Exhibit 2.1
ASSET PURCHASE AGREEMENT
dated as of
May 29, 2001,
among
IExalt, Inc.,
and
000.XXX, Inc.
TABLE OF CONTENTS
SECTION PAGE
ARTICLE I
DEFINITIONS
1.1 Definitions 1
1.2 Interpretation 4
ARTICLE II
SALE OF ASSETS, LIABILITIES NOT ASSUMED AND RELATED TRANSACTIONS
2.1 Purchase and Sale of Assets 4
2.2 Liabilities Not Assumed 4
2.3 Purchase Price and Allocation 5
2.4 Payment of Purchase Price 5
ARTICLE III
CLOSING AND RELATED ITEMS
3.1 Closing Date 6
3.2 Items to be Delivered at the Closing By Seller 6
3.3 Items to be Delivered at the Closing by Buyer 6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
4.1 Organization and Related Matters 7
4.2 Contracts 7
4.3 Condition of Property 7
4.4 Intangible Property 7
4.5 Authorization 8
4.6 No Conflicts 8
4.7 Legal Proceedings 8
4.8 Minute Books 8
4.9 Compliance with Law 8
4.10 No Brokers or Finders 8
4.11 Accuracy of Information 8
4.12 Capital Adequacy 9
4.13 Subscribers 9
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Organization and Related Matters 9
5.2 Authorization 9
5.3 No Conflicts 9
5.4 No Brokers or Finders 9
ARTICLE VI
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COVENANTS OF SELLER
6.1 Noncompetition 10
6.2 Nondisclosure of Proprietary Data 10
ARTICLE VII
INDEMNIFICATION
7.1 Obligations of Seller 10
7.2 Obligations of Buyer 11
7.3 Procedure 11
7.4 Survival 12
7.5 Notice by Seller 12
7.6 Not Exclusive Remedy 12
ARTICLE VIII
GENERAL
8.1 Amendments; Waivers 13
8.2 Schedules; Exhibits; Integration 13
8.3 Best Efforts; Further Assurances 13
8.4 Governing Law 13
8.5 No Assignment 14
8.6 Headings 14
8.7 Counterparts 14
8.8 Publicity and Reports 14
8.9 Confidentiality 14
8.10 Parties in Interest 15
8.11 Notices 15
8.12 Expenses 16
8.13 Remedies; Waiver 16
8.14 Attorney's Fees 16
8.16 Severability 16
EXHIBIT A Xxxx of Sale and Assignment 18
EXHIBIT B Assets used in/ related to the Consumer Business 20
EXHIBIT C Reseller Agreement 21
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into as of May 29,
2001, by and among iExalt, Inc., a Nevada corporation (the "Seller"), and
000.XXX, Inc., a North Carolina corporation (the "Buyer").
R E C I T A L S
WHEREAS, Seller owns all of the assets used in connection with (i) the Internet
dial-up services and (ii) the Internet Filter services it offers to its consumer
clients and, (iii) other internet services as specified (the "Consumer
Business"), .
WHEREAS, Seller desires to sell, assign, transfer, convey and deliver to Buyer
and Buyer desires to purchase all of Seller's right, title and interest in all
of Seller's subscribers, selected other assets used in, related to, and common
and necessary to the operations of the Consumer Business and certain
tangible/intangible property, together (Exhibit B), on the terms and conditions
set forth in this Agreement; and
NOW, THEREFORE, in consideration of the mutual promises contained herein
and intending to be legally bound, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS.
As used in this Agreement and the Exhibits delivered pursuant to this Agreement,
the following definitions shall apply.
"Action" means any action, complaint, investigation, petition, suit or other
proceeding, whether civil or criminal, in law or in equity, or before any
arbitrator or Governmental Entity.
"Affiliate" means a Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with, a
specified Person.
"Agreement" means this Agreement by and among Buyer and Seller as amended or
supplemented together with all attached Exhibits and Schedules.
"Approval" means any approval, authorization, consent, qualification or
registration, or any waiver of any of the foregoing, required to be obtained
from, or any notice, statement or other communication required to be filed with
or delivered to, any Governmental Entity or any other Person.
"Associate" of a Person means
(a) a corporation or organization (other than a party to this Agreement) of
which such person is a
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director, an officer or partner or is, directly or indirectly, the beneficial
owner of 10% or more of any class of equity securities;
(b) any trust or other estate in which such person has a substantial beneficial
interest or as to which such person serves as trustee or in a similar capacity;
and
(c) any relative or spouse of such person or any relative of such spouse who has
the same home as such person or who is a director or officer of any Affiliate of
Seller.
"Closing" means the consummation of the transaction contemplated by this
Agreement.
"Closing Date" has the meaning specified in Section 3.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consumer Business" means the business of connecting dial-up consumer
subscribers to the Internet, Email Only Accounts, Filter Only Accounts, ISDN
Customer Accounts, Web Hosting Service Accounts and the business of providing
business customers collocation, email services and T-1 Access to the Internet
also known as "Other Services" as described in "Exhibit B".
"Contract" has the meaning specified in Section 2.1(d).
"Existing Subscribers" has the meaning specified in Section 2.1(a).
"Encumbrance" means any claim, charge, lease, covenant, easement, encumbrance,
security interest, lien, option, pledge, rights of others or restriction
(whether on voting, sale, transfer, disposition or otherwise), whether imposed
by agreement, understanding, law, equity or otherwise.
"GAAP" means generally accepted accounting principles in the United States, as
in effect from time to time.
"Governmental Entity" means any government or any agency, bureau, board,
commission, court, department, official, political subdivision, tribunal or
other instrumentality of any government, whether federal, state or local,
domestic or foreign.
"Indemnifiable Claim" means any Loss for or against which any party is entitled
to indemnification under this Agreement.
"Indemnified Party" means the party entitled to indemnity hereunder.
"Indemnifying Party" means the party obligated to provide indemnification
hereunder.
"Intangible Property" means all copyrighted material related to the Consumer
Business, including all rights to the name Cleanweb and all derivations thereof;
all websites used in the Consumer Business; all domain names used in the
Consumer Business; all goodwill associated with the Consumer Business (the
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"Goodwill"); all marketing materials; all of Seller's books and records relating
to the Subscribers; transferable Permits; and all Marks associated with the
Consumer Business.
"Law" means any constitutional provision, statute or other law, rule, regulation
or interpretation of any Governmental Entity and any Order.
"Loss" means any action, cost, damage, disbursement, expense, liability, loss,
deficiency, diminution in value, obligation, penalty or settlement of any kind
or nature, whether foreseeable or unforeseeable, including but not limited to,
interest or other carrying costs, penalties, legal, accounting and other
professional fees and expenses incurred in the investigation, collection,
prosecution and defense of claims and amounts paid in settlement, that may be
imposed on or otherwise incurred or suffered by the specified person.
"Xxxx" means, whether registered or not, any brand name, copyright, patent,
service xxxx, trademark, trade name, trade programming and all registrations or
application for registration of any of the foregoing.
"Order" means any decree, injunction, judgment, order, ruling, assessment or
writ.
"Permit" means any license, permit, franchise, certificate of authority or
order, or any waiver of the foregoing, required to be issued by any Governmental
Entity.
"Person" means an association, a corporation, an individual, a partnership, a
trust or any other entity or organization, including a Governmental Entity.
"Purchase Price" has the meaning set forth in Section 2.3.
"Purchased Assets" has the meaning set forth in Section 2.1.
"Reseller Agreement" means the agreement by and between the Buyer and Seller, to
be agreed upon at a later date, under which Buyer agrees to compensate Seller
for any cross marketing activities Seller initiates on behalf of Buyer. (Exhibit
C).
"Subscribers" has the meaning specified in Section 2.1(a).
"Subscriber Account" means Consumer Business account for any Subscriber not
currently maintained by Buyer.
"Systems" has the meaning specified in Section 2.1(e).
"Tax" means any foreign, federal, state, county or local income, sales and use,
excise, franchise, real and personal property, transfer, gross receipt, capital
stock, production, business and occupation, disability, employment, payroll,
severance or withholding tax or charge imposed by any Governmental Entity, any
interest and penalties (civil or criminal) related thereto or to the nonpayment
thereof, and any Loss in connection with the determination, settlement or
litigation of any Tax liability.
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"Tax Return" means a report, return or other information required to be supplied
to a Governmental Entity with respect to Taxes.
1.2 INTERPRETATION. For all purposes of this Agreement, except as otherwise
expressly provided,
(a) the terms defined in this ARTICLE I have the meanings assigned to them in
this ARTICLE I and include the plural as well as the singular;
(b) all accounting terms not otherwise defined herein have the meanings assigned
under GAAP;
(c) all references in this Agreement to designated "Articles," "Sections" and
other subdivisions are to the designated Articles, Sections and other
subdivisions of the body of this Agreement;
(d) pronouns of either gender or neuter shall include, as appropriate, the other
pronoun forms; and
(e) the words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision.
ARTICLE II
SALE OF ASSETS, LIABILITIES NOT ASSUMED
AND RELATED TRANSACTIONS
2.1 PURCHASE AND SALE OF ASSETS. Subject to the terms and conditions of this
Agreement, on the Closing Date Seller shall sell, convey, assign, transfer and
deliver to Buyer, and Buyer shall purchase, acquire and accept from Seller, the
following assets, properties, rights, privileges, claims and contracts owned by
Seller and used in connection with the Consumer Business as defined herein, and
provided in part, as Exhibit B,(the "Purchased Assets"):
(a) All of Seller's (i) subscribers who as of the date hereof, pay a
charge to access the Internet through Buyer's services (the "Existing
Subscribers"); (ii) Subscriber lists, Subscriber relationships, mailing
lists, and all records with respect to such lists and Subscriber files
owned and maintained by Seller relating to the Consumer Business.
(b) Certain of Seller's third party contracts, including network
contracts, vendor contracts, strategic alliances, spokespersons or other
promotional agreements for Seller used in connection with the Consumer
Business.
(c) Information services systems, technology, licenses and software
used in the Consumer Business and common and necessary for servicing
Subscribers (the "Systems").
(d) All other related items of Seller common and necessary to the
conduct of the Consumer Business.
2.2 LIABILITIES NOT ASSUMED. Buyer shall not assume, shall not take
subject to and shall not be liable for, any liabilities or obligations of any
kind or nature, whether absolute, contingent, accrued, known or unknown, of
Seller or any Affiliate of Seller, (the "Excluded Liabilities") including, but
not limited to, the following:
(i) Any liabilities or obligations incurred, arising from or out of or in
connection with Seller's operations and products, the condition of its assets or
places of business, its ownership of the Purchased Assets or its
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Taxes and employees.
(ii) Any liabilities or obligations incurred, arising from or out of, in
connection with or as a result of claims made by or against Seller whether
before or after the Closing Date that arise out of events before the Closing
Date or Seller's acts and omissions after the Closing Date.
2.3 PURCHASE PRICE AND ALLOCATION. In consideration for the sale,
conveyance, transfer and delivery of the Purchased Assets and upon the terms and
subject to the conditions set forth in this Agreement, Buyer shall pay to Seller
the "Purchase Price", which shall be an amount equal to "One Times Annual Gross
Revenue" of Sellers Consumer Business, less credits and adjustments for
revenue/expense tied to pre-paid accounts of the Seller (the "Pre-Paid
Revenue").
(A) The Purchase Price for the Purchased Assets shall be $1,456,000.00
(Exhibit B-1), less Pre-paid revenue/expense adjustment of
$72,000.00 (Exhibit B-2).
(B) The Purchase Price shall be paid as follows:
(i) $150,000.00 cash upon closing (cashiers check or wire
transfer); plus
(ii) $24,000.00 per month for the first twelve (12) months, payable
in equal installments (by wire transfer), such payments which
shall represent the credit and adjustments for Pre-paid
Revenues received by Seller; plus
(iii) $30,000.00 per month for the second twelve (12) months, such
payments from (ii) and (iii) totaling $648,000.00. The first
payment shall commence 30 days from the date Seller
transitions the Consumer Business to the Buyer; plus
(iv) A Ten percent (10%) equity interest of Buyer in an amount
equal to the Purchase Price less payment provided in sections
2.3 (b) (i), (ii) and (iii) above. Such equity interest shall
be payable by shares of common stock of Buyer delivered within
30 days after "Closing Date".
2.4 PAYMENT OF PURCHASE PRICE. All payments to be made under this Agreement by
Buyer to Seller shall be made in either cash or shares of common stock of Buyer
(the "Buyer Common Stock") the price of which is $1.50 per share. In the event
of a stock split, reverse stock split or similar recapitalization after the
Closing Date, the price per share, and the number of shares shall be adjusted
accordingly.
It is understood that the Buyer will issue a note payable to the Seller,
with a first security lien in the amount of the assets sold, in exchange for the
twenty-four month notes. The Buyer may prepay the Purchase Price at any time
without penalty, and Seller shall have the option to convert all or a portion of
Buyers debt (note) to equity in Buyer at a preferred stock price of $1.50 per
share, at which option to convert must be exercised prior to May 31, 2003.
ARTICLE III
CLOSING AND RELATED ITEMS
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3.1 CLOSING DATE. Upon the terms and subject to the conditions set forth in this
Agreement, the Closing shall take place no later than May 30, 2001, or at such
other location and time as Seller and Buyer may agree in writing (the "Closing
Date").
3.2 ITEMS TO BE DELIVERED AT THE CLOSING BY SELLER. At the Closing, Seller shall
deliver or cause to be delivered to Buyer:
(a) A Xxxx of Sale and Assignment in the form of EXHIBIT A conveying title to
the Purchased Assets;
(b) Copies of resolutions duly adopted by the board of directors of Seller
authorizing and approving Seller's performance of the transactions contemplated
hereby and the execution and delivery of this Agreement.
(c) All other exhibits as defined herein including "Exhibit B" and "Exhibit D".
3.3 ITEMS TO BE DELIVERED AT THE CLOSING BY BUYER. At the Closing, Buyer shall
deliver to Seller:
(a) Cashiers Check or execute wire transfer of $150,000 to Seller.
(b) Promissory Note Payable to Seller reflecting the notes payable
above in section 2.3 (b) (ii) & 2.3 (b) (iii). Such
payments shall commence as defined in Section 2.3 (b)
(iii) above defined.
(c) Buyer's Board Resolution authorizing and approving issuance of
Common Stock to Seller in the amount resulting in an
equity interest of 10% of Buyer and such stock
certificates to be delivered no later than 30 days after
Closing Date.
(d) Copies of resolutions duly adopted by the board of directors
of Buyer authorizing and approving Buyer's performance
of the transactions contemplated hereby and the
execution and delivery of this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF SELLER
Seller represents, warrants and agrees for the benefit of Buyer as follows:
4.1 ORGANIZATION AND RELATED MATTERS. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada.
Seller has all necessary corporate power and authority to carry out its business
as now being conducted. Seller has the necessary corporate power to execute,
deliver and perform this Agreement and any related agreements and documents to
be delivered herewith.
4.2 CONTRACTS. EXHIBIT B lists each Contract to which Seller is a party or to
which Seller is subject that constitutes a Purchased Asset under this Agreement.
Unless otherwise noted in EXHIBIT B, each such Contract was entered into in the
ordinary course of business. True, correct and complete copies of the agreements
appearing on EXHIBIT B, including all amendments and supplements, shall be
delivered to Buyer. Each Contract is valid and existing; Seller has duly
performed all its obligations thereunder to the extent that such obligations to
perform have accrued; and no breach or default, alleged breach or default, or
event that would (with the passage of time, notice or both) constitute a breach
or default thereunder by Seller (or, to the best knowledge of Seller, any other
party or obligor with respect thereto), has occurred or as a result of this
Agreement or its performance will occur. Except as set forth in EXHIBIT B,
consummation of the transactions contemplated by this Agreement will not (and
will not give any person a right to) terminate or modify any rights of, or
accelerate or augment any obligation of, Seller.
4.3 CONDITION OF PROPERTY. To the best of Sellers knowledge, Seller has good and
marketable title to the Purchased Assets, free and clear of any Encumbrances.
Seller has all rights, power and authority to sell, convey, assign, transfer and
deliver the Purchased Assets to Buyer in accordance with the terms of this
Agreement. At the Closing, Seller shall deliver the Purchased Assets to Buyer,
free and clear of any Encumbrances.
4.4 INTANGIBLE PROPERTY. Marks and other Intangible Property that constitutes a
Purchased Asset under this Agreement. Such assets include all Permits or other
rights with respect to any of the foregoing. To the best of Seller's Knowledge,
Seller has complete rights to and ownership of all Intangible Property. Seller
does not use any Intangible Property by consent of any other person and are not
required to and do not make any payments to others with respect thereto. The
Intangible Property of Seller is fully assignable free and clear of any
Encumbrances. Seller has not received any notice to the effect (or is otherwise
aware) that the Intangible Property or any use by Seller of any such property
conflicts with or infringes (or allegedly conflicts with or infringes) the
rights of any Person.
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4.5 AUTHORIZATION. The execution, delivery and performance of this Agreement and
any related agreements by Seller have been duly and validly authorized by the
Board of Directors of Seller and by all other necessary corporate action on the
part of Seller. This Agreement (and any related agreements) constitutes the
legally valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws and
equitable principles relating to or limiting creditors rights generally.
4.6 NO CONFLICTS. The execution, delivery and performance of this Agreement and
any related agreements by Seller will not violate the provisions of, or
constitute a breach or default (whether upon lapse of time or the occurrence of
any act or event or otherwise) under, (a) the articles of incorporation or
bylaws of Seller, (b) any Law to which Seller is subject or (c) any Contract of
Seller, or result in the imposition of any Encumbrance against any of the
Purchased Assets.
4.7 LEGAL PROCEEDINGS. There is no Order or Action pending, or, to the best
knowledge of Seller, threatened, against or affecting Seller or any of its
properties or assets that individually or when aggregated with one or more other
Orders or Actions has or if determined adversely might reasonably be expected to
encumber or to have a material adverse effect on the Purchased Assets, Seller's
ability to perform this Agreement or any aspect of the transactions contemplated
by this Agreement.
4.8 MINUTE BOOKS. The minute books of Seller accurately reflect all actions and
proceedings taken to date by the respective stockholders, boards of directors
and committees of Seller, and such minute books contain true and complete copies
of the charter documents of Seller and all related amendments.
4.9 COMPLIANCE WITH LAW. Seller is organized and has conducted its business in
accordance with applicable Laws, and the forms, procedures and practices of
Seller are in compliance with all such Laws in all material respects.
4.10 NO BROKERS OR FINDERS. No agent, broker, finder or investment or commercial
banker, or other Person or firm engaged by or acting on behalf of Seller or any
of its Affiliates in connection with the negotiation, execution or performance
of this Agreement or the transactions contemplated by this Agreement, is or will
be entitled to any brokerage or finder's or similar fee or other commission as a
result of this Agreement or such transactions.
4.11 ACCURACY OF INFORMATION. All information furnished by or on behalf of
Seller to Buyer, its agents or representatives in connection with Seller, the
Consumer Business and the Purchased Assets, this Agreement and the transactions
contemplated by this Agreement is true and complete in all material respects and
does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make any statement therein not misleading. None of
the information supplied or to be supplied by or on behalf of Seller (a) to any
Person for inclusion, or included, in any document or application filed with any
Governmental Entity having jurisdiction over or in connection with the
transactions contemplated by this Agreement or (b) to Buyer, its agents or
representatives in connection with these transactions or this Agreement, did
contain, or at the respective times such information is delivered or becomes
effective, will contain any untrue statement of a material fact, or omitted or
will omit to state any material fact required to be stated therein or necessary
in order to make the statements therein,
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in light of the circumstances under which they were made, not misleading. If any
of such information at any time subsequent to its delivery becomes untrue or
misleading in any material respect, Seller will promptly notify Buyer in writing
of such fact and of the reasons for such change.
4.12 CAPITAL ADEQUACY. Seller both before and after giving effect to the
transactions contemplated by this Agreement will have sufficient capital with
which to engage in its ongoing business.
4.13 SUBSCRIBERS. EXHIBIT B lists the names of and describes all of Seller's
Existing Subscribers. Seller has not received any notice and has no reason to
believe that any Existing Subscriber (x) has ceased, or will cease, to use the
Seller's service, (y) has substantially reduced or will substantially reduce,
the use of Seller's services or (z) has sought, or is seeking, to reduce the
price it will pay for Seller's products, including in each case after the
consummation of the transactions contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as otherwise indicated on the attached Schedules, Buyer represents,
warrants and agrees as follows:
5.1 ORGANIZATION AND RELATED MATTERS. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of North Carolina. Buyer
has all necessary corporate power and authority to carry on its business as now
being conducted. Buyer has the necessary corporate power and authority to
execute, deliver and perform this Agreement and any related agreements to which
it is a party.
5.2 AUTHORIZATION. The execution, delivery and performance of this Agreement and
any related agreements by Buyer have been duly and validly authorized by the
Board of Directors of Buyer and by all other necessary corporate action on the
part of Buyer. This Agreement constitutes the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
relating to or limiting creditors' rights generally.
5.3 NO CONFLICTS. The execution, delivery and performance of this Agreement and
any related agreements by Buyer will not violate the provisions of, or
constitute a breach or default whether upon lapse of time or the occurrence of
any act or event or otherwise under (a) the articles of incorporation or bylaws
of Buyer, (b) any Law to which Buyer is subject or (c) any Contract to which
Buyer is a party that is material to the financial condition, results of
operations or conduct of the business of Buyer.
5.4 NO BROKERS OR FINDERS. No agent, broker, finder or investment or commercial
banker, or other Person or firms engaged by or acting on behalf of Buyer or its
Affiliates in connection with the negotiation, execution or performance of this
Agreement or the transactions contemplated by this Agreement, is or will be
entitled to any broker's or finder's or similar fees or other commissions as a
result of this Agreement or such transactions.
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ARTICLE VI
COVENANTS OF SELLER
6.1 NONCOMPETITION.
(a) RESTRICTIONS ON COMPETITIVE ACTIVITIES. Seller agrees that, after the
Closing, Buyer shall be entitled to the goodwill of the Consumer Business and
shall protect and preserve the same to the maximum extent permitted by law.
Seller also acknowledge that their management contributions to the Consumer
Business have been uniquely valuable and involve proprietary information that
would be competitively unfair to make available to any competitor of the
Consumer Business. For these and other reasons and as an inducement to Buyer to
enter into this Agreement, Seller agrees that for a period of two years after
the date hereof none of them will directly or indirectly, for their own benefit
or as agent for another, carry on or participate in the ownership, management or
control of, or the financing of, or be employed by, or consult for or otherwise
render services to, or allow the Seller's name or reputation to be used in or by
any other present or future business enterprise that competes with Buyer, or any
Affiliate of Buyer, in the Consumer Business as of the Closing Date.
(b) SPECIAL REMEDIES AND ENFORCEMENT. Seller recognizes and agrees that a breach
by Seller of any of the covenants set forth in this SECTION 6.1 could cause
irreparable harm to Buyer, that Buyer's remedies at law in the event of such
breach would be inadequate, and that, accordingly, in the event of such breach a
restraining order or injunction or both may be issued against Seller, in
addition to any other rights and remedies that are available to Buyer. If this
SECTION 6.1 is more restrictive than permitted by the Laws of any jurisdiction
in which Buyer seeks enforcement hereof, this SECTION 6.1 shall be limited to
the extent required to permit enforcement under such Laws. In particular, the
parties intend that the covenants contained in the preceding portions of this
SECTION 6.1 shall be construed as a series of separate covenants If, in any
judicial proceeding, a court shall refuse to enforce any of the separate
covenants deemed included in this paragraph, then such unenforceable covenant
shall be deemed eliminated from these provisions for the purpose of those
proceedings to the extent necessary to permit the remaining separate covenants
to be enforced.
6.2 NONDISCLOSURE OF PROPRIETARY DATA. After the Closing, neither Seller, or
their representatives, shall, at any time, make use of, divulge or otherwise
disclose, directly or indirectly, any trade secret, confidential information or
other proprietary data (including, but not limited to, any customer list, record
or financial information concerning the Consumer Business or the business or
policies of Seller related to the Consumer Business) that Seller or any of their
representatives may have learned as an owner or a stockholder, employee, officer
or director of the Consumer Business.
ARTICLE VII
INDEMNIFICATION
7.1 OBLIGATIONS OF SELLER. Seller agrees to indemnify and hold harmless Buyer
and its directors, officers,
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employees, affiliates, agents and assigns from and against any and all Losses of
Buyer, directly or indirectly, as a result of, or based upon or arising from:
(a) any inaccuracy in or breach or nonperformance of any of the representations,
warranties, covenants or agreements made by Seller in or pursuant to this
Agreement whether or not of a material nature;
(b) any other matter as to which Seller in other provisions of this Agreement
has agreed to indemnify Buyer;
(c) any liability or obligation of Seller or any of its Affiliates;
(d) any third-party claims in respect of the Purchased Assets before the Closing
Date that are asserted after the Closing Date; or
(e) noncompliance with any applicable bulk-sales or fraudulent-conveyance law in
connection with or as a result of the sale and transfers contemplated by this
Agreement.
7.2 OBLIGATIONS OF BUYER. Buyer agrees to indemnify and hold harmless, Seller
from and against any Losses of Seller, directly or indirectly, as a result of,
or based upon or arising from, any inaccuracy in or breach or nonperformance of
any of the representations, warranties, covenants or agreements made by Buyer in
or pursuant to this Agreement.
(a) any inaccuracy in or breach or nonperformance of any of the representations,
warranties, covenants or agreements made by Buyer in or pursuant to this
Agreement whether or not of a material nature;
(b) any other matter as to which Buyer in other provisions of this Agreement has
agreed to indemnify Seller;
(c) any liability or obligation of Buyer or any of its Affiliates;
(d) any third-party claims in respect of the Purchased Assets before the Closing
Date that are asserted after the Closing Date; or
(e) noncompliance with any applicable bulk-sales or fraudulent-conveyance law in
connection with or as a result of the sale and transfers contemplated by this
Agreement
7.3 PROCEDURE.
(a) NOTICE. Any party seeking indemnification (an "Indemnified Party") with
respect to any Loss shall give notice thereof to the party required to provide
indemnity hereunder (the "Indemnifying Party") and within 30 days after receipt
by the Indemnified Party of notice of any demand, claim or circumstances that
could give rise to a claim, or the commencement (or threatened commencement) of
any action, proceeding or investigation (including, without limitation, a notice
of any Tax audit or of any request to waive or extend the statute of limitations
applicable to the assessment or collection of any Tax) that could give rise
11
to a right to indemnification pursuant to this ARTICLE VIII. Notwithstanding the
foregoing, (i) no Indemnified Party shall have any obligation to give any notice
of any asserted liability by a third party unless such assertion is in writing
and (ii) the rights of any Indemnified Party to be indemnified in respect of any
Loss resulting from the asserted liability shall not be adversely affected by
the Indemnified Party's failure to give or delay in giving notice unless (and
then only to the extent that) the Indemnifying Party is materially prejudiced
thereby.
(b) DEFENSE. If any claim, demand or liability is asserted by any third party
against any Indemnified Party, the Indemnifying Party shall upon the written
request of the Indemnified Party, defend any action or proceeding brought
against the Indemnified Party in respect of matters embraced by the indemnity,
but the Indemnified Party shall have the right to conduct and control the
defense, compromise or settlement of any Indemnifiable Claim if the Indemnified
Party chooses to do so, on behalf of and for the account and risk of the
Indemnifying Party who shall be bound by the result so obtained to the extent
provided herein. If, after a request to defend any action or proceeding, the
Indemnifying Party neglects or refuses to defend the Indemnified Party, a
recovery against the latter suffered by it in good faith, is conclusive in its
favor against the Indemnifying Party; provided, however, that, if the
Indemnifying Party has not received reasonable notice of the action or
proceeding against the Indemnified Party, or is not allowed to control its
defense, judgment against the Indemnified Party is only presumptive evidence
against the Indemnifying Party. The parties shall cooperate in the defense of
all third-party claims that may give rise to Indemnifiable Claims hereunder.
(c) INSURANCE MATTERS. The provisions of this ARTICLE VII are subject to the
rights of any Indemnified Party's insurer that may be defending any such claim.
If the Indemnifying Party makes any payment hereunder of a Loss, the
Indemnifying Party shall be subrogated, to the extent of such payment, to the
rights of the Indemnified Party against any insurer or third party with respect
to such Loss. Nothing in this SECTION 7.3 shall be deemed to obligate any person
to maintain any insurance or to pursue any claim against any insurer or third
party.
7.4 SURVIVAL. This indemnification shall survive the Closing and shall remain in
effect for a period of 2 years after the date of Closing, intentional
misrepresentations under or breaches of this Agreement, as to which the
indemnification obligations shall remain in effect for a period of 2 years after
the date of actual discovery of each such misrepresentation or breach. Any
matter as to which a claim has been asserted by notice to the other party that
is pending or unresolved at the end of any limitation period shall continue to
be covered by this ARTICLE XII until such matter is finally terminated or
otherwise resolved subject to applicable statutes of limitations by the parties
and settled under this Agreement or by a court of competent jurisdiction and any
amounts payable hereunder are finally determined and paid.
7.5 NOTICES BY SELLER. Seller agrees to notify Buyer of any liabilities, claims
or misrepresentations, breaches or other matters covered by this ARTICLE VII
upon discovery or receipt of notice thereof (other than from Buyer), whether
before or after Closing.
7.6 NOT EXCLUSIVE REMEDY. This ARTICLE VII shall not be deemed to preclude or
otherwise limit in any way the exercise of any other rights or pursuit of other
remedies for the breach of this Agreement or with
12
respect to any misrepresentation.
ARTICLE VIII
GENERAL
8.1 AMENDMENTS; WAIVERS. This Agreement and any schedule or exhibit attached
hereto may be amended only by agreement in writing of all parties. No waiver of
any provision nor consent to any exception to the terms of this Agreement or any
agreement contemplated hereby shall be effective unless in writing and signed by
the party to be bound and then only to the specific purpose, extent and instance
so provided.
8.2 SCHEDULES; EXHIBITS; INTEGRATION. Each schedule and exhibit delivered
pursuant to the terms of this Agreement shall be in writing and shall constitute
a part of this Agreement, although schedules need not be attached to each copy
of this Agreement. This Agreement, together with such schedules and exhibits,
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior agreements and understandings of the
parties in connection therewith.
8.3 BEST EFFORTS; FURTHER ASSURANCES.
(a) COMMITMENT TO BEST EFFORTS. Each party will use its best efforts to cause
all conditions to its and the other parties' obligations hereunder to be timely
satisfied and to perform and fulfill all obligations on its part to be performed
and fulfilled under this Agreement. Each party shall execute and deliver such
further certificates, agreements and other documents and take such other actions
as may be necessary or appropriate to consummate or implement the transactions
contemplated hereby or to evidence such events or matters.
(b) LIMITATION. As used in this Agreement, the term "best efforts" shall not
mean efforts that require the performing party to do any act that is
unreasonable under the circumstances or to expend any funds other than in
payment of reasonable out-of-pocket expenses incurred in satisfying obligations
hereunder, including but not limited to the fees, expenses and disbursements of
its accountants, actuaries, counsel and other professional advisers.
8.4 GOVERNING LAW; ARBITRATION.
(a) The parties expressly and irrevocably agree and consent that this Agreement
and the legal relations between the parties shall be governed by and construed
in accordance with the laws of State of North Carolina applicable to contracts
made and performed in such State and without regard to conflicts-of-law
doctrines except to the extent that certain matters are preempted by federal law
or are governed by the law of the jurisdiction of incorporation of the
respective parties.
13
(b) Any dispute arising from this agreement shall be governed in accordance with
the RULES OF PROCEDURE FOR CHRISTIAN CONCILIATION of the Institute for Christian
Conciliation (Peacemaker Ministries) for any and all disputes concerning or
arising from or under this agreement. Both parties realize that arbitration will
be the exclusive remedy for potential disputes and may not later litigate these
or any other related matters in civil court
(c) In the event of a breach of any party to consummate a dispute through
Arbitration as set out in section 8.4(b) above, or breach of any covenant of any
party to this agreement, nothing herein shall prohibit the non-breaching party
from seeking equitable relief in a court of law, and to be entitled to enforce
this Agreement as to such matters by injunctive relief and by specific
performance; such relief to be without the necessity of posting a bond, cash or
otherwise (unless required by North Carolina law).
8.5 NO ASSIGNMENT. Neither this Agreement (nor related agreements pursuant to
this Agreement) nor any rights or obligations under any of them are assignable
except by mutual consent.
8.6 HEADINGS. The descriptive headings of the articles, sections and subsections
of this Agreement are for convenience only and do not constitute a part of this
Agreement.
8.7 COUNTERPARTS. This Agreement and any amendment hereto or any other agreement
(or document) delivered pursuant hereto may be executed in one or more
counterparts and by different parties in separate counterparts. All of such
counterparts shall constitute one and the same agreement (or other document) and
shall become effective (unless otherwise therein provided) when one or more
counterparts have been signed by each party and delivered to the other party.
8.8 PUBLICITY AND REPORTS. Seller and Buyer shall coordinate all publicity
relating to the transactions contemplated by this Agreement, and no party shall
issue any press release, publicity statement or other public notice relating to
this Agreement, or the transactions contemplated by this Agreement, without
consulting with the other party.
8.9 CONFIDENTIALITY. All information disclosed in writing and designated in
writing as confidential by any party (or its representatives) whether before or
after the date hereof, in connection with the transactions contemplated by, or
the discussions and negotiations preceding, this Agreement to any other party
(or its representatives) shall be kept confidential by such other party and its
representatives and shall not be used by any such Persons other than as
contemplated by this Agreement, except to the extent that such information (i)
was known by the recipient when received, (ii) it is or hereafter becomes
lawfully obtainable from other sources, (iii) is necessary or appropriate to
disclose to a Governmental Entity having jurisdiction over the parties, (iv) as
may otherwise be required by law or (v) to the extent such duty as to
confidentiality is waived in writing by the other party. If this Agreement is
terminated in accordance with its terms, each party shall use all reasonable
efforts to return upon written request from the other party all documents (and
reproductions thereof) received by it or its representatives from such other
party (and, in the case of reproductions, all such reproductions made by the
receiving party) that include information not within the exceptions contained in
the first sentence of this SECTION 9.9, unless the recipients provide assurances
reasonably satisfactory to the requesting party that such documents have been
destroyed.
14
8.10 PARTIES IN INTEREST. This Agreement shall be binding upon and inure to the
benefit of each party, and nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement. Nothing in this Agreement is
intended to relieve or discharge the obligation of any third person to any party
to this Agreement.
8.11 NOTICES. Any notice or other communication hereunder must be given in
writing and either (a) delivered in person, (b) transmitted by telex, telefax or
telecommunications mechanism provided that any notice so given is also mailed as
provided in clause (c) or (c) mailed by certified or registered mail, postage
prepaid, return receipt requested as follows:
If to Buyer, addressed to:
000.XXX, Inc.
Attention: Xxxxx Xxxxxxx
0000 Xxxxxxxxx Xxxxxxx Xxxxx
Xxxxx X
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Fax: 000-000-0000
With a copy to:
Xxxx X. Xxxxx
Xxxxx Xxxxx Mulliss & Xxxxx, L.L.P.
000 X. Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
If to Seller, addressed to:
IExalt, Inc.
00000 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx
(000) 000-0000
With a copy to:
Xxx Xxxxxxxxx
General Counsel
Christian & Xxxxx
0000 Xxxxxx #000
Xxxxxxx, Xxxxx 000000
Fax: (000) 000-0000
15
or to such other address or to such other person as either party shall have last
designated by such notice to the other party. Each such notice or other
communication shall be effective (i) if given by telecommunication, when
transmitted to the applicable number so specified in (or pursuant to) this
SECTION 8.11, (ii) if given by mail, three days after such communication is
deposited in the mails with first-class postage prepaid, addressed as aforesaid,
or (iii) if given by any other means, when actually delivered at such address.
8.12 EXPENSES. Each of Seller and Buyer shall pay its own expenses incident to
the negotiation, preparation and performance of this Agreement and the
transactions contemplated hereby and of securing third-party consents and
approvals required to be obtained by it. Seller shall pay any documentary
transfer tax, real property transfer or gains tax, document-recording fees and
charges, and any income, franchise or revenue tax or excise tax (and any surtax
thereon) due in connection with the consummation of the transactions
contemplated by this Agreement.
8.13 REMEDIES; WAIVER. All rights and remedies existing under this Agreement and
any related agreements or documents are cumulative to, and not exclusive of, any
rights or remedies otherwise available under applicable Law. No failure on the
part of any party to exercise or delay in exercising any right hereunder shall
be deemed a waiver thereof, nor shall any single or partial exercise preclude
any further or other exercise of such or any other right.
8.14 ATTORNEYS' FEES. In the event of any Action for the breach of this
Agreement or misrepresentation by any party, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and expenses incurred in such
Action.
8.16 SEVERABILITY. If any provision of this Agreement is determined to be
invalid, illegal or unenforceable by any Governmental Entity, the remaining
provisions of this Agreement to the extent permitted by Law shall remain in full
force and effect.
[SIGNATURE PAGE FOLLOWS.]
16
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed by its duly authorized officers as of the day and year first above
written.
000.XXX, INC.
By: /s/XXXXX XXXXXXX
---------------------------------
Title: PRESIDENT
------------------------------
IEXALT, INC.
By: /s/XXXXXX X. XXXXXXX
--------------------------------
Title: CEO
-----------------------------
17
XXXX OF SALE AND ASSIGNMENT AGREEMENT
This XXXX OF SALE AND ASSIGNMENT AGREEMENT is made this the 29th day of
May 2001, by IEXALT, INC., a Nevada corporation ("Seller") and 000.XXX, INC., a
North Carolina corporation ("Buyer"). All capitalized terms not otherwise
defined herein shall have the meaning ascribed to them in the Asset Purchase
Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to an Asset Purchase Agreement, dated as of May 29, 2001
(the "Agreement"), between Seller and Buyer, Seller has agreed to sell to Buyer
all of the Purchased Assets of Seller related to the Consumer Business (as
defined in the Asset Purchase Agreement) of Seller; and
WHEREAS, Buyer, in exchange for the Purchased Assets, has agreed to pay to
Seller the Purchase Price based on a formula of One Times Annual Gross Revenue,
adjusted for prepaid accounts; and which the Parties have hereto agreed equals
the total sum of $1,456,000.00 for the Purchased Assets, and which such sum
shall be paid as follows;
(i) One Hundred Fifty Thousand dollars ($150,000) shall be paid
upon closing; plus
(ii) Six Hundred Forty-Eight Thousand dollars ($648,000) shall be
paid in monthly payments of not less then Twenty-four Thousand
dollars ($24,000), and payable in not more then 25 months from
the date all of Sellers "Consumer Business" has transitioned
to Buyer (as defined in section 2.3 (b) ii and iii of the
"Asset Purchase Agreement"); plus
(iii) The balance of the Purchase Price (the total sum of the
payment amounts of (i) and (ii) above), an amount that equals
$658,000.00, shall be paid to Seller in shares of common stock
of Buyer (the "Buyer Common Stock") the price of which is
$1.50 per share. In the event of a stock split, reverse stock
split or similar recapitalization after the Closing Date, the
price per share, and the number of shares to be exchanged
shall be adjusted accordingly.
WHEREAS, Seller has executed and delivered this Xxxx of Sale and
Assignment to Buyer for the purpose of selling and assigning to and vesting in
Buyer all of Seller's right, title and interest in and to the Purchased Assets.
NOW, THEREFORE, in consideration of the Purchase Price and other good and
valuable consideration, the receipt of which is hereby acknowledged, and
intending to be legally bound, Seller hereby grants, sells, conveys, assigns,
transfers and delivers to Buyer (and/or its successors and assigns) all of
Seller's right, title and interest, legal and equitable, in and to all of the
Purchased
18
Assets, to have and to hold the same; and Seller hereby warrants title to such
Purchased Assets unto Buyer (and/or its successors and assigns) to the full
extent warranted in the Agreement.
Nothing in this instrument, express or implied, is intended or shall be
construed to confer upon or give to any person, firm or corporation other than
Buyer, its successors and assigns, any remedy or claim under, or by reason of,
this instrument or any term, covenant, condition, promise or agreement hereof.
All of the terms, covenants, conditions, promises and agreements contained in
this instrument shall be for the sole and exclusive benefit of Buyer, its
successors and assigns.
Neither the making nor the acceptance of this instrument shall enlarge,
restrict or otherwise modify the terms of the Agreement or constitute a waiver
or release by Seller or Buyer of any liabilities, duties or obligations imposed
upon them by the terms of the Agreement, including without limitation the
representations, warranties, covenants, agreements and other provisions of the
Agreement.
This instrument shall be governed by and enforced in accordance with the
laws of the State of North Carolina.
This instrument may be executed in counterparts and all copies so executed
shall constitute one agreement, notwithstanding that all parties are not
signatories to the original or the same counterpart.
IN WITNESS WHEREOF, this Xxxx of Sale and Assignment has been duly
executed on the date first above written.
IEXALT, INC.
By: /s/ XXXXXX X. XXXXXXX
------------------------------
Name: XXXXXX X. XXXXXXX
------------------------------
Title: CEO
------------------------------
000.XXX, INC.
By: /s/ XXXXX XXXXXXX
------------------------------
Name: XXXXX XXXXXXX
------------------------------
Title: PRESIDENT
------------------------------
19
EXHIBIT B - ASSETS
Customer Data -
[ ] Individual account data for all customers;
[ ] List of all pricing plans and effective dates of plans including ISP,
filter only, broadband, hosting and other;
[ ] Historical account data for entire customer database (including inactive
customers)
[ ] List of "paid thru" dates for all active customers
[ ] List of pending refunds (if any)
[ ] Copy of prior communication to customers for future reference
[ ] Name / telephone number of billing department/customer service contacts
Equipment/Licenses -
[ ] List/description of all hardware (e.g., servers, CPUs, monitors,
switches, routers, etc.)
[ ] List/description of all software packages (e.g., radius, licenses)
[ ] List/description of all filtering hardware
[ ] List of all domains to be transferred
[ ] List/copy of all leasing agreements
[ ] List of IP addresses for equipment
[ ] List of all service/maintenance agreements and warranty information.
Software -
[ ] PRISM Billing System and documentation
[ ] List / copy of all software licenses, documentation
[ ] Documents of ownership (property rights) to internal development,
proprietary information
Vendor Contracts -
[ ] NOC - Lease agreement
[ ] NOC - Service agreement
[ ] Network agreements
[ ] Contact name/address/telephone numbers for vendors
[ ] Miscellaneous contracts (e.g., Netsurfer, etc., PRISM maintenance,
etc.)
[ ] Dates paid thru (A/P - Invoices)
Partnerships -
[ ] List/Copy of agreements with all affiliates, partnerships
[ ] Copy of contract with DPEC; database of current learning center
accounts
[ ] Current list of groups advertising on CleanWeb site; copy of
agreements, price listing.
Miscellaneous -
[ ] Samples of current / past marketing materials
[ ] Camera ready art for logo
[ ] Trademarks, copyrights owned
[ ] Names and telephone numbers of contacts
[ ] Other items common and necessary for the conduct of the assets conveyed
20
Exhibit C
STRATEGIC MARKETING AND
RESELLER AGREEMENT
THIS STRATEGIC MARKETING AGREEMENT ("Agreement") is entered into this 29th day
of May 2001, by and between iExalt, Inc. ("iExalt"), a Nevada corporation having
its principal offices at 00000 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx
00000, and 000.XXX, Inc. ("000.XXX"), a North Carolina corporation having its
principal offices at 0000 Xxxxxxxxx Xxxxxxx Xxxxx, Xxxxx X, Xxxxxxxxx, Xxxxx
Xxxxxxxx 00000. 000.XXX and iExalt are sometimes referred to in this Agreement
collectively as the "Parties." Capitalized terms used herein and not otherwise
defined shall have the meaning set forth in the Asset Purchase Agreement.
RECITALS
WHEREAS, 000.XXX has entered into an Asset Purchase Agreement with
iExalt (the "Asset Purchase Agreement") dated as of May 29, 2001 whereby 000.XXX
agreed to purchase certain of the assets of iExalt, including but not limited to
iExalt subscribers and subscriber lists (the "Purchased Assets"), to use in its
business as an Internet services and marketing company; and
WHEREAS, 000.XXX is in the business of providing Internet Filtering and
Content Management products and services to consumers, business, education,
organization, and government entities (the "Internet Business"); and
WHEREAS, in connection with the sale of the iExalt Internet business to
000.XXX, iExalt desires to continue to market, resell, and produce additional
business and Internet subscriber sales and services to iExalt constituency,
market influences, and other organizations as a Reseller of such Internet
services for 000.XXX's ISPBrand Internet access services; and
WHEREAS, 000.XXX wishes to be the exclusive provider of the Internet
Business to persons affiliated with those entities contracted by iExalt during
its offerings and wishes to retain iExalt for the purpose of marketing and
promoting the Internet Business to those entities, and iExalt hereto desires to
be so retained by 000.XXX; and
WHEREAS, iExalt desires to commit to the terms of this Agreement in order
to market a branded version of ISPBrand Internet access services by 000.XXX.
NOW, THEREFORE, in consideration of the engagement by 000.XXX of iExalt to
perform certain services and the engagement by iExalt of 000.XXX to perform
certain services, the promises contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as set forth herein:
1. LICENSE TO MARKET AND RESELL. Subject to the terms and provisions of this
Agreement, 000.XXX grants to iExalt the worldwide, nonexclusive,
nontransferable, limited, personal right ("License") to
21
market ISPBrand Internet access services under the branding of 000.XXX, and
whose ownership of such subscribers shall be the sole property of 000.XXX.
2. THE SERVICE. Internet services provided for marketing by iExalt of the
ISPBrand Internet access service will include the following items:
2.1. Permission to customize existing "CleanWeb", "ViaFamily
Online", or other brands of 000.XXX as agreed by the Parties,
such marketing material, CD jacket, CD, graphics and other
related materials with the logo of the private label. iExalt
shall be required to display the "Powered by ISPBrand" service
xxxx on all materials. See Addendum 2 - Service Xxxx.
2.2. Permission for iExalt to use 000.XXX trademarks and service
marks for the expressed purpose of marketing the Private Label
version of ISPBrand Internet service pursuant to item " 8.
Usage" below.
2.3. Permission for iExalt to establish a "home" web site, or link
to such a site, that will be the default home page for its
customers. In addition, iExalt and iExalt customers are
granted permission to link to certain components of the
"ViaFamily Online" portal (XXX.XXXXXXXXX.XXX) related
specifically to service issues such as technical support,
service availability, or other sections specifically approved
by 000.XXX, pursuant to item "8. Usage" below.
2.4. Permission for iExalt to establish a custom e-mail address
(domain name) for the customers as agreed by the Parties.
3. PERFORMANCE. It is recognized by the Parties that iExalt will have current
and future Marketing relationships that are expected to produce additional
subscribers for 000.XXX. iExalt will faithfully, industriously, and
aggressively and to the best of its ability, experience and talent, perform
all duties that may be required of it, pursuant to the express and implicit
terms of this Agreement. In exchange for a forward pricing plan (defined in
Addendum 1 Compensation, hereto attached), iExalt commits to securing at
least 10,000 new Subscribers to the 000.XXX system through its marketing
channels. Should iExalt not equal or exceed 10,000 Subscribers within the
initial twelve (12) months following Closing, iExalt shall pay to Purchaser
$50,000 in iExalt common stock, but not greater than 100,000 shares of
restricted common stock.
4. AS TO IEXALT.
4.1. Prior to the execution of this Agreement, iExalt shall present
000.XXX an overview of the Marketing Plan to be carried out
following the activation of a Private Label service, and
provide growth forecasts to ensure timely network capacities.
4.2. iExalt may establish or change pricing to the customers for
services offered by the Private Label service with a 30 day
written notification to 000.XXX, such pricing changes that
could be subject to revised Royalty payments.
4.3. iExalt acknowledges that all costs related to marketing
materials including, but not limited to, brochures, CD
jackets, CD's, mailing expenses, and toll free customer sales
telephone calls associated with marketing campaigns are borne
by iExalt and iExalt may use such customer list for other
marketing purposes.
4.4. iExalt agrees to pay for services provided by 000.XXX for each
subscriber contracted by IExalt including costs for postage
and handling costs as related to the processing and shipment
of start-up CD's requests handled by the 000.XXX customer
services center defined herein in Addendum 1 - Compensation.
22
4.5. iExalt acknowledges that if it elects to offer any "Free Trial
Offers" (30 day or other) as an incentive to acquire new
subscribers, iExalt will be charged $25.00 per customer that
takes advantage of such an offer, but who subsequently cancels
the service within the "trail" period offered.
4.6. iExalt agrees to place a non-hyper linked service xxxx
"Powered by ISPBrand" on the services home page.
5. AS TO 000.XXX.
5.1. iExalt shall be paid a monthly Royalty for all active fully
paying subscribers developed through such Marketing
relationship, as defined in Addendum 1 Compensation, hereto
attached. Royalty payment will only be made after payment for
services is received from the customer by 000.XXX. Royalty
payments will be made to iExalt no later than 30 days after
the end of the calendar month of which a subscriber activated
their service account.
5.2. 000.XXX will provide iExalt the complete ISPBrand Internet
access service including toll free technical and billing
support as well as services including branded e-mail address
(domain names), custom Web Mail, ability to use
off-line/online communication windows specific to the start-up
software currently being used by 000.XXX, establishment of the
private label homepage as the default homepage for its
customers and basic service information to prospective
customers.
5.3. 000.XXX will provide complete billing services for private
label customers. All customer account billing is charged in
advance for services rendered.
5.4. 000.XXX will provide a monthly report to iExalt regarding new
customers, cancellations, refunds and other relevant billing
information via a web "reports" interface.
6. ROYALTY CONVERSION RIGHTS. 000.XXX grants to iExalt, and iExalt shall have
the right and option to increase ownership in 000.XXX by converting Royalty
payments to 000.XXX stock (common), such stock which shall contain preferred
pricing as set out herein and which terms are incorporated in the Asset
Purchase Agreement;
For each Royalty dollar iExalt converts to 000.XXX stock, such dollar shall
be calculated at a premium rate of 1.25 times such dollar. E.g. each $5.00
royalty, times 1.25 premium, shall equal $6.25 in stock ($5.00x1.25=$6.25).
Until May 31, 2002, iExalt shall receive a preferred stock purchase price of
$1.50 per share of 000.XXX (Common Stock) on all Royalty dollars converted to
000.XXX stock. E.g. each $6.25 post-premium Royalty dollar shall equal 4.166
shares of 000.XXX stock ($6.25/$1.50= 4.166).
7. SET UP. Parties agree to provide the necessary resources to establish a new
private label service within 30 days of receipt of a completed "task list"
for the new private label service from iExalt.
8. TERM OF THE AGREEMENT. This Agreement is for a period of one year and shall
automatically extend for additional periods of one year unless either party
provides written notice to the other at least thirty (30) days in advance of
the then-current term. iExalt is subject to termination costs associated with
the closing of iExalt customer accounts. Costs may include, customer bad
credit, unpaid accounts and refunds, as a result of iExalt or its customers.
9. NONCOMPETITION-NONDIVERSION. iExalt will not offer to its customers or
operate any other Internet access service in competition with the Internet
services offered by 000.XXX during the term of this agreement. For
23
two (2) years after the Closing Date, iExalt shall not solicit, directly or
indirectly, any of 000.XXX's present or past subscribers or customers for
the purpose of diverting such subscribers, for either their own individual
or combined benefit or for the benefit of any individual, company or other
entity, that is engaged directly or indirectly, in the same or substantially
the same activities as comprise the Internet Business of 000.XXX.
10. USAGE. iExalt and 000.XXX will take such action as is necessary to protect
000.XXX's copyrights, trade names, trademarks, goodwill, trade secrets,
proprietary information, products and services. iExalt may attach to or
modify existing 000.XXX marketing materials to the extent necessary to
effectively market the CleanWeb Online Internet service. iExalt shall submit
to 000.XXX all such material for accuracy and clarity regarding the services
marketed prior to distribution. This License is written approval for iExalt
to market and obtain subscribers for the benefit of 000.XXX and its ISPBrand
Internet access service. This approval does not extend to any other products
or services provided by 000.XXX, except as provided under separate agreement
between the Parties.
11. CUSTOMER TERMS OF SERVICE AND CONDITIONS.
11.1. ACCEPTABLE USE POLICY, FEES, CANCELLATIONS, REFUND POLICY.
Licensee and all private label services of ISPBrand shall be
subject to and comply with the Acceptable Use Policies and
Terms of Service, including Fees, Cancellations and Refunds
Policy established and enforced by 000.XXX as defined in
Addendum 4-Acceptable Use Policy. 000.XXX, Inc. reserves the
right, in its sole discretion, to amend, modify or change the
Acceptable Use Policy from time to time. Any such change shall
be effective upon posting. 000.XXX, Inc. reserves the right to
suspend or terminate the private label's service for a
violation of the Acceptable Use Policy. iExalt agrees to
require its private label clients and End-Users to comply with
the terms of the Policies and conditions of the acceptable
policy and shall make their compliance a condition to
continued provision of private labeled services. iExalt agrees
to require its private label clients to indemnify and hold
harmless iExalt and 000.XXX, Inc. from any losses, damages,
costs or expenses resulting from any third party claim or
allegation arising out of or relating to use of the Internet
Services provided by 000.XXX, Inc., including any claim which
would constitute a violation of the policy or a violation of a
third party's intellectual property rights.
11.2. IEXALT USE OF 000.XXX'S ACCEPTABLE USE POLICY. 000.XXX grants
iExalt the right to replace references to any of the 000.XXX
filtered services, such as ViaFamily or 000.XXX Online stated
in the Acceptable Use Policy, with the service name it is
offering.
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12. CONFIDENTIALITY. CONFIDENTIAL INFORMATION. iExalt acknowledges that in the
course of iExalt's rendering of the Services to 000.XXX after the sale of
the Purchased Assets, they have had and may continue to have access to and
acquire confidential information relating to the Purchased Assets and the
Internet Business. ("Confidential Information. For purposes of this
Agreement, the term "Confidential Information" means and includes any and
all information used by 000.XXX or iExalt, as the case may be, in its
business and any and all information provided by one party to the other,
including, without limitation, all methods, ideas, concepts, materials,
documents, records, computer programs, work, models, processes, procedures,
designs, drawings, plans, inventions, devices, parts, improvements, trade
secrets, know-how, financial data, customer lists, customer information,
market information, all other physical and intellectual property and all
other information in any form whatsoever and howsoever related to the
Internet Business; provided, however, that the term "Confidential
Information" shall not include information which the non-disclosing party
through reasonable documentary evidence can show it was aware of prior to
disclosure or which is generally available to the public other than by
breach of this Agreement. iExalt acknowledge that the Confidential
Information will be the property solely of 000.XXX as a result of the
closing of the Asset Purchase Agreement and will constitute trade secrets
and Confidential Information of 000.XXX and that their knowledge of the
Confidential Information would enable either to cause 000.XXX irrevocable
harm upon the disclosure of such matters.
12.1. DUTY OF CONFIDENTIALITY AND RESTRICTIVE USE. The parties agree
that access given to the other party's Confidential Information
is in a fiduciary capacity only, and that the Confidential
Information shall be deemed proprietary and confidential without
regard to whether such information would be deemed so by others.
Accordingly, each party agrees that it will not, at any time or
in any manner whatsoever, either during or after termination of
the engagement, divulge, disclose or otherwise make known to any
person, firm, corporation or other entity such Confidential
Information, except for those who need to know in connection
with the engagement and who agree in writing to be bound by the
terms of this Agreement, and that who will not make use of such
Confidential Information for any purposes other than for the
benefit of the other party. Each party further agrees that, upon
termination of the engagement, they will return to the
disclosing party all originals and copies of the Confidential
Information.
13. OTHER LEGAL ISSUES
13.1. COPYRIGHT. Content of ISPBrand, Via Family Online, CleanWeb,
000.XXX Online and other Internet access service owned by
000.XXX are protected by United States copyright laws and
international treaty provisions. iExalt shall treat this
material like any other copyrights material and agrees not to
rent, lease, lend or sell the service. iExalt shall not attempt
to reverse engineer, decompose, disassemble or make any attempt
to discover the source code to the service and the details of
any proprietary content.
13.2. LIMITED WARRANTY. 000.XXX warrants to iExalt that during the
term of this Agreement, ISPBrand Internet access service will
substantially conform to its documentation and specifications
when used in conformance with such documentation, and the
service will be free from material defects under normal use.
EXCEPT AS PROVIDED HEREIN, THE SERVICE THAT IS THE SUBJECT OF
THIS AGREEMENT IS LICENSED "AS IS" AND WITHOUT WARRANTY, EITHER
EXPRESSED OR IMPLIED, AS TO PERFORMANCE, MERCHANTABILITY, OR
FITNESS FOR ANY PARTICULAR PURPOSE.
13.3. REMEDIES. Each party acknowledges that the intentional or
unintentional release of any proprietary content or Confidential
Information in violation of this Agreement, will cause
irreparable harm for which the other party may not be fully or
adequately compensated by recovery of monetary damages. In the
event of any such violation,
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the non-breaching party will be entitled to injunctive relief
form a court of competent jurisdiction in addition to monetary
damages and any other remedy available at law or in equity. If
any action at law or in equity is brought to enforce or
interpret the terms of this Agreement, the prevailing party will
be entitled to recover, at trial and on appeal, reasonable
attorneys' fees, costs and disbursements in addition to any
other relief that may be granted.
13.4. GOVERNING LAW; ARBITRATION. The parties expressly and
irrevocably agree and consent that this Agreement and the legal
relations between the parties shall be governed by and construed
in accordance with the laws of State of North Carolina
applicable to contracts made and performed in such State and
without regard to conflicts-of-law doctrines except to the
extent that certain matters are preempted by federal law or are
governed by the law of the jurisdiction of incorporation of the
respective parties. (a) Any dispute arising from this agreement
shall be governed in accordance with the RULES OF PROCEDURE FOR
CHRISTIAN CONCILIATION of the Institute for Christian
Conciliation (Peacemaker Ministries) for any and all disputes
concerning or arising from or under this agreement. Both parties
realize that arbitration will be the exclusive remedy for
potential disputes and may not later litigate these or any other
related matters in civil court.
(b) In the event of a breach of any party to consummate a
dispute through Arbitration as set out in section 13 (a) above,
or breach of any covenant of any party to this agreement,
nothing herein shall prohibit the non-breaching party from
seeking equitable relief in a court of law, and to be entitled
to enforce this Agreement as to such matters by injunctive
relief and by specific performance; such relief to be without
the necessity of posting a bond, cash or otherwise (unless
required by North Carolina law).
13.5 TERMINATION BY BREACH OR DEFAULT OF IEXALT. In the event a
breach or default of this Agreement by iExalt remains uncured
for more than thirty (30) days after receipt of written notice
from 000.XXX, 000.XXX may terminate this Agreement and all
rights hereunder by giving iExalt written notice of termination.
Upon the termination thereof, 000.XXX will have the right
immediately to discontinue the provision of Private Label
services provided to iExalt.
13.6 TERMINATION BY BREACH OR DEFAULT OF 000.XXX. In the event a
breach or default of this Agreement by 000.XXX remains uncured
or more than thirty (30) days after receipt of written notice
from iExalt, iExalt may terminate this Agreement and all rights
hereunder by giving 000.XXX written notice of termination. Upon
the termination hereof, iExalt will have the right to
immediately discontinue the marketing of the Internet Business,
and shall relinquish all claims to future Royalty.
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13.7 MUTUAL INDEMNIFICATION. Each party to this Agreement will
indemnify and defend the other and its directors, officers,
employees and agents against any and all losses, liabilities,
judgments, awards and costs (including reasonable legal fees and
expenses) arising from or relating to: a) any material breach of
obligations herein; or b) any negligent act or omission or
willful misconduct by its employees and/or its agents.
13.8 ASSIGNMENT. The rights in this Agreement are iExalt's and will
not be transferred or assigned by operation of law or otherwise,
without the prior written consent of 000.XXX. Any transfer or
assignment in violation of this paragraph shall be void and will
have no force or effect as to 000.XXX.
13.9 FORCE MAJEURE. Neither party shall be considered in default
under any provision of this Agreement by reason of any delay or
failure in its performance of its obligations hereunder if such
delay or failure is caused by events beyond its reasonable
control, including but not limited to acts of God or the public
enemy; riots or insurrections; war; accidents; fire; strikes;
and other labor difficulties (whether or not the party is in a
position to concede to such demands); embargoes; judicial
action; lack of or inability to obtain export permits or
approvals, necessary labor, materials, energy, components, or
machinery; and acts of civil or military authorities. The time
for any performance required hereunder shall be extended by the
delay incurred as a result of the events described above,.
13.10 MISCELLANEOUS/SEVERABILITY. The terms of this Agreement are
binding on the Parties, their subsidiaries, affiliates and any
party controlling, controlled by or under common control with,
the Parties and their successors, iExalt, agents, employees and
associated individuals of the Parties. The invalidity or lack of
enforceability of any provision hereof will in no way affect the
validity or enforceability of any other provision. The Parties
agree that this Agreement will be governed by the internal laws
of the state of North Carolina, without regard to North Carolina
conflict of law principles.
13.11 BINDING AGREEMENT. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns as
permitted hereunder. No person or entity other than the parties
hereto is or shall be entitled to bring any action to enforce
any provision of this Agreement against either of the parties
hereto, and the covenants and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be
enforceable only by, the parties hereto or their respective
successors and assigns as permitted hereunder.
13.12 ENTIRE AGREEMENT. This Agreement and the attached Addendums
constitute the entire understanding and agreement between the
parties and supersede any and all prior or contemporaneous oral
or written communications with respect to the subject matter
hereof. This Agreement shall not be modified, amended or in any
way altered except by an instrument in writing signed by the
parties. If any provision of this Agreement, or the application
of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of
such provision to persons or circumstances other than those to
which it is held invalid, shall not be affected thereby.
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13.13 NOTICES. Any notice required by this Agreement or given in
connection with it, will be in writing and will be given to the
appropriate party by personal delivery or by certified mail, or
recognized overnight delivery services, return receipt
requested. Facsimile notice may be used only if a means of
obtaining an immediate written confirmation of receipt is
available and such proof is presented in the event of a dispute.
13.14 CHANGES. 000.XXX reserves the right to modify all names,
trademarks, service marks, trade names or other marks as it, in
its sole discretion, may determine from time to time to be
appropriate or beneficial to it. IExalt shall comply promptly
with notice from 000.XXX with any such change.
[Signature page follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of this 29th day
of May 2001.
000.XXX, INC.
By: /s/XXXXX XXXXXXX
-----------------------------
Title: PRESIDENT
-----------------------------
IEXALT, INC.
By: /s/ XXXXXX X. XXXXXXX
-----------------------------
Title: CEO
-----------------------------
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STRATEGIC MARKETING AND RESELLER AGREEMENT
ADDENDUM 1-COMPENSATION
A. ROYALTY-COMPENSATION PLAN. 000.XXX shall pay to iExalt a royalty for each
consumer that becomes an active fully paying subscriber developed through the
iExalt Marketing plans and programs. Royalty shall be paid each month the
subscriber remains an active subscriber to the 000.XXX service. The Royalty
payment shall be delivered to iExalt as set forth in Section 5 of the Strategic
Marketing and Resellers Agreement, and except as amended by the Parties, shall
be based on the following plan of compensation;
A-1. ROYALTY PROGRAM. The following Royalty amounts are based on a
customer who is paying $21.95/month for filtered ISP services.
Active Subscribers 0 - 10,000 $5.00 per subscriber
Active Subscribers 10,001 - 20,000 $6.00 per subscriber
Active Subscribers 20,001 + $7.00 per subscriber
A-2 PREPAID PAYMENT PLANS. A Royalty payment in the amount of 10% of the
Gross Subscription price paid by subscriber shall be paid on all Prepaid,
semi-annual or annual payment plans. E.g. a discounted, prepaid plan of
$18.95 times 10% equals Royalty ($18.95x12 months=$227.40x10% = $22.74
Royalty).
B. SUBSCRIBER DEFINITION. The Parties agree that a "Subscriber" shall be more
fully defined as a customer who has requested the services of 000.XXX through
iExalt for filtered ISP services, completed the account registration process,
accepted all terms of service policies, provided for account payment, and has
prepaid the account prior to use on a accepted monthly payment plan, or other
plan(s) as offered by the Parties.
C. FULFILLMENT SERVICES. 000.XXX provides fulfillment services for private
labels where CD request orders are placed through the 000.XXX Call Center.
Orders will be processed and shipped by 000.XXX and Licensee will be charged for
postage and handling for each CD shipped. Postage charges, as determined by the
U.S. Postal Service (First Class Rate) plus a $.05 cents per CD handling fee
will be assessed. 000.XXX will provide a monthly report that reflects
information on the number of CD's processed and shipped for the Licensee. The
total charge will be deducted from compensation due Licensee from monthly
subscriber sales.
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ADDENDUM 2
SERVICE XXXX
The following is a sample service xxxx for "Powered by ISPBrand". Customization
will be considered as requested by iExalt or offered by 000.XXX.
[ISPBRAND LOGO]
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