and invention disclosures (whether or not patented)
(collectively, "Patents"); (ii) Seller's rights to the names (Internet of
Western North Carolina, Internet of Asheville, Cheetah Communications, Inc. and
Alph-Tech On-line, Inc., Primeline Internet Services, Inc. ), 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"); (iii) all copyrights
in both published and unpublished works, including, without limitation, all
compilations, databases and computer programs, and all copyright registrations
and applications, and all derivatives, translations, adaptations and
combinations of the above (collectively, "Copyrights"), (iv) 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,
16
techniques, Beta testing procedures and Beta testing results (collectively,
"Trade Secrets"); (v) Seller's web-sites (including the domain name ("xxx.xxx,"
"xxxx-x.xxx," "xxxxx.xxx," "x-x.xxx," "xxxxxxxxx.xxx," "xxxxxxxxxxxxxxxxx.xxx"
and "xxx.xxx") and any other similar domain name); (vi) all goodwill,
franchises, licenses, permits, consents, approvals, technical information,
telephone numbers, and claims of infringement against third parties (the
"Rights"); and (vii) 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) Except as described on Schedule 2.20, Seller has exclusive
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
Shareholder, 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 Shareholder, 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.
Except as set forth on Schedule 2.20 attached hereto, all former and
current employees, consultants and contractors of Seller have executed written
instruments with Seller that assign to Seller all rights to any inventions,
improvements, discoveries, or information relating to the business of Seller. To
the best knowledge of Seller after inquiry, 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 Patents. All of the issued Patents are
currently in compliance with formal legal requirements (including without
limitation payment of filing, examination and maintenance fees and proofs of
working or use), are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within ninety (90) days after
the Closing Date. In each case where a Patent is held by Seller by assignment,
the assignment has been duly recorded with the U.S. Patent and Trademark Office
and all other jurisdictions of registration. No Patent has been or is now
involved in any interference, reissue, re-examination or opposition proceeding.
To the knowledge of Seller and the Principal Shareholder, there is no
potentially interfering Patent of any third party. All products made, used or
sold under the Patents have been marked with the proper patent notice.
(d) Schedule 2.20 sets forth a complete and accurate list and
summary description of all of Seller's Marks. All Marks that have been
registered with the United States
17
Patent and Trademark Office and/or any other jurisdiction are currently in
compliance with formal legal requirements (including, without limitation, the
timely post-registration filing of affidavits of use and incontestability and
renewal applications), are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within ninety (90) days after
the Closing Date. In each case where a Trademark is held by Seller by
assignment, the assignment has been duly recorded with the U.S. Patent and
Trademark Office and all other jurisdictions of registration. No Xxxx has been
or is now involved in any opposition, invalidation or cancellation proceeding
and, to the knowledge of Seller and the Principal Shareholder, no such action is
threatened with respect to any of the Marks. All products and materials
containing a Xxxx xxxx the proper notice where permitted by law.
(e) Schedule 2.20 sets forth a complete and accurate list and
summary description of all of Seller's Copyrights. All the Copyrights have been
registered with the United States Copyright Office and are currently in
compliance with formal legal requirements, are valid and enforceable, and are
not subject to any fees or taxes or actions falling due within ninety (90) days
after the Closing Date. In each case where a Copyright is held by Seller by
assignment, the assignment has been duly recorded with the U.S. Copyright Office
and all other jurisdictions of registration. All copies of works encompassed by
the Copyrights have been marked with the proper copyright notice.
(f) Except as set forth in Schedule 2.20 attached hereto, Seller has
taken all reasonable security measures (including, without limitation, entering
into appropriate confidentiality and non-disclosure agreements with all
officers, directors, employees, consultants and contractors of Seller and any
other persons with access to the Trade Secrets) to protect the secrecy,
confidentiality and value of all Trade Secrets. To the knowledge of Seller and
the Principal Shareholder, there has not been any breach by any party to any
such confidentiality or non-disclosure agreement. The Trade Secrets have not
been disclosed by Seller to any person or entity other than employees or
contractors of Seller who had a need to know and use the Trade Secrets in the
course of their employment or contract performance. Seller has the right to use,
free and clear of claims of third parties, all Trade Secrets. To the knowledge
of Seller and the Principal Shareholder, there is not any assertion that the use
by Seller of any Trade Secret violates the rights of any third party.
(g) Seller has the exclusive right to use, license, distribute,
transfer and bring infringement actions with respect to the Intellectual
Property. Except as set forth on Schedule 2.20, 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 or transfer of any of its Intellectual Property.
(h) All licenses or other agreements under which Seller is granted
rights by others in Intellectual Property are listed on Schedule 2.20. All such
licenses or other agreements are in full force and effect, to the knowledge of
Seller and the Principal Shareholder 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
18
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.
(i) All licenses or other agreements under which Seller has granted
rights to others in Intellectual Property are listed on Schedule 2.20. All such
licenses or other agreements are in full force and effect, and to the knowledge
of Seller and the Principal Shareholder there is no material default by any
party thereto. True and complete copies of all such licenses or other
agreements, and any amendments thereto, have been provided to Buyer.
(j) Seller has reviewed the areas within its businesses and
operations which could be adversely affected by, and has developed a program to
address on a timely basis, 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). Seller and the Principal
Shareholder reasonably believe that the "Year 2000 Problem" will not have any
material adverse effect on the business or operations of Seller.
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 as set forth on Schedule
2.22 hereto, neither Seller, nor any shareholder, officer, supervisory employee
or director of Seller or, to the knowledge of Seller or the Principal
Shareholder, 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.
(a) Schedule 2.23 sets forth a list of every Employee Program (as
defined in Section 2.23(c) below) that has been maintained by the Seller or an
Affiliate (as defined herein) at any time during the six-year period ending on
the Closing Date. Each Employee Program which has ever been maintained by the
Seller or an Affiliate and which has been intended to qualify under Section
401(a) or 501(c)(9) of the Code has received a favorable determination or
approval letter from the Internal Revenue Service ("IRS") regarding its
qualification under such section and has, in fact, been qualified under the
applicable section of the Code from the effective date of such Employee Program
through and including the Closing Date (or, if earlier, the date that all of
such Employee Program's assets were distributed). No event or omission has
occurred which would cause any such Employee Program to lose its qualification
or otherwise fail to satisfy the relevant requirements to provide tax-favored
benefits under the applicable Code Section (including without limitation Code
Sections 105, 125, 401(a) and 501(c)(9)). With respect to any Employee Program
ever maintained by the Seller or any Affiliate, there has been
19
no (i) "prohibited transaction," as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or Code Section
4975, or (ii) failure to comply with any provision of ERISA, other applicable
law, or any agreement which, in the case of either of (i) or (ii), could subject
the Seller or any Affiliate to liability either directly or indirectly
(including, without limitation, through any obligation of indemnification or
contribution) for any damages, penalties, or taxes, or any other loss or
expense. All payments and/or contributions required to have been made (under the
provisions of any agreements or other governing documents or applicable law)
with respect to all Employee Programs ever maintained by the Seller or any
Affiliate, for all periods prior to the Closing Date, either have been made or
have been accrued (and all such unpaid but accrued amounts are described on
Schedule 2.23). Each Employee Program ever maintained by the Seller or an
Affiliate has complied with the applicable notification and other applicable
requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985.
(b) Neither the Seller nor any Affiliate (A) has ever maintained any
Employee Program which has been subject to title IV of ERISA or Code Section
412, including, but not limited to, any Multi Employer Plan (as defined in
Section 3(37) of ERISA) or (B) has ever provided health care or any other
non-pension benefits to any employees after their employment is terminated
(other than as required by part 6 of subtitle B of title I of ERISA) or has ever
promised to provide such post-termination benefits.
(c) For purposes of this section:
(i) "Employee Program" means all employee benefit plans within
the meaning of ERISA Section 3(3) as well as all other employee benefit
plans, agreements and arrangements of any kind.
(ii) An entity "maintains" an Employee Program if such entity
sponsors, contributes to, or provides benefits under or through such
Employee Program, or has any obligation (by agreement or under applicable
law) to contribute to or provide benefits under or through such Employee
Program, or if such Employee Program provides benefits to or otherwise
covers employees of such entity (or their spouses, dependents, or
beneficiaries).
(iii) An entity is an "Affiliate" of the Seller if it would
have ever been considered a single employer with the Seller under ERISA
Section 4001(b) or part of the same "controlled group" as the Seller for
purposes of ERISA Section 302(d)(8)(C).
2.24 Environmental Matters.
(a) Except as set forth in Schedule 2.24, (i) To the knowledge of
Seller and Principal Shareholder, 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) to the knowledge of Seller and the
Principal Shareholder, no Hazardous Material (as defined in Section
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2.24(c) below) has ever been or is threatened to be spilled, released, or
disposed of at any site associated with a structure presently or formerly owned,
operated, leased, or used by Seller, or has ever been located in the soil or
groundwater at any such site; (iii) to the knowledge of Seller and the Principal
Shareholder, no Hazardous Material has ever been transported 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 either Seller in connection with
the presence of any Hazardous Material.
(b) Except as set forth on Schedule 2.24 and to the knowledge of
Seller and the Principal Shareholder, (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, nor any property associated with a structure owned,
operated, leased, or used by Seller, nor facilities or operations thereon are
presently not in compliance with all applicable Environmental Laws; (iii) 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 (iv) neither Seller nor the Principal Shareholder has any
knowledge or reason to know that any of the items enumerated in clause (iii) 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 Disclosure. The representations, warranties and statements contained
in this Agreement and in the certificates, exhibits and schedules delivered by
Seller and the Principal Shareholder 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. There are no facts known
to Seller or the Principal Shareholder which presently or may in the future have
a material adverse affect on the Business, properties, Assets, prospects,
operations or (financial or other) condition of Seller which has not been
specifically disclosed herein or in a Schedule furnished
21
herewith, other than general economic or market conditions affecting the
Internet services industry generally.
2.26 Non-Disclosure. Seller agrees that it and its representatives prior
to the Closing Date, except as and to the extent required by law, without prior
written consent of Buyer shall not make any public comment, statement, or
communication with respect to the transactions contemplated hereby.
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 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 and the issuance and delivery of the
Shares do 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 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, Buyer has
not retained any broker or finder or other person who would have any valid claim
against any of the
22
parties to this Agreement for a commission or brokerage fee in connection with
this Agreement or the transactions contemplated hereby.
3.5 Non-Disclosure. Buyer agrees that it and its representatives prior to
the Closing Date, except as and to the extent required by law, without prior
written consent of Seller shall not make any public comment, statement, or
communication with respect to the transactions contemplated hereby.
SECTION 4. COVENANTS OF SELLER.
Seller covenants and agrees that:
4.1 Access to Premises and Records. Subject to Section 5.1 of this
Agreement and to the terms and conditions of the Mutual Non-Disclosure Agreement
defined in Section 4.8, from the date hereof until consummation of the
transactions contemplated hereby at the Closing, Seller shall give Buyer and its
representatives, at reasonable times and with reasonable prior notice, free
access to the properties, books and records of the Business and to the Assets
and will furnish to Buyer and its representatives such information regarding the
Business and the Assets as Buyer or its representatives may from time to time
reasonably request in order that Buyer may have full opportunity to make a
diligent investigation consistent with this Agreement. In addition to, and not
in limitation of the foregoing, Seller shall provide Buyer with access to and
copies of the records of all: (a) Accounts Receivable, (b) Subscriber xxxxxxxx,
(c) pre-paid accounts, (d) accounts for which no remuneration is received by
Seller and (e) general reports with respect to each category of service provided
by the Business.
4.2 Continuity and Maintenance of Operations of the Business. Except as to
actions of which Buyer has been advised and to which Buyer has consented to in
writing, except for Seller's purchase of certain assets, properties and rights
of Primeline and except as specifically permitted or required by this Agreement,
Seller shall:
(a) Operate the Business in the ordinary course consistent with past
practices, use its commercially reasonable efforts to keep available the
services of the employees who are involved in the operation of the Business, and
use commercially reasonable efforts to preserve any beneficial business
relationships with Subscribers, customers, suppliers and others having business
dealings with Seller relating to the Business;
(b) Use and operate the Assets in a manner consistent with past
practice and maintain the Assets in good operating condition, ordinary wear and
tear excepted;
(c) Maintain insurance upon the Assets in such amounts and types as
in effect on the date of this Agreement as set forth in Schedule 2.6 attached
hereto;
23
(d) Keep all of its business books, records and files in the
ordinary course of business in accordance with past practices, and provide Buyer
with access thereto upon its reasonable request;
(e) Continue to implement and enforce its procedures for
disconnection and discontinuance of service to Subscribers whose accounts are
delinquent in accordance with those in effect on the date of this Agreement;
(f) Perform and comply in all material respects with the terms of
the Contracts and keep such Contracts in full force and effect; and
(g) Use its reasonable best efforts to preserve the goodwill of the
Business.
4.3 Negative Covenants. Seller shall not, without the prior written
consent of Buyer:
(a) Sell, transfer, lease, assign or otherwise dispose of, or agree
to sell, transfer, lease, assign or otherwise dispose of, any Assets outside the
ordinary course of business;
(b) Enter into any contract or commitment for the acquisition of
goods or services relating to the Business (other than in the ordinary course of
business and other than the acquisition of certain assets of Primeline) or which
otherwise obligates Seller to perform in full or in part beyond the Closing
Date;
(c) Hire any new employees or enter into any employment arrangements
or otherwise increase the salary or compensation of any existing employees;
(d) Renegotiate, modify, amend or terminate any Contract;
(e) Create, assume, or permit to exist, or agree to incur, assume or
acquire, any Lien, claim or liability on the Assets;
(f) Make any modifications or changes to the existing rate schedules
or product offerings in effect with respect to the Business;
(g) Offer or employ any sales discounts, free services or other
extraordinary marketing practices or extraordinary promotions outside the
ordinary course of business and not consistent with Seller's past practices;
(h) Take any actions or permit its employees and agents to take any
actions which would materially interfere with or preclude the transactions
contemplated by this Agreement; or
(i) Cause or permit the provision for any new and material pension,
retirement or other employment benefits for employees who perform services in
connection with
24
the conduct of the Business or any material increase in any existing benefits
(other than as required by law).
4.4 Consents. Seller will use its reasonable best efforts to obtain, as
soon as practicable and at its expense, the consent of all third parties under
the Contracts for which the prior approval of such third party is required
pursuant to the terms of the Contract; provided, however, that "reasonable best
effort" for this purpose shall not require Seller to undertake extraordinary or
unreasonable measures to obtain such approvals and consents, including, without
limitation, the initiation or prosecution of legal proceedings or the payment of
fees in excess of customary filing and processing fees.
4.5 Notification of Certain Matters. Seller shall promptly notify Buyer of
(i) any fact, event, circumstances or action the existence or occurrence of
which would cause any of Seller's representations or warranties under this
Agreement, or the disclosures in any schedules or exhibits attached hereto, not
to be true in any material respect and (ii) any failure on its part to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement. Seller shall promptly
notify buyer in writing of the assertion, commencement or threat of any claim,
litigation, proceeding or investigation in which Seller is a party or in which
the Assets or Business may be affected and which could reasonably be expected to
be material or which relates to the transactions contemplated hereby.
4.6 Adverse Change. Seller shall promptly notify Buyer in writing of any
materially adverse developments affecting the Assets or the Business which
become known to Seller, including, without limitation, (i) any damage,
destruction or loss (whether or not covered by insurance) materially and
adversely affecting any of the Assets or the Business, (ii) any material notice
of violation, forfeiture or complaint under any material Contract, or (iii)
anything which, if not corrected prior to the Closing Date, would prevent Seller
from fulfilling any condition to Closing described in Section 6 hereof.
4.7 No Solicitation. Seller shall not, and Seller shall cause its
officers, employees, stockholders, agents and representatives (including,
without limitation, any investment banker, attorney or accountant retained by
Seller) and all other employees who perform services with respect to the
operation of the Business not to, initiate, solicit, entertain, or encourage,
directly or indirectly, any inquiries or the making of any proposal with respect
to the Assets or the Business, or engage in any negotiations concerning, or
provide to any other person any information or data relating to, the Business,
the Assets or Seller for the purpose of, or have any discussions with, any
person relating to, or otherwise cooperate in any way with or assist or
participate in, facilitate or encourage, any inquiries or the making of any
proposal which constitutes, or may reasonably be expected to lead to, any effort
or attempt by any other person to seek or effect a transaction, or enter into a
transaction with any person or persons, other than Buyer, concerning the
possible sale of the Assets or Business, or the capital stock of Seller. Seller
shall promptly inform Buyer of any such inquiries or proposals and provide all
pertinent documentation related thereto.
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4.8 Confidentiality. Seller agrees that it and its representatives will
hold in strict confidence, and will not use, any confidential or proprietary
data or information obtained from Buyer with respect to its business or
financial condition except for the purpose of evaluating, negotiating and
completing the transactions contemplated hereby. Information generally known in
Buyer's industry or which has been disclosed to Seller by third parties which
have a right to do so shall not be deemed confidential or proprietary
information for purposes of this Agreement. If the transactions contemplated by
this Agreement are not consummated, Seller will return, and cause its respective
officers, directors, agents and representatives to return, to Buyer (or certify
that they have destroyed) all copies of such data and information made available
to Seller (and its officers, directors, agents and representatives) in
connection with the transaction. The Mutual Non-Disclosure Agreement by and
among Buyer, Seller and Rampart Associates, LLC (the "Mutual Non-Disclosure
Agreement") shall remain in full force and effect.
4.9 Use of Trade Names. Except as set forth on Schedule 4.9, After the
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, except for Principal Shareholder, in connection with
his employment with Buyer, (a) use the names ("Internet of Western North
Carolina," "Internet of Asheville," "Cheetah Communications, Inc.," "Alph-Tech
On-line," Inc.," "Primeline Internet Services, Inc.," "xxx.xxx," "xxxx-x.xxx,"
"xxxxx.xxx" "a- x.xxx," "xxxxxxxxx.xxx," "xxxxxxxxxxxxxxxxx.xxx" and "xxx.xxx")
or any other Internet domain name used or useful in the business of Seller, or
any other 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.
4.10 Post-Closing Transitional Matters. For a period of ninety (90) days
following the Closing, Seller shall provide, without additional cost to Buyer,
such assistance as is reasonably requested by Buyer in order to effect an
orderly transition in the ownership and operation of the Assets; provided,
however, such post-Closing assistance shall not, in any event, exceed ten (10)
hours per week.
4.11 Collection of Assets. Subsequent to the Closing, Buyer shall have the
right and authority to collect all receivables 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 or other items, 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 claims,
contracts, licenses, leases, commitments, sales orders, purchase orders,
receivables of any character or any other items included in the Assets.
4.12 Payment of Obligations. Seller shall pay all of the Excluded
Liabilities in the ordinary course of business as they become due.
4.13 Further Assurances. Seller, from time to time after the Closing at
the request of Buyer and without further consideration, shall execute and
deliver further instruments of transfer and assignment and take such other
action as Buyer may reasonably require to more effectively
26
transfer and assign to, and vest in, Buyer the Assets free and clear of all
Liens (as defined in Section 2.8).
SECTION 5. COVENANTS OF BUYER.
Buyer covenants and agrees that:
5.1 Confidentiality. Buyer agrees that, from the date hereof until
consummation of the transactions contemplated hereby at the Closing, Buyer and
its representatives will hold in strict confidence, and will not use, any
confidential or proprietary data or information obtained from Seller with
respect to its business or financial condition except for the purpose of
evaluating, negotiating and completing the transactions contemplated hereby.
Information generally known in Seller's industry or which has been disclosed to
Buyer by third parties which have a right to do so shall not be deemed
confidential or proprietary information for purposes of this Agreement. If the
transactions contemplated by this Agreement are not consummated, Buyer will
return, and cause its respective officers, directors, agents and representatives
to return, to Seller (or certify that they have destroyed) all copies of such
data and information made available to Buyer (and its officers, directors,
agents and representatives) in connection with the transaction.
5.2 Assumed Liabilities. From and after the Closing Date, Buyer shall pay
and/or perform the Assumed Liabilities in the ordinary course as they become
due.
5.3 Notification of Certain Matters. Buyer shall promptly notify Seller of
(i) any fact, event, circumstances or action the existence or occurrence of
which would cause any of Buyer's representations or warranties under this
Agreement, or the disclosures in any schedules or exhibits attached hereto, not
to be true in any material respect and (ii) any failure on its part to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement. Buyer shall promptly
notify Seller in writing of the assertion, commencement or threat of any claim,
litigation, proceeding or investigation in which Seller is a party or in which
the Assets or Business may be affected and which could reasonably be expected to
be material or which relates to the transactions contemplated hereby.
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATION OF BUYER.
Buyer's obligation to consummate the transactions contemplated by this
Agreement is subject to the satisfaction, on or prior to the 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
27
to be performed or complied with by Seller prior to or upon the Closing Date and
shall have delivered all documents and items required to be delivered at or
prior to the Closing, including, without limitation:
(a) A certificate, dated the Closing Date, from the President of
Seller to the effect that the conditions set forth in Sections 6.1 and 6.2 have
been satisfied;
(b) A certificate, dated the Closing Date, from Seller's Secretary
as to the Certificate of Incorporation, By-Laws, authority and the incumbency of
all officers executing the Seller Documents on behalf of Seller;
(c) A certified copy of Seller's Certificate of Incorporation from
the Secretary of State of the State of North Carolina;
(d) An Amendment to the Certificate 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
Closing;
(e) A Certificate of Good Standing from the Secretary of State of
the State of North Carolina; and
(f) Such other certificates and instruments reasonably requested by
Buyer.
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;
(c) An Assignment of Patents and Trademarks in the form attached
hereto as Exhibit E;
(d) An Assignment of Internet Domain Name in the form attached
hereto as Exhibit F; and
(e) Such other instruments of transfer reasonably requested by
Buyer.
6.3 Assignment of Contracts and Authorizations; Approvals. All Contracts
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 in form and substance satisfactory to
28
Buyer and without conditions materially and adversely affecting Buyer and which
do not require Buyer to pay money to any party to any such Contract or
Authorization in excess of amounts required to be so paid pursuant to the terms
and conditions thereof. 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 Shareholder, 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 and the Principal Shareholder shall
have executed and delivered to Buyer a Non-competition Agreement in
substantially the form attached hereto as Exhibit G.
6.6 Release of Liens. Seller shall have obtained and delivered to Buyer at
or prior to the 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 or
opinions of Long, Xxxxxx, Xxxxxx & Xxxxx, P.A., counsel for Seller, dated the
Closing Date, substantially in the form of Exhibit H attached hereto.
6.8 Closing Date Balance Sheet. No later than thirty (30) days following
the Closing, Seller shall provide to Buyer a balance sheet dated as of the
Closing, as determined in accordance with GAAP consistently applied, which
includes, but is not limited to, Seller's accounts receivable, accounts payable,
and all deferred and all unearned revenue.
6.9 Employment Agreement. Buyer and Xxxxxxx X. Xxxxxxxxx shall have
entered into an Employment Agreement in a form mutually agreeable to both Buyer
and Xx. Xxxxxxxxx.
6.10 Board of Directors Approval. Buyer shall have received at or prior to
the Closing the approval of its Board of Directors for this transaction and all
related documents.
6.11 Due Diligence. Buyer shall have completed to its satisfaction a due
diligence investigation of the Seller and of its Assets, liabilities, operations
and of the financial statements.
6.12 Consents. Seller shall have made all filings with and notifications
of governmental authorities, regulatory agencies and other entities required to
be made by such Seller in connection with the execution and delivery of this
Agreement, the performance of the transactions contemplated hereby and the
continued operation of the Business by Buyer subsequent to the Closing Date; and
Seller shall have received all authorizations, waivers,
29
consents and permits, in form and substance reasonably satisfactory to Buyer,
from all third parties, including, without limitation, applicable governmental
authorities, regulatory agencies, lessors, lenders and contract parties,
required to permit the continuation of the Business and the consummation of the
transactions contemplated by this Agreement, and in connection with the transfer
of all assets, except the Excluded Assets, or Sellers' contracts, permits,
leases and licenses, to avoid a breach, default, termination, acceleration or
modification of any material indenture, loan or credit agreement or any other
material agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award as a result of, or in connection with, the execution and
performance of this Agreement.
6.13 No Material Change. There shall have been no material adverse change
in the Business or in the Assets, operations or financial condition of the
Business since the date of the Base Balance Sheet Date;
6.14 Operation of Business in Ordinary Course. The Business shall have, 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, except as otherwise set forth in this Agreement.
6.16 Primeline Transaction. Seller shall have entered into an asset
purchase agreement with Primeline, Inc. ("Primeline") in which Primeline agrees
to sell, transfer and assign to Seller, and Seller agrees to purchase from
Primeline, all of the properties, rights and assets used or useful in connection
with Primeline's Internet service business.
6.17 Accounts Payable Payoffs. Seller shall have fully met its payment
obligations (in the form of checks delivered in the amount of the outstanding
balances remaining) with regard to the accounts payable amounts listed on
Schedule 1.5(j) attached hereto. Seller has agreed to provide Buyer, within
three (3) days of the Closing, with a full accounting of all checks (in the form
of a list of the checks executed and photocopies of the checks executed)
executed and delivered in connection with such payments of the outstanding
balances remaining with regard to the amount payable for each and every account.
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATION OF SELLER.
The obligation of Seller to consummate the transactions contemplated by
this Agreement is subject to the satisfaction, on or prior to the 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 Closing Date and shall have delivered all documents and items required
to be delivered at or prior to the Closing, including, without limitation:
30
(a) A certificate, dated the Closing Date, from the President of
Buyer to the effect that the conditions set forth in Sections 7.1 and 7.2 have
been satisfied;
(b) A certificate, dated the 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; and
(d) A Certificate of Good Standing from the Secretary of State of
the State of Delaware.
7.2 Escrow Agreement. Buyer shall have executed and delivered to Seller
the Escrow Agreement.
7.3 Board of Directors and Stockholder Approval. Seller shall have
received at or prior to the Closing the approval of its Board of Directors and
stockholders for this transaction and all related documents.
7.4 Employment Agreement. Buyer and Xxxxxxx X. Xxxxxxxxx shall have
entered into an Employment Agreement in a form mutually agreeable to both Buyer
and Xx. Xxxxxxxxx.
SECTION 8. TERMINATION.
8.1 Events of Termination. This Agreement and the transactions
contemplated by this Agreement may be terminated at any time prior to the
Closing:
(a) By the mutual written consent of Buyer and Seller.
(b) By Seller, if it is not in breach or default hereunder:
(i) if any representation or warranty of Buyer made herein is
untrue in any material respect and such breach is not cured within
thirty (30) days of Buyer's receipt of a notice from Seller that
such breach exists or has occurred;
(ii) if Buyer shall have defaulted in any material respect in
the performance of any material obligation under this Agreement and
such breach is not cured within thirty (30) days of Buyer's receipt
of a notice from Seller that such default exists or has occurred;
(iii) subject to Section 8.4 below, if the conditions to
Seller's obligations to consummate the Closing as set forth in
Section 7 cannot reasonably
31
be satisfied or performed on or before October 31, 1999 (unless such
failure of satisfaction, non-compliance or non-performance is the
result, directly or indirectly, of any action or failure to act on
the part of Seller); or
(iv) if the Closing has not occurred prior to October 31,
1999.
(c) By Buyer, if it is not in breach or default hereunder:
(i) if any representation or warranty of Seller made herein is
untrue in any material respect and such breach is not cured within
thirty (30) days of Seller's receipt of a notice from Buyer that
such breach exists or has occurred;
(ii) if Seller shall have defaulted in any material respect in
the performance of any material obligation under this Agreement and
such breach is not cured within thirty (30) days of Seller's receipt
of a notice from Buyer that such default exists or has occurred; or
(iii) subject to Section 8.4 below, if the conditions to
Buyer's obligations to consummate the Closing as set forth in
Section 6 cannot reasonably be satisfied or performed on or before
October 31, 1999 (unless such failure of satisfaction,
non-compliance or non-performance is the result directly or
indirectly of any action or failure to act on the part of Buyer); or
(iv) if the Closing has not occurred prior to October 31,
1999.
8.2 Manner of Exercise. In the event of the termination of this Agreement
by either Buyer or Seller pursuant to Section 8.1 notice thereof shall forthwith
be given to the other party in accordance with the provisions set forth in
Section 11 hereto and this Agreement shall terminate and the transactions
contemplated hereunder shall be abandoned without further action by Buyer or
Seller.
8.3 Effect of Termination; Liabilities. In the event of the termination of
this Agreement pursuant to Section 8.1 or Section 8.4 and prior to the Closing,
all obligations of the parties hereunder (other than pursuant to Sections 4.8
and 5.1 hereof) shall terminate, and neither Seller nor Buyer shall have any
further liability hereunder, including for losses, liabilities, obligations,
damages, deficiencies, actions, suits, proceedings, demands, assessments,
orders, judgments, costs and expenses (including attorneys' fees) of any kind
whatsoever; except upon termination of this Agreement pursuant to Sections
8.1(c)(i) and 8.1(c)(ii), Buyer shall be entitled to any remedy which it may
have, whether at law or in equity, and except upon termination of this Agreement
pursuant to Sections 8.1(b)(i) and 8.1(b)(ii), Seller shall be entitled to any
remedy which it may have, whether at law or in equity.
8.4 Waiver; Extension of Time for Performance. Seller may extend the time
for the performance of any of the obligations or other acts of Buyer hereunder,
waive any inaccuracies in
32
the representations and warranties of Buyer contained herein or in any document
delivered pursuant hereto, or waive compliance by Buyer with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by Seller. Buyer may
extend the time for the performance of any of the obligations or other acts of
Seller or the Principal Shareholder hereunder, waive any inaccuracies in the
representations and warranties of Seller or the Principal Shareholder contained
herein or in any document delivered pursuant hereto, or waive compliance by
Seller or the Principal Shareholder with any of the agreements or conditions
contained herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by Buyer.
SECTION 9. SURVIVAL.
9.1 Survival of Warranties. 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 Closing
regardless of any investigation and shall not merge in the performance of any
obligation by either party hereto.
SECTION 10. INDEMNIFICATION.
10.1 Indemnification by Seller and the Principal Shareholder.
(a) Seller and the Principal Shareholder 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
Shareholder 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 Shareholder
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 Closing Date, including without limitation the litigation set forth
on Schedule 2.9 hereto; (iv) any claim which arises in connection with any
liability or obligation of Seller other
33
than the Assumed Liabilities; and (v) any and all claims, liabilities, losses,
damages, costs and expenses (including without limitation the reasonable fees
and disbursements of counsel) arising out of any failure of (i) Seller or any of
its affiliates, service providers or agents or (ii) any Benefit Program, to
comply with any provision of ERISA, the Code, or other applicable law.
10.2 Indemnification by Buyer. Buyer agrees to indemnify and hold harmless
Seller and its Principal Shareholders, officers, directors, managers, members,
employees, agents, and Principal Shareholder (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, certificate, agreement or other instrument delivered
pursuant to this Agreement; (ii) any breach of any covenant or agreement made by
Buyer in this Agreement or in any schedule, exhibit, certificate, agreement or
other instrument 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 Closing Date; and (iv) the
Assumed Liabilities.
10.3 Notice; Defense of Claims.
(a) Notice of Claims. Promptly after receipt by an indemnified party
of notice of any claim, liability or expense to which the indemnification
obligations hereunder would apply, the indemnified party shall give notice
thereof in writing to the indemnifying party, but the omission to so notify the
indemnifying party promptly will not relieve the indemnifying party from any
liability except to the extent that the indemnifying party shall have been
prejudiced as a result of the failure or delay in giving such notice. Such
notice shall state the information then available regarding the amount and
nature of such claim, liability or expense and shall specify the provision or
provisions of this Agreement under which the liability or obligation is
asserted.
(b) Third Party Claims. With respect to 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
34
expense that is subject or potentially subject to indemnification. 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 or
expense 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 and shall consult with the indemnified party
prior to acting on major matters, including settlement discussions.
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; 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 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,
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, 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. If the parties cannot reach
agreement within such 30-day period, the matter may be submitted by either party
for binding arbitration in accordance with the provisions of Section 12.11
hereof.
10.4 Claims Against Escrow Deposit. In the event that any Buyer
Indemnified Party sustains or incurs damages, liabilities, losses, taxes, fines,
penalties, costs or expenses, including, without limitation, attorneys fees, for
which it is entitled to indemnification from Seller or the Principal Shareholder
under this Agreement, in addition to all other rights or remedies that Buyer may
have (including the right to collect directly from Seller or the Principal
Shareholder), such Buyer Indemnified Party shall be entitled to 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 receive payment from the Escrow Deposit such Buyer Indemnified Party shall
first deliver to Seller a written claim for damages arising under or by virtue
of this Agreement
35
specifying the nature of the claim and the type and amount of damages,
liabilities, losses, taxes, fines, penalties, costs and expenses sustained or
incurred by such Buyer Indemnified Party. Within thirty (30) calendar days of
receiving a claim against the Escrow Deposit from or on behalf of any Buyer
Indemnified Party, Seller shall provide a written response to such Buyer
Indemnified Party with a copy to the Escrow Agent, which either accepts or
rejects all or any portion of such Buyer Indemnified Party's claim, the amount
accepted by Seller shall be paid to such Buyer Indemnified Party from the Escrow
Deposit by the Escrow Agent within ten (10) calendar days of the Escrow Agent's
receipt of Seller's acceptance of such Buyer Indemnified Party's claim. If
Seller rejects any portion of such Buyer Indemnified Party's claim, Seller's
written response shall specify the specific reason(s) for the rejection and the
amount, if any, of such Buyer Indemnified Party's claim which is accepted. The
amount of any claim rejected by Seller shall be retained in escrow and
distributed by the Escrow Agent only as directed by a written settlement
agreement signed by both Seller and such Buyer Indemnified Party or in
accordance with a judgement rendered in accordance with Section 12.11 of this
Agreement. The principal amount of the Promissory Note shall be reduced by the
amount of any disbursements to Buyer from the Escrow Account.
SECTION 11. 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 (i) if delivered or sent by
facsimile transmission, upon acknowledgment of receipt by the recipient, (ii) if
sent by a nationally recognized overnight courier, properly addressed with
postage prepaid, on the next business day (or Saturday or Sunday if sent for
delivering on such days), (iii) or if sent by registered or certified mail, upon
the earlier of the date on which receipt is acknowledged and the date which is
three (3) days after deposit in United States post office facilities properly
addressed with postage prepaid.
If to Seller: Internet of Western North Carolina, Inc.
0000 Xxxxxxxxxxxxxx Xxxx
Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, President
and Chief Executive Officer
With a copy to: Long, Xxxxxx, Xxxxxx & Xxxxx, P.A.
00 Xxxxx Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxx
Facsimile: (000) 000-0000
If to Principal Shareholder: Xxxxxxx X. Xxxxxxxxx
36
00 Xxxxxxxx Xxx
Xxxxxxxxx, XX 00000
With a copy to: Long, Xxxxxx, Xxxxxx & Xxxxx, P.A.
00 Xxxxx Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxx
Facsimile: (000) 000-0000
If to Buyer: DURO Communications, Inc.
0000 Xxxxxxx Xxxx., Xxxxx 000
Xxxxxxxxxxx, Xxxxxxx 00000
Attn.: Xxxxx X. Xxxxxx, President
With a copy to: Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn.: Xxxxx X. Xxxxx, P.C.
SECTION 12. MISCELLANEOUS.
12.1 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.
12.2 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.
12.3 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.
12.4 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
37
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.
12.5 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.
12.6 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.
12.7 Governing Law. This Agreement and the transactions contemplated
hereby shall be governed and construed by and enforced in accordance with the
laws of the State of North Carolina, without regard to conflict of laws
principles.
12.8 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.
12.9 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.
12.10 Remedies. It is specifically understood and agreed that certain
breaches of this Agreement will result in irreparable injury to the parties
hereto, that the remedies available to the parties at law alone will be an
inadequate remedy for such breach, and that, in addition to any other legal or
equitable remedies which the parties may have, a party may enforce its rights by
an action for specific performance and the parties expressly waive the defense
that a remedy in damages will be adequate.
12.11 Dispute Resolution.
(a) Each of the parties to this Agreement hereby unconditionally and
irrevocably submits to the jurisdiction of the United States District Court for
the Western District of North Carolina, Charlotte Division. To the extent that
jurisdiction is proper and allowed by the laws and rules governing such Court,
the parties agree that the Charlotte Division of the United States District
Court for the Western Division of North Carolina will be the sole and exclusive
forum and venue for litigation and adjudication of any disputes among the
parties to this Agreement. Otherwise, each of the parties to this Agreement
hereby unconditionally and
38
irrevocably submits to the jurisdiction of the Superior Court of Mecklenburg
County, North Carolina for the purpose of enforcing the award or decision in any
such proceeding.
(b) To the extent that the laws or rules governing the above-named
Courts allow waiver or consent regarding jurisdictional matters, each of the
parties to this Agreement waives any claim that an action is not subject to the
jurisdiction of the above-named court, that its property is exempt or immune
from attachment or execution, that any civil action is brought in an
inconvenient forum, that the venue of any civil action is improper, or that this
Agreement or the subject matter hereof may not be enforced in or by such courts.
(c) Each of the parties waives and agrees not seek review by any
court of any other jurisdiction which may be called upon to grant an enforcement
of the judgment of the above-named Courts. Each of the parties to this Agreement
hereby consents to service of process by registered or certified mail at the
address to which notices are to be given. Each of the parties hereto agrees that
its submission to jurisdiction and its consent to service of process by mail is
made for the express benefit of the other parties to this Agreement. Final
judgment against any party hereto in any such action, suit, or proceeding may be
enforced in any other jurisdiction by suit, action, or proceedings on the
judgment, or in any other manner provided by or pursuant to the laws of such
other jurisdiction; provided, however, that any party may at its option bring
suit, or institute other judicial proceedings, in any state or federal court of
the United States or of any country or place where the other parties or their
assets, may be found.
Notwithstanding the foregoing, the parties may enforce their rights under
this Agreement in accordance with Section 12.10.
12.12 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.
39
IN WITNESS WHEREOF, Seller, Principal Shareholder and Buyer have caused
this Asset Purchase Agreement to be executed as of the date first above written.
SELLER:
INTERNET OF WESTERN NORTH CAROLINA
By: /s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President, CEO
PRINCIPAL SHAREHOLDER:
/s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------------
Xxxxxxx X. Xxxxxxxxx
BUYER:
DURO COMMUNICATIONS, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Xxxxx X. Xxxxxx, President
40
LIST OF EXHIBITS AND SCHEDULES
SCHEDULES
Exhibit A - Form of Escrow Agreement
Exhibit B - Form of Xxxx of Sale
Exhibit C - Form of Assignment and Assumption Agreement
Exhibit D - Form of Assignment of Patents and Trademarks
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 Employment Agreement
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) Accounts Receivable
Schedule 1.2(a) Excluded Assets
Schedule 1.2(b) Excluded Accounts Receivable
Schedule 1.2(c) Excluded Insurance Contracts
Schedule 1.2(d) Excluded Tax Items
Schedule 1.3(a) Notes Payable for Professional Services Rendered
Schedule 1.3(b) Excluded Liabilities
Schedule 1.5 Payoff Letters
Schedule 1.6(c) Estimated Adjustment Statement
Schedule 1.7 Allocation of Purchase Price
Schedule 2.1 Subsidiaries
Schedule 2.4 Taxes
Schedule 2.6 Insurance
Schedule 2.9 Pending or Threatened Litigation
Schedule 2.10 Employees; Labor Matters
Schedule 2.11 Financial Statements
Schedule 2.14 Approvals; Consents
Schedule 2.16(a) Subscribers
Schedule 2.16(b) Complimentary Accounts
Schedule 2.16(c) Disconnection Policy
Schedule 2.17 Brokers
Schedule 2.19 Banking Relations
Schedule 2.20 Intellectual Property
Schedule 2.22 Transactions with Interested Persons
Schedule 2.23 Employee Benefit Programs
Schedule 2.24 Environmental Matters
41
Schedule 4.9 Use of Trade Names
Schedule 6.17 Accounts Payable Amounts
42
