ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made this 1st day of
February, 1998 by and between CONVERGENT COMMUNICATIONS SERVICES, INC., a
Colorado corporation ("CCSI") whose address is 00 Xxxxxxxxx Xxxxx Xxxx, Xxxxx
000, Xxxxxxxxx, Xxxxxxxx 00000, and PEAK COMM, INC. D/B/A TELEPHONE
COMMUNICATIONS COMPANY, a Colorado corporation ("PEAK COMM"), whose address is
0000 Xxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000 (hereinafter
collectively referred to as "the parties").
RECITALS
A. CCSI desires to buy certain of PEAK COMM's Identified Assets (as
defined herein) and PEAK COMM desires to sell certain of PEAK COMM's Identified
Assets to CCSI;
B. CCSI has also agreed to assume certain specific obligations of PEAK
COMM associated with the Identified Assets;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, both parties agree as follows:
1. IDENTIFICATION AND TRANSFER OF ASSETS.
1.1 IDENTIFICATION OF ASSETS TO BE TRANSFERRED TO CCSI. The assets
described in EXHIBIT 1.1 shall collectively constitute the "Identified Assets."
1.2 ASSUMPTION OF CERTAIN LIABILITIES. Except for the NNC Note (as
defined in Section 2.4) and those trade liabilities set forth on EXHIBIT 1.2
(the "Assumed Liabilities"), which are hereby expressly assumed by CCSI, CCSI
shall assume no other liabilities and obligations relating to the Identified
Assets. PEAK COMM agrees to hold CCSI harmless from any other liabilities or
obligations incurred by PEAK COMM, or accruing with respect to the Identified
Assets, and all other assets of PEAK COMM, with respect to any period prior to
and including the Closing Date and from liabilities or obligations with respect
to all other assets of PEAK COMM with respect to any period after the Closing
Date.
1.3 TRANSFER OF IDENTIFIED ASSETS. PEAK COMM shall take all actions
reasonably requested by CCSI to transfer the Identified Assets to CCSI
including, but not limited to, the execution of a xxxx of sale and assignment in
the form attached hereto as EXHIBIT 1.3 ("Xxxx of Sale"), and all other bills of
sale, assignment and transfer forms, amendments, applications to governmental
agencies, licenses, and reports reasonably required by CCSI of PEAK COMM to
effectuate the transfer of the Identified Assets.
-1-
2. PURCHASE PRICE. The Purchase Price shall be equal to NINE HUNDRED
THIRTY-SIX THOUSAND SEVEN HUNDRED NINETY-SIX DOLLARS ($936,796) to be paid by
CCSI to PEAK COMM ("Purchase Price") on the Closing Date as follows:
2.1 CCSI NOTE. CCSI will issue PEAK COMM a promissory note, in
substantially the form attached hereto as EXHIBIT 2.1 ("CCSI Note") in an amount
equal to Two Hundred Thousand Dollars ($200,000).
2.2 SECURITY FOR CCSI NOTE. Subject to NNC's approval, and as
security for the payment of the CCSI Note, CCSI shall grant PEAK COMM a security
interest in the Identified Assets. The security interest shall be subordinated
to NNC's security interest, if any, and shall be evidenced by a security
agreement in substantially the form of EXHIBIT 2.2 attached hereto.
2.3 CASH PAYMENT. CCSI will pay PEAK COMM Three Hundred Seventy-Five
Thousand Dollars ($375,000) by wire transfer at the Closing. The parties
acknowledge that CCSI has paid PEAK COMM Twenty-Five ($25,000) as an xxxxxxx
money deposit on January 13, 1998 ("Xxxxxxx Money"). The Xxxxxxx Money shall be
applied toward the Purchase Price on the Closing and shall be in addition to the
$375,000 cash payment.
2.4 CONVERGENT STOCK. CCSI's parent company, namely Convergent
Communications, Inc., a Colorado corporation ("Convergent") will deliver a
treasury request to Convergent's transfer agent directing the issuance of Ten
Thousand (10,000) shares of Convergent's no par value voting common stock
("Convergent Stock") to PEAK COMM at the Closing. The parties agree that the
value of each share of Convergent Stock shall be $5.00 for a total value of
$50,000. In order to evidence such transfer and issuance of the Convergent
Stock, CCSI shall cause Convergent to deliver a copy of the treasury request
issued to Convergent's transfer agent to PEAK COMM at the Closing. The share
certificate evidencing the Convergent Stock will be delivered to PEAK COMM by
Convergent's transfer agent within thirty (30) days of the date of Closing.
2.5 ASSUMPTION OF NNC NOTE. Pursuant to the Assumption Agreement
attached hereto as EXHIBIT 2.5, on the Closing Date, CCSI will assume that
certain Payment and Security Agreement dated as of December 31, 1996 ("NNC
Note") between PEAK COMM and National Network Corporation ("NNC"), subject to
NNC's approval. CCSI will pay the remaining balance of the NNC Note in equal
installments until paid in full, and in no event later than December 31, 1998.
In addition, at the Closing CCSI will pay PEAK COMM the difference between (a)
the remaining principal balance of the NNC Note at the Closing Date and (b) the
remaining principal balance of the NNC Note as of February 1, 1998.
3. CLOSING DATE DOCUMENTATION. In addition to the other documents
required hereunder, as a predicate to the closing of the transactions hereunder,
PEAK COMM and CCSI shall supply each other, as applicable, with the following on
or before the Closing Date:
-2-
3.1 TRANSFER DOCUMENTS. Transfer Documents, in form and substance
reasonably satisfactory to CCSI and PEAK COMM, to effect the transfer of the
Identified Assets to CCSI pursuant to the terms of this Agreement.
3.2 CONSENTS. Any and all consents, in a form and substance
reasonably satisfactory to CCSI and PEAK COMM, from any person or entity not a
party to this Agreement whose consent is necessary or desirable for the
execution and performance of this Agreement by CCSI and PEAK COMM.
3.3 COMPLIANCE CERTIFICATES.
3.3.1 PEAK COMM COMPLIANCE CERTIFICATE. All corporate and other
proceedings, including approval by the directors and shareholders of PEAK COMM,
required to be taken by or on the part of PEAK COMM to authorize PEAK COMM to
execute, deliver and carry out this Agreement shall have been duly and properly
taken. CCSI shall have received a certificate of authorized individuals of PEAK
COMM in the form of EXHIBIT 3.3.1, dated as of the Closing, certifying to the
fulfillment of the conditions specified in this Agreement.
3.3.2 CCSI COMPLIANCE CERTIFICATE. All corporate and other
proceedings, including approval by the directors of CCSI, required to be taken
by or on the part of CCSI to authorize CCSI to execute, deliver and carry out
this Agreement shall have been duly and properly taken. PEAK COMM shall have
received a certificate of authorized individuals of CCSI in the form of EXHIBIT
3.3.2, dated as of the Closing, certifying to the fulfillment of the conditions
specified in this Agreement.
3.4 XXXXXXX AGREEMENT. CCSI and W. Xxxx Xxxxxxx ("Xxxxxxx") will
enter into a non-compete and non-contravention agreement, in substantially the
same form as EXHIBIT 3.4, attached hereto ("Xxxxxxx Agreement") whereby Xxxxxxx
would agree not to compete with CCSI, nor to interfere with the vendors,
suppliers, employees or customers that are related to the Identified Assets in
accordance with the terms and conditions stated in the Xxxxxxx Agreement.
3.5 OPINION OF COUNSEL FOR PEAK COMM. CCSI shall have been furnished
with an opinion of PEAK COMM's counsel, dated the date of the Closing, in
substantially the form of EXHIBIT 3.5 attached hereto.
3.6 CARRIER AGREEMENT. CCSI and National Network Corporation will
enter into a new carrier services agreement ("Carrier Agreement") on terms and
conditions acceptable to CCSI for the provision of services for the Identified
Assets. PEAK COMM shall assist CCSI in obtaining an acceptable Carrier
Agreement.
3.6 RISK OF LOSS AND ALLOCATION OF COSTS AT CLOSING.
3.6.1 RISK OF LOSS. Prior to Closing, all risk of any loss or
damage to the Identified Assets being sold or transferred hereunder shall be
borne by PEAK COMM.
-3-
3.6.2 ALLOCATION OF COSTS AT CLOSING. All expenses of operating
the Identified Assets through and including the Closing Date shall be the sole
responsibility of PEAK COMM. Personal property taxes, lease costs, utilities
and other like obligations for the calendar month in which Closing occurs, shall
be prorated between PEAK COMM and CCSI as of February 1, 1998. PEAK COMM shall
be responsible for prorated expenses associated with the Identified Assets prior
to, but not including, February 1, 1998. CCSI shall be responsible for prorated
expenses associated with the Identified Assets from February 1, 1998.
3.6.3 INCOME AND EXPENSE. Except to the extent sold to CCSI as
part of the Identified Assets, including, without limitation, any accounts
receivable of PEAK COMM shown in EXHIBIT 1.1, PEAK COMM shall retain all rights
to income earned prior to, but not including February 1, 1998 and CCSI shall be
entitled to all income earned by operation of the Identified Assets from
February 1, 1998. PEAK COMM shall accrue all corresponding expenses related to
the income accrued by PEAK COMM hereunder, all in accordance with generally
accepted accounting principles.
4. REPRESENTATIONS OF PEAK COMM. As material representations to induce
CCSI to enter into this transaction, PEAK COMM represents to CCSI as follows:
4.1 OWNERSHIP. The Identified Assets transferred pursuant hereto are
owned by PEAK COMM, free and clear of all liens, encumbrances, agreements and
claims with or of third parties, except as identified on EXHIBIT 4.1.
4.2 CORPORATE STATUS AND AUTHORITY. PEAK COMM is a corporation duly
incorporated and existing in good standing under the laws of the state of its
incorporation and is fully authorized to carry on its business as it is now
being conducted and to enter into the transactions herein set forth. PEAK COMM
is duly qualified to transact business as a foreign corporation and is in good
standing in each of the jurisdictions requiring such qualification whether by
reason of the ownership or leasing of its properties or the conduct or nature of
its business. Attached hereto as EXHIBIT 4.2 is a complete listing of all of
the states in which any portion of the Identified Assets is located. All
corporate, director, and stockholder approvals required have been secured to the
extent required. No consents, approvals, or filings from or with any person or
entity other than those delivered to CCSI herewith are necessary for the
execution, delivery and performance by PEAK COMM of this Agreement and the
transactions contemplated hereby. PEAK COMM has all requisite power and
authority to execute this Agreement and carry out all the actions required of it
herein. This Agreement is the legal, valid and binding agreement of PEAK COMM
enforceable against PEAK COMM in accordance with its terms.
4.3 PENDING CLAIMS. To its best knowledge, PEAK COMM is not
presently subject to any claim which would materially and adversely affect the
Identified Assets such as: litigation; disclosed or undisclosed claims or
liabilities; or pending governmental investigations or complaints of any kind or
description. The Identified Assets are subject to no contracts, claims or liens
other than as set forth in EXHIBIT 4.3.
-4-
4.4 COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery and
performance of and compliance with this Agreement, or any agreement or
instrument contemplated hereby, by PEAK COMM will not result in any violation of
its Certificate of Incorporation or Bylaws or be in material conflict with or
constitute a default in any material respect under any term of any agreement,
instrument, judgment, decree, or, to the knowledge of PEAK COMM, any order,
statute, rule or governmental regulation applicable to PEAK COMM, or to the
knowledge of PEAK COMM, result in the creation of any lien, charge or
encumbrance of any kind or nature on the Identified Assets.
4.5 UNDISCLOSED LIABILITIES. To its best knowledge, PEAK COMM does
not have, with respect to its current operation, any material and undisclosed
liabilities or obligations of any nature affecting the Identified Assets.
4.6 ENVIRONMENTAL MATTERS. To the best knowledge of PEAK COMM, PEAK
COMM has duly complied with, and the operation of its business, equipment and
other assets in the facilities owned or leased by PEAK COMM and its subsidiaries
are in compliance with the provisions of all applicable federal, state and local
environmental, health and safety laws, statutes, ordinance, rules and
regulations of any governmental or quasi governmental authority relating to (i)
error omissions, (ii) discharges to surface water or ground water, (iii) solid
or liquid waste disposal, (iv) the use, storage, generation, handling,
transport, discharge, release or disposal of toxic or hazardous substances or
waste, (v) the emission of non-ionizing electromagnetic radiation, or (vi) other
environmental, health or safety matters, including, without limitation, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Authorization Act of 1986; the
Occupational Safety and Health Act; the Resource Conservation and Recovery Act
of 1976, as amended; the Federal Water Pollution Control Act of 1970; the Safe
Drinking Water Act of 1974; the Toxic Substances Control Act of 1976; the
Emergency Planning and Community Right to Know Act of 1986, as amended; and the
Clean Air Act, as amended (collectively "Environmental and Health Laws") or the
Federal Communications Act, as amended ("FCC Laws"). To the best knowledge of
PEAK COMM, there are no investigations, administrative proceedings, judicial
actions, orders, claims or notices which are pending, anticipated or threatened
against PEAK COMM, relating to violations of the Environmental and Health Laws
and the FCC Laws. PEAK COMM has not received a notice of, and does not know or
have any reason to suspect, any facts which might constitute a violation of any
Environmental or Health Laws which relate to the use, ownership or occupancy of
any property or facilities used by PEAK COMM in connection with the operation of
its business or any activity of PEAK COMM's business which would result in a
violation or threaten violation of any Environmental or Health Laws and the FCC
Laws.
4.7 TAX LIENS. To PEAK COMM's best knowledge there are no tax liens
on any of the Identified Assets. PEAK COMM has duly filed all required federal,
state and local tax returns and reports (including, without limitation, returns
for estimated tax), and all returns and reports for any other governmental units
or taxing authorities having jurisdiction with respect to any taxes required to
be paid by PEAK COMM, except where extensions have been applied for and granted,
and where such extensions have not expired; all such returns and all such
reports show the correct and proper amounts due, and all taxes shown on such
returns and reports and all
-5-
assessments received by PEAK COMM have been paid to the extent that such taxes
or any estimates thereon have become due. From the date of this Agreement until
the Closing, PEAK COMM shall pay all taxes as and when the same become due and
payable.
4.8 LIQUIDATION. PEAK COMM has not adopted any plan of liquidation
or dissolution affecting the Identified Assets.
4.9 ACCURACY OF DOCUMENTS AND INFORMATION. The copies of all
instruments, agreements, other documents and written information set forth as,
or referenced in, Exhibits and attachments to this Agreement or specifically
required to be furnished pursuant to this Agreement to CCSI by PEAK COMM are and
will be complete and correct in all material respects. To PEAK COMM's best
knowledge, there have been no material changes, and will be no material changes
as of the Closing Date, in the information set forth in the Exhibits and
attachments between the date of the Exhibits and attachments and the date of
this Agreement. No representations or warranties made by PEAK COMM in this
Agreement, nor any document, written information, statement, financial
statement, certificate, Exhibit or attachment furnished to CCSI pursuant to the
requirements of this Agreement intentionally contains any untrue statement of a
material fact, or omits to state a material fact necessary to make the
statements or facts contained therein not misleading. There is no fact which
materially and adversely affects the Identified Assets known to PEAK COMM which
has not been expressly and fully set forth in this Agreement or the Exhibits and
attachments hereto.
4.10 DISCLOSURE. To PEAK COMM's best knowledge, no representation or
warranty whether contained in this Agreement or in any certificates provided to
CCSI pursuant to this Agreement contains or will contain any materially untrue
statement or omits, or will omit, to state a material fact necessary to make any
such statement(s) not misleading.
4.11 STOCK REPRESENTATIONS. PEAK COMM (i) intends to acquire the
shares of Convergent Stock solely for the purpose of investment and not for the
resale and distribution thereof, and has no present intention to offer, sell,
pledge, hypothecate, assign or otherwise dispose of the same except in
accordance with this Section 4.11; (ii) understands and acknowledges that the
sale of such shares of Convergent Stock will not be registered under the
Securities Act of 1933, as amended (the "Securities Act"), the Convergent Stock
being acquired pursuant to this Agreement constitute "restricted securities" as
that term is defined under Rule 144 promulgated under the Securities Act and may
not be sold except pursuant to a registration statement under the Securities Act
or pursuant to an exemption available under federal and applicable state
Securities laws, and such shares may be required to be held indefinitely unless
the shares are subsequently registered under the Securities Act or an exemption
from such registration is available, (iii) agrees that it will not offer, sell,
pledge, hypothecate, transfer, assign or otherwise dispose of any such shares of
Convergent Stock unless such shares and such offer, pledge, hypothecation,
transfer, assignment or other disposition shall be registered or exempt from
registration under the Securities Act and shall comply with all applicable
federal and state securities laws, and (iv) agrees and acknowledges that the
stock certificates representing the shares of Convergent Stock will contain a
legend restricting the transferability of the shares as provided herein and that
stop order instructions may be imposed by Convergent's transfer agent
-6-
restricting the transferability of the Convergent Stock.
4.12 NNC NOTE. PEAK COMM represents and warrants that the principal
amount of the NNC Note is no greater than $286,796 as of February 1, 1998.
4.13 PURCHASE PRICE ALLOCATION. PEAK COMM represents, warrants and
covenants to CCSI to report the transaction contemplated by this Agreement as a
sale and purchase of the Identified Assets in the specific amounts described on
EXHIBIT 4.13 attached hereto for all purposes including federal, state and local
tax purposes, and shall not take any position to the contrary in any tax return
or proceeding before any taxing authority. PEAK COMM and CCSI agree to complete
EXHIBIT 4.13 on or before Closing. PEAK COMM shall cooperate fully with CCSI,
shall execute any documents reasonably requested by CCSI, and shall furnish
appropriate information and testimony, upon request, with respect to any
liability asserted by taxing authorities, all without payment of further
consideration; provided such tax liability relates to the Identified Assets or
Assumed Liabilities as conducted by PEAK COMM prior to Closing.
4.14 BROKERS AND FINDERS. Neither PEAK COMM nor any affiliate nor
any officer or director thereof has engaged any finder or broker in connection
with the transactions contemplated hereunder.
4.15 ACCURACY OF REPRESENTATIONS. In the event that any of the
foregoing representations or warranties should be inaccurate as of the Closing
Date, PEAK COMM shall have thirty (30) days after written notice from CCSI in
which to cure such inaccuracy.
5. PEAK COMM'S EMPLOYEES AND CUSTOMERS. CCSI is not a successor business
to PEAK COMM nor any operation of PEAK COMM. CCSI shall not be liable for any
obligations which PEAK COMM has on any contracts including employment contracts,
existing or future workers compensation claims, employment discrimination
claims, unfair labor practice claims, or compensation claims except those
obligations, if any, specifically identified on EXHIBIT 1.1, EXHIBIT 1.2 or
elsewhere in this Agreement and any obligations of which CCSI hereby
specifically assumes in writing. CCSI is purchasing the Identified Assets only,
and it is not taking over any employment contracts for any employees or any
obligations under agreements entered into by PEAK COMM in its own right and CCSI
shall not be liable for any sums owed to customers by PEAK COMM.
6. REPRESENTATIONS OF CCSI. As material representations to induce PEAK
COMM to enter into this transactions, CCSI represents to PEAK COMM as follows:
6.1 CORPORATE STATUS AND AUTHORITY. CCSI is a corporation duly
organized and existing in good standing under the laws of the state of its
incorporation and is fully authorized to carry on its business as it is now
being conducted and to enter into the transactions herein set forth. CCSI is
duly qualified to transact business as a foreign corporation and is in good
standing in each of the jurisdictions requiring such qualification whether by
reason of the ownership or leasing of its properties or the conduct or nature of
its business. All corporate
-7-
approvals required have been secured. No consents, approvals, or filings from
or with any person or entity other than those delivered to PEAK COMM herewith
are necessary for the execution, delivery and performance by CCSI of this
Agreement and the transactions contemplated hereby. CCSI has all requisite
power and authority to execute this Agreement and carry out all the actions
required of it herein. This Agreement is the legal, valid and binding agreement
of CCSI enforceable against CCSI in accordance with its terms.
6.2 DISCLOSURE. No representation or warranty whether contained in
this Agreement or in any certificates provided to PEAK COMM pursuant to this
Agreement contains or will contain any materially untrue statement or omits, or
will omit, to state a material fact necessary to make any such statement(s) not
misleading.
6.3 CONSENTS. CCSI shall have delivered to PEAK COMM copies of all
consents from any person or entity not a party to this Agreement whose consent
is necessary or desirable for the execution and performance of this Agreement by
CCSI, prior to the Closing Date.
6.4 PURCHASE PRICE ALLOCATION. CCSI represents, warrants and
covenants to PEAK COMM to report the transaction contemplated by this Agreement
as a sale and purchase of the Identified Assets in the specific amounts
described on EXHIBIT 4.13 attached hereto for all purposes including federal,
state and local tax purposes, and shall not take any position to the contrary in
any tax return or proceeding before any taxing authority. CCSI and PEAK COMM
agree to complete EXHIBIT 4.13 on or before Closing. CCSI shall cooperate fully
with PEAK COMM, shall execute any documents reasonably requested by PEAK COMM,
and shall furnish appropriate information and testimony, upon request, with
respect to any liability asserted by taxing authorities, all without payment of
further consideration; provided such tax liability relates to the Identified
Assets or Assumed Liabilities as conducted by CCSI after Closing.
6.5 BROKERS AND FINDERS. Neither CCSI nor any affiliate nor any
officer or director thereof has engaged any finder or broker in connection with
the transactions contemplated hereunder.
6.6 RELIANCE ON REPRESENTATIONS AND WARRANTIES. PEAK COMM shall not
be deemed to have made to CCSI any representation or warranty other than those
expressly made by PEAK COMM pursuant to this Agreement. Without limiting the
generality of the foregoing, and except as expressly set forth in
representations and warranties made by PEAK COMM pursuant to this Agreement,
PEAK COMM makes no representation or warranty to CCSI with respect to any
projections, estimates or budgets heretofore delivered to or made available to
CCSI of future revenues, expenses or expenditures or future results of
operations. CCSI acknowledges that it has not relied on any representations or
warranties regarding PEAK COMM, the Identified Assets or the Assumed Liabilities
except those set forth in this Agreement.
7. OBLIGATIONS PRIOR TO THE CLOSING DATE. The following conditions and
obligations shall be satisfactorily performed prior to the Closing Date.
-8-
7.1 NO OBSTRUCTIVE PROCEEDING. As of the Closing Date, no action or
proceeding shall have been instituted against, and no order, decree or judgment
of any court, agency, commission or governmental authority shall be subsisting
against PEAK COMM or CCSI that which renders or could render it unlawful to
effect the transactions contemplated hereunder in accordance with the terms
hereof.
7.2 GOVERNMENTAL AGENCY APPROVALS. Any governmental agencies whose
approval is required prior to the consummation of the transactions contemplated
by this Agreement, including, without limitation, the Colorado Public Utilities
Commission, shall have approved such sale on the terms contemplated by this
Agreement.
7.3 NOTICES TO CUSTOMERS. PEAK COMM, with the cooperation of CCSI and
at PEAK COMM's sole expense, shall have provided any notice(s) to its customers,
if any, required by its contracts, federal or state laws, rules or regulations,
if any, with respect to the transfer of the Identified Assets to CCSI. The
content of such notice(s) shall be approved by CCSI.
7.4 PERFORMANCE. Both parties shall have executed and delivered to
the other party this Agreement and the other documents required hereby and shall
have performed and complied in all material respects with all agreements and
conditions required by this Agreement to be performed or complied with by the
parties prior to the Closing Date.
7.5 NO ACTION TO PREVENT COMPLETION. There shall not have been
instituted and be continuing or threatened any claim, action or proceeding that
would materially adversely affect the Identified Assets, nor shall there have
been instituted and be continuing or threatened any claim, action or proceeding
by or before any court or other governmental body to restrain, prohibit or
invalidate, or to obtain damages in respect of, the transactions contemplated by
this Agreement or which might affect the rights of CCSI.
8. CONDUCT OF BUSINESS AND CERTAIN COVENANTS. Prior to the Closing Date,
PEAK COMM agrees that, with respect only to the Identified Assets, unless
otherwise specifically provided for in this Agreement or unless otherwise
consented to in writing by CCSI:
8.1 ORDINARY COURSE. PEAK COMM shall conduct its business in the
ordinary course.
8.2 CERTAIN CHANGES. PEAK COMM shall not: (i) grant any security
interest to or in connection with the Identified Assets; (ii) make or offer to
make any disposition, including any sale or transfer, of any of the Identified
Assets; (iii) make any change in any method of accounting, billing, rates, rate
structure, tariffs, payment of fees and expenses related in any way to the
Identified Assets; and, (iv) enter into any material contract, agreement, or
commitment relating to the Identified Assets.
9. CLOSING DATE. Closing will occur within three (3) business days after
the completion of due diligence and the receipt of any and all necessary board,
shareholder,
-9-
governmental or other approvals, but not later than April 30, 1998, unless
extended by mutual agreement of the parties, and will take place at the offices
of CCSI.
10. NOTICES. Notices required or allowed hereunder shall be deemed
given when hand delivered or when deposited in the United States mail, postage
prepaid, return receipt requested, to the parties at the following addresses:
If to CCSI: Convergent Communications Services, Inc.
00 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn.: Legal Department
If to PEAK COMM: Peak Comm, Inc.
0000 Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn.: President
or to such other addresses as may from time to time be supplied.
11. INDEMNITY.
11.1 PEAK COMM'S INDEMNIFICATION. Notwithstanding the Closing and
regardless of any investigation at any time made by or on behalf of CCSI or of
any information CCSI may have in respect thereof, PEAK COMM will indemnify,
defend and save and hold CCSI harmless from and against any costs, expenses,
damages, liabilities, losses or deficiencies, including, without limitation,
reasonable attorneys' fees and other costs and expenses incident to any suit,
action or proceeding (collectively "Losses") suffered or incurred by CCSI
arising out of or resulting from, and will pay CCSI on demand the full amount of
any such amounts which CCSI may pay or may become obligated to pay in respect
of:
(a) any material inaccuracy in any representation or document
delivered under or pursuant to this Agreement or the material breach of any
warranty made by PEAK COMM in or pursuant to this Agreement;
(b) any misrepresentations in or omission from any Exhibit,
Schedule, or other attachment to this Agreement;
(c) any failure by PEAK COMM duly to perform or observe any
material term, provision, covenant, or agreement in this Agreement to be
performed or observed on the part of PEAK COMM ; or
(d) any action, suit, investigation, proceeding, demand,
assessment, audit, judgment and claim, including any employment-related claim
relating to the time period on or prior to Closing (collectively "Claims"), even
though such Claims may not be filed or come to light until after the Closing
Date.
-10-
(e) acts or omissions in connection with business activities
conducted or to be conducted by PEAK COMM, including, without limitation, the
sale of goods or provision of services prior to the Closing Date.
CCSI hereby covenants and agrees to immediately provide to PEAK COMM any
and all notifications or other correspondence it receives related to matters
which may affect this indemnity and hereby agrees to allow PEAK COMM to defend
any and all actions affecting this indemnity and shall not settle any action or
dispute affecting this indemnity without obtaining the prior written consent of
PEAK COMM. However, failure to provide any such notifications or other
correspondence in a timely manner will not relieve PEAK COMM of its obligation
to indemnify CCSI under this Section 11.1. If CCSI becomes unsatisfied with
the conduct of the defense of the Claims, CCSI may defend against, and consent
to the entry of any judgment or enter into any settlement with respect to such
Claims in any manner it may deem to be appropriate and PEAK COMM shall reimburse
CCSI promptly for the acts of defending against such Claims and will otherwise
remain responsible for any Loss which CCSI may suffer from, arising out of,
relating to or caused by such Claims to the full extent provided in this
Section.
All statements of fact contained in any written statement, certificate,
schedule or other document delivered to CCSI by or on behalf of PEAK COMM
pursuant to Article 4 of this Agreement shall be deemed representations and
warranties by PEAK COMM hereunder.
11.2 CCSI'S INDEMNIFICATION. CCSI agrees that notwithstanding the
Closing and regardless of any investigation at any time made by or on behalf of
PEAK COMM or any information PEAK COMM may have in respect thereof, CCSI will
indemnify, defend and save and hold PEAK COMM harmless from and against any
Losses suffered or incurred by PEAK COMM arising out of or resulting from, and
will pay PEAK COMM on demand the full amount of any such amounts which PEAK COMM
may pay or may become obligated to pay in respect of:
(a) any material inaccuracy in any representation or the
breach of any warranty made by CCSI in or pursuant to this Agreement;
(b) any failure by CCSI duly to perform or observe any item,
provision, covenant or agreement in this Agreement to be performed or observed
on the part of CCSI, as applicable;
(c) any action, suit, investigation, proceeding, demand,
assessment, audit, judgment and claim resulting from the operation of the
Identified Assets and discharge of the Assumed Liabilities by CCSI after
Closing; or
(d) acts or omissions in connection with business activities
conducted or to be conducted by CCSI, including, without limitation, the sale of
goods or provision of services after the Closing Date.
11.3 LIMITATION ON INDEMNITY.
-11-
11.3.1 GENERALLY. Notwithstanding any provision herein to the
contrary, except as set forth in Sections 4.14 and 6.5 hereof relating to
brokers and finders and 11.3.2 below, neither CCSI nor PEAK COMM, shall be
required to indemnify the other for any misrepresentation, breach of warranty or
failure to fulfill any covenant or agreement herein except to the extent that
the aggregate amount which PEAK COMM or CCSI, respectively would otherwise (but
for this provision) be liable on account thereof exceeds in the aggregate the
sum of five thousand dollars ($5,000) (the "Threshold Amount") and then only to
the extent of such excess; provided, however, for purposes of calculating
whether the Threshold Amount has been reached, any specific materiality
provision contained in the representations and warranties shall be disregarded.
The obligation of either party to indemnify the other party, as provided
hereunder, shall not exceed the aggregate amount equal to the Purchase Price
received by PEAK COMM.
11.3.2 KNOWLEDGEABLE MISREPRESENTATION. The limitation on
indemnity set forth herein shall not be applicable with respect to any failure
of a representation or warranty or an omission which makes any representation or
warranty set forth in this Agreement, or in any Schedule, Exhibit or any other
attachment to this Agreement inaccurate or misleading and such failure is a
result of fraud, gross negligence or willful or wanton disregard by PEAK COMM as
to the truth and accuracy of the matters stated therein of which PEAK COMM had
any knowledge ("Knowledgeable Misrepresentation"). In this case, and
notwithstanding the provisions of Section 11.3.1 above, the obligation to
indemnify PEAK COMM shall not exceed the aggregate amount equal to the Purchase
Price plus the total amount of the Assumed Liabilities assumed or paid by CCSI.
11.3.3 TERMINATION OF OBLIGATION. The obligation of either party
to indemnify the other hereunder shall terminate one (1) year after the Closing
Date except as to matters as to which notice of a claim has been given to the
appropriate party prior to the expiration of such one (1) year period.
12. NO THIRD PARTY BENEFICIARIES. This Agreement shall be for and inure
to the benefit of CCSI and PEAK COMM and there shall be no third party
beneficiaries hereto. Specifically excluded from any beneficial status
hereunder are PEAK COMM's creditors, employees, customers and suppliers.
13. GOVERNING LAW AND FORUM. This Agreement shall be construed under the
laws of the state of Colorado and any action to enforce, construe or modify
this Agreement shall be brought in an appropriate court of competent
jurisdiction in Colorado.
14. BINDING NATURE. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors and
assigns. This Agreement shall not be assigned by either party without the
express written consent of the other party.
15. PARAGRAPH HEADINGS. The section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
-12-
16. TIME OF THE ESSENCE. Time is of the essence of this Agreement and the
obligations of the parties hereunder.
17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, indemnifications and agreements of CCSI and PEAK COMM provided
herein shall survive the Closing for a period of one (1) year following the
Closing Date.
18. WAIVER. The failure of either of the parties hereto to enforce any
provision of this Agreement shall not be construed to be a waiver of such
provision or of the right thereafter to enforce the same, and no waiver of any
breach shall be construed as an agreement to waive any subsequent breach of the
same or any other provisions.
19. EXPENSES. Except as expressly provided herein, each party will pay
their own expenses, including fees of their respective attorneys, accountants
and consultants in connection with this transaction.
20. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
21. CONFIDENTIALITY. PEAK COMM and CCSI agree to not disclose the terms
and conditions of this Agreement except (i) as may be required to fulfill
obligations hereunder; (ii) as may be required by law, regulation, custom or
judicial or administrative proceeding; or, (iii) as and to the extent such
information becomes known to the general public through no fault of either party
in tangible, demonstrable form. Both parties shall take reasonable precautions
to insure that their respective employers, employees and agents also treat such
information in a confidential manner. The obligations of confidentiality shall
survive the consummation of the transactions herein set forth.
22. TAXES. CCSI shall be responsible for and shall pay all federal, state
and municipal taxes or other charges, if any, on the sale of the Identified
Assets except income taxes payable by PEAK COMM on the Purchase Price.
23. SEVERABILITY. It is agreed and understood that should any of the
provisions of this Agreement be determined by any court of competent
jurisdiction to be invalid or void for any reason, then the parties consent that
this Agreement shall be amended retroactive to the date of its execution to
include all terms and conditions other than those found by the court to be
invalid or void in order to give effect to the parties intent.
24. PUBLIC ANNOUNCEMENT. Each party acknowledges and agrees that either
may make a public announcement of the transactions contemplated by this
Agreement any time after the date of execution of this Agreement provided that
the other party approves the form and substance of any such public announcement
prior to its release, which approval shall not be unreasonably withheld.
-13-
25. FORCE MAJEURE. This Agreement and the obligations of the parties
hereunder shall not be impaired or invalidated and a party shall not be in
breach hereof if such party is unable to fulfill any of its obligations
hereunder or is delayed in doing so by reason of strike, labor troubles, acts of
God or any other cause beyond the reasonable control of such party.
26. ATTACHMENTS. All Exhibits and attachments to this Agreement are made
a part of this Agreement by this reference. Any information disclosed in an
Exhibit or attachment shall be deemed to be disclosed and incorporated into any
other Exhibit or attachment where such disclosure would be appropriate.
27. ADDITIONAL DOCUMENTATION. PEAK COMM shall from time to time,
subsequent to Closing, at CCSI's request and without further consideration,
execute and deliver such other instruments of conveyance, assignment and
transfer and take such other action as CCSI reasonably may require in order more
effectively to effectuate the purchase of the Identified Assets.
28. ARBITRATION. Notwithstanding anything to the contrary herein, in the
event that there is any dispute arising pursuant to or in any way related to
this Agreement or the transactions contemplated hereby, the parties shall first
attempt to resolve the dispute between each other. The party claiming the
dispute shall provide written notification to the other party detailing the
nature and facts of the dispute. The parties shall attempt to resolve the
dispute within thirty (30) days, or such other longer period of time as the
parties may mutually agree. In the event that the parties fail to resolve the
dispute within the thirty (30) day period, or such other longer period as shall
have been agreed upon by the parties, the dispute shall be settled by
arbitration at a mutually agreed upon location in Denver, Colorado; provided,
however, that nothing in this Section shall restrict the right of any party to
apply to a court of competent jurisdiction for emergency relief pending final
determination of a claim by arbitration in accordance with this Section; and
further provided, that in the event the dispute involves an amount of money to
be paid to a party, the arbitration shall only be commenced to the extent of the
disputed amount. All arbitration shall be conducted in accordance with the
rules and regulations of the American Arbitration Association, in force at the
time of any such dispute. Each party shall pay its own expenses associated with
such arbitration, provided that the prevailing party in any arbitration shall be
entitled to reimbursement of reasonable attorneys' fees and expenses (including,
without limitation, arbitration expenses) relating to such arbitration. The
decision of the arbitrators, based upon written findings of fact and conclusions
of law, shall be binding upon the parties; and judgment in accordance with that
decision may be entered in any court having jurisdiction thereof. In no event
shall the arbitrators be authorized to grant any punitive, incidental or
consequential damages of any nature or kind whatsoever.
29. TERMINATION.
29.1 This Agreement may be terminated, and the transactions
contemplated hereby abandoned (i) by the mutual consent of CCSI and PEAK COMM;
(ii) by CCSI or PEAK COMM at any time after April 30, 1998 (or such later date
as shall have been agreed to in writing by the parties) if the conditions and
obligations set forth in this Agreement shall not have
-14-
been fulfilled (or waived by the party entitled to the benefit thereof) by such
date, with no further liability on the part of any party hereto; provided,
however, that no party shall be released from liability hereunder if any such
condition is not fulfilled by reason of the breach by such party of its
obligations hereunder.
29.2 Notwithstanding anything contained in the foregoing to the
contrary, if this Agreement is terminated by CCSI due to a failure of PEAK COMM
to perform the conditions precedent to the Closing hereunder, PEAK COMM shall
immediately refund to CCSI all amounts paid to PEAK COMM, including, without
limitation, the Xxxxxxx Money.
30. ENTIRE AGREEMENT; AMENDMENT. This Agreement, together with the
Exhibits, Schedules and attachments hereto, contains the entire understanding
between the parties hereto with respect to the subject matter hereof and no
prior or collateral promises or conditions in connection with or with respect to
the subject matter hereof not incorporated herein shall be binding upon the
parties. No modification, extension, renewal, rescission, termination or waiver
of any of the provisions contained herein or any future representation, promise
or condition in connection with the subject matter hereof, shall be binding upon
either of the parties hereto unless made in writing and duly executed by both
the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives on the day and year first above
written.
CONVERGENT COMMUNICATIONS SERVICES, INC.,
a Colorado corporation
By: /s/ Xxxx X. Xxxxx
-------------------------------------------
Xxxx X. Xxxxx, Chief Executive Officer
PEAK COMM, INC. d/b/a TELEPHONE COMMUNICATIONS
COMPANY, a Colorado corporation
By: /s/ W. Xxxx Xxxxxxx
-------------------------------------------
W. Xxxx Xxxxxxx, President
-15-
