EXHIBIT 10.28
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "AGREEMENT") is entered into as of July
13, 2000, by and among Aquis IP Communications, Inc., a Delaware corporation
(the "COMPANY"), Aquis Communications Group, Inc., a Delaware corporation
("AQUIS GROUP"), and Aquis Communications, Inc., a Delaware corporation ("AQUIS"
and, together with Aquis Group, the "STOCKHOLDERS"), and Sunstar IP
Communications, LLC, a Delaware limited liability company (the "PURCHASER").
INTRODUCTION
The Company is engaged in the business of providing internet services,
virtual private network services, and web hosting and web development services
(the "BUSINESS").
The Company wishes to sell, and the Purchaser wishes to buy, substantially
all of the assets of the Company, on the terms and conditions set forth herein.
The Stockholders are the direct and indirect owners of the Company, will derive
substantial benefits from such sale and purchase, and wish to cause such sale
and purchase to be consummated. Such sale and purchase and each other related
transaction contemplated hereby are collectively referred to herein as the
"TRANSACTIONS."
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. As used herein, the following terms shall have the following
meanings:
(a) "AFFILIATE" means a person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under common
control with, the person specified. The term control means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of voting
securities, by contract, or otherwise.
(b) "BASE PURCHASE PRICE" means Two Million Twenty Five Thousand
Dollars ($2,025,000) PLUS the Extension Payment, if any.
(c) "BUSINESS DAY" means any day other than a Saturday, Sunday or a
day on which banks in Boston, Massachusetts or New York, New York are not open
for business.
(d) "CLOSING CURRENT LIABILITIES" means all liabilities of the Company
included in Section 2.7(c) of the Assumed Liabilities (as defined in Section
2.7) and specifically excluding liabilities of the kind referred to in Sections
2.7(a) and 2.7(b).
(e) "CLOSING PURCHASE PRICE" means the Base Purchase Price MINUS the
Deposit Amount MINUS the amount, if any, of the Closing Current Liabilities PLUS
the amount, if any, necessary to reimburse the Stockholders for operating losses
of the Company for the period from January 1, 2000 through the Closing Date,
determined by calculating the amount by which operating expenses and capital
expenses incurred by the Company exceeds revenue generated by the Company.
(f) "DEPOSIT AMOUNT" means the amount of $500,000, paid to Aquis Group
by the Purchaser pursuant to the Letter of Intent PLUS Purchaser Advances, if
any.
(g) "EXTENSION PAYMENT" means a cash payment to the Company of $50,000
which may be made pursuant to Section 2.9.
(h) "KNOWLEDGE OF THE COMPANY," "COMPANY'S KNOWLEDGE" or "KNOWN TO THE
COMPANY" or other like words means the actual knowledge of Xxxx Xxxxxxx and
Xxxxx Xxxxxxxx.
(i) "KNOWLEDGE OF THE PURCHASER," "PURCHASER'S KNOWLEDGE" or "KNOWN TO
PURCHASER" or other like words means the actual knowledge of Xxxx Xxxxxxxx.
(j) "KNOWLEDGE OF THE STOCKHOLDERS," "STOCKHOLDER'S KNOWLEDGE" or
"KNOWN TO THE STOCKHOLDERS" or other like words means the actual knowledge of
Xxxx Xxxxxxx and Xxxxx Xxxxxxxx.
(k) "LETTER OF INTENT" means the letter of intent dated December 22,
1999, between Deerfield Partners, LLC and Aquis Group.
(l) "LIENS" means liens, security interests, mortgages, encumbrances
and restrictions of any kind.
(m) "MATERIAL ADVERSE EFFECT" shall mean (i) when used in Article III,
any event, condition or circumstance that could reasonably be expected to have a
material adverse effect upon the Purchased Assets and, (ii) when used in Article
IV, any event, condition or circumstance that could have a material adverse
effect upon the Purchaser's ability to consummate the Transactions or upon the
business, assets and liabilities of the Purchaser or which could reasonably be
expected to have such material adverse effect after the Closing.
(n) "PERMITTED LIENS" means (i) Liens of leases on leased equipment;
(ii) mechanics', carriers', workers', repairmens' or other Liens arising or
incurred in the ordinary course of business which are not yet due and payable or
are being contested in good faith, (iii) Liens for current taxes, assessments
and other governmental charges which are not yet due and payable or are being
contested in good faith or which may thereafter be paid without penalty; and
(iv) Liens that are listed or described in SCHEDULE 2.1.
(o) "PURCHASER ADVANCES" means additional amounts, if any, advanced by
the Purchaser to support the operations of the Company prior to Closing which
shall only be made with the written consent of the Company.
(p) RESERVED.
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(q) "STOCK PURCHASE AGREEMENT" means the Stock Purchase Agreement
dated as of June 15, 1999, among Aquis, Sunstar Communications, Inc. and Sunstar
One, L.L.C.
SECTION 1.2. The following defined terms shall have the meanings set forth
in the referenced Section:
TERM SECTION WHERE DEFINED
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AAA Section 9.11
Agreement Preamble
Aquis Preamble
Aquis Group Preamble
Assigned Contracts Section 2.1
Assumed Liabilities Section 2.7
Balance Sheet Section 3.6
Balance Sheet Date Section 3.6
Business Introduction
Claim Section 8.4
Closing Section 2.9
Closing Date Section 2.9
Closing Purchase Price Section 2.6
Closing Purchase Price Certificate Section 1.7
Company Preamble
Cooperative Marketing Agreement Section 7.1
Disputed Items Notice Section 2.6
ERISA Section 2.19
Estimated Purchase Price Certificate Section 2.4
Excluded Assets Section 2.2
Indemnified Party Section 8.4
Indemnifying Party Section 8.4
Intellectual Property Section 2.1
Leased Property Section 3.9
Litigation Conditions Section 8.4
Material Adverse Effect Section 3.4
Material Contracts Section 3.8
Operating Agreement Section 4.1
Organizational Documents Section 3.1
Purchased Assets Section 2.1
Purchaser Preamble
Related Documents Section 2.2
Rules Section 9.11
Stockholders Preamble
Subscription Agreement Section 7.1
Tax Section 9.3
Tax Returns Section 9.3
Third Party Claim Section 8.4
Transactions Introduction
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ARTICLE II
PURCHASE AND SALE; CLOSING
SECTION 2.1. PURCHASE AND SALE OF PURCHASED ASSETS. Subject to the terms
and conditions of this Agreement, the Company shall sell, convey, transfer,
assign and deliver to the Purchaser at the Closing (as hereinafter defined), and
the Purchaser shall purchase and accept, all of the Company's assets and
properties of every kind, nature and description as such assets and properties
exist on the Closing Date, free and clear of all Liens, other than Permitted
Liens, except to the extent any of such assets constitute Excluded Assets (all
of such assets being referred to herein as the "PURCHASED ASSETS") including,
without limitation, the following assets of the Company:
(a) all of the Company's rights and interests in accounts and accounts
receivable (including any collateral or security held by the Company for the
payment thereof and accrued but unpaid interest thereon) which remain
uncollected as of the close of business on the Closing Date;
(b) all tangible assets, including without limitation, office and
other equipment, leasehold improvements, furniture and vehicles;
(c) all inventories, including without limitation, finished goods,
work-in-process, raw materials, processing materials, purchased parts and
supplies;
(d) originals or duplicate copies of all financial, accounting and
operating data and records, including without limitation, all books, records,
notes, sales and sales promotional data, advertising materials, credit
information, cost and pricing information, customer and supplier lists, business
plans, projections, reference catalogs, payroll and personnel records (to the
extent permitted by law) and other similar property, rights and information;
(e) subject to Sections 2.7 and 2.12, all intangible assets,
including, without limitation, all rights to the "Sunstar Communications" name
and all derivations thereof and all patents, trademarks, trade names, service
marks, logos, service names, copyrights and applications therefor, brand names,
domain names, franchises, licenses, royalty agreements, commercial and technical
trade secrets, engineering, production and other designs, drawings,
specifications, formulae, technology, computer and electronic data processing
programs and software, inventions, processes, know-how, confidential information
and other proprietary property, rights and interests (collectively,
"INTELLECTUAL PROPERTY");
(f) subject to Sections 2.7 and 2.12, all rights under all leases,
license agreements, contracts, agreements, sale orders, purchase orders, open
bids and other commitments, warranties and warranty claims and awards, prepaid
expenses, deposits and retentions (collectively, "ASSIGNED CONTRACTS"); and
(g) any and all of the Company's rights and interest in Sunstar
Communications, Inc., an Arizona corporation.
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SECTION 2.2. EXCLUDED ASSETS. Notwithstanding anything in this Agreement to
the contrary, the Company shall not transfer to the Purchaser, and the Purchased
Assets shall not include (i) the charter, bylaws, corporate seal, stockholders'
lists, stock record, minute books and similar corporate records of the Company;
(ii) the Company's rights under this Agreement (including to the Purchase
Price), any other document contemplated hereby (the "Related Documents"), the
Letter of Intent and the Stock Purchase Agreement; (iii) cash, bank deposits,
other cash equivalents and marketable securities existing as of the close of
business on the Closing Date; (iv) tax records and books and records that the
Company is required by law to retain; (v) any claim, right or interest of the
Company in and to any refund to taxes of any kind relating to any period on or
prior to the Closing Date and any deferred tax assets of the Company relating to
any period on or prior to the Closing Date; (vi) any rights (including refunds
and claims thereto relating to the liabilities retained by the Company or any
insurance policy of the Company); or (vii) any of the assets listed on SCHEDULE
2.2 (collectively, the "EXCLUDED ASSETS").
SECTION 2.3. PURCHASE PRICE. Subject to the terms and conditions of this
Agreement, in full consideration of the sale, transfer and conveyance of the
Purchased Assets, the Purchaser shall assume the Assumed Liabilities and pay the
Closing Purchase Price to the Company, subject to adjustment as provided in
Section 2.6.
SECTION 2.4. PREPARATION OF PRE-CLOSING ESTIMATED PURCHASE PRICE
CERTIFICATE. At least 2 days prior to the Closing Date, the Company shall have
furnished to the Purchaser a certificate setting forth (a) the estimated Closing
Current Liabilities, including itemization of the components of the Closing
Current Liabilities, and (b) the Company's estimated calculation of the Closing
Purchase Price (the "ESTIMATED PURCHASE PRICE CERTIFICATE").
SECTION 2.5. PAYMENTS AT CLOSING. At the Closing, the Purchaser shall
assume the Assumed Liabilities and pay the Closing Purchase Price based on the
Estimated Purchase Price Certificate to the Company.
SECTION 2.6. DETERMINATION OF FINAL CLOSING PURCHASE PRICE.
(a) Within 30 days after the Closing Date, the Company will deliver to
the Purchaser a certificate (the "CLOSING PURCHASE PRICE CERTIFICATE") executed
by the Company, setting forth an itemization of Closing Current Liabilities and
a computation of the Closing Purchase Price. If the parties agree on the Closing
Purchase Price, pursuant to Section 2.6(e), any additional payments will be made
by the Purchaser to the Company or by the Company to the Purchaser, as the case
may be, within 15 days of the delivery of the Closing Purchase Price Certificate
to the Purchaser.
(b) If the Purchaser does not agree with the Closing Purchase Price,
within 15 days after receipt by the Purchaser of the Closing Purchase Price
Certificate, the Purchaser shall deliver written notice (the "DISPUTED ITEMS
NOTICE") to the Company, which Disputed Items Notice specifies the basis of the
Purchaser's objections to the Closing Purchase Price Certificate, its proposed
modifications to the Closing Purchase Price Certificate and its computation of
the Closing Purchase Price. The Purchaser and the Company will attempt to
resolve and finally determine the Closing Purchase Price as promptly as
practicable after the Company's receipt of the Disputed Items Notice.
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(c) If the Purchaser and the Company are unable to agree upon the
Closing Purchase Price within 20 days after delivery of the Disputed Items
Notice, the Purchaser and the Company will select by lot an independent "Big-5"
accounting firm (which accounting firm has not previously rendered services to
Purchaser, an Affiliate of Purchaser or the Company) to resolve the disputed
items and make a final determination of the Closing Purchase Price. Such
determination will be made within 60 days after such selection and will be final
and binding upon the parties. The fees, costs and expenses of the accounting
firm so selected will be borne by the party whose positions did not prevail in
such determination, or if the accounting firm determines that neither party
could be fairly found to be the prevailing party, then such fees, costs and
expenses will be borne 50% by the Purchaser and 50% jointly and severally by the
Company and the Stockholders.
(d) If the Purchaser does not deliver the Disputed Items Notice to the
Company within 15 days after receipt by the Purchaser of the Closing Purchase
Price Certificate, the Closing Purchase Price specified in the Closing Purchase
Price Certificate delivered by the Company to the Purchaser will be conclusively
presumed to be true and correct in all respects, will be the final Closing
Purchase Price and will be final and binding upon the parties.
(e) At such time as the Closing Purchase Price is finally determined,
either (i) a cash payment will be made by the Purchaser to the Company in the
amount by which the Closing Purchase Price exceeds the amount set forth in the
Estimated Purchase Price Certificate as issued at the Closing or (ii) a cash
payment will be made by the Company to the Purchaser in the amount by which the
amount set forth in the Estimated Purchase Price Certificate as issued at the
Closing exceeds the Closing Purchase Price. The obligations of the Company and
the Stockholders pursuant to this Section 2.6(e) shall be joint and several.
SECTION 2.7. ASSUMPTION OF LIABILITIES. At the Closing, the Purchaser shall
assume and agree to pay when due, perform and discharge in accordance with the
terms thereof, the following liabilities and obligations of the Company (the
"ASSUMED Liabilities"):
(a) all liabilities and obligations of the Company for future
performance as of the Closing under all Assigned Contracts and Intellectual
Property;
(b) 50% of the transfer taxes owed by the Company associated with the
Transactions; and
(c) all accounts payable and accrued expenses of the Company existing
as of the Closing (including, without limitation, all accounts payable disclosed
to the Purchaser, taxes, and accrued vacation expense).
Except with respect to the Assumed Liabilities, the Purchaser shall not assume
and shall not in any way be responsible for any of the debts, liabilities, or
obligations of the Company. Without limiting the generality of the foregoing,
the Purchaser shall have no liability for the following (except to the extent
the following constitute Assumed Liabilities): (a) the outstanding amount of all
principal, interest, fees and expenses in respect of borrowed money, (b)
obligations relating to taxes of any nature of the Company, including, but not
limited to, 50% of the transfer taxes owed by the Company associated with the
Transactions, (c) obligations of the Company under this
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Agreement or any agreement entered into in connection with the Transactions, (d)
liabilities of the Company to any Affiliate of the Company, or (e) obligations
of the Company with respect to any pension, profit sharing, retirement, employee
benefit or similar plan, benefit or arrangement.
SECTION 2.8. ALLOCATION. The total amount of the Closing Purchase Price and
the Deposit Amount and the Assumed Liabilities shall be allocated among the
Purchased Assets as set forth on SCHEDULE 2.8. It is agreed by the parties that
such allocation was arrived at by arm's-length negotiation and in the judgment
of the parties properly reflects the fair market value of the Purchased Assets
transferred pursuant to this Agreement. It is agreed that the allocations under
this Section 2.8 will be binding on all parties for federal, state, local and
other tax purposes in connection with the purchase and sale of the Purchased
Assets will be consistently reflected by each party on its tax returns.
SECTION 2.9. CLOSING. The closing (the "CLOSING") of the Transactions
hereunder will take place at Dechert, 4000 Xxxx Atlantic Tower, 0000 Xxxx
Xxxxxx, Xxxxxxxxxxxx, XX 00000, on the earlier of (a) September 30, 2000 or (b)
if the conditions set forth in Article VI herein are satisfied, at such earlier
date as is five Business Days after satisfaction or waiver of such conditions;
PROVIDED, HOWEVER, that the Closing may be extended at the option of the
Purchaser for one 30 day period upon payment of the Extension Payment. The date
of the Closing is referred to herein as the "CLOSING DATE."
SECTION 2.10. DELIVERIES BY THE COMPANY AND THE STOCKHOLDERS. At the
Closing, and upon satisfaction or waiver of the conditions set forth in Section
7.2 herein, the Company and the Stockholders will deliver or cause to be
delivered to the Purchaser the instruments, consents, opinions, certificates and
other documents required of it by Section 7.1.
SECTION 2.11. DELIVERIES BY THE PURCHASER. At the Closing, and upon
satisfaction or waiver of the conditions set forth in Section 7.1 herein, the
Purchaser will deliver or cause to be delivered to the Company and the
Stockholders the instruments, opinions, certificates and other documents
required of it by Section 7.2.
SECTION 2.12. NONASSIGNABLE ASSETS.
(a) To the extent that any rights under the Assigned Contracts and
Intellectual Property cannot be transferred without the consent, approval or
waiver of a third person or entity and such transfer or attempted transfer would
constitute a breach of such Assigned Contract or any agreement or understanding
relating to the Intellectual Property or a violation of any law, nothing in this
Agreement will constitute a transfer or an attempted transfer thereof; PROVIDED,
HOWEVER, that the Company will use its reasonable efforts before and for a
reasonable time after Closing, and Purchaser will cooperate with the Company, to
obtain such consents, approvals and waivers, and to obtain any other consents,
approvals and waivers necessary to transfer to Purchaser all of such Assigned
Contracts and Intellectual Property; PROVIDED FURTHER, HOWEVER, that the Company
will not be obligated to pay any consideration therefor (except to the extent
amounts are expended by the Company's employees and/or agents in the use of its
reasonable efforts) or to incur any additional liability or obligation in
connection therewith (except to the extent amounts are expended by the Company's
employees and/or agents in the use of its reasonable efforts) or remain
secondarily liable thereon.
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(b) If the consents, approvals and waivers referred to in Section
2.12(a) are not obtained prior to the Closing, the Company will cooperate in any
reasonable arrangement requested by Purchaser to provide Purchaser with all of
the benefits under such Assigned Contracts and Intellectual Property as if such
Assigned Contracts and Intellectual Property had been assigned to Purchaser,
including enforcement for the benefit of Purchaser of any and all rights of the
Company against any other party thereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE STOCKHOLDERS
The Company, and each Stockholder hereby severally (but not jointly)
represents and warrants to Purchaser that to its actual knowledge:
SECTION 3.1. ORGANIZATION, POWER AND STANDING. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, with all requisite corporate power and authority to own,
lease and operate its properties and to carry on the Business. The copies of the
Articles of Incorporation and by-laws of the Company (the "ORGANIZATIONAL
DOCUMENTS") delivered to the Purchaser are true, complete and correct in all
respects.
SECTION 3.2. RESERVED.
SECTION 3.3. RESERVED.
SECTION 3.4. VALIDITY AND ENFORCEABILITY; NO CONFLICT. Each of the Company
and the Stockholders has full corporate power and authority and has taken all
corporate actions necessary to permit them to execute, deliver and perform this
Agreement and the other documents contemplated hereby to which it is a party.
This Agreement has been, and at Closing the Related Documents will be, duly
executed and delivered by the Company and each Stockholder, as applicable, and
assuming the due execution and delivery of this Agreement and the Related
Documents by the Purchaser, constitutes and with respect to the Related
Documents will constitute, the valid and binding obligations of the Company and
the Stockholders, as applicable, enforceable against each of them in accordance
with its terms, except as such enforcement may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally or (ii) general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law). Neither the execution and delivery hereof by the Company and
the Stockholders, nor the consummation by the Company or the Stockholders of the
Transactions, will contravene, result in a material breach or material default
under, or result in the creation of any Lien upon the Purchased Assets under,
the Organizational Documents, or any material agreement to which the Company is
a party or by which the Business or the Purchased Assets may be bound or
affected, except for such breaches, defaults or Liens that, individually or in
the aggregate, would not have a Material Adverse Effect.
SECTION 3.5. RESERVED.
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SECTION 3.6. FINANCIAL STATEMENTS. The Company has delivered to the
Purchaser the unaudited financial statements of the Company for the 5 1/2 month
period ended December 31, 1999 including the unaudited statement of income of
the Company for such period. The Company has also furnished to the Purchaser the
unaudited balance sheet (the "BALANCE SHEET") of the Company as of December 31,
1999 (the "BALANCE SHEET DATE"). Such financial statements are complete and
accurate in all material respects and fairly present in all material respects
the financial condition of the Company at the respective dates thereof and the
results of its operation for the periods then ended, and were prepared in
accordance with the books and records of the Company in conformity with GAAP
consistently applied during the periods covered thereby, except for customary
year-end adjustments and the absence of footnotes.
SECTION 3.7. ABSENCE OF MATERIAL ADVERSE CHANGES. Except as set forth on
SCHEDULE 3.7, since the Balance Sheet Date, the Company has operated only in the
usual and ordinary course, and there has been no (a) acquisition or disposition
of assets or securities, or commitment therefor by the Company, except in the
ordinary course of business; or (b) incurrence of any Lien (other than Permitted
Liens), except in the ordinary course.
SECTION 3.8. MATERIAL CONTRACTS. SCHEDULE 3.8 sets forth a complete and
accurate list of all:
(a) contracts with respect to which the Company has any liability or
obligation involving more than $50,000, contingent or otherwise, or which may
extend for a term of more than one year after the Closing other than purchase
orders or service contracts entered into in the ordinary course of business;
(b) contracts under which the amount payable by the Company is
dependent on the revenue, income or similar measure of the Company or any other
person or entity;
(c) licenses, leases, contracts and other arrangements with respect to
any material property of the Company, including without limitation, all real
estate leases, material software licenses and material sales and supply
contracts;
(d) agreements, contracts or instruments to which the Company is a
party relating to the borrowing of money, the capital lease or purchase on an
installment basis of any asset, or the guarantee of any of the foregoing, which
would constitute an Assumed Liability;
(e) contracts of the Company with officers, directors or stockholders
of the Company or their relatives or Affiliates on other than fair market value
terms and conditions;
(f) contracts which place any material limitation on the method of
conducting or scope of the Business;
(g) contracts with sales representatives or distributors; and
(h) other material contracts, instruments, commitments, plans and
arrangements of the Company.
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All of the foregoing (whether written or unwritten), including all
amendments or modifications thereto, are referred to as "MATERIAL CONTRACTS."
The Company has made available to the Purchaser copies of all Material Contracts
and descriptions of any oral Material Contracts. Except as set forth on SCHEDULE
3.8, each Material Contract is a valid and binding obligation of the Company,
and to the Company's and the Stockholder's knowledge, the other parties thereto,
and is in full force and effect and there is no event which has occurred or
exists, which constitutes or, with notice, the happening of any event and/or the
passage of time, would constitute a material default or material breach under
any such Material Contract by the Company, or, to the Company's and the
Stockholders' knowledge, any other party thereto.
SECTION 3.9. REAL PROPERTY. SCHEDULE 3.9(A) sets forth each interest in
real property leased by the Company (the "LEASED PROPERTY"). Except for the
Leased Property, the Company does not own or lease any real property. The
Company enjoys peaceful and quiet possession of the Leased Property, is not in
material default under any such leasehold and the Company has not been informed
in writing that the lessor under any of the leases has taken action or
threatened in writing to terminate the lease before the expiration date
specified in the lease. There is neither pending nor, to the knowledge of the
Company or the Stockholders, threatened, any condemnation, eminent domain or
similar proceeding with respect to the Leased Property.
SECTION 3.10. PERSONAL PROPERTY. Except as listed on SCHEDULE 3.10, the
Company has good title to or a valid leasehold or license interest in the
Purchased Assets, free and clear of any Liens (other than Permitted Liens). The
Company is the sole and lawful owner of the Purchased Assets and will convey to
the Purchaser good and marketable title to the Purchased Assets, free and clear
of all Liens, other than Permitted Liens.
SECTION 3.11. INTELLECTUAL PROPERTY. SCHEDULE 3.11 sets forth all
Intellectual Property owned or used by the Company in connection with the
Business which, to the knowledge of the Company and the Stockholders, is
material to the Business. To the knowledge of the Company and the Stockholders,
the Company is not violating or infringing any trademark, service xxxx, trade
name, patent or copyright owned by any other person or entity, and no written
claim has been made by any person or entity with respect to the use, validity or
enforceability of any of the Intellectual Property. To the knowledge of the
Company and the Stockholders, no person or entity is violating or infringing any
of the Intellectual Property.
SECTION 3.12. ACCOUNTS RECEIVABLE. The accounts receivable of the Company
represent amounts receivable for merchandise or services actually delivered or
provided, have arisen from BONA FIDE transactions in the ordinary course of
business and, to the knowledge of the Company and the Stockholders, are not
subject to set-off or counterclaim (other than allowance for doubtful accounts
reflected on the most recent financial statements of the Company provided to the
Purchaser prior to the date hereof, as adjusted for the passage of time through
the Closing Date).
SECTION 3.13. REQUIRED CONSENTS. Except for the consents specified on
SCHEDULE 3.13 or any consent, order, authorization, approval, declaration or
filing the failure of which to make or obtain would not have a Material Adverse
Effect, no consent, order, authorization, approval, declaration or filing,
including, without limitation, any consent, approval or authorization of or
declaration or filing with any governmental authority or any party to a Material
Contract, is
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required on the part of the Company or the Stockholders for or in connection
with the execution, delivery or performance of this Agreement. Subject to making
or obtaining the consents specified on SCHEDULE 3.13, the execution, delivery
and performance of this Agreement and the Related Documents by the Company and
the Stockholders, as applicable, will not result in any violation of, be in
conflict with or constitute a default under, any applicable law, statute,
regulation, ordinance, judgment, decree or order to which the Company is a party
or by which the Business or the Purchased Assets may be bound or affected,
except for violations, conflicts and defaults which would not reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.14. COMPLIANCE. The Company is in compliance with all statutes,
laws, ordinances, judgments, decrees, orders or governmental rules, regulations,
policies and guidelines applicable to it, except where the failure so to comply
would not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect. The Company has not received any written notice from
any governmental or regulatory authority of any alleged violation or
noncompliance with any statute, law, ordinance, judgment, decree, order or
governmental rule, regulation, policy or guideline applicable to it.
SECTION 3.15. LICENSES AND PERMITS. SCHEDULE 3.15 sets forth all material
licenses, permits and authorizations of governmental authorities (the
"AUTHORIZATIONS") held by the Company. The Company is in material compliance
with all such Authorizations, all of which are in full force and effect.
SECTION 3.16. LITIGATION. There is no action, suit, proceeding or
investigation before any court, arbitrator or governmental authority pending or,
to the knowledge of the Company and the Stockholders, threatened against the
Company in relation to the Business or the Purchased Assets which may reasonably
be expected to, individually or in the aggregate, have a Material Adverse
Effect.
SECTION 3.17. RESERVED.
SECTION 3.18. EMPLOYEES AND COMPENSATION.
(a) None of the employees of the Company is represented by a union;
and there is no labor strike, dispute, arbitration, grievance, slowdown,
stoppage, organizational effort, dispute or proceeding by or with any employee
or former employee of the Company or any labor union pending or, to the
knowledge of the Company and the Stockholders, threatened against the Company.
(b) There are no employment or consulting contracts or arrangements
(other than those terminable at will) with any employees or consultants of or
associated with the Company other than as described on SCHEDULE 3.18.
SECTION 3.19. AFFILIATE TRANSACTIONS. Except as set forth on SCHEDULE 3.19,
(a) the Company is not a party to any contract or arrangement, or indebted,
either directly or indirectly, to any of its officers, directors or
stockholders, their relatives or Affiliates, and (b) none of such persons or
entities is indebted to the Company.
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SECTION 3.20. BROKERS. No finder, broker, agent, financial advisor or other
intermediary has acted on behalf of the Stockholders or the Company in
connection with the negotiation or consummation of this Agreement or the
Transactions and no such person or entity is entitled to any fee, payment,
commission or other consideration in connection therewith as a result of any
arrangement made by any of them.
SECTION 3.21. RESERVED.
SECTION 3.22. NO RELIANCE. The Company and the Stockholders acknowledge and
agree that (a) Xxxx Xxxxxxxx, a director of Aquis Group, is an Affiliate of, and
has an interest in, the Purchaser and (b) the Company and the Stockholders have
each determined (including by vote of the disinterested directors of each) that
this Agreement and the Transactions are fair to the Company and the
Stockholders. The Company and the Stockholders are not relying on any statement
or representation made by or on behalf of the Purchaser except as expressly set
forth in this Agreement and the Related Documents. Notwithstanding the
foregoing, neither the Company nor the Stockholders waive any claim arising
under or resulting from this Agreement based upon fraud, Rule 10b-5 promulgated
under the Securities Exchange Act of 1934 or any similar claim.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER
The Purchaser hereby represents and warrants to the Company and the
Stockholders that each of the statements contained in this Article IV is true
and correct and will be true and correct as of the Closing Date:
SECTION 4.1. LEGAL EXISTENCE AND ORGANIZATION. The Purchaser is a limited
liability company duly organized, validly existing and in good standing under
the laws of Delaware with all requisite power and authority to own its
properties and to carry on its business as such business is now conducted and
presently proposed to be conducted. The copies of the Limited Liability Company
Agreement (the "Operating Agreement") and the Certificate of Formation of the
Purchaser delivered to the Company are true, correct and complete in all
respects. The Purchaser is duly qualified to do business and is in good standing
as a foreign limited liability company in each jurisdiction in which the failure
to be so qualified could have a Material Adverse Effect.
SECTION 4.2. AUTHORITY; ENFORCEABILITY. The Purchaser has all requisite
power and authority to and has taken all limited liability company actions
necessary to permit the Purchaser to execute, deliver and perform this Agreement
and the Related Documents to which the Purchaser is a party. This Agreement has
been, and at Closing the Related Documents will be, duly executed and delivered
by the Purchaser, and assuming the due execution and delivery of this Agreement
and the Related Documents by the Company and the Stockholders, as applicable,
constitutes and with respect to the Related Documents will constitute, the valid
and binding obligations of the Purchaser, enforceable against it in accordance
with its terms, except as such enforcement may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally or (ii) general
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principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).
SECTION 4.3. NO CONFLICT WITH OTHER INSTRUMENTS. Neither the execution and
delivery hereof by the Purchaser nor the consummation by the Purchaser of the
Transactions will contravene, result in a breach or default under, or result in
the creation of any Lien under, the organizational documents of the Purchaser,
any applicable law, or any agreement to which the Purchaser is a party or by
which the Purchaser or any of its assets are bound or affected.
SECTION 4.4. BROKERS. No finder, broker, agent, financial advisor or other
intermediary has acted on behalf of the Purchaser in connection with the
negotiation or consummation of this Agreement or any of the Transactions and no
such person or entity is entitled to any fee, payment, commission or other
consideration in connection therewith as a result of any arrangement made by the
Purchaser.
SECTION 4.5. SUBSIDIARIES. The Purchaser has no subsidiaries and does not,
directly or indirectly, own or have the right to acquire any equity interest in
any corporation, joint venture, partnership or other entity and does not have
any investment in, loan to or material advance of cash or other extension of
credit (other than advances to employees and extensions of credit to customers
in the ordinary course of business) to any entity or individual.
SECTION 4.6. REQUIRED CONSENTS. No consent, order, authorization, approval,
declaration or filing, including, without limitation, any consent, approval or
authorization of or declaration or filing with any governmental authority or any
party to a material contract of the Purchaser, is required on the part of the
Purchaser for or in connection with the execution, delivery or performance of
this Agreement. The execution, delivery and performance of this Agreement and
the Related Documents by the Purchaser will not result in any violation of, be
in conflict with or constitute a default under, any law, statute, regulation,
ordinance, judgment, decree or order to which the Purchaser is a party or by
which the Purchaser is bound, except for violations, conflicts and defaults
which will not, individually or in the aggregate, have a Material Adverse
Effect.
SECTION 4.7. COMPLIANCE. The Purchaser is in compliance with all statutes,
laws, ordinances, judgments, decrees, orders or governmental rules, regulations,
policies and guidelines applicable to it, except where the failure so to comply
would not, individually or in the aggregate, have a Material Adverse Effect. The
Purchaser has not received any written notice from any governmental or
regulatory authority or otherwise of any alleged violation or noncompliance with
any statute, law, ordinance, judgment, decree, order or governmental rule,
regulation, policy or guideline applicable to it.
SECTION 4.8. LITIGATION. There is no action, suit, proceeding or
investigation before any court, arbitrator or governmental authority pending or,
to the actual knowledge of the Purchaser, threatened against the Purchaser in
relation to the affairs of the Purchaser which may reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 4.9. RESERVED.
SECTION 4.10. RESERVED.
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SECTION 4.11. NO UNDISCLOSED LIABILITIES. Purchaser does not have any
liabilities or obligations (whether accrued, contingent, due or to become due)
that would be required to be set forth on a balance sheet of the Purchaser
prepared in accordance with GAAP.
SECTION 4.12. DISCLOSURE. None of Purchaser or its authorized
representatives has any knowledge of any fact, event or circumstance that
constitutes (or would constitute) or indicate (or would indicate) a breach of
any representation, warranty or covenant made by the Company and/or the
Stockholders in this Agreement.
SECTION 4.13. RESERVED.
SECTION 4.14. NO RELIANCE. The Purchaser is not relying on any statement or
representation made by or on behalf of the Company or the Stockholders except as
expressly set forth in this Agreement and the Related Documents. Notwithstanding
the foregoing, the Purchaser does not waive any claim arising under or resulting
from this Agreement based upon fraud, Rule 10b-5 promulgated under the
Securities Exchange Act of 1934 or any similar claim.
ARTICLE V
COVENANTS OF THE COMPANY AND THE STOCKHOLDERS
SECTION 5.1. EMPLOYMENT OF EMPLOYEES. Effective on the Closing Date, except
as otherwise provided in any existing employment or consulting agreement, the
Company shall cause the employment of each employee to be terminated in
accordance with applicable law. The Company shall use its reasonable efforts to
terminate the Employment Agreement, dated as of June 15, 1999, between Xxxx
Xxxxx and the Company. As of the Closing Date, Mr. Hobko's existing options to
purchase 53,500 shares of Aquis Group's Common Stock shall become fully vested.
SECTION 5.2. NONSOLICITATION COVENANT; INJUNCTIVE RELIEF. For a period of
one year after the Closing, neither the Company nor the Stockholders will,
directly or indirectly, solicit or endeavor to entice away from the Purchaser,
or otherwise interfere with the business relationship of the Purchaser with, any
current customer of the Business or any current employee of the Business who has
been hired by Purchaser. The Company and each Stockholder acknowledge that any
breach of the provisions of this Section 5.2 will cause irreparable injury to
the Purchaser for which an adequate monetary remedy does not exist. Accordingly,
in the event of any such breach, the Purchaser shall be entitled, in addition to
the exercise of other remedies, to seek and obtain injunctive relief restraining
the Company from committing such breach. If any provision of this Section 5.2 is
unenforceable or illegal, such provision shall be enforced to the fullest extent
permitted by law and the remainder of this Section shall remain in full force
and effect.
SECTION 5.3. USE OF NAME. For a period of six months following the Closing,
the Company shall, and as of the Closing hereby does, license to the Purchaser,
on a royalty-free basis, the exclusive right (except as to the Company) to use
the name Aquis IP Communications in connection with its operation of the
Business, and the Company agrees to take all necessary actions to allow the
Purchaser to exercise such right.
SECTION 5.4. ENDORSEMENT OF CHECKS, ETC. The Company hereby authorizes the
Purchaser following the Closing to endorse for deposit only its name on and
collect for the
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Purchaser's account any checks received in payment of any accounts included in
the Purchased Assets, and any refunds of deposits, prepaid expenses and similar
amounts. In the event payment for any amounts due the Purchaser are received by
the Company, the Company will promptly turn the same over to the Purchaser.
ARTICLE VI
COVENANTS OF THE PURCHASER
SECTION 6.1. CONFIDENTIALITY. Pending the Closing, all proprietary
information obtained by the Purchaser from or on behalf of the Stockholders or
the Company will be kept confidential and will not be disclosed by the Purchaser
other than to its directors, officers, employees, advisors and financing sources
who need to know such proprietary information for the purpose of entering into
the Transactions (and, if such information is disclosed to any such director,
officer, employee, advisor or financing source, the Purchaser shall notify such
person or entity that such information is to be kept confidential); PROVIDED
that the foregoing restriction shall not apply to information which (a) is
lawfully and independently obtained by the Purchaser from a third party without
restriction as to disclosure by the Purchaser, (b) was known by the Purchaser
prior to its disclosure by or on behalf of the Company or the Stockholders, (c)
is in the public domain or enters into the public domain through no fault of the
Purchaser, (d) is independently developed by the Purchaser without reference to
information provided by the Company or the Stockholders or (e) the Purchaser is
required by law or legal process to disclose such information. If this Agreement
is terminated, the Purchaser will cause to be delivered to the Company all
materials obtained by the Purchaser from or on behalf of the Company or the
Stockholders, whether obtained before or after the execution hereof.
SECTION 6.2. EMPLOYMENT OF EMPLOYEES. Effective as of the Closing Date,
Purchaser or one of its Affiliates shall extend offers of employment commencing
as of the Closing to all of the employees terminated in accordance with the
first sentence of Section 5.1 hereof.
ARTICLE VII
CONDITIONS TO CLOSING; TERMINATION
SECTION 7.1. CONDITIONS TO OBLIGATIONS OF THE PURCHASER. Unless waived in
writing by the Purchaser in its sole discretion, the obligation of the Purchaser
hereunder to consummate the Transactions is subject to the satisfaction at or
prior to the Closing of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in Article III shall be true and accurate in all material respects
(except that the representations and warranties qualified as to materiality
shall be true and correct in all respects) on and as of the Closing Date with
the same effect as though made on and as of such date (other than
representations and warranties that address matters only as of a particular date
which shall be true and correct as of that date).
(b) PERFORMANCE OF COVENANTS. The Company and the Stockholders shall
have performed and complied in all material respects with each and every
covenant, agreement
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and condition required to be performed or complied with by them hereunder on or
prior to the Closing Date.
(c) CERTIFICATE. The Purchaser shall have received a certificate of
the Company and the Stockholders certifying to the matters set forth in
subsections (a) and (b) above.
(d) LICENSES, CONSENTS, ETC. RECEIVED. The Company and the
Stockholders shall have obtained and delivered to the Purchaser copies of all
consents, licenses, approvals and permits listed on SCHEDULE 3.13 or SCHEDULE
3.15, and no such consent, license, approval or permit shall have been withdrawn
or suspended. The Purchaser shall have received the consent of each landlord
under each lease of Leased Property to the assumption of the applicable lease by
the Purchaser.
(e) NO INJUNCTION. There shall not have been entered a preliminary or
permanent injunction, temporary restraining order or other judicial or
administrative order or decree, the effect of which prohibits the Closing.
(f) INSTRUMENTS OF TRANSFER. The Company shall have delivered to the
Purchaser such bills of sale, assignments and other instruments of transfer as
the Purchaser may reasonably require to transfer to it good and marketable title
to the Purchased Assets, free and clear of all Liens except Permitted Liens.
(g) CERTIFICATES; DOCUMENTS. The Purchaser shall have received copies
of each of the following, certified to its reasonable satisfaction: (i) the
Articles of Incorporation of the Company and each Stockholder, certified by the
Secretary of State of the jurisdiction of its incorporation; (ii) a certificate
of the Secretary of State of Delaware as to the legal existence and good
standing of the Company and each Stockholder; and (iii) the by-laws of the
Company and each Stockholder and resolutions of the Board of Directors
authorizing the Transactions, each certified by the secretary of the Company and
each Stockholder, as applicable.
(h) LEES WARRANT. Aquis Group shall issue to Xxxxx X. Xxxx a warrant
to purchase 100,000 shares of Aquis Group's Common Stock at an exercise price of
$1.50 per share. The warrant shall expire three years from the date of grant.
(i) RESERVED.
(j) COOPERATIVE MARKETING AGREEMENT. The Company and the Purchaser
shall have entered into a Cooperative Marketing Agreement, in a form and in
substance reasonably satisfactory to the Company and the Purchaser (the
"COOPERATIVE MARKETING Agreement").
(k) ACTIONS AND PROCEEDINGS. Prior to the Closing, all actions,
proceedings, instruments and documents reasonably necessary to carry out the
Transactions shall have been taken, completed or delivered by the Company or the
Stockholders and shall be in form and substance reasonably satisfactory to
counsel to the Purchaser.
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SECTION 7.2. CONDITIONS TO OBLIGATIONS OF THE COMPANY. Unless waived in
writing by the Company, the obligation of the Company to sell the Purchased
Assets is subject to the satisfaction at or prior to the Closing of the
following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in Article IV shall be true and accurate in all material respects
(except that the representations and warranties qualified as to materiality
shall be true and correct in all respects) on and as of the Closing Date with
the same effect as though made on and as of such date (other than
representations and warranties that address matters only as of a particular date
which shall be true and correct as of that date).
(b) COVENANTS PERFORMED. The Purchaser shall have performed and
complied in all material respects with each and every covenant, agreement and
condition required to be performed or complied with by it under this Agreement
on or prior to the Closing Date.
(c) OFFICER'S CERTIFICATE. The Purchaser shall have delivered to the
Company and the Stockholders a certificate certifying as to the matters set
forth in subsections (a) and (b) above.
(d) NO INJUNCTION. There shall not have been entered a preliminary or
permanent injunction, temporary restraining order or other judicial or
administrative order or decree, the effect of which prohibits the Closing.
(e) PURCHASE PRICE; LENDER CONSENT. The Purchaser shall have paid the
Closing Purchase Price. FINOVA Capital Corporation shall have executed and
delivered a consent to the Transactions in substantially the form of EXHIBIT
7.2(E).
(f) ASSUMPTION OF LIABILITIES. The Purchaser shall have delivered to
the Company instruments of assumption, in a form reasonably required by it,
pursuant to which the Purchaser shall assume the Assumed Liabilities.
(g) CERTIFICATES; DOCUMENTS. The Company shall have received copies of
each of the following, certified to its reasonable satisfaction: (i) the
Certificate of Formation of the Purchaser, as amended, certified by the
Secretary of State of Delaware; (ii) a certificate of the Secretary of State of
Delaware as to the legal existence and good standing of the Purchaser and (iii)
the Operating Agreement of the Purchaser and resolutions of the Board of
Managers of the Purchaser authorizing the Transactions, each certified by a
Manager of the Purchaser.
(h) RESERVED.
(i) COOPERATIVE MARKETING AGREEMENT. The Company and the Purchaser
shall have entered into the Cooperative Marketing Agreement.
(j) ACTIONS AND PROCEEDINGS. Prior to the Closing, all actions,
proceedings, instruments and documents reasonably necessary to carry out the
Transactions shall have been taken, completed or delivered by the Purchaser and
shall be in form and substance reasonably satisfactory to counsel to the Company
and the Stockholders.
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SECTION 7.3. TERMINATION; EFFECT OF TERMINATION. This Agreement may be
terminated:
(a) By mutual written consent of the Company and the Purchaser at any
time prior to the Closing; or
(b) By the Company or Purchaser if the Closing shall not have occurred
by September 30, 2000 or, upon payment of the Extension Payment, October 31,
2000; PROVIDED, HOWEVER, that the Company or the Purchaser may terminate this
Agreement pursuant to this Section 7.3(b) only if the Closing shall not have
occurred by such date for a reason other than the failure by such party to
fulfill any its obligations under this Agreement which has been the cause of or
resulted in the failure of the Closing to occur on or before such date; or
(c) By the Company or Purchaser if there shall have been entered a
final, nonappealable order or injunction of a governmental authority restraining
or prohibiting the Transactions or any material part thereof.
In the event of termination of this Agreement by either the Company of Purchaser
or both of them as provided in this Section 7.3, this Agreement shall
immediately terminate and be of no further force and effect, and there shall be
no liability on the part of either the Company or the Purchaser or their
respective directors, officers or stockholders, except for liabilities arising
from a willful breach of this Agreement prior to such termination, or pursuant
to Section 6.1 hereof.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
SECTION 8.1. SURVIVAL. All representations and warranties contained herein
shall survive the Closing for twelve (12) months following the Closing Date,
except that such time limitation shall not apply to (i) claims for
misrepresentations or breaches of warranty relating to Sections 3.1, 4.1, 4.4
and 4.12, (ii) claims of a material misrepresentation or material breach of
warranty based on actual fraud or (iii) any claims which have been the subject
of a written notice from the Purchaser prior to the expiration of such twelve
(12) month period, which notice specifies in reasonable detail the nature of the
claim. All covenants and agreements contained herein shall survive the Closing
for so long as they shall remain applicable.
SECTION 8.2. INDEMNIFICATION BY THE COMPANY AND THE STOCKHOLDERS. Each of
the Company and the Stockholders hereby severally (but not jointly) indemnify
and hold the Purchaser harmless from and against all claims, liabilities,
obligations, costs, damages, losses and expenses of any nature (excluding lost
profits and punitive, unforeseen or consequential damages) (collectively,
"DAMAGES"), arising out of or relating to (a) any breach of their respective
representations, warranties, covenants or agreements set forth herein, (b) all
pre-Closing liabilities relating to the Purchased Assets and the Business other
than the Assumed Liabilities (regardless of whether information with respect
thereto is set forth on a Schedule hereto) and (c) all costs and expenses
(including reasonable attorneys' fees) incurred in connection with the
foregoing.
SECTION 8.3. INDEMNIFICATION BY THE PURCHASER. The Purchaser hereby
indemnifies and holds the Company and the Stockholders harmless from and against
all Damages arising out of or relating to (a) any breach of the representations,
warranties, covenants or agreements of the
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Purchaser set forth herein, (b) all post-Closing liabilities relating to the
Purchased Assets and the Business, (c) all Assumed Liabilities, and (d) all
costs and expenses (including reasonable attorneys' fees) incurred in connection
with the foregoing.
SECTION 8.4. PROCEDURES FOR INDEMNIFICATION OF THIRD PARTY CLAIMS.
(a) A party seeking indemnification pursuant to this Agreement (an
"INDEMNIFIED PARTY") shall give prompt notice to the party from whom such
indemnification is sought (the "INDEMNIFYING PARTY") of the assertion of any
claim, or the commencement of any action, suit or proceeding by a third party
which is not an affiliate of any party hereto in respect of which indemnity may
be sought hereunder (a "THIRD PARTY CLAIM"), and will give the Indemnifying
Party such information with respect thereto as the Indemnifying Party may
reasonably request, but failure to give such notice shall not relieve the
Indemnifying Party of any liability hereunder except to the extent that the
Indemnifying Party is actually prejudiced thereby.
(b) The Indemnifying Party shall have the right, exercisable by
written notice to the Indemnified Party within 30 days of receipt of notice from
the Indemnified Party of the commencement or assertion of any Third Party Claim
in respect of which indemnity may be sought hereunder, to assume and conduct the
defense of such Third Party Claim with counsel selected by the Indemnifying
Party and reasonably acceptable to the Indemnified Party; PROVIDED that (i) the
defense of such Third Party Claim by the Indemnifying Party will not, in the
reasonable judgment of the Indemnified Party, have a material adverse effect on
the Indemnified Party; and (ii) the Indemnifying Party has sufficient financial
resources, in the reasonable judgment of the Indemnified Party, to satisfy the
amount of any adverse monetary judgment that is reasonably likely to result; and
(iii) the Third Party Claim solely seeks (and continues to seek) monetary
damages; and (iv) the Indemnifying Party expressly agrees in writing that as
between the Indemnifying Party and the Indemnified Party, the Indemnifying Party
shall be solely obligated to satisfy and discharge the Third Party Claim,
subject to all applicable limitations contained in this Agreement (the
conditions set forth in clauses (i) through (iv) are collectively referred to as
the "LITIGATION CONDITIONS"). If the Indemnifying Party does not assume the
defense of such Third Party Claim in accordance with this Section 8.4, the
Indemnified Party may continue to defend the Third Party Claim. If the
Indemnifying Party has assumed the defense of a Third Party Claim as provided in
this Section 8.4, the Indemnifying Party will not be liable for any legal
expenses subsequently incurred by the Indemnified Party in connection with the
defense thereof; PROVIDED, however, that if (i) the Litigation Conditions cease
to be met, or (ii) the Indemnifying Party fails to take reasonable steps
necessary to defend diligently such Third Party Claim, the Indemnified Party may
assume its own defense, and the Indemnifying Party will be liable for all
reasonable costs or expenses paid or incurred in connection therewith.
(c) The Indemnifying Party or the Indemnified Party, as the case may
be, shall have the right to participate in (but not control), at its own
expense, the defense of any Third Party Claim which the other is defending as
provided in this Agreement.
(d) The Indemnifying Party, if it shall have assumed the defense of
any Third Party Claim as provided in this Agreement, shall not, without the
prior written consent of the Indemnified Party, consent to a settlement of, or
the entry of any judgment arising from, any such Third Party Claim (i) which
does not include as an unconditional term thereof the giving by
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the claimant or the plaintiff to the Indemnified Party a complete release from
all liability in respect of such Third Party Claim, or (ii) which grants any
injunctive or equitable relief, or (iii) which may reasonably be expected to
have a material adverse effect on the affected business of the Indemnified
Party. The Indemnified Party shall have the right to settle any Third Party
Claim, the defense of which has not been assumed by the Indemnifying Party, with
the written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed.
(e) Whether or not the Indemnifying Party chooses to defend or
prosecute any Third Party Claim, all the parties hereto shall cooperate in the
defense or prosecution thereof and shall furnish such records, information and
testimony, and attend such conferences, discovery proceedings, hearings, trials
and appeals, as may be reasonably requested in connection therewith.
SECTION 8.5. SATISFACTION OF INDEMNIFICATION CLAIMS. Amounts payable in
respect of the indemnification obligations of the parties shall be paid within
ten (10) Business Days.
SECTION 8.6. LIMITATIONS ON LIABILITY. The Purchaser, on one hand, and the
Company and the Stockholders, on the other hand, shall not be entitled to
recover any damages for a breach of the representations and warranties contained
in Article III or Article IV, as the case may be, for damages unless the
cumulative total of damages contained in Article III or Article IV exceeds
$50,000, and then only to the extent of such excess. The maximum aggregate
obligation of the Company and the Stockholders, on one hand, and the Purchaser,
on the other hand, for breach of the representations and warranties contained in
Articles III or IV, shall not exceed $1,000,000.
SECTION 8.7. EXCLUSIVE REMEDY. The indemnification provided in this Article
VIII shall be the sole and exclusive remedy after the Closing Date for damages
available to Purchaser, the Company and the Stockholders for breach of any of
the representations or warranties contained herein.
SECTION 8.8. DAMAGES NET OF INSURANCE. The amount of any Damage for which
indemnification is provided under Section 8.2 and 8.3 shall be net of (i) any
insurance recovery in respect thereof (net of any increase in insurance premiums
that may be reasonably attributed thereto and collection expenses) and (ii) any
amounts recovered by the Indemnified Party from any third party. If the amount
to be netted hereunder from any payment required under Sections 8.2 or 8.3 is
determined after payment by the Indemnifying Party of any amount otherwise
required to be paid to an Indemnified Party pursuant to this Article VIII, the
Indemnified Party shall repay to the Indemnifying Party, promptly after such
determination, any amount that the Indemnifying Party would not have had to pay
pursuant to this Article VIII had such determination been made at the time of
such payment.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. NOTICES. Any notices or other communications required or
permitted to be given hereunder shall be sufficiently given if delivered in
person or mailed by registered or certified mail, return receipt requested, or
sent by nationally recognized overnight delivery service, addressed as follows:
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To the Purchaser: Sunstar IP Communications, LLC
0000 X. Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxx, Vice President
To the Company and
the Stockholders: Aquis Communications, Inc.
0000X Xxxxx 00
Xxxxx 000
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
With a copy to: Dechert
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
SECTION 9.2. EXPENSES. All legal and other costs and expenses incurred in
connection with this agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses, except as otherwise
provided herein.
SECTION 9.3. CERTAIN TAXES. Notwithstanding any provision of law, all
transfer, documentary, sales, use, real property gains, stamp, registration, and
other such Taxes and fees (including any penalties and interest) arising in
connection with this Agreement shall be borne equally by the Company and the
Purchaser and paid when due. The Company will file all necessary documentation
with respect thereto, and, if required by law, the Purchaser will join in the
execution of any such documentation.
SECTION 9.4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of the parties and their respective successors
and assigns, PROVIDED that neither this Agreement nor any right hereunder may be
assigned by any party (except by operation of law in the liquidation of the
Company) without the written consent of the Purchaser, the Company and the
Stockholders.
SECTION 9.5. AMENDMENTS AND WAIVERS. This Agreement may be modified or
amended only by a writing signed by the Purchaser, the Company and the
Stockholders. No waiver of any term or provision hereof shall be effective
unless in writing signed by the party waiving such term or provision.
SECTION 9.6. COUNTERPARTS. This Agreement may be executed by facsimile, in
two or more counterparts, and with counterpart signature pages, all of which
taken together shall constitute one and the same instrument, and any of the
parties hereto may execute this Agreement by signing any such counterpart.
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SECTION 9.7. HEADINGS. The headings of Articles and Sections herein are
inserted for convenience of reference only and shall be ignored in the
construction or interpretation hereof.
SECTION 9.8. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the choice of law provisions thereof.
SECTION 9.9. NO WAIVER. No failure to exercise and no delay in exercising
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or remedy hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The rights provided are cumulative and not exclusive of
any rights provided by law.
SECTION 9.10. INTEGRATION. This writing, together with Exhibits and Schedules
hereto, embodies the entire agreement and understanding between the parties with
respect to this transaction and supersedes all prior discussions, understandings
and agreements concerning the matters covered hereby.
SECTION 9.11. DISPUTE RESOLUTION. Except to the extent otherwise expressly
provided herein, any dispute, for which the only relief sought is money damages,
arising out of or in connection with this Agreement, including any question for
which such relief is sought regarding the existence, scope, validity, or
termination of this Agreement or this clause, shall be referred to and finally
resolved under the rules (the "Rules") of the American Arbitration Association
(the "AAA"), which Rules are deemed to be incorporated by reference into this
Section. The number of arbitrators shall be three (3), of whom one (1) shall be
selected by the Purchaser, one (1) shall be selected by the Company and one (1)
shall be nominated by agreement of the Purchaser and the Company. If a party
fails to appoint its arbitrator within fifteen (15) days following the
appointment by the other party of its arbitrator, or if the Purchaser and the
Company cannot agree on the third arbitrator within twenty (20) days following
the appointment of the second arbitrator, then the arbitrator of the failing
party and/or the third arbitrator shall be appointed by the Court of Arbitration
of the AAA. The place of arbitration shall be New York, New York. The
proceedings of the arbitration shall be governed by the laws of the State of New
York. The parties agree that information concerning any arbitration, including
without limitation, information concerning any arbitration award, shall be
treated as confidential and not disclosed to any third party without the consent
in writing of all the parties unless (a) the information has come into the
public domain other than through the fault of the party disclosing it, (b) such
disclosure is required by law or by a securities exchange or regulatory or
governmental body having jurisdiction over the party disclosing the information,
whether or not the requirement has the force of law, (c) such disclosure is
necessary in order to establish or protect any legal right of the party
disclosing the information, or (d) the disclosure is limited to the directors
and officers, professional advisers, auditors, lenders to or insurers of the
person disclosing the information, acting as such, or to a person intended to be
called as a witness in the arbitration by the person disclosing the information,
for the purpose of preparing his testimony. Each party shall bear its own costs
in any such arbitration, and the costs of arbitration shall be shared equally by
the parties hereto. This Section shall survive the termination of this
Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
AQUIS IP COMMUNICATIONS, INC. SUNSTAR IP COMMUNICATIONS, LLC
By: /s/ D. XXXXX XXXXXXXX By: XXXX XXXXX
---------------------- -----------------------------
Vice President (title) President and Chief Executive
Officer (title)
AQUIS COMMUNICATIONS GROUP, INC.
By: /s/ D. XXXXX XXXXXXXX
-----------------------
Vice President (title)
AQUIS COMMUNICATIONS, INC.
By: /s/ D. XXXXX XXXXXXXX
------------------------
Vice President (title)
